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ArcelorMittal Turns To Profit; Sees Higher Steel Demand In US, Brazil; Stock Up

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Shares of ArcelorMittal (MT) were gaining around 5 percent in the early morning trading after the steel and mining company reported Friday a profit in its fourth quarter, compared to last year's hefty loss, in the absence of prior year's charges.

Based on the current economic outlook, ArcelorMittal expects global apparent steel consumption or ASC to grow further in 2017 by between about 0.5 percent to 1.5 percent. ASC in the US is expected to grow about 3 percent to 4 percent and in Europe to grow 0.5 percent to 1.5 percent. In Brazil, ASC is expected to grow by 3 percent to 4 percent. In China, following ASC growth in 2016, demand is expected to stabilise in 2017.

Lakshmi Mittal, ArcelorMittal Chairman and CEO, said, "We enter 2017 with good momentum in the business and the market. …. The improvement in performance is, however, from a low base so we will need to continue to prioritise improved returns. Central to this will be our Action 2020 programme which will sustainably improve the underlying performance of the business."

For the fourth quarter, net profit attributable to shareholders of the parent was $403 million, or $0.13 per basic share compared to net loss of $6.69 billion or $2.89 per basic share in the prior year.

The prior result was impacted by exceptional charges of $4.7 billion, which included $0.9 billion with respect to Mining segment goodwill and $3.8 billion primarily related to fixed assets.

Operating income was $809 million, compared to operating loss of $5.3 billion a year ago. EBITDA, a key earnings metric, climbed 51 percent from last year to $1.66 billion.

Sales for the fourth-quarter rose 1 percent to $14.13 billion from the prior year's $13.98 billion. The higher results mainly reflected growth in steel shipment volumes, average steel selling prices, and higher iron ore reference prices, partly offset by lower market-priced iron ore shipments.

Steel shipment volumes increased 1.6 percent to 20 million metric tonnes from 19.7 million metric tonnes last year. Quarterly iron ore shipments were 13.5 million metric tonnes, down 13.4 percent from the prior year. Average steel selling prices grew 3.5 percent and iron ore reference prices climbed 51.7 percent.

Looking ahead, the company said capex spend in 2017 is expected to increase to $2.9 billion from $2.4 billion in 2016. The company expects the cash needs of the business in 2017 to increase to $5.0 billion from $4.5 billion in 2016.

In Amsterdam, ArcelorMittal shares were trading at 7.88 euros, up 4.78 percent.

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