Steel producer ArcelorMittal South Africa (AMSA) expects to report earnings a share of R2.66 to R2.86 for the six months ended June 30.
That represents an increase of 32% to 42% on the earnings a share of R2.02 reported for the six months to June 30, 2021.
Headline earnings a share are expected to increase by between 17% and 26% to between R2.61 and R2.81, compared with the headline earnings a share of R2.23 reported for the prior comparable period.
The company, which will publish its interim results on July 28, says it successfully delivered against its predicted outlook for the six months to June 30, while, in some instances, even exceeding expectations.
“That said, the specifics of the delivery were far more complicated given the unavailability of the rail service; the impact on customers of the destructive flooding in KwaZulu-Natal; a two-week labour strike and unnecessary associated violence, intimidation, criminality and misconduct; and severe electricity load-shedding which is proving to be particularly disruptive to suppliers and customers,” AMSA states in a trading update.
It warns, however, that slowing economic growth and the heightened risk of a global recession present challenges for the outlook of commodities and steel demand in the next 12 to 18 months.
“In China, the world’s largest steelmaker, plants are being idled to reduce high inventories and address weak orders. Inflation is at its highest levels in decades across many parts of the world. Inflationary pressures are expected to continue at least through 2022.
“It is against this backdrop that the company is intensifying its Value Plan Programme in preparation for the more difficult trading environment which lies ahead,” it notes.
AMSA states, however, that the long-term investment case for steel remains intact.