Mining and minerals group Arrium is set to post a massive full-year loss after announcing a $320 million impairment hit on top of the $1.3 billion already announced in January.
The weak iron ore price is causing problems for the group, with the latest figures including write-downs of $245 million to the mining business.
The $1.3 billion impairments already announced were mostly associated with the decision to close one of its two iron ore projects – Southern Iron, which cost nearly 600 jobs.
Chief executive Andrew Roberts flagged selling assets or businesses as part of a strategic review seeking to protect the company’s balance sheet and cut its large debt pile.
The group’s shares opened half a cent down at 15.5 cents.
Arrium is forecasting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the year to June 30 of $335-$350 million.
That means Arrium has failed to achieve the stronger overall second half earnings chief executive Andrew Roberts had predicted back in February, when it posted underlying EBITDA of $189 million.
Its net loss for the first half was $1.5 billion.
The company said in today’s statement that underlying earnings in the second half were stronger in the mining consumables and steel divisions.
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It said it expected to achieve $40-$50 million in cost savings this year and was targeting a lower iron ore breakeven price of $US50 a tonne for next year.
Net debt is estimated at $1.75 billion to $1.85 billion.
Roberts addressed staff this morning, saying that reducing debt was a priority in the tough environment and it was considering selling assets or businesses.
