Falling steel prices will hurt earnings, ArcelorMittal warns


ArcelorMittal (NYSE:MT-6.3% premarket after reporting below consensus Q2 earnings and warning it will miss its target for full-year earnings, as shipments are being hit by lower commodity prices.

MT says FY 2014 EBITDA likely would total more than $7B, below a previous forecast of ~$8B, reflecting a probable average iron ore price of $105/metric ton for this year vs. prior expectations for $120.

While the softening of iron ore prices may hurt MT's relatively small mining segment, the result could be countered by stronger demand for the steel that makes up most of the company’s business.

Also, MT agrees to acquire a near 50% effective stake in Guinea's Mount Nimba iron ore project, buying out shareholders BHP and Areva for an undisclosed sum; the high-quality deposit is 40 km from MT's existing Liberian iron ore mine, which means the steelmaker could take advantage of its existing rail and port infrastructure in Liberia to lower development costs.

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Comments (4)
  • ravimantri
    , contributor
    Comment (1) | Send Message
     
    Pressure on bottom line, results to down side pressure on share and may touch to Euro 10.00
    1 Aug 2014, 09:27 AM Reply Like
  • marpy
    , contributor
    Comments (1764) | Send Message
     
    The headline is misleading - read the articles to find out what they really said. Anyway - picked up some more near the low today. Worlds largest steel company with lots on the go in terms of projects and managing costs. They own the best mills in North America and have been using the slowdown over the past few years to their advantage in restructuring the European operation and making strategic purchases. IMO - should provide a very good return going forward.
    1 Aug 2014, 09:15 PM Reply Like
  • Fanebrb
    , contributor
    Comments (664) | Send Message
     
    It's a buy if you are 30 years young. No dividend while waiting either. Maybe there's something better out there.
    2 Aug 2014, 11:51 AM Reply Like
  • Warren Buffett007
    , contributor
    Comments (1118) | Send Message
     
    Will go to the 8 Euros again!.
    3 Aug 2014, 04:06 PM Reply Like
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