| Tue 26 Apr 2005, 8:47 | | Quarter Ended 31 March 2005 |
|
Mittal Steel South Africa Ltd - Unaudited Group Earnings And Physical
Information For The Quarter Ended 31 March 2005
MITTAL STEEL SOUTH AFRICA LTD
(formerly Ispat Iscor Limited and prior to that Iscor Limited)
(Registration number 1989/002164/06)
Share code:MLA ISIN:ZAE000064044
(`the Company`)
UNAUDITED GROUP EARNINGS AND PHYSICAL INFORMATION FOR THE QUARTER ENDED 31 MARCH
2005
FINANCIAL RESULTS
Headline earnings for the quarter increased by 136% over the corresponding
period of the previous year, driven primarily by a substantial increase in
global steel prices and cost containment through cost savings.
Operating profit for the quarter was lower by 4% compared to Q4 2004, due to
higher costs and 3% lower local dispatches in the sales mix. However headline
earnings increased by 12% mainly due to lower STC on dividends in Q1 2005, the
tax effect of an impairment reversal in Q4 2004 and a reduction in the tax rate.
MARKET REVIEW
International
The international demand for steel generally remained firm during the quarter,
with price levels in line with Q4 2004 driven by continued strong demand from
the Far East, while the EU in particular was turning soft. Compared to Q1 2004,
international selling prices of hot rolled coil and low carbon wire rod
increased by 73% and 63%, respectively.
Domestic
Domestic sales for the quarter was in line with the corresponding period last
year but was lower by 4% compared with the previous quarter level, mainly due to
a destocking effect. However, the real consumption grew in line with the
economy.
PRODUCTION
Liquid steel production was in line with the previous quarter while 9% higher
than the corresponding quarter last year, mainly as a result of improved
operational performance.
COST
Cost per ton were 15% higher compared with the corresponding period last year,
mainly as a result of a substantial increase in the international prices of
input costs of which coal, alloys, scrap and freight had the largest impact,
offset by significant cost savings. Over Q4 2004, costs increased by 4% on
account of alloys, freight and an adverse coal mix.
TAXATION
The tax deductibility of the Business Assistance Agreement payment has been
challenged by the authorities on the ground that it is of a capital nature. The
company has obtained legal opinion from senior counsel, supporting its stand
that the set payment is of revenue in nature and hence tax deductible. The
Company intends to appeal against the proposed assessment by the authorities
once it is formally received. The contingent liability on this account is R403
million.
OUTLOOK
The local market is expected to improve slightly with the inventory levels at
the channels returning to normal levels. The underlying demand remains firm, in
line with the domestic economy. With the Rand getting into a weakening bias,
price levels are generally expected to be maintained in the next quarter.
Export volumes are expected to be higher than the previous quarter, Long
Products in particular. However, average prices realised may be lower due to
less off-take from traditionally higher priced markets of Europe and the US.
Costs are expected to be generally in line with Q1 2005, with lower scrap prices
expected to be offset by higher prices for imported iron ore pellets and alloys.
Overall, the results for the next quarter are expected to remain in line with Q1
2005.
GROUP INCOME STATEMENT
Quarter ended Year ended
31 March 31 March 31 December 31 December
2005 2004 2004 2004
Rm Rm Rm Rm
Revenue 6 065 4 869 6 122 23 053
Flat Steel Products
* Vanderbijlpark 3 119 2 613 3 239 12 288
* Saldanha Steel 1 041 755 1 029 3 638
Long Steel Products 1 731 1 347 1 648 6 339
Coke & Chemicals 272 219 346 1 253
Other 30 30 30 111
Inter-Group (128) (95) (170) (576)
Operating profit 2 122 1 003 2 216 6 668
Flat Steel Products
* Vanderbijlpark 1 106 610 1 164 4 129
* Saldanha Steel 415 137 420 1 147
Long Steel Products 529 214 559 1 769
Coke & Chemicals 85 53 114 462
Other 6 10 19 42
Corporate (19) (21) (60) (150)
BAA remuneration (731)
Net financing income/(costs) 22 (32) 12 (134)
Profit from equity accounted
investments before tax 73 60 97 347
Impairment credit 502 502
Goodwill impairment (5) (5) (5) (21)
Taxation (636) (358) (1 061) (2 485)
Minority interest (3) (4) - (6)
Profit attributable to
ordinary shareholders 1 573 664 1 761 4 871
ADDITIONAL INFORMATION
Profit attributable to
ordinary shareholders 1 573 664 1 761 4 871
Adjusted for:
* Impairment credit (502) (502)
* Goodwill impairment 5 5 5 21
* Taxation on adjustments 151 151
Headline earnings 1 578 669 1 415 4 541
Performance per ordinary
share
Attributable earnings
per share (cents) 353 149 395 1 093
Headline earnings per
share (cents) 354 150 317 1 019
PHYSICAL INFORMATION (`000 TONNES)
Quarter ended Year ended
31 March 31 March 31December 31 December
2005 2004 2004 2004
Flat Steel Products
- Vanderbijlpark
Liquid steel production 976 834 994 3 628
Sales 767 795 786 3 166
* Local 492 518 525 2 224
* Exports 275 277 261 942
* Local sales as % of total sales 64 65 67 70
- Saldanha Steel
Liquid steel production 318 328 321 1 227
Sales 306 299 287 1 141
* Local 125 75 142 504
* Export 181 224 145 637
* Local sales as % of total sales 41 25 49 44
Long Steel Products
Liquid steel production 555 528 551 2 178
Sales 461 496 437 1 894
* Local 255 275 245 1 151
* Export 206 221 192 743
* Local sales as % of total sales 55 55 56 61
Total
Liquid steel production 1 849 1 690 1 866 7 033
Sales 1 534 1 590 1 510 6 201
* Local 872 868 912 3 879
* Export 662 722 598 2 322
* Local sales as % of total sales 57 55 60 63
Please note that a conference call to discuss the company`s financial results
and general business operations will be held at 17:00 (SA time) / 16:00 (London
time) /11:00am (New York time) on Tuesday, April 26, 2005. The conference call
will include a brief question and answer session. The conference call
information is as follows:
Dial-In number from within South Africa: +27 11 535 3600 (toll) or 0800 200 648
(toll free)
Dial-In number from within the USA: +1 412 858 4600 (toll) or 1 800 860 2442
(toll free)
Dial-In number from within the UK: 0800 917 7042 (toll free)
Dial-In number from within the UK: 1 866 519 5086
For individuals unable to participate in the conference call, a telephone replay
will be available from 22:00 SA time / 21:00 London time / 15:00 New York time
on Tuesday, 26 April, 2005.
Replay number from within SA and Other: +27 11 305 2030
Replay number within the USA: +1 412 317 088
Passcode: 2476#
Registered Office Transfer Secretaries
Mittal Steel South Africa Computershare Investor
Room N3-5 Services 2004 (Pty) Limited
Main Building 70 Marshall Street
Delfos Boulevard Johannesburg
Vanderbijlpark, 1911 PO Box 61051
Marshalltown, 2107
Directors: K Ngqula (Chairman), D K Chugh* (Chief Executive Officer), S
Maheshwari*,
J J A Mashaba, A Mittal*, L N Mittal*, Dr K D K Mokhele, M J N Njeke, V
Sethuraman*
*Citizen of India
Company Secretary: Xoliswa Motswai
This report is available on the Mittal Steel South Africa World Wide Web site
at: http://www.mittalsteelsa.com.
Share queries: Please call the Mittal Steel South Africa Share care Line toll
free on 0800 006 960 or +27 11 370 7850 if calling from outside South Africa.
