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UPDATE 1-Arrium profit beats estimates; expects strong China iron ore demand
August 21, 2012 / 12:46 AM / in 5 years

UPDATE 1-Arrium profit beats estimates; expects strong China iron ore demand

* H2 underlying profit A$117 mln vs consensus A$104.3 mln

* Says strong China iron ore demand to underpin prices (Recasts to lead on H1 profit, adds share price)

SYDNEY, Aug 21 (Reuters) - Mining and materials group Arrium on Tuesday said it expected continued strong iron ore demand from China and posted a forecast-beating 6 percent rise in second-half profit.

Underlying second-half profit for the company, which changed its name from OneSteel earlier this year to reflect its more diversified portfolio, was A$117 million, according to Reuters calculations.

That was ahead of A$110 million a year earlier and above analysts’ expectations of A$104.3 million.

The company said fundamentals remain strong for iron ore and it expects “continued strong demand from China will underpin high prices compared to historical levels.”

Arrium’s shares rose 1.2 percent to A$0.82 in early trade.

In its steel and recycling division, Arrium expects a challenging external environment, including weak domestic and international steel markets to continue through the first half.

The company’s steel manufacturing and distribution business has been hard hit by a downturn in Australia’s construction and engineering sectors.

Full-year underlying profit after tax was A$195 million, down from A$235 million a year ago, but ahead of analysts’ expectations of A$167.8 million, according to Thomson Reuters I/B/E/S.

Net profit slipped further to A$58 million when a A$125 million writedown of the company’s LiteSteel beam technology was included in the results.

Arrium earlier this year changed its name from OneSteel Ltd to reflect its shift towards a diversified global mining and materials business and to attract new investors.

“We have continued to make good progress against our strategy of growing our resource-based business,” said Chief Executive Officer Geoff Plummer.

The company said its mining division was on track to deliver its first sales from expanded operations in the December 2012 quarter and increase total iron ore sales to a run rate of 11 million tonnes per annum by mid-2013.

Statutory cash flow for the year was up 2 percent at A$470 million and the company announced an unfranked final dividend of A$0.03 per share, bringing the total dividend for the year to A$0.06 per share. (Reporting By Jane Wardell; Editing by Chris Gallagher)

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