ArcelorMittal South Africa: Navigating Adversity with Resilience & Foresight
ArcelorMittal South Africa, amidst a challenging operating environment, presented its first-half results for the period ending 30 June 2023. The CEO, Mr. Kobus Verster, remarked on the impact of weaker economic activity, loadshedding, and rising raw materials, leading to a headline loss of R448 million against earnings of R3,025 million in H1 2022.
EBITDA plummeted by 86% to R499 million (H1 2022: R3,591 million), while net finance charges surged by 114% to R536 million (H1 2022: R250 million), mainly due to higher net interest charges and lower net foreign exchange profit.
Despite a 3% increase in total steel sales volumes, revenue decreased by 5% to R21,045 million (H1 2022: R22,176 million) due to an 8% fall in net realised steel prices. The Company's raw material basket, representing 48% of cash cost per tonne, increased by 2% in rand terms, compared to a 13% decrease in the international basket.
ArcelorMittal South Africa's average capacity utilisation rose from 42% for H1 2022 to 53% in 2023, with sales volumes up 3% and crude steel production 29% higher against the comparable period.
Mr. Verster highlighted the outcome of the 2023 wage negotiations, yielding a three-year agreement that brings stability and allows for a focus on performance and value-add. However, increasing security costs to safeguard facilities and logistics routes pose a concern for fixed costs.
The trading environment remained challenging, especially with electricity load shedding and mixed growth in key steel-consuming sectors. Falling international commodity demand and muted steel demand further pressured local prices.
Bron Steelguru (via email)