ArcelorMittal Q2 net income rose to USD1.3 billion

Essar Steel

ArcelorMittal said its second quarter result rose to USD1.3 billion. The group’s half year net income was USD2.3 billion as compared to uSD696 million in 1H 2016.

The group’s new focus is to become the new owner of Ilva, a significant opportunity to create value for our shareholders by leveraging ArcelorMittal’s strengths to realise Ilva’s potential as a Tier 1 supplier to European and Italian steel customers.

Within the period, ArcelorMittal Brasil S.A. announced the acquisition of Votorantim S.A. long steel businesses in Brazil[3] to strengthen the Company’s long product capability and product leadership.

Looking to the outlook, current market conditions are improved compared to twelve months ago with steel spreads currently at healthy levels. The demand environment is positive, as evidenced by the highest readings from the ArcelorMittal weighted PMI Index since April 2011, which suggests that steel shipments in 2H 2017 will be higher than would normally be suggested by seasonality alone.

The Company now expects that the cash needs of the business (excluding working capital and premiums paid to retire debt early of $0.2 billion (not included in previous guidance)) in 2017 to be approximately $4.6 billion (as compared to $5.0 billion previous guidance). Given the liability management exercise and lower average debt, we now expect interest expense to decline to $0.8 billion in 2017 (as compared to $0.9 billion from previous guidance and $1.1 billion in FY 2016). While capex expectation for 2017 remains at $2.9 billion (from $2.4 billion in 2016), the Company expects lower cash taxes and contributions to fund pensions and other cash expenses to be lower than previous guidance.

Given the improved market conditions, the Company now expects a full year 2017 investment in working capital of approximately $1.5 billion (as compared to previous guidance of approximately $1.0 billion).

Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said: “We have materially improved our financial performance in the first half of 2017, and continue to make important progress on our Action 2020 plan. The recently announced acquisition of Ilva represents a unique opportunity to create value for our shareholders. Looking ahead demand remains strong in our core markets supporting robust order books and healthy levels of steel spreads. However, it remains a matter of concern that we are not able to capture the full benefits of this demand growth due to continued high levels of imports. We continue to work towards achieving a comprehensive trade solution in response to unfair imports.”

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