London : ArcelorMittal, the world’s leading steel company, Wednesday reported a 29 percent rise in third quarter profits but said it will cut back production until the economic scenario brightens.
“The current period of de-stocking requires that we make appropriate production cuts to seek to rebalance supply and demand, and we are also accelerating efforts to pay down debt,” ArcelorMittal chairman Lakshmi Niwas Mittal said.
“ArcelorMittal, with its diversified business model, strong cash-flow and cost leadership position, is well placed to weather the challenging economic environment we currently face.
“We remain optimistic about the industry’s medium-term growth prospects, but it is appropriate to pause our growth strategy until we have a more settled economic outlook,” he added.
The company said sales at $35.2 billion were up 38 percent compared with the third quarter last fiscal; earnings before interest, tax, depreciation and amortisation (EBITDA) at $8.6 billion was up 76 percent, and net income at $3.8 billion was up 29 percent.
The figures were described as “another strong set of results from ArcelorMittal” by analysts Cazenove Pan Europe Research.
Cazenove’s Kartik Swaminathan said the EBITDA of $8.58 billion was “in line with our expectations ($8.55 billion) but slightly ahead of consensus figures ($8.4 billion).”
“Beyond the operational performance, a lack of colour on the outlook going into 2009 and a flat dividend for next year may be disappointing to some, but reading between the lines, we believe this is telling of the challenging times to come in the near term for the industry as a whole.
“In this regard, we believe investors should take some comfort from the company’s announcement this morning that Mittal has upped its cost savings target by 25 percent to $5 billion,” the analyst added.