ArcelorMittal South Africa, a unit of the world’s biggest steelmaker, swung to a first-half profit on Wednesday, helped by a recovery in steel demand, but forecast a decline in third-quarter profit.
The company said its headline earnings per share totalled 450 cents in the six months to end-June, compared with a loss of 190 cents a year earlier.
Headline earnings are the main gauge of earnings in South Africa and strip out certain one-time items.
“The earnings for the third quarter are expected to decline compared with the previous quarter due to lower international steel prices and demand, together with input material costs that still remain at high levels,” the company said in a statement.
Revenue rose by 33% to R16-billion.
The global economic crisis eroded demand in key steel-consuming sectors such as construction and automotive manufacturing, forcing steelmakers to sharply cut production and causing inventories to balloon.
Steel demand has gradually picked up since then, but analysts have cautioned that high raw materials costs and an uncertain economic outlook may mean steelmakers will be downbeat about the rest of the year.
ArcelorMittal South Africa last week reached a stop-gap agreement to buy ore from Kumba Iron Ore over the next year at about half of recent market prices, following a pricing disagreement that had dragged on since February. — Reuters