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QUARTERLEY REPORT
ISCOR Limited
Registration number: 1989/002164/06
Unaudited Consolidated
Net Operating Income and Physical Results
for the quarter ended 30 September 2001
Operating profits double
2001/02 2000/01
1st quarter 1st quarter
REVENUE (Rm)
Mining
Iron Ore 909 621
Coal 323 299
Base Metals 210 227
Heavy Minerals 8
Other 22 117
Total Mining 1 472 1 264
Steel
Flat Steel Products 1 864 1 549
Long Steel Products 1 063 827
Other 220 187
Total Steel 3 147 2 563
Intra group (615) (502)
Total 4 004 3 325
NET OPERATING PROFIT (Rm)
Mining
Iron Ore 306 134
Coal 60 21
Base Metals 13 15
Heavy Minerals (21) (8)
Other 1 12
Total Mining 359 174
Steel
Flat Steel Products 50 48
Long Steel Products 83 12
Other 23 18
Total Steel 156 78
Group
Costs (30) (28)
Unrealised profit adjustment 3 (16)
Total 488 208
PHYSICAL RESULTS ('000 tons)
IRON ORE
Production 6 977 5 758
Sales
- Exports 4 526 3 561
- Iscor 1 809 1 626
- Local 365 270
Total 6 700 5 457
COAL
Production
- Powerstation 3 572 3 289
- Coking 538 583
- Other 673 595
Total 4 783 4 467
Sales
- Eskom 3 304 3 136
- Iscor 609 573
- Export 215 238
- Local 373 375
Total 4 501 4 322
BASE METALS
Production
- Zinc concentrate 20 19
- Zinc metal 27 23
- Lead concentrate 7 4
Total 54 46
Zinc sales
- Iscor 5 8
- Other 19 19
Total 24 27
HEAVY MINERALS
Production
- Ilmenite 28
- Zircon 4
- Rutile 2
Total 34
Sales
- Export 10
FLAT STEEL PRODUCTS
Liquid steel production 930 933
Sales
- Local 462 437
- Exports 286 156
Total 748 593
Local sales as % of total 62 74
LONG STEEL PRODUCTS
Liquid steel production 525 491
Sales
- Local 266 189
- Export 202 208
Total 468 397
Local sales as % of total 57 48
2001/02 2000/01
1st quarter 1st quarter
SALDANHA STEEL
Turnover (Rm) 373 405
Net operating loss (Rm) (136) (136)
Hot rolled coil
production ('000 tons) 238 216
Sales ('000 tons) 201 209
Commentary
GROUP RESULTS
Operating profits for the quarter for both the mining and steel businesses
doubled compared to last year mainly as a result of high sales volumes. The
impact of the weaker currency was offset to some extent by the drop in steel
and zinc prices.
Note: These results do not reflect the proposed change in the iron ore
procurement arrangements post unbundling.
PERFORMANCE OF THE STRATEGIC BUSINESS UNITS
Iron Ore
Increased volume, combined with the weakening of the currency, resulted in a
substantial increase in revenue and a more than doubling in net operating
profit despite a derailment on the Orex rail line in July. Last year's
volumes were negatively affected by the production interruption during the
tie-in of the Sishen expansion conveyor system.
Coal
While revenue only increased by 8% for the quarter, operating profit almost
trebled as a result of the successful reduction in unit costs.
Base Metals
Revenue decreased by 7% as a result of lower volumes and a sharp drop in
zinc prices. As a consequence net operating profit decreased by 13%.
The annual August maintenance shut-down had a negative impact on first
quarter volumes.
Heavy Minerals
The first two shipments of ilmenite (10 000t) were made. The net operating
loss is within budget and costs are under control. Production for the
quarter was in line with the targets which were set and both the mine and
the plant are producing at acceptable levels given their respective ramp-up
schedules. The go-ahead was also given for the construction of the first
furnace.
Flat Steel Products
Revenue increased by 20% for the quarter driven by higher local and export
volumes. However, net operating profit was only marginally higher than last
year as a result of the higher proportion of export sales at significantly
lower prices. The exchange rate benefit was negated by the drop in export
prices.
In the light of the pressure on international steel markets, the
Vanderbijlpark works is currently considering a major restructuring in order
to reduce costs further. The financial impact of this will only be
determined during the next three months.
Long Steel Products
Net operating profit for the quarter increased substantially as a result of
a strong improvement in local demand for profile products and increased
international demand and prices for seamless tubes. The benefit of weaker
exchange rates on export revenue was to a large extent negated by the
current weak international prices for profile products as well as the impact
on dollar-based input material.
Saldanha Steel
The unit cost of production improved significantly over last year as
efficiencies continued to improve with production reaching 93% of design
capacity in September. These benefits, however, were offset by the sharply
lower prices realised and the impact of the oxygen plant failure in July, so
that the operating loss remained at the same level as last year.
OUTLOOK
International selling price levels in both the mining and steel operations
are not expected to improve significantly for the remainder of the financial
year. However, should the currency weakness continue, it will have the
effect of increasing realised prices in rand.
The benefits of the further restructuring at the Vanderbijlpark steel works
will start flowing through in the second half of the financial year.
However, the results from the Saldanha Steel re-engineering programme will
not be fully realised during the current year due to the loss of volume
during the planned Corex repair in the last quarter.
Subject to shareholder approval of the proposed unbundling of the mining
business on 21 November 2001, the steel and mining businesses will operate
as independent listed companies, reporting separately in future.
Iscor shareholders are advised that Iscor has received various proposals
from interested parties regarding the acquisition of an interest in Kumba
Resources Limited ("Kumba") and/or its iron ore assets. These proposals have
included an offer to acquire a 25% interest in Kumba ahead of the proposed
Kumba unbundling. The board of Iscor believes that the interest of
shareholders are best served by considering offers for Kumba once the
unbundling process has been completed on 26 November 2001.
STRATE
Shareholders are reminded that the Company will move into the electronic
settlement environment on 26 November 2001. For more information or
assistance, please call the Iscor ShareCare Line on 0800 006 960 (or +27 11
775 3420 if you are phoning from outside South Africa).
25 October 2001
Registered office: Iscor Corporate Centre, Roger Dyason Road, Pretoria West,
0002. Transfer secretaries: Mercantile Registrars Limited, First National
House, 11 Diagonal Street, Johannesburg, 2001. PO Box 1053, Johannesburg,
2000.
This report is available on Iscor's worldwide website at:
http://www.iscor.com
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