ArcelorMittal profits recover to $1 bn
Top global steelmaker ArcelorMittal said on Wednesday its first quarter net profit rebounded to $1.07 billion (744 million euros) following a setback at the end of last year due to exceptional items.
The company, by far the biggest steelmaker by volume, said it expected profitability to improve further in the second quarter due to increased seasonal factors and increased underlying demand.
The group reported a loss for the last quarter of 2010 because of costs arising from the sale of its stainless steel division.
In the comparable first quarter of last year it made a net profit of $640 million.
"As anticipated, we have seen a stronger start to the year, with an increase in both shipments and selling prices," chief executive Lakshmi Mittal said in a statement.
First quarter sales rose by 27.3 percent on a 12-month basis to 22.2 billion dollars.
It made a gross operating profit of $2.6 billion, marking an increase of 52 percent. This was slightly higher than its forecast range of $2.0-$2.5 billion.
The outcome included the recovery of $300 million in the form of unused provisions.
Net debt rose by $2.9 billion to $22.6 billion in the first quarter due to investment in working capital, mergers and acquisition and foreign currency operations.
Sales and prices are "expected to further improve in the second quarter as the underlying demand recovery continues," added Mittal.
The company now expects gross operating profit to come in at between $3.0 and $3.5 billion in the quarter.
Capacity utilisation is expected to rise to approximately 80 percent from 75 percent.
High commodity prices affecting the costs of its inputs have so far been more than offset by higher increases to its sales prices.
ArcelorMittal said however that certain markets such as Japan and North Africa had begun to slow, which might weigh second quarter results, and that a rise in interest rates in China could also dent growth.
Net debt is expected to increase further due to additional investment in working capital.
The company expects the global steel market to rise by 6.5 to 7.0 percent this year.
"We remain confident that 2011 will be a stronger year than 2010," said Mittal.
ArcelorMittal has begun reporting the results of its mining operations separately, but dismissed suggestions it was considering spinning them off, saying there were significant synergies with steel production.
A 6.3 percent drop in iron ore production in the first quarter should corrected in the second quarter, it said.
© 2011 AFP