Steelmaker ArcelorMittal reported a significant decline in earnings for the full year ended December 2022 as the company faced various challenges related to the energy crisis, inefficient rail operations, and tighter global market conditions.
Sub-Saharan Africa's largest steelmaker reported a 62 percent drop in total profit to R2.60 billion from R6.86 billion the previous year, driven by a 50 percent drop in earnings before interest, taxes, depreciation and amortization (Ebitda) to R4.27 billion compared to the previous year.The Group also reported a 13% drop in sales volumes to 2.2 million tons, due to a drop in sales in the domestic market in 14% to 1.9 million tons and a drop in exports of 14,000 tons.
“Recent economic headwinds, both globally and locally, have significantly impacted the trading environment for steel,” said General director Cobus Werster.
“However, our business has responded effectively thanks to our evolving value creation plan, as well as the support of our dedicated employees, customers and suppliers. Despite the sharp decline that characterized the second half of last year, our financial results are significantly better than they could otherwise be.”
ArcelorMittal again refrained from declaring dividends, last doing so in 2011, when the company made changes to its dividend policy.
Shares fell more than 2% in Johannesburg afternoon trading on Thursday.
Problem solving
Eskom energy crisis and poor rail traffic at Transnet are just some of the issues the company identified as factors affecting its results during this period.
Regarding Eskom's implementation of load shedding to manage power generation shortfalls, ArcelorMittal says that The risk of a power outage causing damage to its equipment remains high, and to manage this risk it is investing in alternative energy solutions.
It is close to completing a feasibility study, according to the group. justification for a 200 MW renewable energy solution, which is scheduled to begin construction in the fourth quarter of 2023. The project is expected to result in significant cost savings for the group by 2024.
Outlook
According to ArcelorMittal, the industry's recovery looks positive. This year, the sector expects a recovery in demand for steel, as well as positive dynamics in world prices. Locally, the trading environment is forecast to recover in the first half of 2023 and be better than reported in the last six months of 2022
