BRUSSELS, May 7 (Reuters) - Luxembourg-based stainless steel firm Aperam forecast a further improvement in core profit after surpassing expectations in the first three months of 2014.
The world’s seventh-largest stainless steel maker by output, which produces in Belgium, France and Brazil, said the strong performance at the start of 2014 was based on an 8 percent rise in shipments from the previous quarter as customers restocked.
Prices also increased slightly, while the company gained from its cost-cutting programme.
Earnings before interest, tax, depreciation and amortisation (EBITDA) doubled to $129 million in the first quarter, year-on-year, and rose by more than half compared with the fourth quarter of 2013. The figure beat the average forecast of $100 million average forecast in a Reuters poll of analysts.
Aperam had previously said it expected profits to increase slightly in the first quarter from the end of 2013.
The company said on Wednesday that core profit would be higher still in the second quarter and net debt would slightly decrease.
“The market started up in September. End user market is favourable. Compared to the past years it’s a considerable difference. Now the recession looks over and we see it in all sectors,” Chief Executive Philippe Darmayan told a conference call, adding that customers were also not reducing inventories in light of high nickel prices.
Three-month forward nickel prices on the London Metals Exchange climbed to 15-month highs at the end of April and were near that level on Wednesday, related to supply constraints in Indonesia.
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 company also ended a series of 10 consecutive quarterly net losses, with a net profit of $19 million, above the $2 million average market forecast.
The group said its “Leadership Journey” cost-cutting plan, targeting $475 million by the end of 2015, had produced $385 million of annual savings since the start of 2011.
Reporting By Philip Blenkinsop; Editing by Pravin Char