Price drop hammers ArcelorMittal SA
Johannesburg - ArcelorMittal SA [JSE:ACL], a unit of the world's top steelmaker, reported an 84% drop in first-half earnings on Wednesday. Hit by lower prices and soft demand, the company said it expects a further reduction in the third quarter.
Africa's biggest steelmaker said diluted headline earnings per share for the six months to end-June totalled 26 cents compared with 166c in the same period last year.
"Third-quarter financial results are expected to extend the headline loss incurred in second quarter on the back of lower steel prices and a further decline in domestic demand," the company said in a statement.
ArcelorMittal South Africa, which sells 90% of its steel in Africa, said revenue rose 7% to R17.8bn.
It did not declare an interim dividend.
The company also said it was in talks with Kumba Iron Ore [JSE:KIO] to extend an interim iron ore supply agreement which expires on July 31.
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.
ArcelorMittal South Africa paid R1.1bn more for iron ore in 2011 due to the dispute.
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