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ArcelorMittal South Africa, a Gauteng-based steelmaker partly owned by South African businesswoman Noluthando Gosa, has reported significant losses amounting to millions of dollars for the 2023 fiscal year, primarily attributed to the country’s ongoing electricity crisis, soaring inflation, and sluggish demand in steel-consuming sectors.
According to the recently published financial results, ArcelorMittal South Africa suffered a staggering headline loss of R448 million ($25.1 million) at the close of the first half of its 2023 fiscal year. This comes in stark contrast to the company’s strong earnings of R3.02 billion ($169.2 million) during the same period in 2022.
The headline loss can be linked to a 5.1-percent decrease in the steelmaker’s revenue, which fell from R22.17 billion ($1.24 billion) to R21.04 billion ($1.17 billion), primarily due to an 8 percent decline in net realized steel sales prices.
Additionally, higher raw materials costs have further pressured the company’s earnings potential, with fixed costs rising from R3.45 billion ($193.28 million) in H1 2022 to R3.55 billion ($198.9 million) for the period under review.
The surge in operating expenses has also taken its toll on the group as South Africa grapples with an unprecedented electricity crisis, experiencing the highest number of blackout days in its history. Daily power cuts have been extended to nearly 10 hours daily, severely impacting industrial operations nationwide.
ArcelorMittal South Africa, renowned for its annual production capacity of 7 million tonnes of liquid steel, has long-established itself as a leading steel producer on the African continent, boasting an extensive steel operation in the region, encompassing flat and long steel products, coke, and chemicals.
Gosa, a leading South African executive and a non-executive independent director at ArcelorMittal South Africa, owns a 6.15-percent stake in the Gauteng-based steelmaker.
In reaction to the company’s dismal financial performance so far, ArcelorMittal SA shares on the Johannesburg Stock Exchange have experienced a drastic decline of more than 40 percent since the start of the year, subsequently pushing the group’s market capitalization below $180 million.
The outlook for ArcelorMittal South Africa remains uncertain as it navigates through challenging economic conditions and a persistently volatile energy situation.
Market analysts and investors closely monitor the company’s strategic measures to weather the current storm and restore profitability.
