The Kyiv Post welcomes feedback about our new website and we stand ready to fix any problems users might encounter in our test phase. Contact us at: news@kyivpost.com or +38-044-591-3344. Thank you!

Share Tweet Pocket Add to Bookmarks
You're reading: ArcelorMittal net profit jumps 67 percent

BRUSSELS (AP) — Steel maker ArcelorMittal said Wednesday its first-quarter net profit jumped 67 percent thanks to higher sales and the spin-off of its stainless-steel unit.

The world’s largest steel maker said results should further improve in the second quarter — traditionally the year’s strongest — as demand continues to recover from the financial crisis, which hit construction and car production around the world.

However, growth might peter off in the second half, as it did last year, Finance Chief Aditya Mittal cautioned.

For the first three months of the year, ArcelorMittal recorded $1.07 billion (€0.75 billion) in net profit, up from $640 million a year earlier. Sales rose 27 percent to $22.18 billion, as shipments and steel prices increased.

The average price at which ArcelorMittal sold its steel rose 7 percent compared with the fourth quarter. It did not provide a detailed comparison with a year earlier.

The company’s bottom line was further lifted by a $419 million gain related to the spin-off of its stainless steel unit earlier this year.

"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 the earnings report. "We remain confident that 2011 will be a stronger year than 2010."

As demand for steel recovers, ArcelorMittal has been reopening blast furnaces it shut down during the crisis and the company said capacity utilization should reach about 80 percent in the second quarter, compared with 75 percent in the first.

However, the company’s finance chief said the 80 percent may be the peak for this year, as increased interest rates in China could hit production and construction there and seasonal effects weigh on steel demand elsewhere.

In the first quarter, demand was down in earthquake-hit Japan and in North Africa, where popular uprisings have disrupted business.

Overall, car production has recovered more quickly than construction, which is still suffering in the United States and the debt-ridden countries of Southern Europe, the Aditya Mittal said.

In the first quarter, ArcelorMittal was able to turn around one of the defining trends of last year, namely a fast rise in raw material prices eating up profit margins. In the first three months of the year, steel prices finally increased more than the cost of key raw material such as coking coal and iron ore, and that dynamic should continue on the second quarter, the finance chief said.

Whether the trend can be sustained into the second half, however, is more questionable, as steel prices have been softening again in recent weeks.

Anindya Mohinta, an analyst with Citigroup in London, said he expected a "sharp margins squeeze" in the second half, which is already weighing on the company’s stock.

ArcelorMittal shares were down 1.5 percent in late morning trading in Amsterdam.

ArcelorMittal has been working to increase its own production of iron ore, by buying up mining reserves.

Production of iron ore increased 11 percent from a year earlier, but dropped 6.3 percent from the previous three months, due to some problems at mines in Canada and Ukraine.

The finance chief said the company hoped to make up for that shortfall over the rest of the year.

Luxembourg-based ArcelorMittal produces about 6 percent of the world’s steel.

Found a spelling error? Let us know – highlight it and press Ctrl + Enter.

Advertisement

Add comment

Sorry, you must be logged in to post a comment.
More in this section
Attention

Add a picture
Choose file
Add a quote
Attention

Are you sure you want to delete your comment?

Attention

Are you sure you want to delete all user's comments?

Attention

Are you sure you want to unapprove user's comment?

Attention

Are you sure you want to move to spam user's comment?

Attention

Are you sure you want to move to trash user's comment?

Spelling error report

The following text will be sent to our editors: