The company gave a muted expectation for the fourth quarter.
The world’s largest steelmaker, ArcelorMittal, posted a net profit of $1.35 billion in the third quarter, ended September 30, as against $910 million for the same period last year. Its sales increased by 30.5 per cent to $21.03 bn in the quarter, as against $16.2 bn in the corresponding period last year .
The company, however, gave a muted expectation for the fourth quarter. Lakshmi Mittal, chairman and CEO, said that the business was low in the third quarter as it was a seasonal period of lower volumes. Moreover, raw material costs were higher, coupled with weakening spot steel prices.
Mittal said capacity utilisation in the third quarter was 71 per cent, as against 78 per cent in the second quarter. He said, “We expect the capacity utilisation to be flat at 70 per cent in the fourth quarter, due to the weaker market conditions and uncertainty.”
Ebitda (earnings before interest, taxes, depreciation and amortisation) for the third quarter was $2.3 bn, as against $3 bn for the same period last year. Mittal said steel prices have gone up but raw material prices had done so even more. He expected Ebitda of $1.5-1.9 bn in the next quarter.
Sudhir Maheshwari, member of the Group Management Board, ArcelorMittal, said the company was still in talks with Steel Authority of India Ltd (SAIL) for a possible joint venture. He said, “We had made a proposal to SAIL for a steel plant and are still in discussion with them.” ArcelorMittal had approached SAIL in April for a joint venture to set up a steel plant at Bokaro. However, SAIL is also said to be in talks with Posco of South Korea and Kobe Steel of Japan for a possible joint venture.
About India plans, ArcelorMittal said the company will be building smaller modules of steel plants. Mittal said, “There is no change in the overall plan but just an enhancement to set up steel plants faster.” He said that the company continued to make progress in India.
JV with Uttam Galva
Meanwhile, the company said it was in discussions with its India partner Uttam Galva for jointly setting up a steel plant in West India. “We are working with our partner (Uttam Galva) on something in west of India...There are certain projects and expansion ideas and we are evaluating them,” ArcelorMittal CFO Aditya Mittal said.
However, market sources said ArcelorMittal and Uttam Galva are in talks for setting up an estimated Rs 15,000-crore steel plant in Maharashtra. The plant will have an annual production capacity of three million tonnes, half of which is likely to come up in the first phase.
