London: ArcelorMittal, the world’s largest steelmaker, reported a 20% increase in annual profit on rising steel and iron ore prices, and forecast higher demand this year.
The company decided not to reinstate its dividend and stopped providing earnings guidance.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) rose to $6.26 billion last year, the Luxembourg-based company said in a statement Friday. The figure beat the $6.14 billion average of 18 analysts’ estimates compiled by Bloomberg. Ebitda in the fourth quarter was $1.66 billion, 51% higher than a year ago.
Steelmakers’ earnings have been bolstered by a rally in prices as Chinese stimulus stabilized the economy and policy makers around the world pledged to back growth. European steel prices surged 82% last year, while benchmark rates for iron ore and coking coal, which ArcelorMittal also mines, almost doubled and tripled, respectively.
ArcelorMittal has also benefited from increased efforts to protect US and European markets from record Chinese exports that producers have argued are at unfairly low prices. The company estimates that global steel consumption will rise 0.5% to 1.5% this year.
The company decided not to reinstate its dividend, preferring instead to pay down debt in an effort to return to an investment-grade credit rating. Net debt decreased by $4.6 billion to $11.1 billion at year-end, the company said.
“EBITDA was comfortably in excess of initial expectations and, furthermore, we have delivered on our commitment to prioritize debt reduction, significantly strengthening our balance sheet and ending the year with the lowest level of net debt since the creation of the company,” chief executive officer Lakshmi Mittal said in the statement.
The shares settled at 7.518 euros on Thursday and have more than tripled in the past year.