BRUSSELS, July 31 (Reuters) - Stainless steel maker Aperam beat profit expectations in the second quarter, declaring on Thursday the market was clearly picking up, with improved conditions in Europe.
The world’s seventh-largest stainless steel maker, which produces in Belgium, France and Brazil, said it was nevertheless cautious given the state of the economy, uncertainties over the price of stainless steel alloy nickel and the pressure from imports.
Earnings before interest, tax, depreciation and amortisation (EBITDA) doubled from a year earlier to $164 million in the second quarter. The figure was well above the average forecast of $141 million given in a Reuters poll of analysts.
Aperam had previously said that core profit would be higher than the $129 million made in the first quarter and net debt would be slightly lower.
The company said that earnings in the third quarter would likely be lower, due principally to seasonal factors such as summer holidays in Europe. However, net debt should fall further.
Three-month forward nickel prices on the London Metals Exchange have softened since two-year highs in mid-May, but are still a third higher than at the start of 2014, supported by top producer Indonesia’s ban on exports of unprocessed ore.
Distributors tend to stock up when prices start to rise and hold off when they fall in the hope of yet cheaper prices in the future.
Europe is by far Aperam’s biggest market, accounting for more than 60 percent of revenue in 2013, followed by Latin America which contributed 26 percent.
The group said its “Leadership Journey” cost-cutting plan, targeting $475 million of savings by the end of 2015, had produced $401 million of savings since the start of 2011.
Net debt dropped to $663 million at the end of June from $689 million at the end of March and Aperam said it was aiming to pull it down to $550 million by the end of the year. (Reporting By Philip Blenkinsop; Editing by Greg Mahlich)