The South African unit of ArcelorMittal narrowed its loss to R4.7bn in 2016 from R8.6bn in 2015, it reported on Friday morning.
An 8% increase to R7,282/tonne in the average selling price of steel helped it grow revenue 5% to R32.7bn despite the volume of liquid steel it produced declining slightly to 4.77-million tonnes, its results for the year to end-December showed.
Thanks to a rights issue mainly supported by its Luxembourg-listed parent, ArcelorMittal SA managed to slash its nearly R3bn debt down to R290m.
In contrast to 2015, when current liabilities of R14.2bn were higher than current assets of R13.3bn, its 2016 results showed the group has nudged back into solvency with current assets of R14.8bn against current liabilities of R13.8bn.
Auditors Deloitte & Touche, however, still included an emphasis of matter saying the group’s going-concern status was dependent on support from its parent company.
Furthermore, the South African steel maker needed protection from cheap Chinese imports to survive.
Its going-concern status depended on import protection duties that the government had agreed to apply, the going-concern section of the results statement warned.
Wim de Klerk, Exxaro’s former chief financial officer who replaced Paul O’Flaherty as ArcelorMittal SA CEO in July, said in the commentary accompanying the financial results: "Total steel sales volume decreased by 44,000 tonnes with export sales declining by 26% due to the oversupply of steel in the global market and the Corex campaign extension at Saldanha Works.
"This was partially offset by local sales, which improved by 8%, [and] growth, which derived mostly from the closure of Evraz Highveld Steel and Vanadium after that company was placed under business rescue. Commercial coke and tar sales volumes fell by 19% and 22% respectively. "