Photo by: Duane Daws
Steel producer ArcelorMittal South Africa (AMSA) reported a R524-million operating-profit turnaround in 2013, with earnings recovering to R47-million from a loss of R477-million in 2012. However, the company still reported a headline loss of R224-million for the year, which was inclusive of a R158-million provision for the closure of the Tshikondeni coal mine.
Full-year revenue was flat at R32.4-billion, despite a 9% rise in average steel prices, underpinned by rand weakness rather than stronger international prices. The rise in prices also helped AMSA offset a 9% fall in steel shipments.
Outgoing CEO Nonkululeko Nyembezi-Heita, who would depart this month, said the turnaround was aided by a more reliable operational environment – Dr Hans Ludwig Rosenstock would take over as acting CEO from February 19, while the board sought a permanent replacement.
The JSE-listed group expected prices and sales volumes to recover in the current quarter from the seasonal slowdown associated with the fourth quarter, which would result in a “significant improvement” in the first-quarter headline earnings. Fourth quarter revenue decreased by 12% to R7.7-billion when compared with the September quarter, owing to a 14% fall in steel shipments.
Liquid steel production for the year was marginally higher at nearly 5.1-million tons, while hot-rolled-coil cash costs rose 4%, while the production costs for billets increased 1%.
AMSA said the December 12 Constitutional Court ruling on the long-running dispute over iron-ore rights at the Sishen mine, in the Northern Cape, did not affect the agreement it had reached with the Sishen Iron Ore Company (SIOC) on November 5.
The agreement became effective on January 1 and enabled AMSA to purchase up to 6.25-million tons of iron-ore yearly at cost plus a margin of 20%. However, it remained subject to a number of conditions, including that SIOC retained the entire Sishen mining right and that it was “not required to account to any third party in respect thereof”.