Arcelor Mittal Q2 Net Rises, EBITDA Down; Backs 2015 View

(RTTNews) - Steel and mining company ArcelorMittal (MT) reported Friday increased net profit for the second quarter reflecting lower foreign exchange and other net financing loss. However, earnings before interest, tax, depreciation and amortization or EBITDA, a key metric for the steel company, declined year-over-year. Looking forward, the company reaffirmed its EBITDA guidance for the full-year 2015.

"Despite continued pressure on both steel and iron-ore prices, we have delivered a consistent set of operating results compared with the first quarter. Europe continues to be a bright spot, with EBITDA again improving by 10.5% compared with the first quarter of 2015," Chairman and CEO Lakshmi Mittal said in a statement.

The Luxembourg-based company reported net income attributable to equity holders of the parent of $179 million or $0.10 per basic share for the second quarter, sharply higher than $52 million or $0.03 per basic share in the prior-year quarter.

EBITDA, however, declined to $1.40 billion from last year's $1.76 billion.

Sales for the quarter declined 18.4 percent to $16.89 billion from $20.70 billion in the same quarter last year. The decrease was attributable to 20.5 percent lower average steel selling prices and a 43 percent decline in iron ore prices.

Own iron ore production edged down to 16.4 million metric tonnes from 16.6 million metric tonnes last year. Iron ore unit cash costs reduced 14 percent from last year, with a 2015 cost reduction target at 15 percent. Iron ore shipped at market price grew 2.7 percent to 10.8 million metric tonnes from last year.

The NAFTA segment, which includes the Flat, Long and Tubular operations of USA, Canada and Mexico, reported 16.1 percent lower sales at $4.55 billion. NAFTA crude steel production decreased 2.3 percent, amid weaker demand.

In Brazil, sales declined 10.7 percent to $2.17 billion from last year, and Europe sales decreased 18.7 percent to $8.55 billion a year ago.

ACIS segment sales also dropped 28.3 percent to $1.65 billion, and sales in the mining business were $964 million, down from $1.38 billion last year.

Operating income for the quarter decreased to $579 million from $832 million last year, and operating margin contracted 60 basis points to 3.4 percent from last year. Foreign exchange and other net financing costs were $73 million, as against $327 million a year ago.

Looking ahead to fiscal 2015, ArcelorMittal continues to project EBITDA in the range of $6.0 billion to $7.0 billion.

The company also still expects net interest expense of about $1.4 billion and capital expenditure of about $3.0 billion.

"We remain concerned by the high level of imports. Whilst we are somewhat encouraged by recent actions on potential trade defence measures from both the US and Europe, we are also taking action to adapt our own business," Mittal stated.

MT closed Thursday's regular trading session at $8.87, down $0.02 on a volume of 9.58 million shares. In the past 52-week period, the stock has been trading in a range of $8.45 to $15.19.