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Amsa boosts first-quarter profit

May 10 2012 09:03 Reuters

Company Data

ARCELORMITTAL SOUTH AFRICA LIMITED [JSE:ACL]

Last traded 34.98
Change -0.85
% Change -0.02
Cumulative volume 544997
Market cap 15.59bn

Last Updated: 24/10/2014 at 04:28. Prices are delayed by 15 minutes. Source: McGregor BFA

KUMBA IRON ORE LIMITED [JSE:KIO]

Last traded 277.00
Change -5.14
% Change -0.02
Cumulative volume 205988
Market cap 89.22bn

Last Updated: 24/10/2014 at 04:28. Prices are delayed by 15 minutes. Source: McGregor BFA

ANGLO AMERICAN PLC [JSE:AGL]

Last traded 230.44
Change -5.31
% Change -0.02
Cumulative volume 1045262
Market cap 323.88bn

Last Updated: 24/10/2014 at 04:28. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - ArcelorMittal South Africa [JSE:ACL], a unit of the world’s top steelmaker, on Thursday reported a rise in first-quarter profit, but warned that a drop in domestic demand, lower steel prices and higher costs would hit the second quarter.

The steelmaker reported first-quarter headline earnings per share of 71 cents, compared with 49 cents in the same quarter last year and up from a loss of 65 cents in the previous three months.

“Earnings for the second quarter 2012 are expected to be substantially lower than the previous quarter due to lower domestic demand, lower steel prices, higher costs such as electricity and transport and lower sales of commercial coke due to the usual shutdown by the ferrochrome industry during the winter months,” the company said in a statement.

The company, which sells 90% of its steel in Africa, said first-quarter revenue rose 26% to R9.1bn compared with the previous three months, with domestic steel shipments increasing by 37% and exports up 10%.

A major issue facing the South African unit is the outcome of an ongoing dispute over iron ore prices with Kumba Iron Ore [JSE:KIO], a unit of Anglo American [JSE:AGL].

The two firms have been at loggerheads over prices since early 2010 after a preferential deal lapsed, and an arbitration hearing will decide if the steelmaker can keep sourcing iron ore from Kumba at a discount.

The company has said it was confident the arbitration hearing would rule in its favour although it may take until next year to resolve the dispute. The company paid R1.1bn more for iron ore in 2011 due to the dispute.

To mitigate the impact from further cost hikes, the firm in April bought a 20% stake in an iron ore exploration project in South Africa’s Northern Cape province.

The unit is also investing heavily in electricity projects, hoping to reduce its reliance on power utility Eskom and steep increases in power tariffs expected for the next few years.

Shares in the company are down more than 17% in the year to date, compared with a 4.9% rise in the JSE All Share [JSE:J203] index.

 
arcelormittal sa  |  iron ore  |  mining
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