Brussels: ArcelorMittal, the world’s largest steel producer, posted forecast-beating core profit in the second quarter after keeping costs low, and said an improving global market and trade protection were feeding into an upbeat full-year outlook.
US President Donald Trump introduced a 25 per cent tariff on steel imports in March, initially excluding the European Union and Canada but lifting those exemptions in June.
While the group’s imports into the United States from Brazil and Canada were hit by the measures, ArcelorMittal said that on balance it had benefited from the tariffs as they had fed into higher steel prices.
“We see a significant positive impact of the tariffs in our Nafta segment results and we will continue to see this into the second half of 2018,” Chief Financial Officer Aditya Mittal told a conference call.
The group also upgraded its forecast for global apparent steel consumption, which excludes the impact of inventory changes, buoyed by a rebound in Chinese demand due to an improved housing market and strong automotive and machinery industries.
ArcelorMittal’s shares were 1.8 per cent higher in early Wednesday trading, though they were little changed from the start of the year.
ArcelorMittal has long complained about cheap exports from China and elsewhere flooding its markets in the United States and Europe.
Mittal said he was not worried that a further ratcheting up of trade tensions would derail the global economic outlook, given much improved sentiment in the steel industry.
“We believe the discussion on tariffs is not impacting the level of trade [to the extent] that it would take global GDP into negative territory,” Mittal said.
“Clearly it is a risk, but perhaps we need to appreciate a bit more the improvements that have occurred and the size of this risk,” he added.
The company’s second-quarter core profit surged 45 per cent to $3.073 billion (Dh11.28 billion) from $2.112 billion a year ago. That was well above the $2.892 billion expected in a Reuters survey of nine analysts.
ArcelorMittal said this was because of improved margins as it kept costs low.
The group said global apparent steel consumption would increase by 2.0 to 3.0 per cent in 2018, up from the 1.5 to 2.5 per cent growth expected in its May forecast.
The upward revision was driven by a more positive market outlook in China, the world’s largest producer and consumer of steel, while the company slightly moderated its forecast for a rebound in Brazil ahead of presidential elections.
ArcelorMittal said its net debt decreased to $10.5 billion from $11.1 billion in March and added it expected to accelerate progress towards its net debt target of $6 billion.
