Johannesburg - ArcelorMittal South Africa [JSE:ACL]
, a unit of the world's top steelmaker, reported a first-half profit loss as sales weakened and production dipped, and it said it expected the bleak outlook to continue.
Africa's biggest producer of steel, posted a diluted headline loss of 31 cents per share for the six months to end-June compared with 26 cents in the same period last year.
Headline earnings, the main profit gauge in South Africa, exclude certain one-off and non trading items.
While international prices appear to have stabilised, the company said lingering weakness in the domestic economy continues to hit steel demand.
"Domestic sales are expected to remain flat and any increase in steel prices will be more than offset by increasing costs," it said in a statement.
The company, which sells 90% of its steel in Africa, said steel sales dropped 16% and liquid steel production declined 9%, primarily due to a fire at its Vanderbijlpark operations in February.
"On the positive side, the weakening in the rand exchange rate in May provided a strong underpin to our export sales towards the end of the half year although the impact on shipments will only materialise in the third quarter," the company said.
Shares in ArcelorMittal South Africa have fallen 25% over the last 12 months, underperforming a 19% gain in the JSE's All-share index.
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