ArcelorMittal beats forecast, posts $1.85bn Ebitda

LONDON: Arcelormittal, the world's biggest steelmaker, jumped to the highest in nine months in Amsterdam trading after 2010 earnings beat analyst estimates and the company forecast a stronger year ahead as demand recovers.

The shares rose as much as 4.8% to 28.55 euros, the highest intraday price since May 3. The company today reported earnings before interest, tax, depreciation and amortization of $1.85 billion, beating the $1.68 billion average estimate of 17 analysts Bloomberg surveyed. First-quarter sales are improving and prices increasing to reflect higher material costs, it said.

"The market will react positively to ArcelorMittal's guidance as it is above expectations and represents the first time in several quarters that ArcelorMittal canÃ, underpin its outlook with optimism," Jeffrey Largey, an analyst at Nomura Holdings Inc., wrote today in a note.

The company, based in Luxembourg, rose 1.09 euro, or 4%, to 28.34 euros by 11:22 a.m. in Amsterdam trading.

A rebound in demand will mark a relief for steelmakers, who struggled to pass on rising raw-material costs while consumption was subdued in 2010. The price of iron ore, used to make steel, almost doubled from the first quarter of 2010, while coking-coal costs gained 38%, according to HSBC Holdings Plc. Sales have begun to pick up on Chinese demand, ArcelorMittal said.

"The gradual underlying demand recovery continues and we expect 2011 to be stronger than 2010," Chief Executive Officer Lakshmi Mittal said in a statement.

Use of capacity will rise to 76% in the first three months of 2011, from 69% in the previous quarter.

Ebitda will total $2 billion to $2.5 billion in the first quarter, ArcelorMittal said, compared with the average estimate of $2.03 billion of six analysts surveyed by Bloomberg. While the second quarter may be stronger than the first, demand may slow toward the end of the year, Aditya Mittal, chief financial officer, said on a conference call today.