ArcelorMittal Posts Surge in Profit on Exceptional Item

By Alex MacDonald 

LONDON--Steel giant ArcelorMittal on Friday said net profit rose in the second quarter from a year earlier due to a one-time gain and said it was optimistic about a better second half but cautioned that excess steel capacity globally remains a concern.

The Luxembourg-based steelmaker--the world's largest by production, accounting for some 6% of global steel output--reported a surge in net profit to $1.11 billion in the three months ended June 30 compared with $179 million a year earlier.

The figure beat expectations for a $201 million net profit based on a Wall Street Journal poll of seven analysts, largely due to an exceptional $832 million one-time gain on employee benefits following the signing of the new U.S. labor contract.

Revenue fell 13% to $14.74 billion due to lower steel and iron ore prices, although sales and earnings before interest, taxes, depreciation and amortization were up across all divisions in the second quarter compared with the first.

"Although the industry continues to face the challenges of structural overcapacity, we are seeing better market conditions compared with the second half of 2015 which lead us to be cautiously optimistic about the remainder of the year," said Chief Executive Lakshmi Mittal.

ArcelorMittal earlier this year raised EUR2.8 billion ($3.1 billion) through a rights issue to strengthen its balance sheet given a protracted steel price rout globally. Shares subsequently rallied and are up 80% so far this year, buoyed by a pickup in steel prices in its key U.S. and European markets as well as China.

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(END) Dow Jones Newswires

July 29, 2016 01:46 ET (05:46 GMT)

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