ArcelorMittal Q2 net profit down 28.25% to $2.4 bn

The company's second quarter iron ore production rose to 14.4 MT, up 9.9%

World's largest steel maker ArcelorMittal today posted a 28.25% decline in core profit to $2.44 billion for the quarter ended June 30, 2012, due to sagging demand in European markets and lower prices.

The company, which posted better results than the market expectations, was also aided by one time gain of $339 million on account of selling its stake in Skyline Steel in June.

ArcelorMittal had reported an Earnings before interest, tax, depreciation and amortisation (EBITDA) of $3.41 billion in the corresponding quarter of 2011.

Stating that ArcelorMittal has delivered a "creditable performance" during the quarter, company Chairman Lakshmi Mittal said: "Market conditions in the first half have been very challenging, indeed more challenging than we had expected due to a combination of factors, not least the still unresolved crisis in the eurozone".

He further said "although the global economy remains fragile, we expect operating conditions to remain broadly similar in the second half".

During the quarter, the company's net income declined by over 37% to $959 million vis-a-vis $1.53 billion during the corresponding quarter of 2011. Its production decreased by over 6.5% to 22.8 million tonnes (MT).

ArcelorMittal reported a decline of 2.5% in its steel shipments to 21.7 million tonnes (MT) in the quarter.

Besides, the company reduced its net debt by USD 1.6 billion during the April-June quarter to $22.0 billion.

This was due to improved cash flow from operations of $1.1 billion, Skyline Steel divestment proceeds of $0.7 billion and foreign exchange impacts.

"Europe remains our biggest concern and the severity of the situation is reflected in the performance of our European operations. Our focus throughout the remainder of the year remains on further improving competitiveness and reducing debt," Mittal said.

The global steel producer also said its second quarter iron ore production rose to 14.4 MT, up 9.9% from the previous year's levels.

Meanwhile, the company announced sale of its 48.1 percent stake in Paul Wurth Group to SMS GmbH as part of its strategy to divest non-core assets.

In its outlook for the remaining part of the year, the company said it expects EBITDA per tonne to remain at similar levels of first half but steel shipments may be lower due to "normal seasonal factors".

It, however, expects 10% growth in the iron ore shipments during the second half of the year.