Luxembourg-based ArcelorMittal said on Friday that the company’s Brazilian segment’s EBITDA in Q2 declined 13.2 percent, year-on-year, to $360 million, while operating profit diminished nearly 10 percent to $275 million, from $305 million in Q2 2014.
The company said the decline in Q2’s EBITDA was a result of “lower average steel selling prices (-25.6 percent) offset in part by higher steel shipments (+22.6 percent), following the restart of the furnace in Tubarao, Brazil, in July 2014.”
Brazil segment crude steel production was stable in Q2 in the comparison with Q1, reaching 2.9 million mt, but increased 23.1 percent, year-on-year.
Steel shipments in Q2 totaled 2.8 million mt, 22.6 and 4.7 up, year-on-year and quarter-on-quarter, respectively. The quarter-on-quarter increase was “primarily driven by increased slab exports from Brazil and higher tubular shipment volumes.”
Brazil segment sales in Q2 declined 10.8 percent, year-on-year, to $2.16 billion, but increased 2.2 percent in the quarter-on-quarter comparison due to higher steel shipments.
ArcelorMittal said on Friday it expects apparent steel consumption in Brazil to decline by 11 percent to 13 percent this year, due to a weaker civil construction market.
“The economic scenario in Brazil continues to be challenging and the country is
undergoing a prolonged recession in 2015 with real GDP expected to decline by
between 1.5 to 2 percent,” the company said in Q&A letter to investors.
ArcelorMittal said investment remains “weak” and business and consumer confidence is worsening.
“Real steel demand is expected to contract 10 percent after 6 percent contraction in 2014. Auto sales and demand are falling by over 20 percent year on year and construction output has contracted 10 percent year to date after a 6 percent decline last year.”
Despite the bearish scenario, the company said its business performance remains “resilient.” “Our flat operations are running full, and we are able to adjust production in our long business to fully utilize our lowest-cost operations,” the company said.