ArcelorMittal reported strong second-quarter results yesterday with earnings per share more than doubling compared with first-quarter numbers. Higher volume and rising steel prices helped lift earnings. Sales went up 27% compared with the first quarter, with 2% volume increase and the rest coming from price increases. The company's operating margin expanded by 40% on first-quarter levels, as higher selling prices more than offset raw material cost inflation. Second-quarter EBITDA of $8 billion is much higher than the $6.5 billion the company forecasted earlier. Management expects third-quarter EBITDA to exceed $8.5 billion.
On the earnings call, CEO Lakshmi Mittal commented on global steel demand outlook given the current credit crunch, worldwide inflationary pressure, and possible glo
bal economic slowdown. Mr. Mittal expected steel demand to grow at 3% per year in his "pessimistic scenario," which assumes a 5% gross domestic product growth in China and other emerging-market countries and negative 1% GDP growth in the developed world. Nevertheless, he commented that steel prices are less likely to trend down due to production capacity constraints and higher input costs. Going forward, ArcelorMittal will be focusing more on backward integration into iron ore and coal resources rather than expanding steel production capacity. We expect to see stabilizing volume and more margin expansion down the road.
SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk
To view this article, become a Morningstar Basic member.
Register For Free
The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.