ArcelorMittal Pressured by China and Russia

LONDON—Steel titan ArcelorMittal said Friday that its second-quarter net profit was lifted by lower foreign exchange charges but warned that increased competition from steel imports, mainly from Russia and China, still threaten its business.

The Luxembourg-based steelmaker, the world's largest by shipments accounting for some 6% of global steel output, reported a net profit of $179 million in the second quarter compared with $52 million in the same period a year earlier. The figure beat analysts' expectations of $30 million based on a FactSet poll of four analysts.

Net profit rose partly due to lower foreign exchange and net financing costs of $73 million in the second quarter compared with a $327 million charge in the same period a year ago.

Revenue, however, fell 18% to $16.9 billion in the second quarter compared with the same period a year ago due to a collapse in iron ore prices and lower steel prices as a result of increased competition from Russian and Chinese steel exports.

ArcelorMittal reaffirmed its plan to generate between $6 billion to $7 billion in earnings before interest, taxes, depreciation and amortization or Ebitda this year. The company revised the guidance last quarter from $6.5 billion to $7 billion as a result of the weak iron ore price and continued U.S. steel destocking. Arcelormittal generated $7.24 billion in Ebitda last year.

"We remain concerned by the high level of imports," said ArcelorMittal's Chief Executive Lakshmi Mittal. "Whilst we are somewhat encouraged by recent actions on potential trade defense measures from both the U.S. and Europe, we are also taking action to adapt our own business," he said.

The company reaffirmed its expectations to lower net debt to $15 billion over the medium term after reporting net debt of $16.6 billion as of the end of June.

Write to Alex MacDonald at [e-mail]

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