MT ArcelorMittal

   By Nathan Allen 
 

ArcelorMittal (MT.AE) on Wednesday dismissed concerns that global trade tensions would damage its bottom line and said U.S. tariffs on steel imports were a net positive for the group as it reported solid second-quarter earnings.

The U.S. is a key market and a major production hub for the Luxembourg-listed steelmaker, which has long called for stricter measures to combat an influx of cheap raw materials and is now benefiting from a 25% duty imposed on all foreign-produced steel.

Chief Financial Officer Aditya Mittal said protective measures were justified given the significant overcapacity in global steel production and "certain nations unfairly supporting domestic industries," a thinly veiled reference to China.

Mr. Mittal said the company was already benefiting from the tariffs, which were introduced in the middle of the quarter, and that he expects the positive impact to continue through the rest of the year.

He downplayed the effect of global trade tensions on demand from the auto industry--a vocal opponent of the tariffs--and said that most of the group's automotive customers buy steel for vehicles that will be sold domestically.

"There are negative impacts on exports from Canada, Mexico and Brazil to the U.S. However, our main concern is the massive overcapacity that exists in the global steel industry," he said

Earnings before interest, taxes, depreciation and amortization, or Ebitda, in the Nafta region rose more than 56% to $791 million in the second quarter, which the company attributed to improved market demand in the U.S.

The steelmaker posted second-quarter net profit of $1.87 billion, up 40% on year, on sales of $20.00 billion. Overall Ebitda rose 46% on year to $3.07 billion, comfortably outstripping a company-compiled consensus of $2.85 billion.

ArcelorMittal doesn't provide quantitative earnings guidance but the company increased its forecasts for steel consumption in China, the U.S. and the EU, while slightly trimming expectations for Brazil.

Chief Executive Lakshmi N. Mittal was fairly bullish in a statement accompanying Wednesday's results, noting structural improvements in the global steel industry and within ArcelorMittal. He said deleveraging remained the priority and the group would continue to pursue its goal of lowering its net debt to $6 billion.

"We believe improvements in underlying industry fundamentals are sustainable, although there is still more to be done to thoroughly address the issue of global overcapacity," he said.

Write to Nathan Allen at nathan.allen@dowjones.com

-0- 

(END) Dow Jones Newswires

August 01, 2018 06:22 ET (10:22 GMT)

ArcelorMittal (EU:MT)
Historical Stock Chart
From Jun 2024 to Jul 2024

ArcelorMittal (EU:MT)
Historical Stock Chart
From Jul 2023 to Jul 2024