By Geoffrey Smith
Investing.com -- ArcelorMittal SA (AS:MT), the world’s second-largest steelmaker, said its profits dropped in the third quarter, hurt by both high energy costs and weakening demand.
While its core underlying earnings were better than consensus forecasts, the Luxembourg-based company said it expects the squeeze to worsen in the current quarter, as the relief from falling energy costs is more than offset by a faster drop in selling prices.
Earnings before interest, taxes, depreciation and amortization fell by more than half from a year earlier to $2.66 billion, some 10% ahead of consensus, but net income fell by nearly three-quarters to $993M. Earnings per share of $1.11 were down from $3.63 a year earlier. Sales, meanwhile, fell 6% to $19B.
CEO Aditya Mittal said "seasonally lower shipments, a reduction in exceptional price levels, destocking and higher energy costs combined to put profits under pressure," adding that the company had responded by cutting its capacity where costs were highest, notably in Europe, where it cut its gas demand by 30%. Overall steel shipments were down 6.9% from a year earlier at 13.6 million tons.
"The short-term outlook for the industry remains uncertain and caution is appropriate," Mittal added, although he argued that the company is strong enough to "face the future with confidence."