ELLIS MNYANDU, Johannesburg | Thursday
METALS and minerals group Iscor Ltd reported a sharp drop in headline earnings after taking a knock from losses at its Saldanha Steel joint venture.
The group, which is South Africa’s biggest steel maker, forecast higher profits in the current year to June 2001 amid expected gains from iron ore and coal operations.
”Higher volumes and selling prices, together with the further release of re-engineering benefits will result in a significant improvement in profits,” Iscor said in a statement.
Headline earnings for the year just ended fell to R34m from last year’s R377m after the group factored in a R945m loss at start-up joint venture Saldanha Steel.
Fully-diluted headline earnings per share slumped to 12.7 cents a share for the year just ended, from 141.2 cents in the previous year, and no dividend was declared.
Total net operating profits more than doubled to R851m from R485m thanks to a turnaround in the steel division, which excludes Saldanha.
Saldanha Steel is a joint venture between Iscor and state-owned Industrial Development Corp (IDC).
”The plant achieved an operational output of 80% during July 2000, one month later than planned. It is expected that full production should be achieved during the second half of the new financial year,” Iscor said.
Analysts said Iscor’s poor results were expected. ”We all knew it wasn’t going to be good. All we’re focusing on now is what happens in the next year,” George Groman, steel analyst at stockbrokers Rice Rinaldi, said.
He said he expected Saldanha’s interest burden to come down after shareholders introduced a further R1.2bn in interest-free funding to improve Saldanha’s capital structure.
”In the current financial year they (Saldanha) should be neutral or may be even contribute a little profit to Iscor,” Groman said. – Reuters