Steelmaker ArcelorMittal’s Q2 core earnings slide but ahead of expectations
It shipped some 13.9 million tonnes of steel in the quarter, down 2 per cent from the same period a year.
ArcelorMittal, the world’s No. 2 steelmaker, reported second-quarter core profit tumbled 38 per cent on low steel prices but the result was somewhat better than expected as shipments picked up from the previous quarter.
Steel prices in Europe and the US are below the marginal cost of production and excess output from China has resulted in “very low domestic steel spreads and aggressive exports,” Arcelor said in a statement.
It shipped some 13.9 million tonnes of steel in the quarter, down 2 per cent from the same period a year earlier but up 3.2 per cent from the first quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $1.86 billion during the quarter, 5 per cent higher than a company-compiled consensus. The results were also helped by lower costs, it said Net profit, however, came in some 20 per cent below consensus at $504 million due to a lower valuation for its stake in steel tube company Vallourec that it acquired this year.
In a downbeat note, the Luxembourg-based company cut its annual apparent global steel demand outside China to a range of 2.5 per cent to 3 per cent growth from the 3 per cent-4 per cent it forecast in February.
The steel industry has been suffering from weaker construction activity in Europe, while in the US, interest rate hikes have dented demand.
But the company also said it was benefiting from diversification and estimated that projects and recent acquisitions would add $2 billion to EBITDA by 2026.
Asked about a worker strike in Mexico that was recently resolved, Chief Financial Officer Genuino Christino estimated the impact at around $100 million each in the second and third quarters.
He also said he wasn’t “overly concerned” by potential US election outcomes, highlighting the positive impact of policies on the sector during the Trump administration that have been mostly maintained by President Joe Biden.
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First Published: Aug 01 2024 | 11:25 PM IST