Weak demand weighs on ArcelorMittal's Q2
AMSTERDAM (AP) - ArcelorMittal SA, the world's largest steelmaker, has cut its forecasts for the full-year as it reported a fall in production, shipments and earnings during the second-quarter due to continued weak demand and low raw material prices.
But the Luxembourg-based company says that the worst of a market downturn is behind it now and with the outlook in Europe improving, it expects a stronger second half.
The company posted a net loss of $780 million (585 million euros) during the period, in contrast to a $1.02 billion profit in the same period of 2012. Revenues meanwhile fell from $20.2 billion from $22.5 billion.
Despite the disappointing second quarter performance, chief executive Lakshmi Mittal said the benefits of the restructuring efforts "are evident," particularly in Europe.
"Although we have revised our full year guidance, the second half should deliver a clear underlying improvement relative to the second half of 2012, which we believe marked the lowest point in the cycle," he said.
He forecast operating earnings before interest, depreciation of goodwill and amortization, or EBITDA, of $6.5 billion this year. After first quarter results, he had forecast full year EBITDA of $7.1 million. However, he said the underlying business will be picking up steam by year end, driven by an increase of 1-2 percent in steel shipments, a 20 percent increase in iron ore shipments and as cost cutting initiatives bear fruit.
In early trading in Amsterdam, shares were up 0.2 percent to 9.918 euros.
Steel production fell to 22.5 million tons in the quarter from 22.8 million tons a year ago. However production during the second quarter was slightly above the 22.4 million tons recorded in the first quarter of 2013. Similarly, steel shipments of 21.3 million tons were slightly below last year's levels but above first quarter 2013 levels.
Lakshmi also said he expected company debt to peak at $17 billion this year.
In Europe, where markets have been weakest and the company has struggled with politically-sensitive plant closures, the company posted a net loss of 150 million euros that included 119 million euros of restructuring costs.
But sales of flat carbon increased slightly, as did steel shipment volumes.
It added that it believed car sales are at or near a cyclical bottom.
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