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MLA
MLA
Mittal - Unaudited Group Earnings and Physical Information for the
quarter ended 30 September 2006
Mittal Steel South Africa 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 2006
FINANCIAL RESULTS
Headline earnings for the quarter of R1 470 million increased by 20%
compared to the previous quarter and by 49% compared to the corresponding
period last year, driven by higher domestic sales, higher sales prices
and a weaker Rand/US Dollar exchange rate. This was partially offset by
lower export volumes and an increase in input material costs.
MARKET REVIEW
International
Export volumes for the quarter declined by 30% compared to the previous
quarter and by 54% compared to the corresponding period last year due to
an increase in domestic sales volumes. Export prices realised during the
past quarter were significantly higher compared to both the previous
quarter and the corresponding period last year. This was mainly due to
higher international prices and the lower volumes available for exports
which created the opportunity to withdraw from less attractive markets.
Prices during the third quarter last year were also depressed as a result
of a de-stocking effect.
Domestic
Domestic demand during the quarter was very strong and increased by 11%
compared to the previous quarter and by 43% compared to the corresponding
period last year, driven by an increase in demand from the building and
construction, automotive and packaging sectors while the recent weakening
of the Rand against the US Dollar stimulated demand from export
orientated industries.
PRODUCTION
Liquid steel production for the quarter decreased by 5% compared to the
previous quarter and by 3% compared to the corresponding period last
year, mainly due to a cut-back in production necessitated by a lack of
iron ore due to delivery problems by way of rail transport.
COST
Cash cost per ton of hot rolled coil for the quarter increased by 5,9%
compared to the previous quarter and by 10,6% compared to the
corresponding period last year while billets increased by 7,3% and 8,6%
respectively. The increases were mainly driven by a substantial increase
in the cost of imported and domestic coal, scrap, iron ore and lower
production volumes.
The cost of galvanised material increased by 12,6% compared to the
previous quarter and by 38,8% compared to the corresponding period last
year due to higher zinc prices of 24,4% and 187,8% respectively.
CONTINGENT LIABILITIES
Subsequent to the appeal that was lodged with SARS against the
disallowance of the deductibility of the payment made in terms of the
BAA, SARS has set a date to commence with the Alternative Dispute
Resolution (ADR) process on 1 December 2006. A contingent liability of
R403 million plus interest thereon exists and no provision has been made
in this regard.
In the case at the Competition Tribunal on alleged excessive pricing
brought by the gold miners, Harmony and DRD Gold, final dates for the
closing arguments are scheduled for the end of November 2006 with a
ruling expected early next year. We maintain our view, based on advice
from senior counsel, that no significant exposure exists in this regard.
No provision has been raised and no contingent liability quantified.
OUTLOOK
Towards the end of October 2006 we experienced an unfortunate event at
our Vanderbijlpark plant where a fire caused substantial damage to both
slab casters that use liquid steel from the Basic Oxygen Furnaces as
source material. The damage to one caster took nine days to repair while
the other caster, with more extensive damage, will take approximately
four weeks to repair. The loss of slab production through this route is
estimated at 106 000 tons. Contingency plans have been put in place to
minimise the impact of the incident by increasing production through the
Electric Arc Furnace route, importation of slabs and the re-direction of
Saldanha Steel exports to the domestic market. An insurance claim will be
lodged as soon as all the required information is available.
Despite the incident on the casters, the results for quarter four are
expected to remain relatively strong, supported by high local demand,
strong prices and improved iron ore supply. However, the movement in the
Rand/US Dollar exchange rate will always have a major impact.
GROUP INCOME STATEMENT
Quarter ended Year
ended
30 30 30 31
September September June December
2006 2005 2006 2005
Rm Rm Rm Rm
Revenue 7 234 6 170 6 257 24 296
Flat Steel Products 5 108 4 188 4 201 16 628
Long Steel Products 2 062 1 844 1 981 7 216
Coke & Chemicals 264 264 217 1 056
Inter Group (200) (126) (142) (604)
Operating profit 1 945 1 598 1 206 6 866
Flat Steel Products 1 370 1 042 646 4 491
Long Steel Products 568 490 502 2 108
Coke & Chemicals 47 86 35 301
Corporate & Other (40) (20) 23 (34)
Gains/(losses) on
foreign exchange and
financial
instruments 314 (128) 485 245
Net financing income 43 24 87 2
Income from investments 1 2 1 5
Profit/(loss) from
equity accounted
investments
before tax (38) 60 (33) 295
Taxation (795) (569) (518) (2 345)
Profit from ordinary 1 470 987 1 228 5 068
activities
Profit attributable to:
Ordinary shareholders 1 470 987 1 228 5 068
Additional information
Profit attributable to 1 470 987 1 228 5 068
ordinary shareholders
Adjusted for:
Goodwill impairment 11
Headline earnings 1 470 987 1 228 5 079
Performance per
ordinary share
Attributable earnings 330 221 275 1 137
per share (cents)
Headline earnings per 330 221 275 1 139
share (cents)
PHYSICAL INFORMATION
Quarter ended Year
ended
30 30 30 31
September September June December
"000 tonnes 2006 2005 2006 2005
Flat Steel Products
Liquid steel production 1 217 1 276 1 287 5 067
Sales 1 108 1 165 1 125 4 283
Long Steel Products
Liquid steel production 546 543 578 2 194
Sales 488 504 508 1 947
Total
Liquid steel production 1 763 1 819 1 865 7 261
Sales 1 596 1 669 1 633 6 230
Local 1 219 855 1 095 3 485
Export 377 814 538 2 745
Local sales as % of 76 51 67 56
total sales
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: Dr K Ngqula (Chairman), EM Reato (Chief Executive Officer),
DK Chugh*#, Dr SE Jonah KBE*+, S Maheshwari*#, JJA Mashaba, LN Mittal*#,
Dr KDK Mokhele*, M Mukherjee*#, MJN Njeke*, HJ Verster.
* Non-executive # Citizen of India + Citizen of Ghana.
Company Secretary: Xoliswa Motswai
FORWARD-LOOKING STATEMENTS
Certain Statements in this release that are neither reported financial
results nor other historical information, are forward-looking statements,
including but not limited to statements that are predictions of or
indicate future earnings, savings, synergies, events, trends, plans or
objectives. Undue reliance should not be placed on such statements
because, by their nature, they are subject to known and unknown risks and
uncertainties and can be affected by other factors, that could cause
actual results and company plans and objectives to differ materially from
those expressed or implied in the forward-looking statements (or from
past results).
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 Share care toll free on 0800 006 960 or +27 11 370 7850 if
calling from outside South Africa
Date: 06/11/2006 12:11:16 PM Produced by the JSE SENS Department
