ArcelorMittal (MT) Third Quarter Earnings and Revenue Best Estimates – November 15, 2022

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ArcelorMittal (MT Free Report) posted earnings of $993 million or $1.11 per share in the third quarter of 2022, compared to $4,621 million or $4.17 in the year-ago quarter.

Excluding one-time items, earnings per share came in at $1.54, beating Zacks consensus estimate of $1.26.

Total sales fell about 6% year-over-year to $18.975 million in the quarter. The figure exceeded Zacks’ consensus estimate of $17,216.5 million. Sales suffered from lower iron ore prices and reduced steel shipments.

Total steel shipments were down about 7% year-over-year to 13.6 million metric tons in the quarter under review.

Sector review

NAFTA: Sales were essentially flat year-over-year at $3.4 billion in the quarter under review. Crude steel production rose about 7% year-over-year to 2.1 million metric tons. Steel shipments increased about 3% year over year to 2.3 million metric tons. The average steel selling price was down about 9% year-over-year to $1,191 per ton.

Brazil: Sales fell about 3% year over year to $3.5 billion. Crude steel production was down about 5% year-over-year to 3 million metric tons. Shipments were flat year-over-year at 2.8 million metric tons. The average selling price of steel fell about 5% year-over-year to $1,137 per ton.

Europe: Sales fell about 5% year over year to $10.7 billion. Crude steel production fell about 12% year-over-year to 8 million metric tons in the quarter under review. Shipments fell about 6% year-over-year to 7.1 million metric tons. The average selling price of steel rose about 5% year over year to $1,150 per ton.

Asia Africa and CIS (ACIS): Sales fell about 35% year over year to $1.6 billion. Crude steel production totaled 1.8 million metric tons, down about 39% year-over-year. Shipments were down about 29% year-over-year to about 1.7 million metric tons. Average selling prices were down about 11% year over year to $773 per ton.

Mining: Sales fell about 36% year over year to $742 million. Iron ore production totaled 6.9 million metric tonnes, up about 1% from year-ago quarter levels. Iron ore shipments were flat year over year at 6.9 million metric tons.

Finance

At the end of the quarter, ArcelorMittal had cash and cash equivalents of approximately $5.1 billion, up approximately 16% year-over-year. The company’s long-term debt was about $6.4 billion, down about 2% year-over-year.

Net cash from operating activities was down about 19% year-over-year to $1,981 million in the third quarter.

Outlook

The company said it adjusted its capacity for the fourth quarter to deal with apparent weak demand and rising energy costs, particularly in Europe. He expects apparent demand conditions to improve once the current phase of destocking matures. ArcelorMittal is also adapting its cost base during this period of low capacity utilization, by optimizing energy consumption and reducing the fixed costs of unproductive capacity.

The company expects real consumption to increase in the United States in 2022. However, a larger than expected impact from destocking should lead to a slight contraction in apparent consumption of up to -1%.

Inflation leads to slower albeit positive real consumption growth in 2022 in Europe. However, the impact of destocking is expected to cause apparent consumption to contract by up to -7%, the company noted.

Ongoing economic weakness due to pandemic-related restrictions and weakness in the construction sector is expected to cause apparent demand to decline by around -3.5% in China.

Price performance

ArcelorMittal shares are down 11.3% over the past year, compared to an industry decline of 1.3%.

Image source: Zacks Investment Research

Zacks ranking and key picks

ArcelorMittal currently holds a Zacks rank #5 (strong sell).

Top-ranked stocks worth considering in the base materials space include Sociedad Quimica y Minera de Chile SA ( free report), Metal trading company (CMC free report) and Reliance Steel & Aluminum Co. (RS free report).

Sociedad forecasts a profit growth rate of 538.1% for the current year. The Zacks consensus estimate for SQM’s earnings for the current year has been revised up 1.2% over the past 60 days.

Sociedad has a last four quarter earnings surprise of around 27.2%. The SQM has increased by about 60% in one year. The company currently carries a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Commercial Metals currently carries a Zacks rank of No. 1. The Zacks consensus estimate for CMC’s earnings for the current year has been revised up 3.8% in the past 60 days.

Commercial Metals’ earnings have exceeded Zacks’ consensus estimate in each of the past four quarters. It has a surprise on earnings for the last four quarters of around 19.7% on average. CMC gained about 40% in one year.

Reliance Steel, which currently holds a No. 2 (buy) Zacks rank, has an expected profit growth rate of 29.7% for the current year. The Zacks consensus estimate for RS’s current-year earnings has been revised up 0.1% over the past 60 days.

Reliance Steel’s earnings have exceeded Zacks’ consensus estimate in each of the past four quarters. It has a surprise on earnings for the last four quarters of about 13.6% on average. RS has gained about 22% in one year.

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