ArcelorMittal profits capitalize on favorable market conditions

Luxembourg-based steel giant ArcelorMittal saw net income of US$1.87bn for the second quarter, compared with US$1.32bn for 2Q17, the company said in its latest earnings release on Wednesday.

Sales rose to US$20bn from US$17.2bn in 2Q17, while Ebitda rose to US$3.07bn from US$2.11bn.

Steel shipments were up to 21.8Mt from 21.5Mt, while crude steel output was flat at 23.2Mt, the company said. Iron ore production fell 0.2Mt to 14.5Mt.

"The outlook for the second half of the year is encouraging as we anticipate current favourable market conditions continuing and are well positioned to capitalise on this from our leadership position across many key markets," chairman and CEO Lakshmi Mittal (pictured) said.

"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."

BRAZIL

ArcelorMittal Brasil reported operating income of US$369mn for the last quarter, compared with US$128mn in 2Q17.

Steel sales rose to US$2.19bn from US$1.83bn in Q2 last year and Ebitda was US$443mn, up from US$201mn, due to positive price-cost effect driven by improved market demand, the company said.

Crude steel output rose to 3.11Mt from 2.71Mt primarily due to an increase in long products resulting from the integration of Votorantim.

Steel shipments rose to 2.83Mt from 2.62Mt, also positively impacted by the scope effect of the Votorantim acquisition net of divestments (+0.2Mt), and adversely impacted by a nationwide trucker strike (0.1Mt).

Brazil's apparent steel consumption forecasts have been slightly moderated to grow in a range of 5.5-6.5% (from previous expectations of 6.5%-7.5%) to reflect the impacts of the nationwide trucker strike and more cautious sentiment ahead of the elections, the company said.

MERGER

During the quarter, Brazil's antitrust watchdog Cade approved the ArcelorMittal-Votorantim long steel operations merger with certain restrictions, including the obligation to divest two sets of assets.

The first set, which consists of the Cariacica and Itaúna industrial plants in Espírito Santo and Minas Gerais states, respectively, as well as wire drawing equipment, was sold to Mexican steel company Grupo Simec.

Brazilian steel producer Aço Verde acquired the second set of assets, which includes other wire drawing equipment, ArcelorMittal said at the time.

The merger resulted in combined crude and rolled steel capacities of 5.6Mt/y and 5.4Mt/y, respectively.

Likewise, in April, ArcelorMittal acquired 55.5% of Bekaert's steel wire unit in Sumaré, São Paulo state. Belgium's Bekaert kept the remaining 44.5% share in the unit.

Bekaert and ArcelorMittal currently operate eight plants in Brazil through joint venture partnerships, including steel wire maker Belgo Bekaert, the largest wire manufacturer in the Americas and market leader in the Brazilian market, with an annual production capacity of 850,000t/y of drawn wire.

In Latin America, ArcelorMittal also has operations in Mexico, Venezuela and Argentina.