ArcelorMittal Earnings Beat Expectations -- Update
29 Julho 2016 - 5:26AM
Dow Jones News
By Alex MacDonald
LONDON--Steel giant ArcelorMittal on Friday reported a rise in
second-quarter net profit on a one-time gain and said it was
optimistic about the second half of the year, but cautioned that
excess steel capacity globally remains a concern.
The Luxembourg-based steelmaker--the world's largest by
production, accounting for some 6% of global steel output--said net
profit surged to $1.11 billion in the three months ended June 30
compared with $179 million a year earlier.
The figure beat expectations of a $201 million profit based on a
Wall Street Journal poll of seven analysts, largely because of an
$832 million one-time gain largely related to reduced health care
costs under its new labor contract in the U.S. The contract is part
the company's efforts to improve the performance of its U.S.
operations.
ArcelorMittal shares rose more than 4% in early trading in
Europe. Jefferies analyst Seth Rosenfeld said the results beat his
expectations across all divisions, with the most notable surprise
in Europe and North America.
Earnings before interest, taxes depreciation and amortization
rose 27% on year to $1.77 billion in the second quarter, as costs
fell more than average selling prices for steel, helping expand the
company's profit margin despite a 13% drop in revenue to $14.74
billion because of lower steel and iron ore prices. Ebitda in its
U.S. division more than doubled in the period.
"Although the industry continues to face the challenges of
structural overcapacity, we are seeing better market conditions
compared with the second half of 2015 which lead us to be
cautiously optimistic about the remainder of the year," Chief
Executive Lakshmi Mittal said. The company said it expects minimal
impact on its business from Britain's decision to exit the European
Union.
The global steel industry has been roiled by Chinese steelmakers
shipping their product abroad at a record pace because of anemic
demand at home. Monthly exports reaching their second highest level
on record in June after hitting a record high in September.
The U.S. and EU have been particularly hard hit by the influx of
cheap Chinese steel, prompting them to respond by launching trade
cases against China to protect their producers. Chief Financial
Officer Aditya Mittal said this is starting to have a positive
effect in reducing steel imports into the U.S. but not the EU,
where more tariffs are in the process of being applied.
In light of the challenging market conditions, ArcelorMittal
earlier this year raised EUR2.8 billion ($3.1 billion) in a rights
issue to strengthen its balance sheet. Shares subsequently rallied
and are up nearly 90% so far this year, buoyed by a pickup in steel
prices in its key U.S. and European markets in the second quarter
compared with the first three months of the year.
Steel prices in the U.S. and Europe, however, have begun to ebb
raising concerns among analysts about ArcelorMittal's profitability
in the second half of the year.
The company noted that its typically takes a quarter for prices
to effect its business, which should provide some support in the
second half when steel demand is seasonally weaker.
ArcelorMittal said it reduced net debt to $12.7 billion by the
end of June from $17.3 billion at the end of the first quarter,
largely because of the rights issue and asset sales.
Last month the company teamed up with Italian steelmaker
Marcegaglia to bid for the troubled Ilva steel plant, Europe's
largest single steel producer, which is currently held under
special administration by the Italian government. The company said
the offer, if successful, would be structured in such a way to
avoid compromising its balance sheet.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
July 29, 2016 04:11 ET (08:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Arcelor Mittal (NYSE:MT)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Arcelor Mittal (NYSE:MT)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024