ArcelorMittal SA’s first-quarter profit dropped 33 percent as the world’s biggest steelmaker contended with slumping prices of the material and a decline in iron ore. It maintained its full-year earnings target.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the three months ended March 31 fell to US$927 million from US$1.38 billion a year earlier, the Luxembourg-based company said in a statement yesterday. That was in line with the US$924.5 million average of 14 analyst estimates compiled by Bloomberg. ArcelorMittal expects full-year EBITDA to be more than US$4.5 billion.
Steelmakers have been hurt by top supplier China exporting record amounts of material as its own economy slows, undercutting prices in Europe and the US. Cheaper iron ore, used to make steel, also pulled down prices. ArcelorMittal was forced to raise US$3 billion from investors earlier this year as it sought to weather the crisis and cut debt.
“Our results for the first quarter reflect the very tough operating conditions in the second half of 2015,” chief executive officer Lakshmi Mittal said in the statement. ”Since that time, we have seen a recovery in spreads in our core markets to more sustainable levels, which is expected to result in improved results in the coming quarters.”
The company has also scrapped its dividend, cut expansion plans and shuttered plants.
ArcelorMittal reported sales of US$13.4 billion in the first quarter, 22 percent lower than a year earlier. Steel shipments were flat at 21.5 million tonnes, while it mined 14.1 million tonnes of iron ore, 9.6 percent less than a year ago.
Steel and iron-ore prices have recovered in recent months, helping ArcelorMittal’s shares climb 55 percent this year.
The company said it expects to see the impact of these gains in the second half of the year.
Separately, Excalibur Steel Ltd, the management buyout vehicle interested in purchasing Tata Steel Ltd’s UK assets, were to meet bankers yesterday to seek financing for the deal.
Tata UK executive Stuart Wilkie, who leads the group, said that it would hold talks with one British and three international banks to present the buyout plan.
“Ideally, by the end of next week we will have secured necessary lines of finance,” Wilkie said late on Thursday.
Excalibur and Sanjeev Gupta’s metals group Liberty House both submitted letters of intent to buy Tata’s UK operations this week.
Additional reporting by Reuters
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