ArcelorMittal cuts outlook as ore prices hit mining

BRUSSELS Fri Aug 1, 2014 1:30pm IST

Operators work on a coil of steel at the ArcelorMittal Factory in Florange, Eastern France, October 18, 2013. REUTERS/Vincent Kessler/Files

Operators work on a coil of steel at the ArcelorMittal Factory in Florange, Eastern France, October 18, 2013.

Credit: Reuters/Vincent Kessler/Files

Related Topics

Stocks

   

BRUSSELS (Reuters) - ArcelorMittal (ISPA.AS), the world's largest steelmaker, cut its forecast for earnings this year after lower than anticipated iron ore prices ate into the profit of its mining business.

The company, which makes about 6 percent of world steel and is a broad gauge for the health of global manufacturing, said it now expected core profit to be above $7 billion, having previously given a figure of about $8 billion for the full year.

ArcelorMittal, more than double the size of its nearest rival, nevertheless said its steel business was faring well and that it had increased demand forecasts for Europe and the United States, which account for about two-thirds of its shipments.

The company retained its forecast that global steel consumption would rise by between 3.0 and 3.5 percent, with slightly lower growth in China, now a modest decline seen in Brazil and a drop for Russia and surrounding states.

Russia only takes up about 2 percent of ArcelorMittal's steel, but its weakness removes a source of expected growth.

The International Monetary Fund last week slashed its global economic growth forecast and said geopolitical risks from crises in the Middle East and Ukraine could dent growth further.

ArcelorMittal also sells less than 2 percent of its steel in China, but the country is both the world's largest steel producer and consumer, and growth there has supported both steel and iron ore prices.

ArcelorMittal said it had adjusted its assumption for iron ore prices to $105 per tonne from $120 per tonne before and implying a second-half average of $100.

The company reported second-quarter core profit (EBITDA) of $1.76 billion, below the average $1.83 billion expectation in a Reuters poll of brokers. Last year, the figure was $1.70 billion.

Overall for steel, demand from automakers is good, with EU car registrations up 6.5 percent in the first half. The construction sector, which uses about half of the world's steel, is gradually improving.

(Reporting By Philip Blenkinsop; editing Robert-Jan Bartunek)

FILED UNDER:

REUTERS SHOWCASE

WTO Trade Deal

WTO Trade Deal

WTO clinches first global trade deal in its history  Full Article 

Kashmir Attack

Kashmir Attack

Ten dead in Kashmir's worst militant attack in more than a year  Read 

OPEC Meeting

OPEC Meeting

Saudis block OPEC output cut, oil price sinks further.  Full Article 

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

GDP, RBI Preview

GDP, RBI Preview

GDP growth set to weaken, business wants reforms more than rate cut  Full Article | Related Story 

Jaitley to Rajan

Jaitley to Rajan

Jaitley likely to meet Rajan on Monday to urge rate cut  Full Article 

Banking Sector

Banking Sector

India moves to allow more businesses to offer basic financial services.  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage