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ArcelorMittal profit beats estimates, rises 2.7% on higher prices

ArcelorMittal profit beats estimates, rises 2.7% on higher prices
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First Published: Wed, Feb 13 2008. 11 52 PM IST
Updated: Wed, Feb 13 2008. 11 52 PM IST
London: ArcelorMittal, the world’s largest steel maker, said fourth quarter profit rose 2.7% on higher prices and expanded Latin American output.
Net income climbed to $2.44 billion (Rs9,662 crore), or $1.71 a share, from $2.37 billion, a year earlier, Luxembourg-based ArcelorMittal said on Wednesday in a statement. That beat the $2.39 billion median estimate of seven analysts surveyed by Bloomberg. Sales increased 21% to $28 billion, with shipments up almost 5% to 28 million tonnes (mt).
Chief executive officer Lakshmi Mittal got approval in December to take full control of Acindar Industria Argentina de Aceros SA, part of the company’s plan to expand in emerging economies. ArcelorMittal is focusing on developing nations as economic growth slows in the US, where it raised prices during the quarter because of raw material and transport costs.
“In 2007, we announced 35 acquisitions, all of which serve to strengthen ArcelorMittal’s global steel offering,” Mittal said in the statement. “We are expecting performance in the first quarter of 2008 to be comparable to the fourth quarter.”
ArcelorMittal rose €2.98 (Rs172), or 6.6%, to close at €49.17 in Amsterdam trading. The stock has increased 36% in the past 12 months, valuing the company at €71.2 billion.
First quarter profit before interest, taxes, depreciation and amortization will be $4.7 billion to $5 billion, up from $4.3 billion a year earlier, ArcelorMittal said.
European prices for hot-rolled steel gained 13% in the fourth quarter from a year earlier, according to Metal Bulletin data. ArcelorMittal raised US prices by $40 a tonne from 1 January, double its average fourth quarter increase of $20. Global steel output may fall short of demand this year by 55mt as China reduces exports, Credit Suisse Group estimated in an 11 February report.
“Any further structural positives in China’s supply and demand balance could leave steel supply well below demand levels even with ongoing weakness in Europe and the US,” Credit Suisse London-based analysts said in the report.
ArcelorMittal produces 10% of the world’s steel. The company was formed last year through the $38.3 billion merger of Mittal Steel Co. and Arcelor SA.
Iron ore and coal have risen to records as steel demand surged in China and other emerging economies. The benchmark price for iron ore, which has tripled in five years, may rise 50% in 2008, according to Macquarie Group Ltd. Steel demand is expected to grow about 6% in 2008, ArcelorMittal said in November.
ArcelorMittal purchased the Sicartsa steel mill in Mexico in April and Arcelor Brasil SA in Brazil in May.
Mark Herlihy in London contributed to this story.
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First Published: Wed, Feb 13 2008. 11 52 PM IST