The world's largest steel producer ArcelorMittal's net income has plunged to $11 million in the first quarter of 2012, compared to $1.069 billion of the same period last year.
However, the results were better than the previous October-December quarter, when ArcelorMittal had reported a net loss of $1 billion.
Stating that demand in North America continues to grow, company chairman and chief executive Lakshmi Mittal said: "Europe remains the biggest challenge and during the first quarter we announced the extended idling of a number of facilities in line with our strategy of meeting demand from our more competitive sites."
He added that the mining business will be the key growth driver and the company was targeting a further increase in its production in 2012.
Giving guidance for the quarter, the company said that it expects first half of the year to be better in terms of core profits (EBITDA) than $4.1 billion EBITDA (earnings before income, tax, depreciation and amortization) of the second half of 2011.
ArcelorMittal's sales, during the quarter, increased by 2.3 per cent to $22.7 billion vis-a-vis $22.2 billion of January-March period of 2011, primarily due to higher steel shipments at 22.2 million tonnes (mt).
The company said that "all steel segments are expected to show improved underlying profitability", although it expects steel shipments, in the current quarter, at similar levels of the last quarter.
The Luxembourg-based steelmaker also said that its iron ore production was up 12.1 per cent to 13.2 mt in the January-March period and mining segment is expected to benefit from seasonally higher ore shipments.
Besides, it is also looking at increasing iron ore and coal production by 10 per cent in the current year. During the quarter, company's net debt increased by $1.1 billion to $23.6 billion, largely due to decreased cash flow from operations, forex losses and dividend payment.
"A reduction in net debt is anticipated through improved operating cash flows and further non-core asset divestments, as per the company's stated objective to retain its investment grade credit rating," ArcelorMittal said.
For 2012, the company has kept a capex of $4-4.5 billion.
In a separate statement, the company also announced to sell its 23.48 per cent stake in Enovos International to a fund managed by AXA Private Equity for €330 million.
"This agreed transaction is in line with the declared Group strategy of selective divestment of non-core assets," the company said.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
