The South African arm of ArcelorMittal, the world's largest steel maker, has racked up a headline loss of 460 million rand (R) for the quarter ended September.
This is a major reversal from the headline earnings of R473m recorded in the previous quarter and the earnings of R68m posted for the corresponding quarter in 2010.
Arcelor-Mittal SA CEO Nonkululeko Nyembezi-Heita on Thursday said the primary contributors to the weak quarterly results were lower sales, significantly higher raw material prices, electricity prices (which increased by 25 per cent during the quarter) as well as the company’s share of losses in equity accounted investments. He noted that operating conditions in the steel industry deteriorated markedly during the third quarter.
"The local economy weakened measurably, with major steel consuming sectors suffering the most reversals in fortunes. All our key business drivers exhibited stable to negative trends," he said.
The quarterly numbers showed total steel sales at under 800,000 tonnes with biggest fall in local sales (588,000 compared to 642,000 units in the June quarter). Export sales held up relatively well at 210,000 compared to 187,000 in the previous quarter.
Nyembezi-Heita said fourth quarter earnings were set to improve from the previous quarter due to a modest rise in prices on the back of the weaker exchange rate supported by higher production volumes.
