Strong revenue wasn't enough for ArcelorMittal (NYSE:MT) to impress investors and traders, as they were able to generate $21.65 billion in revenue for the second quarter, a 43 percent gain, also beating analysts' estimates by close to $2 billion. They are getting punished though for missing on revenue, even though earnings outperformed.
Earnings per share were $1.13, on $1.7 billion in net profits, 43 cents above estimates.
Guidance was the most concerning for shareholders, as the third quarter looks weak for earnings, based largely on a slowing Chinese economy.
Chief Executive Officer Lakshmi Mittal said in this in a statement, “Although the third quarter will be impacted by a combination of seasonal factors and the effects of the economic slowdown in China, underlying demand continues to show improvement. The challenge for the second half of the year will be to pass on the full extent of cost increases to our customers.”
Mittal added that profits could plunge by up to 30 percent in the third quarter from this quarter.
Other factors include the rising costs of iron ore at the same time demand is slowing. That should eventually push down iron ore prices, but that hasn't caught up with lower demand yet.
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