BRUSSELS (Reuters) - ArcelorMittal, the world’s largest steelmaker, reported higher than expected second quarter earnings and said its core markets were showing signs of recovery, albeit from exceptionally low levels.
ArcelorMittal, which withdrew its guidance for global steel consumption in May, said the speed and course of the demand recovery following the pandemic remained uncertain.
However, steel shipments should improve in the third quarter from the second, when they declined by 23.7% compared with the first three months of the year.
“Our base case remains that the demand level in medium term normalises,” Chief Financial Officer Aditya Mittal told a conference call on Thursday, saying he considered normal to be pre-coronavirus crisis levels.
The Luxembourg-based group’s shares were up 1.9% at 9.82 euros (8.91 pounds) at 0800 GMT, putting them among the Europe’s best performing stocks on Thursday, although they are still down 37% this year.
The Luxembourg-based company said the automotive sector, a key customer, had restarted and was recovering quite strongly in the United States, with a bounce-back of demand for machinery and metal products in Europe.
Net debt fell to $7.8 billion at the end of June from $9.5 billion at the end of March, the lowest since ArcelorMittal’s creation in 2006 and closing in on its target of $7 billion.
ArcelorMittal will not resume dividend payments before reaching that target.
Analysts at Jefferies said the release of working capital in the second half of the year and expected $1.5 billion of asset sales by mid-2021 would help ArcelorMittal reach its debt target.
Second-quarter core profit this year came in at $707 million, beating an average forecast in a company poll of $482 million.
The steelmaker said it had taken a series of actions to reduce costs and was looking into potential structural changes. It would announce these with full-year results, which are expected to be published in February 2021.
Reporting by Marine Strauss @StraussMarine; editing by Philip Blenkinsop, Carmel Crimmins and Edmund Blair