ArcelorMittal profit beats expectations, but sees rising risks (updated)

Dongkuk Holdings Co

28/07/2022 08:48

* Q2 core profit $5.16 bln vs consensus $5.09 bln
    * No specific outlook, but list of downside risks
    * Agrees to buy Brazil's CSP for $2.2 bln

 (Adds more on outlook, Brazil purchase)
    By Charlotte Van Campenhout
    AMSTERDAM, July 28 (Reuters) - ArcelorMittal, the world's
second-largest steelmaker, reported higher than expected
second-quarter earnings on Thursday helped by sharply increased
prices, but saw threats from spiralling inflation, the war in
Ukraine and China's COVID-19 restrictions.
    The Luxembourg-based company did not give a specific
forecast, but highlighted downside risks.
    Inflationary pressure presented a significant headwind, the
company said, with a slowdown in real demand, exacerbated by
destocking. 
    Steel prices were declining at a faster rate than those for
raw materials.
    Gas supply problems in Europe and COVID-related lockdowns in
China were further risks.
    ArcelorMittal said it was well placed to manage the gas
supply risk, with sites in nine countries across Europe, meaning
it could meet market demand. 
    It was also taking steps to reduce the gas consumption of
its blast furnaces, such as through oxygen enrichment.
    The company reports a second-quarter core profit (EBITDA) of
$5.16 billion, topping the $5.09 billion forecast by analysts in
a company-provided poll.
    ArcelorMittal's steel shipments in the April-June quarter
were down 9.9% from a year earlier, largely due to the impact of
war in Ukraine, but sales rose as its average selling price rose
by 30.8%.
    Separately, ArcelorMittal said it had agreed with the
shareholders of Brazil's CPS - Brazil's Vale  VALE3.SA  and
South Korea's Dongkuk  001230.KS  and Posco  005490.KS  - to buy
the company for $2.2 billion.
    CSP is a major producer of semi-finished steel 'slab' with
an expected lower carbon footprint due to a nearby renewable and
green hydrogen energy project. ArcelorMittal said it had
identified $50 million in synergy savings from the deal.

 (Reporting by Charlotte Van Campenhout, Marine Strauss
@StraussMarine; editing by Philip Blenkinsop and Jason Neely)
 ((charlotte.vancampenhout@thomsonreuters.com))