ArcelorMittal South Africa Reports 36% Surge in Profit in H1
Strategic Research Institute
Published on :
3 Aug, 2022, 6:49 am
ArcelorMittal South Africa, while announcing April-June 2022 quarter results, said that “Broadly assessed, the company has successfully delivered against its predicted outlook and, in some instances, outperformed expectation. That said, the specifics of the delivery were far more complicated, and a particular word of thanks goes to ArcelorMittal South Africa's loyal staff, customers and suppliers who enabled the company to manage through some tumultuous events.”
Consolidated Results – January-June 2022
Revenue – ZAR 22176 million, up 19% YoY
EBITDA - ZAR 3591 million, up 12% YoY
Profit from operations - ZAR 3235 million, up 10% YoY
Net profit - ZAR 3072 million, up 36% YoY
Headline earnings - ZAR 3025 million, up 22% YoY
Crude steel production – 1.051 million tonne, down 30% YoY
Steel sales – 1.159 million tonne, down 8% YoY
Local – 1.022 million tonne, down 10% YoY
Export – 0.137 million tonne, up 12% YoY
Commerce coke - 120 million tonne, down 38% YoY
The company's average capacity utilization decreased from 59% in the 2021 comparable period to 42% in 2022 and should reach at 76% after the Newcastle blast furnace mid-life campaign restoration. The reduction in capacity utilization reflects the impact of the delivery complexities associated with rail service unavailability, labour disruptions and electricity load shedding as described earlier.
The Company’s overall realized steel price in dollars increased by 23%. In rand terms, this represented a 30% increase as the average dollar/rand exchange rates weakened by 6%. Realized dollar steel prices increased by 7% compared to the immediately preceding six months, with rand prices up by 10% for the same period. This trend reflects the lag-effect of steel price movements which characterize the Company’s order intakes.
Outlook for the second half of 2022 “With economic headwinds having intensified both internationally and domestically, it will significantly affect the trading environment. International price correction in a soft local demand environment will impact results. Managing through a cyclical business environment is all-too familiar territory for ArcelorMittal South Africa, its employees, customers and suppliers. Barring any further rail services challenges, it is anticipated that production levels should improve as capacity utilization levels recover. As ever, the ZAR/USD exchange will continue to have an impact on the results. Finally, it remains worthwhile to re-emphasize that despite the current challenges and the short-term weaker trading environment, the long-term investment case for steel remains intact given steel's inherently vital role in the transition to a tow-carbon, circular economy.”