The South African steel producer expects continued growth and development in the region from a number of keys sectors.
“In sub-Saharan Africa steel demand continued to be positively impacted by significant infrastructure investment in roads, rail, housing development and energy projects, and various investment activities in the mining sector,” [DATA ACL:ArcelorMittal South Africa] said.
“Recent investments in the oil and gas sectors are also stimulating steel demand and further growth prospects are expected to arise from this activity.”
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However, it reported that growth in South Africa remains subdued due to the country’s sluggish economic growth.
“Slow economic growth and a weak GDP continued to dominate the domestic market during the fourth quarter of 2013. Recent data suggests a further contraction and weaker activity in manufacturing and mining production, which increases the risk that overall economic growth for the year ahead could be even lower,” the company said.
“These conditions have led to continued weak steel demand, with local producers and end-users facing stiff competition from cheaper imports. Despite some positive levels in the average rand exchange rate, the rising cost of doing business in South Africa continues to erode this advantage in the international market.”
ArcelorMittal also saw its revenue increase by 18 per cent to 9.1 billion rand for the quarter ending 31 March 2014 from 7.7 billion rand for the same period in 2014.
The company reported profit before tax of 388 million rand in 2014 from a loss of 344 million rand in 2013 and a total comprehensive income for the period of 355 million rand from a loss of 92 million rand in 2013.
The 2014 quarter saw headline earnings of 323 million rand from a headline loss of 270 million rand for the same period in 2013 and headline earnings per share of 81 cents from a loss of 67 cents.
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“During the second quarter of 2014 the reline of the blast furnace in Newcastle will commence. Stocks have been put in place to assure that the domestic demand can be supplied during the project duration of approximately four months,” ArcelorMittal said.
“However, production cost will be high, and the market is expected to remain subdued overall. We expect this to negatively impact our results.”