Steel giant ArcelorMittal (MT) expects its core profit (EBITDA) in 2011 to be higher than in 2009 if the recession hits.
It repeated its forecast for third-quarter 2011 core profit to be between $2.4 billion and $2.8 billion and for second-half 2011 earnings to be greater than a year earlier due to higher steel shipments and growth in iron ore and coal output.
ArcelorMittal confirmed its mining output targets for 2011, with iron ore on track for 10% growth as the group begins shipments from Liberia. The underlying demand for iron ore from its key consumer China remained strong, with buying activity expected to resume later in the year.
The company’s average debt maturity was 5 years at the end of June 2011, double the level at the end of September 2008, with the majority consisting of bonds, rather than bank credit.
ArcelorMittal also revealed plans to idle its three blast furnaces in Europe, in Belgium, France and Germany, due to low demand.
In July 2011, the company reported its second-quarter 2011 results. The company reported diluted net earnings of 99 cents per share in the second quarter of 2011, outshining the Zacks Consensus Estimate of 94 cents, but below last year’s $1.13.
Total steel shipments in the second quarter of 2011 were 22.2 million metric tons compared with 22.3 million metric tons in the year-ago quarter.
Quarterly revenues increased 24.7% year over year to $25.1 billion from $20.2 billion in the year-ago quarter and 13.3% sequentially. Sales were higher over the previous quarter primarily due to average steel selling prices (+10.9%). However, the results were slightly below the Zacks Consensus Estimate of $25.3 billion.
Major competitors of ArcelorMittal are United States Steel Corp. (X), POSCO (PKX) andTata Steel Limited of India.
We maintain our Outperform recommendation on ArcelorMittal with a Zacks #4 Rank (Sell) on the stock.
