"Net income of USD 1.1 billion in Q2 2016 (including one-time USD 0.8 billion gain from employee benefits at ArcelorMittal USA) as compared to a net loss of USD 0.4 billion in Q1 2016 and net income of USD 0.2 billion in Q2 2015," ArcelorMittal said in a statement
Steel giant ArcelorMittal today reported over six-fold jump in net profit to USD 1.11 billion for the quarter ended on June 30 aided by rising steel prices and one-time gain from a US subsidiary.
The Luxembourg-based firm, which follows January-December fiscal year, had clocked a net profit of USD 179 million in the year-ago period, it said in a statement.
“Net income of USD 1.1 billion in Q2 2016 (including one-time USD 0.8 billion gain from employee benefits at ArcelorMittal USA) as compared to a net loss of USD 0.4 billion in Q1 2016 and net income of USD 0.2 billion in Q2 2015,” ArcelorMittal said in a statement.
Net sales, however, dipped by 13 per cent to USD 14.74 billion in April-June 2016 against USD 16.89 billion during the same period in 2015.
“ArcelorMittal enjoyed a stronger second quarter largely due to a more supportive pricing environment in our leading markets. Sales and EBITDA increased in all segments, including mining,” ArcelorMittal Chairman Lakshmi N Mittal said.
The firm also significantly strengthened its balance sheet with proceeds from the rights issue, the Gestamp sale and working capital release reducing net debt to USD 12.7 billion, he added.
The firm continues to focus on the implementation of our strategic initiatives, in particular Action 2020, to support profitability, Mittal said.
“Although the industry continues to face the challenges of structural overcapacity, we are seeing better market conditions compared with the second half of 2015 which lead us to be cautiously optimistic about the remainder of the year,” he added.
Steel shipments rose by 2.9 per cent to 22.1 million tonnes (MT) in the second quarter as compared to the previous quarter.
Gross debt decreased to USD 15.1 billion as on June 30 from USD 20.2 billion as on March 31, 2016, it said.
“Net debt decreased to USD 12.7 billion as of June 30 as compared to USD 17.3 billion at March 31, 2016 mainly due to proceeds from the rights issue (USD 3.1 billion), asset sales (USD 1.1 billion), working capital release (USD 0.2 billion) offset in part by USD 0.2 billion premium on early repayment of debt,” ArcelorMittal said.
On its Action 2020 programme, the firm said the United Steelworkers (USW) union deal has been ratified by members and ArcelorMittal USA is now progressing with a footprint optimisation project at its Indiana Harbor steel making complex in East Chicago, Indiana (US).
On outlook, the firm said: “Despite the steel spread recovery losing momentum in recent weeks, the impact of lagged prices will be an important support for operating results as we move into a period of seasonally slower steel demand.”
Improved market conditions are likely to consume working capital in 2016 (current estimate of around USD 0.5 billion). The company nevertheless expects cash flows from operating activities to exceed capex in 2016, it added.