By Pierre Bertrand

 

ArcelorMittal on Thursday reported third-quarter net income that missed expectations as market conditions deteriorated, marked by lower shipments and higher energy costs.

The Luxembourg-based steelmaker said net income dropped by 78% to $993 million from $4.62 billion for the prior-year period, on sales that declined to $18.98 billion from $20.23 billion in the third quarter of 2021.

Earnings before interest, taxes, depreciation and amortization fell to $2.66 billion from $6.06 billion a year earlier.

The result missed analysts' expectations of net income at $1.35 billion but beat expectations for Ebitda of $2.34 billion, according to consensus expectations provided by the company.

ArcelorMittal said its result reflected lower average steel-selling prices, lower volumes, higher energy costs, customer destocking and added that the economic outlook for the industry in the short term remains uncertain.

Quarterly steel shipments were 13.6 million metric tons, down 5.6% from the second quarter of 2022, largely due to weaker demand in Europe.

The company said it has adapted its capacity for the fourth quarter to mitigate the effects of weak demand and higher energy costs in Europe.

Production curtailments started in the fourth quarter are in effect in France, Spain, Germany and Poland to balance supply and demand, ArcelorMittal said.

The company said it expects to be able to mitigate the costs of idled production capacity in the fourth quarter in part by implementing reduced working hours.

In Europe, inflation headwinds are slowing growth and the effect of destocking is expected to cause apparent consumption to contract by up to 7% in 2022.

"Apparent demand conditions are expected to improve once the current destocking phase reaches maturity," ArcelorMittal said, adding that variable costs per ton for raw materials and energy are expected to decline in the fourth quarter.

 

Write to Pierre Bertrand at pierre.bertrand@wsj.com

 

(END) Dow Jones Newswires

November 10, 2022 04:26 ET (09:26 GMT)

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