ArcelorMittal warns of headline loss of R4bn for year to end December
Amsa said that attributable profit for the period would plummet at least R6.1bn from an R1.37bn profit in 2018, resulting in an increase in loss per share of at least 558cents.
The JSE-listed group announced that operations at its Newcastle plant would continue operating following an asset footprint review.
It said it had identified opportunities to improve both operational effectiveness.
The group, Africa’s biggest steel-making company, said it expected abnormal and impairment charges for the financial year in review on challenging trading conditions and interventions at the Newcastle facility.
The group said the closure of significant long-steel production plants was not on the cards in the foreseeable future.
It said primary steel making operations would continue at Newcastle Works, although now focused on primarily serving the domestic and Africa Overland markets.
“Significant organisational configuration opportunities have been identified to improve both operational effectiveness and controllable cost competitiveness of not only the long steel product business but that of the overall company,” Amsa said.
“Development of this One Organisation initiative has begun, with an envisaged implementation in 2020.”
Amsa said that shareholders would be kept appraised of the outcomes of the process and key decisions that would be taken.
In November Amsa announced that it would wind down its 21-year-old loss-making Saldanha Works on weak exports and the deterioration of the plant’s competitive advantage, placing about 900 jobs at risk following a first-phase asset footprint review.
At the time, the group said that while the plant was established on low input costs, which gave it a competitive advantage, the costs of electricity, rail and raw material had increased substantially. Amsa said structural the cost advantage had been eroded and Saldanha could no longer sustainably and effectively compete in these markets, mainly due to raw material and regulated prices.
It said locally, the situation was exacerbated by continued weak economic growth.
The second phase of the asset review which began in November 2019, focused on Newcastle Works and certain of the long steel products rolling facilities in Pretoria and Vereeniging. The review aimed to sustainably improve these operations’ structural cost position and service offering.
In October, Amsa, one of the largest consumers of electricity in the country, confirmed that Eskom’s load shedding had hit its operations hard.
Amsa shares declined 1.23 percent on the JSE yesterday to close at R1.60.