ArcelorMittal, the world’s largest steelmaker, reported third-quarter core profit above expectations on Thursday as the easing of COVID-19 lockdowns led to improved demand in all regions.
The company, which makes around 5% of the world’s steel, said core profit (EBITDA) fell 15% from a year earlier to $901 million, compared with an average expectation of $838 million in a company-compiled poll.
CEO Lakshmi Mittal said in a statement that steel markets had recovered from a very challenging second quarter, with particular improvement in profits in Brazil and its unit grouping South Africa, Kazakhstan and Ukraine.
The company said its mining business also fared better, with higher iron ore prices and increased production. It now expects iron ore shipments sold at market prices to be about the same as in 2019. It had previously forecast a 5% decline.
ArcelorMittal said it had begun to restart some of its idled capacity, although demand remained below normal, with a second COVID-19 wave adding to uncertainty.
The company added that the experience of the past six to seven months had it operating with a leaner cost structure and it aimed to detail more permanent cost savings when it reports full year results in February. It has already decided to close for good its blast furnace in Krakow, Poland.
ArcelorMittal also hit its $7 billion net debt target at the end of the quarter, the lowest level since ArcelorMittal’s creation in 2006 and a point at which the company can start returning cash to shareholders.
The company is poised to sell its U.S. assets in a cash and shares deal with Cleveland-Cliffs Inc for $1.4 billion in a deal that has allowed it to launch a $500 million share buyback.
Reporting by Philip Blenkinsop; Editing by Himani Sarkar and Kim Coghill