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ArcelorMittal (MT) Q1 Earnings Rise on Higher Steel Prices

Zacks

ArcelorMittal MT saw its profits rise in first-quarter 2018, helped by a spike in steel prices. The steel behemoth logged net income of $1,192 million or $1.17 per share in the reported quarter, up around 19% from $1,002 million or 98 cents a year ago.

Revenues went up roughly 19% year over year to $19,186 million in the quarter on the back of higher average steel selling prices and increased steel shipments.

Average steel selling prices went up around 18% year over year in the quarter. Total steel shipments rose roughly 1% to 21.3 million metric tons in the reported quarter from 21.1 million recorded a year ago, supported by higher steel shipments across Brazil and Europe.

ArcelorMittal Price, Consensus and EPS Surprise

ArcelorMittal Price, Consensus and EPS Surprise

ArcelorMittal price-consensus-eps-surprise-chart | ArcelorMittal Quote


Segment Review

NAFTA: Crude steel production fell around 6% year over year to 5.9 million metric tons in the reported quarter. Steel shipments edged down 1% year over year to 5.6 million metric tons. Sales increased roughly 6% year over year to $4.8 billion. Average steel selling price rose 8% year over year to $779 per ton.

Brazil: Crude steel production rose roughly 3% year over year to 2.8 million metric tons. Shipments went up roughly 12% year over year to 2.5 million metric tons. Sales increased 23% year over year to $2 billion. Average steel selling price rose roughly 11% year over year to $752 per ton.

Europe: Crude steel production was essentially flat year over year at 11.2 million metric tons in the reported quarter. Shipments rose around 5% year over year to 10.7 million metric tons. Sales increased about 29% year over year to $10.6 billion while average steel selling price rose 23% year over year to $801 per ton.

Asia Africa and CIS (ACIS): Sales rose around 15% year over year to $2.1 billion. Crude steel production came in at 3.4 million metric tons, down around 3% year over year. Shipments fell around 6% year over year to 3 million metric tons. Average selling prices increased roughly 22% year over year to $610 per ton.

Mining:
Iron ore production increased roughly 4% year over year to 14.6 million metric tons. Coal production fell around 12% year over year to 1.5 million metric tons. Revenues were flat year over year at $1 billion.

Financials

ArcelorMittal ended the quarter with cash and cash equivalents of roughly $2.3 billion, down around 6% year over year. The company’s long-term debt was around $9.3 billion, down roughly 16% year over year.

Net cash provided by operating activities was $160 million in the reported quarter versus net cash used in operating activities of $299 million a year ago.

Outlook

According to ArcelorMittal, market conditions are favorable and demand environment remains positive along with healthy steel spreads. The company continues to expect global apparent steel consumption (ASC) to grow in the range of 1.5-2.5% in 2018.

In the United States, the company sees apparent steel consumption growth of 1.5-2.5% in 2018, factoring in higher construction and machinery demand. The company also anticipates 1-2% growth in apparent steel consumption in Europe on strength across construction and machinery end-use markets.

Moreover, apparent steel consumption is forecast to rise 6.5-7.5% in Brazil as the economy begins to turnaround with improved consumer confidence as construction recovers. Apparent steel consumption in China increased 3.5% in 2017 and is expected to remain close to this level this year as weakness in the real estate sector to be partly offset by strong infrastructure and automotive end markets.

The company expects capital expenditure to be $3.8 billion in 2018. Cash needs of the business are expected to be around $5.6 billion in 2018.

Price Performance


ArcelorMittal’s shares soared 58.7% over a year, outperforming the industry’s 36.5% growth.



Zacks Rank & Other Stocks to Consider

ArcelorMittal currently has a Zacks Rank #2 (Buy).

Other top-ranked stocks in the basic materials space include Celanese Corporation CE, Methanex Corporation MEOH and Kronos Worldwide Inc. KRO.

Celanese has an expected long-term earnings growth rate of 8.9% and flaunts a Zacks Rank #1 (Strong Buy). Its shares have gained roughly 25% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2. Its shares have rallied roughly 61% over a year.

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #2. The company’s shares have moved up around 21% in a year.

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