Africa's largest steel producer, ArcelorMittal South Africa, has announced its financial results for the second quarter and the first half of the current year, reporting a net profit of ZAR 135 million ($13.45 million) in the second quarter, compared to a net loss of ZAR 177 million in the corresponding quarter of 2012.
In the second quarter this year, the company's EBITDA amounted to ZAR 808 million ($80.53 million), compared to ZAR 224 million in the corresponding quarter of the previous year. ArcelorMittal South Africa's sales revenue in the second quarter decreased by 6.12 percent year on year to ZAR 8.12 billion ($809.2 million), amid a 16.8 percent drop in total steel shipments, with a 1.2 percent fall in domestic shipments and an almost 50 percent decline in exports.
For the first six months of 2013, ArcelorMittal South Africa posted a net loss of ZAR 140 million ($13.9 million), compared to net profit of ZAR 102 million in the corresponding period of the previous year. The company's EBITDA decreased by six percent to ZAR 977 million ($97.36 million) in the given period, while the sales revenues declined 11 percent year on year to ZAR 15.9 billion ($ 1.6 billion) on the back of a 16 percent fall in steel shipments in the first half of 2013.
ArcelorMittal South Africa's overall liquid steel production was 246,000 mt lower year on year in the first half, standing at 2.5 million mt. The company stated that the repairs to the Vanderbijlpark steelmaking plant were completed in record time, leading to the lifting of force majeure on May 9, 2013. ArcelorMittal South Africa had announced force majeure in February this year following a fire which occurred at its Vanderbijlpark plant, causing extensive damage to its steelmaking facilities and resulting in their immediate shutdown.
According to ArcelorMittal South Africa, while international prices appear to have stabilized, lingering weakness in the domestic economy will continue to negatively affect steel demand. Domestic sales are expected to remain flat and any increase in steel prices will be more than offset by increasing costs - in particular, higher winter electricity tariffs and iron ore. Accordingly, ArcelorMittal South Africa expects third quarter earnings to be lower than those reported in the second quarter.
