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ArcelorMittal to Expand Solar Portfolio With Exosun Buyout

Zacks

ArcelorMittal MT has received confirmation from Commercial Court of Bordeauxin in relation to Exosun acquisition.

Exosun designs, develops and markets steel solar trackers that entitle photovoltaic panels to follow the path of sun rays, and enhance the performance of ground-mounted solar farms. ArcelorMittal has already forayed in the solar energy market with its steel solar frames which are manufactured in Europe, China and Egypt, and its corrosion along with abrasion-resistant Magnelis steel.

With this deal, the new entity will be able to benefit from commercial, industrial and R&D synergies. The group will also leverage its financial strength to allow the entity to serve customers in major solar projects.

The global photovoltaic energy market is anticipated to grow by 15 installed gigawatts a year from 2017 to 2020 most of which will be in large-scale solar farms. In addition to this, trackers are an emerging solution that increase profitability and account for 25% of the large solar farms market presently.

Shares of ArcelorMittal have rallied 47.3% in the last six months, outperforming the industry’s 30.7% growth.


In its third-quarter earnings call, ArcelorMittal stated that market conditions are favorable and demand environment remains positive along with healthy steel spreads. It continues to see global apparent steel consumption to grow in the range of 2.5-3% for 2017.

Steel market conditions have improved lately, driven by favorable developments on steel trade cases across the United States and Europe in the recent past, providing reprieve to steel producers including ArcelorMittal. The overall demand fundamentals for steel also remain healthy. ArcelorMittal also gained from higher steel prices in the third quarter, driven by strong pricing in Europe — the company’s biggest market.

ArcelorMittal also remains on track with its cost-reduction actions under the Action 2020 program. The program contributed $900 million to operating results in 2016 and is expected to make a healthy contribution in 2017.

Also, in sync with the Action 2020 plan, ArcelorMittal has announced a three-year investment program of roughly $1 billion at its Mexican operations. The investment, which is geared toward improving the quality and efficiency of operations, will allow ArcelorMittal Mexico to produce 2.5 million tons of flat rolled steel that will be supplied to customers of domestic non-auto and general industry.

Moreover, the company has cut net debt by nearly 45% over the past five years and net debt fell by $0.2 billion year over year in the third quarter. The company remains highly focused on deleveraging its balance sheet. ArcelorMittal remains committed to cut debt which is resulting in lower net interest expenses.

ArcelorMittal Price and Consensus

Zacks Rank & Stocks to Consider

ArcelorMittal currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO, Koppers Holding Inc. KOP and Huntsman Corporation HUN, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos Worldwide has expected long-term earnings growth of 5%. Its shares have skyrocketed 99.6% yearly.

Koppers has expected long-term earnings growth of 18%. Shares of the company have rallied 26.7% yearly.

Huntsman has expected long-term earnings growth of 8%. Its shares have soared 78.8% year to date.

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