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ArcelorMittal's (MT) Q4 Earnings Top Estimates, Revenues Lag

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ArcelorMittal (MT - Free Report) recorded profits of $1,207 million or $1.00 per share in the fourth quarter of 2020 compared with a loss of $1,882 million or $1.86 in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 18 cents that topped the Zacks Consensus Estimate of 8 cents.

Total sales fell around 9% year over year to $14,184 million in the quarter. The figure missed the Zacks Consensus Estimate of $15,717.5 million. Sales were hurt by lower steel shipments due to the impacts of the coronavirus pandemic on steel demand, partly offset by higher average steel selling prices.

Total steel shipments fell around 12% year over year to 17.3 million metric tons in the reported quarter. Average steel selling prices were up around 6% year over year. The steel giant benefited from improved market conditions in the fourth quarter.

 

ArcelorMittal Price, Consensus and EPS Surprise

 

ArcelorMittal Price, Consensus and EPS Surprise

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

 

Segment Review

NAFTA: Sales fell roughly 20% year over year to $3.3 billion in the reported quarter. Crude steel production fell roughly 21% year over year to 4.2 million metric tons. Steel shipments fell around 18% year over year to 4.1 million metric tons. Average steel selling price declined 2% year over year to $714 per ton.

Brazil: Sales fell around 1% year over year to $1.9 billion. Crude steel production rose roughly 15% year over year to 2.9 million metric tons. Shipments fell 5% year over year to 2.6 million metric tons. Average steel selling price went up 12% year over year to $702 per ton.

Europe: Sales declined around 5% year over year to $7.6 billion. Crude steel production rose roughly 1% year over year to 9.1 million metric tons in the reported quarter. Shipments fell around 8% year over year to 8.6 million metric tons. Average steel selling price went up roughly 6% year over year to $695 per ton.

Asia Africa and CIS (ACIS): Sales fell around 9% year over year to $1.5 billion. Crude steel production totaled 2.7 million metric tons, down roughly 10% year over year. Shipments fell around 21% year over year to around 2.4 million metric tons. Average selling prices rose around 11% year over year to $511 per ton.

Mining: Sales climbed 36% year over year to $1.5 billion. Iron ore production totaled 15.3 million metric tons, up around 3% from the year-ago quarter. Coal production totaled 1.1 million metric tons, down roughly 21% year over year.

FY20 Results

Loss (as reported) for full-year 2020 was 64 cents per share, compared with a loss of $2.42 per share a year ago. Revenues dropped roughly 25% year over year to $53.3 billion for the full year.

Financials

At the end of 2020, ArcelorMittal had cash and cash equivalents of around $6 billion, up around 19% year over year. The company’s long-term debt was $9.8 billion, down roughly 14% on a sequential-comparison basis.

Net cash from operating activities fell 32% year over year to $4,082 million for full-year 2020.

Outlook

Moving ahead, ArcelorMittal envisions global apparent steel consumption (“ASC”) to grow 4.5-5.5% in 2021. This compares with a contraction of 1% in 2020. The global steel industry is now benefiting from a favorable supply-demand balance that is supporting rising utilization as demand recovers, the company noted. ArcelorMittal sees ASC to grow year over year in 2021 in all of its core markets based on this positive outlook.

The company also revealed a new $1 billion fixed cost reduction program which it expects to complete by the end of next year. The program includes actions to improve productivity and maintenance efficiency, and rationalize support functions. The company noted that the plan includes a 20% reduction in corporate office headcount. ArcelorMittal expects to achieve the majority of the savings in 2021.

Price Performance

ArcelorMittal’s shares have gained 26.7% in the past year compared with 27.3% rise of the industry.

 

 

Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks worth considering in the basic materials space include Fortescue Metals Group Limited (FSUGY - Free Report) , Impala Platinum Holdings Limited (IMPUY - Free Report) and New Gold Inc. (NGD - Free Report) .

Fortescue has a projected earnings growth rate of 78.4% for the current fiscal. The company’s shares have surged around 147% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impala Platinum has an expected earnings growth rate of 189.4% for the current fiscal. The company’s shares have rallied around 57% in the past year. It currently carries a Zacks Rank #1.

New Gold has a projected earnings growth rate of 733.3% for the current year. The company’s shares have shot up around 107% in a year. It currently carries a Zacks Rank #2 (Buy).

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