ArcelorMittal South Africa has reported a full-year loss due to a drop in domestic steel sales and a decline in commercial coke sales.
ArcelorMittal South Africa, a unit of the world's top steelmaker, on Wednesday reported a full-year loss due to a drop in domestic steel sales and a decline in commercial coke sales.
Africa's biggest steelmaker said liquid steel production was down 7% while annual capacity dropped from eight-million tonnes to 6.5-million tonnes after deciding last year it was cheaper to shut three electric arc furnaces rather than complete a project to capture emissions.
ArcelorMittal's South African operation reported a headline loss per share of 129 cents, compared with a headline loss per share of 13 cents in the previous year.
Headline earnings are the main profit gauge in South Africa and exclude certain one-off and non-trading items.
The fourth quarter loss was substantially higher than in the previous three months due to a seasonal drop in demand during December.
"We expect the loss-making position to be reversed in the first quarter amid signs of improved domestic sales volumes as well as marginally higher prices," said chief executive Nonkululeko Nyembezi-Heita.
Revenue was up 3% to R32.2-billion.
Rise in the JSE Top-40 index
Shares in the company have been flat so far this year, compared with a 4% rise in the JSE Top-40 index.
The company is betting on projects to build renewable power plants, transport infrastructure and water systems to boost its earnings.
A major issue facing the South African unit is the outcome of a dispute over iron ore prices with Kumba Iron Ore, a unit of Anglo American.
The two firms have been at loggerheads over prices since early 2010 after a preferential deal lapsed. An arbitration hearing will decide if the steelmaker can keep sourcing iron ore from Kumba at a discount. – Reuters