ArcelorMittal, the world’s second-largest steelmaker, reported a 38% decline in second-quarter core profit due to low steel prices. Despite this drop, the results exceeded expectations, largely driven by a 3.2% increase in shipments compared to the first quarter, totaling approximately 13.9 million tonnes.
The company’s EBITDA for the quarter was $1.86 billion, 5% above consensus estimates, aided by lower costs. However, net profit fell short of expectations, coming in at $504 million, about 20% below consensus, primarily due to a lower valuation of its stake in Vallourec.
ArcelorMittal adjusted its forecast for global steel demand growth outside China, reducing it to 2.5% to 3%, down from 3% to 4% previously. The steel sector is facing challenges from weak construction activity in Europe and reduced demand in the U.S. due to interest rate hikes.
Despite these challenges, ArcelorMittal expects diversification efforts and recent acquisitions to contribute an additional $2 billion to EBITDA by 2026. The CFO estimated a $100 million impact from a recently resolved worker strike in Mexico for both the second and third quarters.
Shares of ArcelorMittal fell by 1.4% in early trading following the earnings report.