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Steelmaker ArcelorMittal SA says it returned to profits in the year to end-December 2018 thanks to the sale of its investment in Macsteel International Holdings.
In November 2018, the company completed the sale of its 50% stake in Macsteel in a deal valued at $220m (R2.9bn at current exchange rates). At the time, ArcelorMittal SA said it would use the funds to reduce debt and help it become “a sustainable and profitable company”.
The company’s share price surged 6.81% higher to R3.45 at the close on Friday after it said it would report a profit per share for 2018 of between 120c and 130c, from a loss in 2017. It expected to report headline earnings per share (HEPS) of between 84c and 94c.
“I’d say there is a bullish undertone, and with the new members on the board and some good management, ArcelorMittal SA could be seeing better days,” said Afrifocus Securities senior portfolio manager Cheslyn Francis.
Francis said the Macsteel sale brought “much needed cash for their balance sheet”.
He said global steel demand may have been affected by the trade war between the US and China, “as ports were choked with supply and this almost artificial demand may have propped up forecasts”.
“I would keep a close eye on the next few weeks’ discussions between the US and China ... Demand may come in the form of more automotive components and energy markets but, again, it will be a slow grind as China hinges on a quieter front for demand — an interest-rate cut [in China] could spur things on significantly,” Francis said.
According to data from the World Steel Association, SA’s steel production grew just 0.4% to 6.3-million tonnes in 2018. SA is ranked as the 25th largest producer, but accounts for just 0.3% of total volumes.
Global steel production climbed 4.6% in 2018, thanks in part to 6.6% growth in China, which produced 928-million tonnes — slightly more than half the global total.
Meanwhile, a dam disaster at a mine owned by Vale in Brazil has led to supply concerns, said Francis, and this has boosted ArcelorMittal SA’s peer stocks in recent trading days.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
ArcelorMittal SA returned to profit in 2018
Steelmaker ArcelorMittal SA says it returned to profits in the year to end-December 2018 thanks to the sale of its investment in Macsteel International Holdings.
In November 2018, the company completed the sale of its 50% stake in Macsteel in a deal valued at $220m (R2.9bn at current exchange rates). At the time, ArcelorMittal SA said it would use the funds to reduce debt and help it become “a sustainable and profitable company”.
The company’s share price surged 6.81% higher to R3.45 at the close on Friday after it said it would report a profit per share for 2018 of between 120c and 130c, from a loss in 2017. It expected to report headline earnings per share (HEPS) of between 84c and 94c.
“I’d say there is a bullish undertone, and with the new members on the board and some good management, ArcelorMittal SA could be seeing better days,” said Afrifocus Securities senior portfolio manager Cheslyn Francis.
Francis said the Macsteel sale brought “much needed cash for their balance sheet”.
He said global steel demand may have been affected by the trade war between the US and China, “as ports were choked with supply and this almost artificial demand may have propped up forecasts”.
“I would keep a close eye on the next few weeks’ discussions between the US and China ... Demand may come in the form of more automotive components and energy markets but, again, it will be a slow grind as China hinges on a quieter front for demand — an interest-rate cut [in China] could spur things on significantly,” Francis said.
According to data from the World Steel Association, SA’s steel production grew just 0.4% to 6.3-million tonnes in 2018. SA is ranked as the 25th largest producer, but accounts for just 0.3% of total volumes.
Global steel production climbed 4.6% in 2018, thanks in part to 6.6% growth in China, which produced 928-million tonnes — slightly more than half the global total.
Meanwhile, a dam disaster at a mine owned by Vale in Brazil has led to supply concerns, said Francis, and this has boosted ArcelorMittal SA’s peer stocks in recent trading days.
hedleyn@businesslive.co.za
ArcelorMittal SA's share price jumps 12% as global demand for steel holds up
ArcelorMittal shares rise 8% after sale of its half of Macsteel
ArcelorMittal SA produces, and sells, a little more steel
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