ArcelorMittal sees steel rebound from squeezeadmin
ArcelorMittal, the world’s largest steelmaker, forecast a faster than expected rebound in demand and prices at the start of 2011 after suffering a margin squeeze at the end of last year.
The Luxembourg-based company, which makes 6-7 percent of the world’s steel, said on Tuesday core profit would improve in the first quarter by more than the market consensus.
Chief Financial Officer Aditya Mittal told a conference call 2011 should be better than 2010, with a strong recovery in the United States, moderate growth in China and restocking in Europe, even though end-user demand was barely increasing there.
He said the second quarter should be stronger than the first, when ArcelorMittal’s furnaces would run at 76 percent of capacity, compared with 69 percent at the end of 2010.
“There is some risk that in the second half of 2011 the strength that we are seeing in the first half will not repeat, but I still expect overall the year to be better,” he said.
Looking at the company’s main markets, Chief Executive Lakshmi Mittal said recent data showed a clearly recovering car sector. He said there were signs U.S. construction was turning a corner, although it was too early to say the same in Europe.
ArcelorMittal, whose production is more than double that of its nearest rival, said it expected core profit (EBITDA) to rise to between $2 billion and $2.5 billion in the first quarter after a slump to $1.85 billion in the final quarter of 2010.
The market had been expecting a first-quarter figure of $2.15 billion, according to a Reuters poll.
Analysts said the outlook and fourth-quarter core profit were higher than expected and that the net loss at the end of last year was largely the result of one-offs.
ArcelorMittal shares were the among the strongest risers in the FTSEurofirst 300 index (^FTEU3 – News) of top European shares, hitting a nine-month high of 28.55 euros, a gain of 4.8 percent.
UBS analyst Andrew Snowdowne expressed concern that the market might be too bullish for the second half of 2011.
“These were good numbers, decent guidance, but we remain cautious. We don’t think there will be a strong recovery of the construction market before 2012,” he said, adding he favored steel companies more exposed to German autos and engineering.