It is interesting to compare this years tour with last year.
THE BIG SURPRISE IS ROD AND BAR -Sales UP 50% or $650m with no increase in staff.
It is also where they have announced price increases.
No doubt its been a successful year of proving ARI supply can cut customers in use construction costs and now its time to take some of those customer savings back thru increased margins.
ARC-x sales UP $50m with 3 less outlets and 100 less staff.
Reinforcing sales UP $25m with 25 extra staff to 900 staff and $600m
EAF make UP 105kt.Production records at the Sydney mill must be responsible for the fact variable cost ARC furnace capacity has only dropped from 150kt to 100kt.Implying that maybe operational improvements in Sydney have lifted existing production capacity there to nearer that of Laverton I.e. 50kt to a nominal 710kt?Nothing like 65kt of the 105kt added production for no increase in fixed per ton cost.That will save shipping costs of Whyalla or Laverton billets there to meet demand improving margins even more.
With cheap scrap there is every chance ARC furnace production may rise to capitalise on low cost supply, considerably,opening up Whyalla to produce more billets/slabs/coil for export or domestic use by third party steel companies currently importing steel COIL for processing or enabling even greater use of lower grade coals to reduce costs while paring back production a little.
Whyalla revenue down $25m with $35m of costs coming out via pallet stream and reheat rebuild this year.With further costs due out of $100m.
Metalcentre is in the gun sales down $50m sites down to 65 in June and nine gone so far back to 54 so far with more to go.
Wires sales are stagnant at $300m with price increase on some products announced.
THE BIG QUESTION is Without restructuring costs from last year and WITH price increases in Rod and Bar their
biggest and most resilient market and increased efficiency in their Sydney steel plant near their major users how much are they set to be making in steel supply this year?
DYOR+DYODD Will that jump in margins resulting EBIT be as dramatic as seen by Moly-Cops jump in projected earnings?
ARI Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
