Curro Faces Financial Hurdles as Two Private Schools Risk Impairment Amid Steel Industry Closures

In a surprising turn of events, Curro Holdings, one of South Africa’s leading private school operators, has announced a staggering 217% increase in earnings per share for its 2024 financial year. However, the good news comes with a caveat: two of its schools face significant impairments due to the ripple effects of ArcelorMittal South Africa’s (AMSA) steel plant closures.

A Financial Rollercoaster

Curro’s trading statement for the financial year ending 2024 revealed that the group expects earnings per share to skyrocket between 117.1% and 217.1%. This impressive growth is attributed to strong cash flows and a credible operating performance throughout the year. Despite this, the company flagged impairments of between R340 million and R380 million (net of tax) for several campuses, including two schools directly impacted by AMSA’s operational shutdowns.

The two schools in question are located in Newcastle and Vereeniging, areas heavily reliant on AMSA’s steel manufacturing operations. With the steel giant winding down its Long Steel Business, these regions face economic uncertainty, leading to slower-than-anticipated learner growth at Curro’s campuses.

The Steel Industry’s Domino Effect

AMSA’s decision to close its Long Steel Business stems from ongoing pressure on international steel-to-raw material price spreads. Although the Industrial Development Corporation (IDC) provided R380 million in funding to extend operations until February 2024, the future remains bleak. The closures could result in the loss of 3,500 direct and indirect jobs, with some estimates suggesting up to 100,000 jobs could be affected due to the broader economic impact.

For Curro, this means reduced demand for private education in these areas, as families face financial strain. The company has already impaired eight campuses, with the two affected by AMSA’s closures accounting for a significant portion of the total impairment value.

What This Means for Curro

While the impairments are a non-cash item and won’t impact Curro’s operational cash flow, they do highlight the challenges facing the education sector in economically vulnerable regions. Curro’s total number of registered learners dropped slightly from 72,553 in November 2024 to 72,109 in 2025, reflecting constrained consumer spending despite moderating inflation and easing interest rates.

Curro remains optimistic about its financial position, emphasizing that it will continue generating cash from operations to meet its capital expenditure requirements. The group is set to release its full annual results on 5 March 2025, where stakeholders will gain further insights into its performance and strategic plans.

Looking Ahead

The closures of AMSA’s steel plants serve as a stark reminder of the interconnectedness of South Africa’s economy. As Curro navigates these challenges, the broader implications for the education sector and local communities remain a pressing concern. Will government interventions save the Long Steel Business, or will these regions face long-term economic decline? Only time will tell.

For now, Curro’s impressive earnings growth offers a silver lining, but the road ahead is fraught with uncertainty.

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