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BW Businessworld

ArcelorMittal Cuts Forecast On US Steel, Weak Mining

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ArcelorMittal, the world's largest producer of steel, on Thursday cut its profit guidance for 2015 due to a more bearish view of the US steel market and the impact of falling iron ore prices on its mining business.
 
The company, which produces 6 to 7 per cent of the world's steel, said it expected its 2015 core profit to come in between $6 billion and $7 billion. It had previously set a range of $6.5 billion to $7 billion.
 
"We faced a number of headwinds in the first quarter, including a declining iron-ore price, a stronger dollar and surge of imports in the United States," Chief Executive Officer Lakshmi Mittal said in a statement.
 
In the first quarter, core profit (EBITDA) fell 21 percent to $1.38 million, below the $1.43 million expected in a Reuters poll of nine analysts.
 
The fall was caused by a 74 per cent drop in profits at the group's iron ore mining operations, which suffered from much lower market prices.
 
Its steel operations were hit by the US market, where imports increased and demand fell, largely due to destocking of inventories. This was fully offset, however, by a better performing European business.
 
Net debt stood at $16.6 billion at the end of the first quarter, slightly up from the record low of $15.8 at the end of 2014. The group added that it would lower its net debt over the course of 2015.
 
ArcelorMittal reduceds its estimates outlook for global steel consumption including inventory changes, saying consumption would now rise by between 0.5 and 1.5 per cent in 2015, compared to a previous forecast of 1.5 and 2 per cent.
 
The group became more pessimistic about market developments in all geographic areas except for Europe, where it kept its forecast unchanged.
 
Global forecast cuts were especially large for Brazil, the United States and China. The group does not have major exposure to the Chinese market, but outlook for the world's largest steel consuming country affects the global steel market.
 
(Agencies)