ArcelorMittal posts $1,069 mn Q1 net income of 2011

Steel major ArcelorMittal today posted a net income of $1,069 million for the first quarter of 2011, against a $780 million net loss in the previous quarter, driven by an increase in both shipments and selling prices.

For the quarter ended March 31, 2010, the company had a net income of $640 million.

Sales of the company for the quarter ended March 31, 2011, rose to $22,184 million from $17,428 million in the corresponding quarter a year ago.

Commenting on the results, ArcelorMittal Chairman and CEO Lakshmi N Mittal said, "As anticipated, we have seen a stronger start to the year, with an increase in both shipments and selling prices. This is expected to further improve in the second quarter as the underlying demand recovery continues."

For the first quarter of 2011, the company reported a 4% rise in steel shipments to 22.0 million tonnes and a 7% jump in the average steel selling price as compared to the fourth quarter of 2010, ArcelorMittal said in a statement.

Going forward, the company has a bullish outlook and said steel shipments are expected to increase further in the second quarter in line with higher capacity utilisation due to continued improvement in underlying demand and seasonal factors.

Besides, increases in average steel selling prices are expected to more than offset cost increases in the second quarter, while mining production and profitability are also expected to improve, ArcelorMittal said, adding that second quarter EBITDA is expected to be between $3-3.5 billion.

"We remain confident that 2011 will be a stronger year than 2010," Mittal added.

However, increasing working capital requirements in line with increased activity and prices will lead to a further rise in net debt in the second quarter of 2011.

ArcelorMittal's net debt increased by $2.9 billion to $22.6 billion in the first quarter of 2011 "due to investment in working capital, M&A and forex".

From January 1, 2011, ArcelorMittal has been reporting the results of its mining operations as a separate operating segment.

The segment change has been undertaken in order to reflect changes in the company's approach to managing its mining operations, as required by IFRS.