ArcelorMittal, the world’s top steelmaker, cautioned its markets would only recover slowly as it forecast higher shipments but lower selling prices in the early months of this year, putting pressure on core profits.
The firm, which has about 8 percent of the global market and capacity some three times greater than nearest rival Nippon Steel, said yesterday it expected core profit or EBITDA (earnings before interest, tax, depreciation and amortization) of between US$1.8 and US$2.2 billion in the first quarter.
The figure compared with an average forecast in a Reuters poll of US$2.6 billion, albeit with a wide range of estimates, and with a fourth quarter result of US$2.1 billion.
Chief executive Lakshmi Mittal said this year would continue to be challenging, although capital expenditure would rise by 43 percent to US$4 billion this year.
“We therefore start the year in a good position to benefit from the progressive, albeit slow, recovery that is under way,” he said in a statement.
ArcelorMittal said its shipments were expected to be higher in the first quarter of this year than at the end of last year, but it would face lower average selling prices and increased costs. Net debt was expected to increase over the period.
The mixed picture chimed in with results and comments from other major steel companies in recent weeks.
The US$500 billion steel industry took a heavy beating in the 2008-to-last-year downturn, with demand from key construction and auto consumers sharply down and destocking magnifying the negative effect. Producers cut output by as much as a half.
Capacity utilization increased to 70 percent in the last three months of last year. It was set to rise gradually to 75 percent in the first quarter.
ArcelorMittal is among the most exposed companies to spot steel prices, which should rise with expected restocking.
Its EBITDA of US$2.1 billion in the final quarter of last year missed the average US$2.23 billion forecast of a Reuters poll of 21 analysts.
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