Arcelor reports successful first quarter, expects better Q2

Arcelor reports successful first quarter, expects better Q2

World's largest steel producer Arcelor, reported its best operating profit since its establishment with a gross operating profit of €696 million (around $825 million) in the first quarter of 2004, indicating an increase of 8.5% compared to same period last year. According to Arcelor's statement this improvement was a result of practices protecting the company from losses caused by possible price increases, such as long term contracts, and an effective scrap surcharge mechanism. Surging raw material prices also helped company in achieving this result. Net group profit is recorded as €234 million, up by 22% over first quarter in 2003. However, sales revenue was almost stable with €6.89 billion. Furthermore, measures taken in order to reduce financial debt worked out pretty well with a fall of €437 million, resulting with €4.03 million debt at the end of the first quarter. Disposal of certain assets, such as Thainox played a positive role in reducing debts. For the second quarter, Arcelor expects better results as steel demand will still be strong and growing. The economic recovery in US is the supporting belief in this expectation. Besides, Chinese demand, the main driver of the international steel market, won't be drop to scary levels despite China's attempts to slow down its economic growth. Instead, demand from China will hover at high levels. Meanwhile, Arcelor will hike its prices both in the current and third quarter with the aim to offset growing input costs by 8% and around 16% respectively.