LONDON-- Steel titan ArcelorMittal Friday said it swung to a net
loss in the first quarter due to lower steel shipments and prices,
but maintained its full-year earnings guidance on expectations that
steel and iron ore sales will pick up during the year.
ArcelorMittal, the world's largest steelmaker by volume, said
net profit attributable to shareholders swung to a net loss of $345
million in the first three months of the year compared with a net
profit of $92 million in the same quarter a year before.
Sales dropped 13% on the year to $19.75 billion.
The company's keenly watched earnings before interest, taxes,
depreciation and amortization, or Ebitda, fell 26% on the year to
$1.57 billion, as steel shipments dropped 5.7% on the year to 20.95
million metric tons.
The Ebitda figure, however, was ahead of analysts' expectations
of $1.32 billion based on a company consensus forecast of 22
analysts.
The Luxembourg-based steelmaker reiterated its guidance for 2013
Ebitda to rise above $7.1 billion in 2013, assuming that iron ore
prices and the margin of steel prices over raw material costs are
similar to 2012 levels.
This year's Ebitda is forecast to rise on expectations of a 2%
increase in steel shipments and 20% increase in marketable iron ore
shipments during the year as well as significant cost savings, the
company said. ArcelorMittal said it expects Ebitda to rise in the
second quarter compared with the first quarter.
"Economic conditions remain challenging, but our performance in
the quarter reflects the results of the management action we have
taken to confront the effects of the financial crisis," said
ArcelorMittal's Chief Executive Lakshmi Mittal. "We have
significantly reduced our net debt, and the steps we have taken to
focus production on our more competitive assets are beginning to
yield results."
The steelmaker has idled production capacity, cut its dividend,
sold billions of dollars in assets and raised $4.3 billion via a
rights issue in order to pay down debt after the world's largest
credit ratings agencies downgraded the company's debt to junk
status.
Steelmakers around the world are facing profit-margin squeezes
due to weak steel demand stemming from slower-than-expected Chinese
economic growth and still frail demand from U.S. and European
economies.
Global steel demand is set to grow 3% to 3.5% after rising 2%
last year, but European demand is still forecast to shrink at a
pace of 1% after contracting 9% last year, the company said
previously.
The steelmaker, which produces more steel than its next two
closest rivals put together, said it plans to draw more management
savings from operational efficiencies, energy savings, and fixed
cost savings after delivering $4.8 billion in cost savings from a
management gains program announced in 2008 and completed last
year.
Net debt fell to $18 billion at the end of March compared with
$21.8 billion at the end of December. The company reaffirmed that
it's on track to reduce its net debt to $17 billion by the end of
the second half.
ArcelorMittal's shares closed Thursday up 3.1% at EUR9.84 a
share, resulting in a market capitalization of EUR15.37 billion
($20.18 billion). The company's shares are down 24.4% since the
beginning of the year.
-Write to Alex MacDonald at alex.macdonald@dowjones.com
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