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Johannesburg - ArcelorMittal South Africa, the South African arm of the world's largest steel producer, on Wednesday reported a third quarter headline loss per share of 16c, this compares to the 846c headline earnings per share posted for the third quarter last year.
The figure is, however, improved from the 136c a share headline loss posted for the second quarter to end June 2009.
This was on a headline loss of R65m for the three months to end September, which while a narrowing of the R607m loss reported for the June quarter, is still a way off the record headline profit of R3.8bn achieved during the third quarter last year.
Revenue almost halved from R13.3bn for the September quarter last year to R6.9bn for the 2009 September quarter.
Profit from operations shrank to R30m from last year's R5.2bn but showed a turnaround from the June quarter's operational loss of R177m.
Liquid steel production for the third quarter of 2009 totalled 1 365 000 tonnes, an increase of 12% compared to the previous quarter, but still 26% below the corresponding period last year.
Production levels in the first six months of 2009 were at about 60% of total capacity and increased to over 70% in quarter three.
ArcelorMittal has prepared Blast Furnace C at Vanderbijlpark Works for a restart and said it would resume production as soon as market conditions justify an increase in volumes.
Both Newcastle Works and Saldanha Works are currently running at full production.
"As a result of the adverse economic climate a number of projects that were suspended in the first half of the year have been re-activated," the company said.
The company said the improvement from the previous quarter was driven by a 19% rise in sales volumes, a moderate improvement in steel prices and lower raw material input costs as expensive coal contracts started to run out by the middle of the third quarter.
Profit from the Coke and Chemicals business also showed a strong step up from the previous quarter as demand for market coke from the ferro-alloy industry started to recover.
The stronger rand, however, continued to have a negative impact on the financial performance.
Cash costs per ton of hot rolled coil for the quarter decreased by 8.7% compared to the previous quarter and by 10.9% compared to the corresponding period last year.
The cash costs of billets decreased by 12.3% and 17.8% respectively.
Reduced costs were mostly the result of lower coal prices and higher production volumes.
The cash flow for the quarter was a positive R684m and increased the company's cash balance to R3.7bn.
Looking ahead, ArcelorMittal said results in the fourth quarter of 2009 were expected to improve further, driven by higher sales and lower costs, with lower coal prices making the largest contribution.
"The rand's performance is a critical variable in our outlook for the quarter," the company warned.
It expects domestic demand to recover further during the fourth quarter on the back of a stronger international economy and a slight easing of credit requirements by the banking sector.
However, the seasonal slowdown in domestic activities during the December holiday season will have an influence on the sales volumes.
"The recovery in the global economy should continue to boost demand for steel globally. Steel price improvements will depend on the discipline steel producers exercise in aligning production with demand," the company said.
- I-Net Bridge
