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Mittal Steel - Unaudited group earnings for the quarter ended 30 September 2005
Mittal Steel South Africa Limited
(formerly Ispat Iscor Limited)
Registration number 1989/002164/06
Share code: MLA & ISIN: ZAE000064044
("the company" or "the group")
UNAUDITED GROUP EARNINGS AND PHYSICAL INFORMATION FOR THE QUARTER ENDED
30 SEPTEMBER 2005
FINANCIAL RESULTS
Headline earnings for the quarter decreased by 37% compared to the corresponding
period last year, driven primarily by lower international steel prices, lower
local volumes and an increase in the prices of major input materials. This was
partially offset by higher export volumes.
Compared to the previous quarter headline earnings decreased by 40%, mainly due
to the sharp drop in international steel prices as was evident from our quarter
two order intake which subsequently impacted on our invoiced prices for quarter
three. Domestic prices were decreased from 1 August 2005. The effect of these
factors was partially offset by higher export volumes.
MARKET REVIEW
International
Export volumes for the quarter increased by 58% compared to the corresponding
period last year and by 31% compared to the previous quarter. This increase was
mainly driven by the lower local volumes redirected to exports and delayed
shipments rolled over from quarter two. The sudden drop in international demand
and prices was mainly as a result of a destocking effect and a softening of
demand in China.
Domestic
Local sales decreased by 21% compared to the corresponding period last year and
3% compared to the previous quarter. The decrease was mainly driven by a
destocking effect, a delay in orders in anticipation of further price reductions
and lower sales by some of our customers, especially customers exporting value
added products, as a result of the strong rand as well as customers competing
with cheap final product imports from China.
We reduced our local prices for hot rolled flat products by 7.5%, cold rolled
and coated flat products by 5% and selected long products by 5%, from 1 August
2005.
PRODUCTION
Liquid steel production for the quarter increased by 8% compared to the
corresponding period last year mainly due to an improvement in operational
efficiencies at our Vanderbijlpark plant.
The 2% decrease compared to the previous quarter mainly resulted from a brief
cutback in production during the beginning of the quarter following the sudden
weakening of international market conditions.
COST
Cash cost per ton of hot rolled coil for the quarter increased by 12% compared
to the corresponding period last year and that of billets by 13%, driven mainly
by a substantial increase in the prices of coking coal, scrap, iron ore pellets
and alloys.
TAXATION
We submitted our objection, disputing the disallowance of the deductibility of
the payment made in terms of the Business Assistance Agreement, to SARS during
August 2005. SARS responded by a request for more information. We are currently
in the process of compiling the necessary documentation.
OUTLOOK
Domestic demand for quarter four is expected to show an improvement over quarter
three levels, driven to a large extent by stock building activities by
customers, especially the Merchants, following the exceptionally low inventory
levels towards the end of quarter three, together with some improvement expected
in real demand. Export order intake, for quarter four dispatches, indicates a
moderate improvement in export prices compared to quarter three.
Cost is expected to be higher during quarter four mainly due to the increase in
imported coking coal prices, effective from July 2005, but which will only fully
impact on our cost base during quarter four.
Overall we expect the results for quarter four to be in line with quarter three.
GROUP INCOME STATEMENT
Quarter ended Year ended
30 September 30 September 30 June 31 December
2005 2004 2005 2004
Rm Rm Rm Rm
Revenue 6 110 6 387 6 199 23 053
Flat Steel
Products
Vanderbijlpark 3 294 3 319 3 269 12 288
Saldanha Steel 837 1 036 936 3 638
Long Steel
Products 1 833 1 780 1 915 6 339
Coke & Chemicals 256 395 245 1 253
Other 20 26 23 111
Inter Group (130) (169) (189) (576)
Operating Profit 1 468 2 235 2 225 6 668
Flat Steel
Products
Vanderbijlpark 879 1 131 1 226 4 129
Saldanha Steel 74 378 270 1 147
Long Steel
Products 449 578 666 1 769
Coke & Chemicals 86 188 74 462
Other 5 6 42
Corporate (20) (45) (17) (150)
BAA remuneration (731)
Net financing
income/(costs) 26 1 31 (134)
Profit from
equity accounted
investments
before tax 61 39 93 347
Impairment credit 502
Goodwill
impairment (5) (6) (21)
Taxation (569) (698) (706) (2 485)
Profit from
ordinary
activities 986 1 572 1 637 4 877
Profit
attributable to:
Ordinary
shareholders 987 1 570 1 637 4 871
Minority
interest (1) 2 6
ADDITIONAL
INFORMATION
Profit
attributable
to ordinary
shareholders 987 1 570 1 637 4 871
Adjusted for:
Impairment
credit (502)
Goodwill
impairment 5 6 21
Taxation on
adjustments 151
Headline earnings 987 1 575 1 643 4 541
Performance per
ordinary share
Attributable
earnings
per share (cents) 221 352 367 1 093
Headline earnings
per share (cents) 221 353 369 1 019
PHYSICAL INFORMATION ("000 tonnes)
Quarter ended Year ended
30 September 30 September 30 June 31 December
2005 2004 2005 2004
Flat Steel
Products
Vanderbijlpark
Liquid steel
production 947 805 1 010 3 628
Sales 852 811 753 3 166
Local 509 600 504 2 224
Exports 343 211 249 942
Local sales as %
of total sales 60 74 67 70
Saldanha Steel
Liquid steel
production 329 343 298 1 227
Sales 313 306 241 1 141
Local 68 164 89 504
Export 245 142 152 637
Local sales as %
of total sales 22 54 37 44
Long Steel
Products
Liquid steel
production 543 542 550 2 178
Sales 504 473 505 1 894
Local 278 312 285 1 151
Export 226 161 220 743
Local sales as %
of total sales 55 66 56 61
Total
Liquid steel
production 1 819 1 690 1 858 7 033
Sales 1 669 1 590 1 499 6 201
Local 855 1 076 878 3 879
Export 814 514 621 2 322
Local sales as %
of total sales 51 68 59 63
Registered Office Transfer Secretaries
Mittal Steel South Africa Computershare Investor Services
Room N3-5, Main Building 2004 (Pty) Limited
Delfos Boulevard 70 Marshall Street, Johannesburg, 2001
Vanderbijlpark, 1911 PO Box 61051, Marshalltown, 2107
Directors: K Ngqula (Chairman), D K Chugh* (Chief Executive Officer), H
Banthia*, Dr S E Jonah, S Maheshwari*, J J A Mashaba, A Mittal*, L N Mittal*, Dr
K D K
Mokhele, M J N Njeke
*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.
Date: 09/11/2005 09:00:14 AM Produced by the JSE SENS Department
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