ArcelorMittal July-September net income falls 51 per cent to $659 million
03 Nov 2011
ArcelorMittal has reported an over 51 per cent decline in its net income for the quarter ended 30 September, at $659 million, amidst rising raw material costs and a fall in steel demand.
The world's number one steelmaker had reported a net income of $1.35 billion during the corresponding quarter of 2010.
Earnings before interest, taxes, depreciation and amortisation (EBITDA), however, grew 11.4 per cent to $2.4 billion during the quarter, from $2.16 billion in the similar quarter of the previous year.
EBITDA margins though were in the lower range of its outlook for the July-September period, declining by 29.45 per cent vis-a-vis the previous quarter (April-June 2011).
The company had projected an EBITDA margin of $2.4-2.8 billion for the July-September quarter against the April-June quarter EBITDA of $3.14 billion.
ArcelorMittal's sales rose 22.64 per cent year-on-year during the quarter to $24.21 billion, but was down 3.63 per cent from the previous quarter.
"Steel shipments in the fourth quarter of 2011 are expected to be lower than third quarter, 2011, levels, reflecting customers' 'wait-and-see' approach," the company had said in its guidance for the October-December quarter.
ArcelorMittal had reported sales of $25.13 billion in the July-September quarter against sales of $19.75 billion in the previous year quarter.
"Uncertainties around the economic outlook have increased in recent weeks, impacting the confidence levels of our customers, so as we move in to the Q4, we are facing both volume and price pressures," Lakshmi Mittal, chairman and CEO of the company, said.
He also said ArcelorMittal's EBITDA margins in second half of 2011 will be higher than in the corresponding period of 2010.
Mittal, however, expects steel demand growth to slow down to 4.5-5 per cent in 2012 from 7-7.5 per cent this year due to the global economic downturn.
ArcelorMittal also plans to limit its capital expenditure in 2011 from the earlier target of $5.5 billion.
The company, however, is securing raw material supplies with completion of phase-I expansion of its iron ore mines in Liberia. The expansion of its Quebec iron ore mines in Canada is also on track, which will result in an increase in production from 16 MTPA to 24 MTPA by 2013.