ArcelorMittal reports loss of R237-million
ArcelorMittal SA reported a headline loss of R237-million for the first quarter of 2009, the steel giant said on Wednesday.
This compared with a R1,1-billion profit for the fourth quarter of 2008.
“Economic conditions had a significant negative impact on sales and income,” the company’s CEO Nku Nyembezi-Heita said in a conference call.
She added that the company’s domestic steel sales for the quarter were 686 000 tonnes, 4% down on the previous quarter.
This was mainly due to a 22% quarter-on-quarter decline in manufacturing activities, the negative effect of tight credit conditions on demand, especially from the building and construction industry, and de-stocking by steel merchants concerned about the uncertain outlook for steel demand and prices.
However Nyembezi-Heita said on the positive side, the public sector’s infrastructure programme continued to underpin domestic demand, with steel sales to Eskom’s new power stations—such as
Medupi—starting to take off.
She said results for the second quarter were expected to “improve marginally” as the cost of raw materials, particularly coking coal, came down.
While prices for steel products were expected to remain weak, domestic sales volumes were expected to increase slightly during the second quarter as the de-stocking process neared its end.
According to Nyembezi-Heita, a decline in inflation, further interest rate cuts and government’s commitment to continue with its infrastructure projects, should also improve consumer and investment spending as the year progressed.
The company also announced a pro-rata share buy-back on Wednesday.
It said it had excess free cash of more than R5-billion above its operational requirements.
“The company has resolved to return part of the excess free cash to ArcelorMittal South Africa shareholders,” it added in its results announcement.
The steel giant will buy back 10% of its shares for R3,9-billion, paying about R87,64 for each share. - Sapa