ArcelorMittal profit drops but outlook positive

ArcelorMittal said Wednesday that second-quarter net profit fell 11 percent from a year earlier, mostly due to a year-earlier gain, but the world's largest steel maker maintained a positive outlook for the second half of 2011.

Net profit hit $1.54 billion for the three months ended June 30, down from $1.71 billion, mostly because of a $555 million gain recorded in the year-earlier period. When stripping out the results of discontinued operations, net profit would have been down 2.8 percent.

Sales, meanwhile, jumped 25 percent to $25.13 billion from a year earlier and were up 13 percent from the previous quarter, mostly thanks to higher average steel prices.

The world's steel makers, which were hit hard during the global financial crisis as construction and car production plunged, continue to struggle with a slow recovery in demand in the U.S. and Europe. Cheaper imports from countries like China have also weighed in results in recent years.

However, Luxembourg-based ArcelorMittal said it expected demand to continue to recover, leading to higher steel shipments in the second half compared with a year earlier.

Chief Executive Lakshmi N. Mittal said his company had delivered a "strong performance" in the second quarter. Despite the expected seasonal drop-off in the third quarter, "we do not expect this to be as pronounced as last year, and overall the group's performance in the second half of 2011 should compare favorably with the second half of 2010," Mittal added.