ArcelorMittal remains upbeat as U.S. steel tariffs drive up prices

By Bart Meijer

AMSTERDAM (Reuters) - ArcelorMittal <MT.AS>, the world's largest steelmaker, expects its financial results to improve in the coming months as global economic growth drives demand and U.S. tariffs lead to higher prices for the metal.

Arcelor reported a 42 percent year-on-year increase in third-quarter core profit (EBITDA) to $2.73 billion (2.11 billion pounds), roughly in-line with analyst expectations, while sales rose 5 percent to $18.5 billion.

The steel market has been impacted this year by the 25 percent import tariffs put in place by U.S. President Donald Trump to try to reduce imports from China and Europe.

ArcelorMittal makes steel in the United States and has said that it benefited on balance from these protectionist measures, as they raise prices.

"Market conditions in the third quarter remained favourable," Chief Executive Lakshmi Mittal said in a statement on Thursday. "We continue to see robust real demand and healthy utilization rates across all steel segments."

The group stuck to its earlier prediction that global apparent steel consumption -- a measure of production and trade flows -- would increase by 2 to 3 percent in 2018, leading to a continued improvement in results. It did not give any more detail on its outlook.

Steel tariffs worked to Arcelor's advantage in the third quarter, as 5 percent higher prices offset an equally large decline in steel shipments in the North American region, as the U.S. market weakened.

Total shipments of steel also fell 5 percent in the July-September period, due to supply problems stemming from a disruptive power outage in France and a furnace blast in Poland.

But as crude steel production edged up 0.5 percent from the previous quarter, Arcelor said it expected shipments to grow again in the last three months of 2018.

ILVA ACQUISITION

Arcelor's results came in roughly as expected, while "forward commentary was positive", Jefferies analysts said in a note, as they maintained their buy rating on the company's shares.

ArcelorMittal traded up 1.1 percent at 22.28 euros at 0920 GMT in Amsterdam.

ArcelorMittal said it had completed the acquisition of Italy's Ilva, Europe's largest steel plant, strengthening its position in Europe's second-largest steel market.

The company plans to invest 2.4 billion euros ($2.7 billion) in its newest asset, to increase Ilva's production and to make the plant more sustainable.

Meanwhile, asset sales demanded by the European Commission as a precondition for approving the takeover led to a $500 million impairment in the third quarter, Arcelor said.

This drove down the group's net result by 25 percent to $0.9 billion.

The company's net debt remained stable at $10.5 billion in the third quarter, as $1.7 billion was invested in working capital.

($1 = 0.8789 euros)

(Reporting by Bart Meijer; Editing by Darren Schuettler/Keith Weir)