PARIS (AP) — ArcelorMittal SA, the world's largest steelmaker, said Thursday it swung to a relatively modest profit of $679 million in the first quarter compared to a loss a year earlier, and predicted that the recovery will pick up throughout 2010.
The company said it raised output to meet improving demand, particularly in China and developing countries. ArcelorMittal was hit hard by the recession-related slump in demand for steel used in buildings, bridges, cars and machinery, and cut production and jobs last year.
"The year has started with improved demand in all main markets, which will have a positive impact in the second quarter," CEO Lakshmi Mittal said in a statement.
The quarter's profit compared with a loss of $1.06 billion in the first quarter of 2009, but was below the $1.07 billion profit in the fourth quarter of last year and the $903 million in the third quarter.
Shares fell after the announcement Thursday, and were down 3.8 percent at euro29.81 in late morning trading.
Cold winters in Kazakhstan and Ukraine meant production was lower than hoped in those countries' operations, Chief Financial Officer Aditya Mittal said.
Still, sales in the first quarter grew 23 percent to $18.6 billion from $15.1 billion as customers ran down their stocks and demand in the automotive industry picked up, said Aditya Mittal. He said shipments were up 35 percent from the first quarter a year ago to 21.5 million tons.
"The steel market is improving in line with our expectations," he told reporters.
The Luxembourg-based company said earnings before interest, tax, depreciation and amortization were $1.89 billion in the first quarter, and forecast those profits to rise to between $2.8 billion and $3.2 billion in the second quarter.
"Clearly the recovery is under way," Aditya Mittal said. "We are returning to a more normal operating environment, but we are still some way away from operating at full capacity," he said.
Rival United States Steel Corp. on Tuesday reported a loss of $157 million, but that was its best quarterly result since it reported a profit in the last quarter of 2008. The company predicted more improved demand in the current quarter as shipments increase and prices rise, though raw material costs continue to rise.
ArcelorMittal produced some 6 percent of world steel in 2009, down from its usual share of 10 percent.
Aditya Mittal said developing country demand is picking up but the expectation for demand in Europe and the United States is 20 to 25 percent lower for this year than in 2008.
"Even though the recovery has started and we are seeing strong movements upward compared to 2009, our customers and markets are still demanding less steel than they did in 2008," Aditya Mittal said.
Net debt grew 10 percent in the first quarter to $20.7 billion. The company is carrying a large amount of debt from a recent expansion.