JOHANNESBURG: ArcelorMittal South Africa, a subsidiary of Lakshmi Mittal's global steel empire, has bounced back from the 632-million rand losses recorded in 2019, to post profit of 37 million rand for the year 2020, despite the coronavirus outbreak.
"Despite a difficult year in which businesses had to adjust to the impact of COVID-19 in an already weak economy, ArcelorMittal South Africa (AMSA) was able to return to profitability in the second half of the year, as the benefits of substantial cost reduction initiatives and the implementation of an optimised asset footprint review over the past two years are showing positive results," Chief Executive Officer, AMSA, Kobus Verster said on Friday, after the company's financial results for the year ending December 31, 2020 were posted by the Johannesburg Securities Exchange.
AMSA was struggling in the beginning of 2020 when the government appealed to Mittal to reconsider plans to shed 1,000 jobs as part of cost-cutting measures.
"I believe the business is now well-positioned to participate in the improvements in manufacturing activity and the anticipated positive demand spin-offs from the economic recovery plans of both government and South African business," Verster said.
While the company recorded a loss in the first half of 2020, when almost all its operations were stopped for the first time in the company's history due to the COVID-19 national lockdown, gains were recorded in the second half of the year.
AMSA said it had crafted a rapid response plan to protect its people, assets and financial facilities during the hard lockdown, enabling it to successfully re-mobilise for the subsequent restart of operations.
"Although marked by unprecedented challenges, the year also proved to be highly transformative with constructive learnings," said Verster.
"The work done to minimise the impact of COVID-19 on the business was invaluable in at least two respects: firstly, adapting our operations to ensure employees and service providers remain healthy and safe; and secondly, fundamentally resizing the cost structure of the company in response to lower production and sales volumes," he said.
The coronavirus outbreak has led to tremendous job losses and business closures in South Africa.
The detection of a new variant of the virus has led to further complications in the business community's response.
So far, the coronavirus has killed 47,670 people, along with 1,487,681 confirmed cases, in South Africa.
The first half of 2020 was broadly characterised by lockdowns.
However, AMSA managed to bounce back on the back of near-term steel demand internationally.
The company also benefited from international steel prices soaring to levels last seen in 2008.
AMSA said barring a return to a more restrictive lockdown regulation environment, it anticipated both sales volumes and prices to improve, as strong international steel prices are expected to remain in the near-term.
"We are hopeful that the improved price and volume environment, together with the sustained benefits of our fixed cost reduction programme, the strategic asset footprint review and our OneOrganisation operating model footprint benefit, will ensure that the improved performance from the second half of 2020 will continue into the first half of the new year," Verster said.
Earlier in the week, ArcelorMittal announced net income of USD 1,207 million for the quarter ended December 31, 2020, as it named Aditya Mittal its new Chief Executive Officer.
Aditya is the son Lakshmi N Mittal, 70, who will become Executive Chairman of the company.
AMSA was born out of the former state-owned steel manufacturer, Iscor, in 1989 after Mittal helped turn around its ailing fortunes.