ArcelorMittal SA (ADR)(NYSE:MT) reported that the EBITDA in 2Q2016 surged 26.5% YoY to $1.8 billion. Operating income amounted to $1.9 billion in 2Q2016 against $0.3 billion in 1Q2016, following increased sales led by higher steel selling prices and one-time gain of $0.8 billion from employee benefits.
The management speaks
Commenting on 2Q2016 performance, Lakshmi N. Mittal, the CEO and Chairman of ArcelorMittal, said that the company recorded a stronger 2Q2016 primarily due to increased supportive pricing environment in leading markets. EBITDA and sales jumped in all divisions, including mining. They also considerably benefited from the Gestamp sale, earnings from the rights issue, and working capital release cutting net debt to $12.7 billion.
The CEO further added that they continue to focus on the executive of the strategic initiatives, particularly Action 2020, to boost profitability. While the mining and steel industry continues to witness the problems of structural overcapacity, they are seeing improved market conditions over 2H2015. It indicates that they are cautiously positive on the performance of coming two quarters.
The major developments
ArcelorMittal reported that USW union deal has been approved by members and its USA unit is now advancing with a footprint optimization assignment at its Indiana Harbor steelmaking complex. The company may expand its automotive steel portfolio by introducing two new products Ductibor® 1000 and Usibor® 2000 in 2017.
ArcelorMittal management stated that the steel spread recovery has lost momentum in recent weeks. However, the impact of lagged costs will be a vital support for operating performance as they enter into a period of slower steel demand. With the market conditions getting better in coming months, the working capital estimate for 2016 stands around $0.5 billion. The Company projects cash flows from operating businesses to exceed capex in this year. In the second quarter, gross debt came at $15.1 billion compared to $20.2 billion in the previous quarter.
