ArcelorMittal profit beats expectations, but sees rising risks
Reuters
Published Jul 28, 2022 01:56AM ET
Updated Jul 28, 2022 03:50AM ET
By Charlotte Van Campenhout
AMSTERDAM (Reuters) -ArcelorMittal, the world's second-largest steelmaker, reported higher than expected second-quarter earnings on Thursday helped by sharply increased prices, but saw threats from spiralling inflation, the war in Ukraine and China's COVID-19 restrictions.
The Luxembourg-based company did not give a specific forecast, but highlighted downside risks.
Inflationary pressure presented a significant headwind, the company said, with a slowdown in real demand, exacerbated by destocking.
Steel prices were declining at a faster rate than those for raw materials.
Gas supply problems in Europe and COVID-related lockdowns in China were further risks.
ArcelorMittal (NYSE:MT) said it was well placed to manage the gas supply risk, with sites in nine countries across Europe, meaning it could meet market demand.
It was also taking steps to reduce the gas consumption of its blast furnaces, such as through oxygen enrichment.
The company reports a second-quarter core profit (EBITDA) of $5.16 billion, topping the $5.09 billion forecast by analysts in a company-provided poll.
ArcelorMittal's steel shipments in the April-June quarter were down 9.9% from a year earlier, largely due to the impact of war in Ukraine, but sales rose as its average selling price rose by 30.8%.
Separately, ArcelorMittal said it had agreed with the shareholders of Brazil's CPS - Brazil's Vale and South Korea's Dongkuk and Posco - to buy the company for $2.2 billion. CSP is a major producer of semi-finished steel 'slab' with an expected lower carbon footprint due to a nearby renewable and green hydrogen energy project. ArcelorMittal said it had identified $50 million in synergy savings from the deal.
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Written By: Reuters
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