ArcelorMittal share price soars on swing into operating profit
The embattled steelmaker said 2020 was a difficult but transformative year
ArcelorMittal SA’s share price jumped as much as 28% in Friday afternoon trade when the primary steelmaker announced it had swung into profit in the second half of 2020.
In a JSE news service announcement, the embattled company said despite 2020 proving to be an “exceptionally difficult year with unprecedented challenges”, the company swung into profit in the second half of the year.
Headline profits per share are expected to be 220% higher at R0.47-R0.57, compared with a headline loss per share of R2.40 in the second half of 2019.
ArcelorMittal SA, a subsidiary of the global ArcelorMittal steelmaking empire, is the only primary steelmaker in SA. Despite duties on cheaper steel imports, the company has been struggling to make ends meet amid rising costs, slower steel demand and, until now, widening losses. Since 2014 its workforce has more than halved from 15,000 to 7,000 workers and in 2020 the company closed its Saldanha mill.
Though challenging, ArcelorMittal said 2020 was “highly transformative” with “constructive learnings, best demonstrated through the company’s return to earnings before interest, taxes, depreciation and amortisation (ebitda) profitability in the second half of the year [and] in sharp contrast to the significant first-half loss materially influenced by the hard economic lockdown.”
ArcelorMittal said the pandemic necessitated the accelerated implementation of the company’s ongoing restructuring programme, realising sustainable cost benefits.
The business transformation programme, which looks to cut costs and increase efficiencies, also aims to position the SA business among the lowest-cost producers in the ArcelorMittal group by 2023.
By the JSE’s close, ArcelorMittal’s share price was up 8.52% to R1.91, its highest close since November 2019. The share is up 52% in the past year, but has lost about 75% of its value over the past five years.
Friday’s statement was supplementary to one issued a week earlier in which the company said it expects the headline loss for the period to narrow by at least R1bn from a loss of R3.26bn in 2019. An attributable loss for the period will decrease by at least R2.2bn compared with a loss of R4.67bn in 2019.
ArcelorMittal’s annual results will be released on February 11.
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