Despite the global downturn resulting in a dramatic decrease in commodity prices and production cuts, South Africa's Highveld Steel and Vanadium achieved its best results in the year ended December, more than doubling headline earnings to 2210c per share.
Profits rose 33% to R2,5bn on turnover of R8bn — 49% ahead of the previous year’s.
However, the depressed global economic situation meant that Highveld had to implement a restructuring process, cutting back on outsourced services and restructuring its capital expenditure programme.
The group will now focus aggressively on entering new markets to cushion effects of a sharp decrease in orders.
And despite the record results and cash on hand of R1,6bn at year-end, Highveld will not pay a final dividend, considering it more prudent to keep cash to help weather the global storm.
Highveld has identified the financial soundness of its customers, fluctuations in commodity prices, and the availability of electricity and rail transportation as high risks on which it needs to focus in the year ahead.
On a segmental basis, steel production fell 10,5% while sales volumes were down 8,5% in the year, which was blamed on the lack of electricity in the first half, and the sudden downturn in the market from the fourth quarter, necessitating output cuts.
Vanadium prices fluctuated wildly — between $90/kg and $26/kg for ferrovanadium at the end of the year.
Highveld has also had to sell certain of its basic products in the international market at distressed prices to maintain a reduced but economic level of output.
Source: Business Day
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