| Fri 12 May 2006, 8:00 | | Mittal Steel South Africa Limited - Unaudited Grou |
|
MLA
MLA
Mittal Steel South Africa Limited - Unaudited Group Earnings And Physical
Information For The Quarter Ended 31 March 2006
MITTAL STEEL SOUTH AFRICA LIMITED
(Formerly Ispat Iscor Limited)
Registration number 1989/002164/06
Share code: MLA & ISIN: ZAE000064044
("the company" or "the Group")
"Creating the most admired steel institution"
UNAUDITED GROUP EARNINGS AND PHYSICAL INFORMATION FOR THE QUARTER ENDED
31 MARCH 2006
FINANCIAL RESULTS
Headline earnings for the quarter of R684 million declined by 21% compared to
the previous quarter and by 57% compared to the corresponding period last year.
The main reasons for the substantial decline from last year were lower sales
prices, an increase in costs, lower export volumes and voluntary retrenchment
packages provided for during the past quarter. This was partially offset by
higher local sales volumes.
MARKET REVIEW
International
Export sales volume declined by 13% compared to the previous quarter and 15%
compared to the corresponding period last year due to a higher domestic
offtake.
The decline in international steel prices was mainly driven by a softening in
demand in China and a destocking effect following an inventory buildup by
customers during the first half of last year in anticipation of further price
increases.
Domestic
Domestic sales volume was 18% higher than the previous quarter and 19% higher
than the corresponding period last year mainly due to equilibrium between
supply and demand following the 2005 reduction in inventory levels and a
general improvement in economic activities.
Domestic spot prices for the quarter were below that of last year following two
price reductions announced during 2005.
PRODUCTION
Liquid steel production declined by 4% compared to the previous quarter and by
10% compared to the corresponding period last year. The Vanderbijlpark plant
experienced instability at Blast Furnace D during March while one of the three
Electric Arc Furnaces was out of operation for five weeks during
January/February due to cables damaged by fire.
The Saldanha plant experienced power interruptions resulting in delays in the
iron and steel making units.
COST
Cash cost of hot rolled coil increased by 14% compared to the first quarter
last year and billets by 5%, driven by a substantial increase in the cost of
coking coal, iron ore pellets and scrap. The higher increase for hot rolled
coil is mainly due to the production problems experienced at our Flat Product
plants discussed above.
The cost of our galvanized products was also negatively impacted by a
significant increase in the price of zinc.
CONTINGENT LIABILITIES
Our objection, disputing the disallowance of the deductibility of the payment
made in terms of the BAA, was rejected by SARS during April 2006. We intend to
appeal against this decision during May 2006. There is a contingent liability
of R403 million plus interest thereon and no provision has been made in this
regard.
The hearing by the Competition Tribunal, on allegations that we contravened the
Competition Act, started during the middle of March 2006. Closing statements are
scheduled for the end of May 2006 with a possible ruling expected during
July 2006. Management is of the opinion, based on advice from legal counsel,
that no significant exposure exists in this regard and therefore no provision
has been raised.
OUTLOOK
We expect the local market to remain buoyant driven by strong economic
conditions. A moderate improvement in global steel prices is also expected.
group income statement
Quarter ended Year ended
31 March 31 March 31 December 31 December
2006 2005 2005 2005
Rm Rm Rm Rm
Revenue 5 802 6 065 5 658 24 032
Flat Steel Products
Vanderbijlpark 3 128 3 100 2 984 12 664
Saldanha Steel 714 1 081 868 3 712
Long Steel Products 1 865 1 731 1 694 7 173
Coke & Chemicals 211 272 241 1 014
Other 21 30 25 98
Inter Group eliminations (137) (149) (154) (629)
Operating profit 994 1 949 1 199 6 855
Flat Steel Products
Vanderbijlpark 560 1 021 551 3 688
Saldanha Steel (25) 366 97 785
Long Steel Products 433 492 472 2 100
Coke & Chemicals 27 85 51 301
Other 8 6 44 56
Corporate (9) (21) (16) (75)
Gains/(Losses) on foreign exchange
and financial instruments (9) 173 87 246
Net interest income 34 21 (46) 29
Income from investments 1 1 1 5
Profit from equity accounted
investments before taxation 56 73 65 292
Goodwill impairment (5) (11)
Taxation (393) (636) (434) (2 346)
Profit for the period 683 1 576 872 5 070
Profit attributable to:
Equity holders of the parent 684 1 573 871 5 068
Minority interest (1) 3 1 2
ADDITIONAL INFORMATION
Profit attributable to ordinary
shareholders 684 1 573 871 5 068
Adjusted for:
Goodwill impairment 5 11
Headline earnings 684 1 578 871 5 079
Performance per ordinary share
Basic earnings per share (cents) 153 353 195 1 137
Headline earnings per share (cents) 153 354 195 1 139
physical information ("000 tonnes)
Quarter ended Year ended
31 March 31 March 31 December 31 December
2006 2005 2005 2005
Flat Steel Products
- Vanderbijlpark
Liquid steel production 886 976 890 3 823
Sales 825 767 751 3 123
Local 596 492 512 2 017
Exports 229 275 239 1 106
Local sales as % of total sales 72 64 68 65
- Saldanha Steel
Liquid steel production 260 318 299 1 244
Sales 267 306 300 1 160
Local 108 125 103 385
Export 159 181 197 775
Local sales as % of total sales 40 41 34 33
Long Steel Products
Liquid steel production 522 555 546 2 194
Sales 507 461 477 1 947
Local 330 255 265 1 083
Export 177 206 212 864
Local sales as % of total sales 65 55 56 56
Total
Liquid steel production 1 668 1 849 1 735 7 261
Sales 1 599 1 534 1 528 6 230
Local 1 034 872 880 3 485
Export 565 662 648 2 745
Local sales as % of total sales 65 57 58 56
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),
Dr S E Jonah KBE**, S Maheshwari*, J J A Mashaba, A Mittal*,
L N Mittal*, Dr K D K Mokhele, M J N Njeke, H J Verster
*Citizen of India, **Citizen of Ghana
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: 12/05/2006 08:00:23 AM Produced by the JSE SENS Department
