* H1 diluted headline EPS of 26 cents vs 166 cents
* Expects further reduction in third-quarter earnings (Adds details)
JOHANNESBURG, July 25 (Reuters) - ArcelorMittal South Africa , a unit of the world’s top steelmaker, reported an 84 percent drop in first-half earnings on Wednesday hit by lower prices and soft demand and said it expects a further reduction in the third quarter.
Africa’s biggest steelmaker said diluted headline earnings per share for the six months to end-June totalled 26 cents compared with 166 cents in the same period last year.
Headline earnings are the main profit gauge in South Africa and exclude certain one-off and non trading items.
“Third quarter financial results are expected to extend the headline loss incurred in second quarter on the back of lower steel prices and a further decline in domestic demand,” the company said in a statement.
The company, which sells 90 percent of its steel in Africa, said revenue rose 7 percent to 17.8 billion rand ($2.1 billion).
It did not declared an interim dividend.
ArcelorMittal South Africa also said it was in talks with Kumba Iron Ore to extend an interim iron ore supply agreement which expires on July 31.
The two firms have been at loggerheads over prices since early 2010 after a preferential deal lapsed, and an arbitration hearing will decide if the steelmaker can keep sourcing iron ore from Kumba at a discount.
The company paid 1.1 billion rand more for iron ore in 2011 due to the dispute.
$1 = 8.5019 South African rand Reporting by Olivia Kumwenda; Editing by Mark Potter