By Shivani Tanna
(Reuters) -ArcelorMittal, the world's second-largest steelmaker, on Thursday reported first-quarter earnings ahead of analyst expectations and reiterated its expectation global steel demand outside China will increase by 3-4% this year.
The Luxembourg-based company said its first-quarter core profit (EBITDA) was $1.96 billion, higher than the average forecast in a company poll of $1.81 billion, but lower than $2.14 billion reported a year before.
Profit was primarily driven by improved results in North America, Brazil, Europe, India and from its joint ventures, offset by lower mining segment results, it said.
ArcelorMittal's shares were up 3.5% as of 1506 GMT, heading for their best one-day performance in nearly three months.
Despite customers taking a "wait and see" approach in an uncertain economic outlook, the company said low inventories laid the foundation for a rebound in demand.
"A lot of the year-on-year growth that we anticipate in 2024 is a function of us not expecting a repeat of the destock that occurred in 2023," Daniel Fairclough, head of investor relations, told analysts on a call.
"Inventories in the system right now are clearly very low, and that's particularly the case in Europe," he said, adding the company expected a real demand pick-up next year.
The steel industry has suffered from reduced construction activity in Europe and problems in the real estate sector in China, the world's top consumer and producer of the metal. In the United States, interest rate hikes have dented demand.
The World Steel Association last month forecast a 1.7% rise in global steel demand in 2024, as Chinese demand continues to decline.
JP Morgan said lower margins in Europe could limit ability to pass through rising operating costs, although lower raw material prices in the second quarter could help.
Steel demand in Europe, which has been challenged by high inflation and tighter monetary policy, is expected to grow only modestly this year, the World Steel Association has said.
The boss of Spanish steelmaker Acerinox said last week the European Union should do more to curb steel imports from Asia, which are affecting some of the EU's mills as demand and prices weaken.
(Reporting by Shivani Tanna in Bengaluru; Additional reporting by Olivier Sorgho and Augustin Turpin; Editing by Lincoln Feast, Mark Potter and Barbara Lewis)
