ArcelorMittal South Africa (Amsa) anticipates a notable downturn in earnings for the fiscal year ending December 2023, citing a sluggish local economy and deficiencies in national infrastructure and logistics. The company projects a substantial decrease in headline earnings, estimating a decline of at least 166% from R2.34 headline profit per share in the preceding period to a per-share loss ranging between R1.55 and R1.85.
Amsa has been actively engaging with a spectrum of stakeholders, including government representatives, industry associations, and community forums, to address the prospective closure of its longs steel business units.
Attributing the decision to economic lethargy, challenging trading conditions, diminished demand, and national limitations—especially elevated transport and logistics costs and energy prices—Amsa has sought support to reconsider the closure. However, the company emphasizes that it does not seek preferential treatment or subsidies. Instead, Amsa urges the government to rectify structural constraints afflicting the domestic steel industry to foster a fair competitive landscape for primary steel producers in South Africa.
Against the backdrop of a weakened steel market characterized by faltering business confidence and enduring weakness in key steel-consuming sectors, Amsa faces the reality of real demand deterioration.
Concurrently, Amsa has recognized a substantial impairment charge of R2.1 billion against property, plant, and equipment, as well as other intangible assets of the longs business. Nonetheless, closure-related or retrenchment costs have not been incurred thus far, as consultations persist regarding the future of Amsa's longs steel businesses.
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