Issue link: https://read.dmtmag.com/i/578659
I DA U N I V E R S A L S e p te m b e r - O c to b e r 2 0 1 5 35 Europe's recovering steel industry helped to save ArcelorMittal's full-year earnings estimate from a slump in iron ore prices and a glut of exports of the metal from Chinese producers. e world's biggest steelmaker affi rmed its annual earnings forecast in its quarterly results Friday a er analysts at banks from UBS AG to Jeff eriesGroup raised the prospect of a cut. e stock rose as much as 3.9 percent, the most in more than three weeks, and was up 1 percent at 8.221 euros by 12:11 p.m. in Amsterdam trading. It's down 9.7 percent this year. "I'm pretty confi dent that they will keep their guidance," said Rochus Brauneiser, an analyst at Kepler Cheuvreux. "Europe is still robust, while the U.S. probably off ers some upside from here." ArcelorMittal is fi ghting to sustain profi t on two fronts, as prices for the iron ore it mines fell to the lowest in at least six years and record Chinese steel exports pushed prices of the metal lower. It's counting on European demand, its biggest market, to off set weak steel use from China to Brazil. Bright Spot "Despite continued pressure on both steel and iron ore prices, we have delivered a consistent set of operating results, compared with the fi rst quarter," Chief Executive Offi cer Lakshmi Mittal said. "Europe continues to be a bright spot." e company, based in Luxembourg, reported a 21 percent drop in second quarter earnings before interest, taxes, depreciation and amortiza- tion to $1.4 billion, above the $1.34 billion average of 12 analyst estimates compiled by Bloomberg. It kept its annual Ebitda forecast of $6 billion to $7 billion. e company likely would be at the lower end of the range unless the market and trade environment improve, Chief Financial Offi cer Aditya Mittal said on a call with reporters. e decision to affi rm the estimate surprised, according to UBS AG, while Societe Generale SA and J&E Davy Holdings Ltd. called it a positive outcome for the company. Earnings at European plants rose 10 percent from the fi rst quarter on higher output and shipments. ArcelorMittal has shut plants and fi red workers in the region to combat overca- pacity. ''Europe continues to grow,'' the CFO said. Steel demand in the region will gain as much as 2.5 percent this year, while China and the U.S. will contract, ArcelorMittal said. e producer cut its global outlook for steel use to fl at, a er earlier estimating an expansion of as much as 1.5 percent. Steel- makers are battling the eff ects of a slowing Chinese economy. Steel mills in the country, the biggest producer, have boosted overseas sales as local demand stalls for the fi rst time in a generation. Exports from China surged 28 percent to 52.4 million metric tons in the fi rst half of the year, customs fi gures show. TRENDS AND TIDBITS continued from page 23 ArcelorMittal Counting on Europe to Off set China Steel Slump ''We see some moderation as the months go by in Chinese exports,'' Aditya Mittal said. '' e Chinese steel industry is really getting squeezed at this point in time, which means there should be some relief.'' China's slowdown is also hurting iron ore producers. Prices of the steelmaking ingredient fell to the lowest in at least six years on a glut of low-cost supply. Citigroup Inc. forecast it may tumble below $40 a ton this half, from $56 in late July. ArcelorMittal's steel shipments rose 2.8 percent to 22.2 million tons from the fi rst quarter, while iron ore output grew 5 percent to 16.4 million tons. Net debt was unchanged at $16.6 billion, and the company reported a net income of $179 million. ● www.bloomberg.com, by omas Biesheuvel 7/15