Arrium Says First-Half Loss Widens on Steel Asset Writedowns
Arrium Ltd., Australia’s second- largest steelmaker, reported a wider first-half loss after writing down the value of steel assets due to a stronger Australian dollar and weak demand.
The net loss was A$447 million ($461 million) in the six months ended Dec. 31, compared with a loss of A$74 million a year ago, the Sydney-based company said today in a statement. It had an underlying profit of A$51 million, down from A$77 million. Credit Suisse Group AG forecast A$36 million.
Australian steelmakers have struggled in the past two years against lower steel prices, higher labor costs and a stronger local currency. Arrium yesterday promoted Andrew Roberts, 46, the head its mining consumables unit, to succeed Geoff Plummer as chief executive officer.
Roberts, who led acquisitions and expansions in Asia, Australia and the Americas, “will bring new ideas to the strategic direction of the company,” Evan Lucas, a Melbourne- based strategist at IG Markets Ltd., said in a note to clients. “The restructuring and asset impairments will also provide Roberts with clear air to move the company back to profit.”
The stock fell 2 percent to A$1.235 as of 11:04 a.m. in Sydney. Arrium will pay a first-half dividend of 2 cents a share, it said today. Credit Suisse had forecast a payout of 1 cents to 2 cents.
“Our Australian steel businesses continued to be challenged by the difficult external environment,” Arrium said. A drop in the cost of raw materials have led to lower steel prices, though “the impact of this is expected to ease in the second half of this financial year,” it said.
Arrium reiterated today that full-year earnings will be “significantly skewed” to the second half due to uncertainty in commodity prices and a planned increase in iron ore shipment.
To contact the reporter on this story: Soraya Permatasari in Melbourne at email@example.com