Evraz Highveld CEO Mike Garcia
Photo by: Duane Daws
South African steel producer Evraz Highveld – whose stock has come under sustained pressure since the release of an interim-results statement last Thursday in which doubts were raised about the company’s ability to continue as a going concern – reports that “daily operations are not currently impacted by the earnings release, nor any comments made in the release”.
In response to questions posed by Engineering News Online, CEO Mike Garcia argued that, as a publically traded company, Evraz Highveld had to notify its shareholders about volatile market conditions and risks not fully under the control of the company.
“This does not mean that the company expects any of these risks to materialise,” he added.
The risks aired in the notice to shareholders related to labour instability, the fragile health of the steel market, production stability and access to credit lines.
Asked why the company found it necessary to make the statement that there was "significant doubt about the ability of the company to continue as a going concern”, Garcia responded as follows: “This wording can occur in volatile market conditions when there are risks not fully under the control of the company and is not unique to Evraz Highveld”.
“I believe these risk are well understood in the South African context,” Garcia outlined.
He would not be drawn on the market reaction to the statement, saying he could not predict how the market will react.
Shares in Evraz Highveld slumped when the market opened on Friday August 23, with the results statement having been released at the close of trade a day earlier. The company was trading at R14.50 a share on Tuesday, having closed at R18.50 a share on August 22.
Garcia would also not comment on the proposed sale of Evraz’s 85% interest in the South African business to a little-known black economic–empowerment consortium represented by Nemascore. The sale cautionary was renewed on July 26.