ArcelorMittal net income dips to $11 mn on Europe woes, forex losses

London/New Delhi: The world’s largest steel producer ArcelorMittal’s net income plunged to $11 million in the first quarter of 2012 against $1.069 billion in the year-ago period.

Despite the fall in net income, results were better than the previous October-December quarter, when ArcelorMittal reported a net loss of $1 billion.

[caption id=“attachment_305287” align=“alignleft” width=“380” caption=“For 2012, the company has kept a capex of $4-4.5 billion. Reuters”]  [/caption]

Stating that demand in North America continues to grow,company Chairman and CEO Lakshmi Mittal said, “Europe remains the biggest challenge and during the first quarter we announced the extended idling of a number of facilities in line with our strategy of meeting demand from our more competitive sites.”

He added that mining business will be the key growth driver and the company is targeting a further increase in its production in 2012.

Giving guidance for the quarter, the company said it expects first half of the year to be better in terms of core profits (EBITDA) than $4.1 billion EBITDA (earning before income, tax, depreciation and amortisation) of the second half of 2011.

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ArcelorMittal’s sales, during the quarter, increased 2.3 percent to $22.7 billion vis-a-vis $22.2 in the January-March period of 2011, primarily due to higher steel shipments at 22.2 million tonnes (MT).

The company said “all steel segments are expected to show improved underlying profitability”, although it expects steel shipments, in the current quarter, at similar levels of last quarter.

The Luxembourg-based steelmaker also said that its iron ore production was up 12.1 percent to 13.2 MT in the January-March period and mining segment is expected to benefit from seasonally higher ore shipments. Besides, it is also looking at increasing iron ore and coal production by 10 percent in the current year.

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During the quarter, the company’s net debt increased by $ 1.1 billion to $23.6 billion, largely due to decreased cash flow from operations, forex losses and dividend payment.For 2012, the company has kept a capex of $4-4.5 billion.

In a separate statement, the company also announced to sell its 23.48 percent stake in Enovos International SA to a fund managed by AXA Private Equity for 330 million euros. “This agreed transaction is in line with the declared Group strategy of selective divestment of non-core assets,” the company said.

PTI