ArcelorMittal benefited greatly from its new contract with the United Steel Workers union, which helped drive a $1.1 billion profit in the second quarter.
The Luxembourg-based steelmaker posted its first quarterly profit in a year, getting a boost from $832 million one-time employee benefits savings from ArcelorMittal USA. ArcelorMittal, the world’s largest integrated steelmaking company, brought in $1.8 billion in earnings before interest, taxes, depreciation and amoritization in the second quarter, which was double the $900 million in EBITDA it brought in during the first quarter.
“ArcelorMittal enjoyed a stronger second quarter due largely to a more supportive pricing environment in our leading markets,” said Lakshmi Mittal, ArcelorMittal chairman and CEO. “Sales and EBITDA increased in all segments, including mining. We also significantly strengthened our balance sheet with proceeds from the rights issue, the Gestamp sale and working capital release reducing net debt to $12.7 billion.”
Mittal estimates the company will save $200 million by closing some finishing lines at ArcelorMittal Indiana Harbor in East Chicago, which the United Steelworkers union agreed to so the company can remain competitive in a time of rampant overcapacity in the industry.
Business is already turning around as improved prices have driven higher sales, ArcelorMittal reported Friday. Shipments also rose 2.9 percent in the second quarter. ArcelorMittal had lost about $400 million in the first quarter of this year and nearly $8 billion in total last year.
“The company continues to focus on the implementation of our strategic initiatives, in particular Action 2020, to support profitability,” Mittal said. “Although the industry continues to face the challenges of structural overcapacity, we are seeing better market conditions compared with the second half of 2015 which lead us to be cautiously optimistic about the remainder of the year.”
As it cut costs and market conditions improved, the steelmaker managed to reduce its debt to $15.1 billion, down from $20.2 billion at the end of the first quarter.