ArcelorMittal (MT) Wednesday warned that operating conditions in
the second half of the year would remain difficult and Europe
remains its biggest concern as the steel titan reported lower
second quarter earnings due to weak demand.
"Market conditions in the first half have been very challenging,
indeed more challenging than we had expected," said Lakshmi Mittal,
chief executive and chairman. "Although the global economy remains
fragile, we expect operating conditions to remain broadly similar
in the second half," he said.
The world's largest steelmaker by volume, accounting for some 6%
of the world's output, posted a net profit of $959 million in the
three months to June 30, down from $1.54 billion in the
year-earlier period but above analysts' expectations of $452
million. Second-quarter revenue fell 11% to $22.48 billion from
$25.13 billion.
Earnings before interest, taxes, depreciation and
amortization--a profit metric keenly watched by analysts--fell 28%
on year but rose 24% on quarter to $2.45 billion, above analysts'
expectations of $2.07 billion in a Dow Jones Newswires poll.
The steelmaker said it expects Ebitda per ton for the second
half of the year to remain on par with the first half of the
year.
Steelmakers have faced profit margin squeezes in past quarters
as prices were forced down by weak demand. ArcelorMittal has
responded to weaker demand by idling production capacity and
selling non-core assets in order to pay down debt and shore up its
balance sheet.
The company has sold $2.2 billion of assets since September
2011. Net debt was $22 billion, below its target of $22.5 billion
by end of June.
ArcelorMittal's shares closed Tuesday at EUR11.73 a share,
valuing the company at EUR18.32 billion, down 17% since the
beginning of the year.
-Write to Alex MacDonald at alex.macdonald@dowjones.com
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