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Steel giant Arcelor SA has posted third-quarter profits of 629 million euros ($815 million U.S.)—a six-fold jump over a year ago—but warned the boom may lose steam in 2005.
Global steel consumption may slow in 2005
BRUSSELS
Steel giant Arcelor SA has posted third-quarter profits of 629 million euros ($815 million U.S.)—a six-fold jump over a year ago—but warned the boom may lose steam in 2005.
Sales rose almost 22 per cent to 7.2 billion euros ($9.3 billion U.S.), the Luxembourg-based producer said.
It credited a strong performance by its long products—or beams and girders— division, cost savings and productivity gains for its strong thirdquarter showing.
Analysts had generally expected a quintupling of profits at Arcelor, which was created in early 2002 through the merger of Usinor SA of France, Arbed SA of Luxembourg and Aceralia Corp. Siderurgica SA of Spain.
“The results are good, in particular in long products,” said Enego Recio Pascual, an analyst at Caja Madrid Bolsa.
Arcelor chief executive Guy Dolle said profits in the fourth quarter will at least be at the same level as in the third quarter, as world steel consumption continues to grow.
But he warned it will grow by much less next year.
“A slowdown could come in the second half depending on economy and inventories,” he said in a telephone interview.
Dolle expressed concern about the strength of the euro, which recently hit a new high against the dollar, as this will attract higher imports of steel to Europe.
He also said a worldwide shortage of a key ingredient used to make steel could curtail output and increase costs.
“I am very concerned about the availability of coking coal,” Dolle said, adding that a dearth this year had prevented the company from increasing production by three per cent.
Despite these challenges, Dolle expects Arcelor to weather the storm by pushing through further price increases in flat products—its main cash cow—and performance improvements.
The Associated Press
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