Steel titan ArcelorMittal (MT) Wednesday reported a better-than-expected rise in second quarter earnings and said this year's seasonal steel demand slowdown in the second half will be less pronounced due to a shift in apparent steel demand.

The Luxembourg-based steelmaker reported a 25% year-on-year rise in second quarter sales to $25.13 billion and a 22% rise in earnings before interest, taxes, depreciation and amortization, or Ebitda, to $3.41 billion. The keenly watched earnings metric was higher than analysts' expectations of $3.27 billion, according to a Dow Jones Newswires poll of five analysts.

Although second quarter earnings were strong due to higher achieved selling prices, the steelmaker expects third quarter Ebitda to fall to between $2.4 billion and $2.8 billion due to seasonal factors such as summer holidays in the northern hemisphere, which typically lead to lower steel consumption.

"Although the third quarter will experience some seasonal impact, we do not expect this to be as pronounced as last year, and overall the group's performance in the second half of 2011 should compare favorably with the second half of 2010," chief executive Lakshmi Mittal said.

ArcelorMittal expects to ship more steel in the second half of this year than the same period last year. It expects global apparent steel consumption to grow by as much as 7.5% in 2011 with Chinese apparent steel consumption forecast to rise more than 8.5%. Japanese reconstruction demand stemming from one of its worst earthquakes is also likely to prompt global demand to pick up in the fourth quarter, Aditya Mittal, the company's chief financial officer, said.

ArcelorMittal also said Wednesday that it has increased its 2011 capital expenditure plan by 10% to $5.5 billion after approving plans to expand its Canadian iron ore operations, Brazilian steel processing facilities, and investing in energy efficiency programs.

CFO Mittal said the company remains on track to meet its target to increase iron ore and coking coal from its own production by 10% and 20% respectively in 2011, despite suffering iron ore output setbacks in the first quarter.

At 1008 GMT, ArcelorMittal's shares were up 2.5% or EUR0.57 at 22.74 a share.

Second quarter net profit attributable to shareholders was down 10% on year to $1.54 billion.

CFO Mittal said that second quarter net profit wasn't a useful metric to gauge the company's performance since the company has undertaken hedging transactions to minimize the mark-to-market losses on convertible bond related derivatives. In the second quarter of last year, the company reported an exceptional gain of $696 million due to those derivatives.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com

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