ArcelorMittal braced for lower profits in third quarter
Thursday 29 July 2010
ArcelorMittal, the world's biggest steel producer, unveiled a sharp jump in profits in the second quarter, but its chief executive warned on the impact on profits from an economic slowdown in China.
Lakshmi Mittal, who is the world's fifth richest person, according to Forbes magazine, also said it faced a "challenge" to pass on higher prices to its customers that have resulted from a spike in the cost of raw materials.
ArcelorMittal was hit by plummeting demand for steel from the car, construction, household appliances and packaging industries during the downturn, but as the world economy has emerged from recession it has now delivered four consecutive quarters of growth.
For the three months to 30 June, the steel giant delivered net income of $1.7bn (£1.1bn), following a loss of $792m a year ago.
ArcelorMittal's sales surged by 43 per cent to $21.7bn over the period, boosted by higher volumes and a rise in steel prices.
ArcelorMittal, which delivered 6 per cent of the world's steel output last year, posted earnings before interest, tax, depreciation and amortisation (Ebitda) up by 146 per cent to $3bn in the second quarter.
But the company guided to a lower Ebitda of between $2.1bn and $2.5bn for the three months to 30 September.
Mr Lakshmi, who is also the company's chairman and has a net worth of $28.7bn, according to Forbes, said: "Although the third quarter will be impacted by a combination of seasonal factors and the effects of the economic slowdown in China, underlying demand continues to show improvement."
Mr Lakshmi also revealed that the group is "assessing the spin-off" of its stainless steel division.
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