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Evraz loses as steel demand drops

Steel producer Evraz Highveld Steel and Vanadium (EHS) made a headline loss of R800m in the nine months to September thanks to weak demand in an ailing world economy and extensive industrial action.
"The main reason for the decrease in profitability is lower production and sales volumes during the four-week strike by National Union of Metalworkers members and the subsequent difficult ramp-up period thereafter‚" the company's chief executive‚ Michael Garcia said.

"We have also seen slow sales in various markets‚" he said.

Earnings before interest‚ taxation‚ depreciation and amortisation for the period amounted to a loss of R485m‚ compared with a R41m profit for the same period in the nine months to September last year.

Group sales revenue decreased to R3.32bn compared with R4.2bn for the previous period.

The cast steel output for the period decreased 16% to 406‚072 tons‚ mainly due to the four-week strike.

Production of long products fell 8% to 152‚000 tons for the period compared with the same period in 2011. The production of flat products decreased 22% to 171‚682 tons due to the reduced availability of cast steel.

The company's main focus was to continue with initiatives to achieve profitable production in a sustainable, safe manner and to reduce its costs so it can return to a profitable position‚ it said.

"However‚ it remains a challenging goal under the current conditions of increasing input costs. The global over-supply situation has not changed significantly‚ with the local market remaining weak‚" Garcia said.


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