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AET - Alert Steel Holdings Limited - Alert Steel narrows loss as turnaround

Release Date: 30/03/2012 17:50
Code(s): AET
Wrap Text

AET - Alert Steel Holdings Limited - Alert Steel narrows loss as turnaround strategy kicks in ALERT STEEL HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2003/005144/06) JSE code: AET ISIN: ZAE000092847 ("Alert Steel" or "company") ALERT STEEL NARROWS LOSS AS TURNAROUND STRATEGY KICKS IN Pretoria, 30 March 2012 - AltX-listed steel retailer Alert Steel reduced its total headline loss by 73% to R18.4 million and its headline loss per share by 93% to 2 cents per share year on year as efforts to restructure and refocus the group started paying off. Reporting today on the company`s results for the six months ended 31 December 2011, chief executive Johan du Toit said the group`s turnaround strategy was proving successful in the face of a number of external obstacles, including industrial action and stock shortages. "Considering the steel and metalworkers strike that took place in July and the supply problems created primarily by the force majeure at Arcellor Mittal`s Newcastle plant from September to December, August was really the only month in which we experienced normal trading conditions," he said. Du Toit said these developments had a major impact on the company`s ability to generate revenue, which reduced by 1% to R418 million, but it was able to take advantage of increased prices and improved margins. As a result it managed to achieve its targeted EBITDA with gross profit increasing by 38% to R86 million. Operating costs were reduced by 9% to R97 million. During the review period, Alert Steel disposed of Alert Steel Reinforcing and the division of RSC Polokwane as going concerns to Murray & Roberts Steel. At the same time, it acquired the remaining 50% shares in Alert Steel Polokwane from Murray & Roberts Steel as well as all the shares in Alert Steel North West. Looking ahead, du Toit said the company`s working capital will be secured through an estimated R120 million rights offer, partially underwritten by its major shareholders for R58.5 million, which is expected to take place before June this year. The rights offer will also introduce a major BEE shareholder, who has also agreed to underwrite the rights offer for a further value of R44 million. Additionally, the company will embark on a second restructuring exercise aimed at reducing costs at a head office level. Retrenchment costs of R5 million were expected to be incurred between April and May but would realise a monthly saving of R1.2 million in salaries and another R500 000 in other operational expenses. "With the cash injection from the rights offer, we expect a further discount from our suppliers of around R750 000 and an interest saving of approximately R700 000 per month. These measures, the fact that Arcellor Mittal is back to full production, our ability to settle our creditors within terms and obtain stock, as well as our ongoing rural container deployment should put the company in a good position to capitalise on future growth opportunities. We are therefore cautiously optimistic that we`ll achieve our projected results for the 2013 financial period." For further information call Johan du Toit, CEO Alert Steel, on 082 416 8888 Issued by du Plessis Associates on behalf of Alert Steel Holdings Limited. dPA contact Helen McKane Tel : +27 11 728 4701, Fax: +27 11 728 2547, Mobile: 082 330 2034 or e-mail: alertsteel@dpapr.com website: www.alertsteel.co.za Designated advisor: QuestCo(Pty) Limited Date: 30/03/2012 17:50:04 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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