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Arcelor-Mittal reports sharp profit

The steel giant reports a 34% surge in first half net earnings, but warns of a slowdown in activity in Q3.

business Updated: Aug 01, 2007 16:03 IST

Steel giant Arcelor-Mittal on Wednesday reported a sharp 34 per cent surge in first half net earnings, attributed to rising steel demand, but warned of a slowdown in activity in the third quarter.

Arcelor-Mittal, created a year ago in the merger of European steel group Arcelor and Mittal Steel, said net profit in the January-June period came to $ 5.1 billion compared to 2.781 billion euros in the same period of 2006.

Operating earnings advanced 38 per cent from first half 2006 to 5.784 billion euros.

Underlying earnings, operating earnings plus depreciation, increased 31.5 per cent to 7.277 billion euros.

In the second quarter alone, net profit jumped 39.8 per cent to 2.020 billion euros, while underlying earnings were up 42 per cent at 3.951 billion euros, eclipsing company expectations.

First half sales gained 10 per cent to 38.898 billion euros and were up 13 per cent in the second quarter at 20.194 billion euros.

But the group warned that in the third quarter underlying earnings would likely fall in a range of USD 4.7 to 4.9 billion, down from USD 5.326 billion in the second quarter.

"Total shipments in the third quarter of 2007 are expected to decrease compared with the second quarter due to usual seasonal slowdown," the company said in a statement.

Lakshmi Mittal, chief executive at Arcelor-Mittal, said the first half results "were driven by a strong demand for steel combined with higher selling prices in all our major segments.