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ArcelorMittal's (MT) Q2 Earnings Beat Estimates, Sales Lag

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ArcelorMittal (MT - Free Report) recorded profits of $4,005 million or $3.46 per share in the second quarter of 2021, compared with a loss of $559 million or 50 cents in the year-ago quarter. Earnings per share topped the Zacks Consensus Estimate of $2.70.

Total sales increased around 76% year over year to $19,343 million in the quarter. However, the figure missed the Zacks Consensus Estimate of $19,668.5 million. Sales were driven by higher average steel selling prices and shipments as well as higher iron ore prices, partly offset by lower iron ore shipments.

Total steel shipments climbed roughly 31% year over year at 16.1 million metric tons in the reported quarter. Average steel selling prices were up around 61% year over year. The steel giant benefited from continued demand recovery in the second 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 rose roughly 16% year over year to $3.2 billion in the reported quarter. Crude steel production declined roughly 39% year over year to 2.3 million metric tons. Steel shipments fell around 32% year over year to 2.6 million metric tons. Average steel selling price increased around 59% year over year to $1,062 per ton.

Brazil: Sales increased around 171% year over year to $3.3 billion. Crude steel production rose roughly 86% year over year to 3.2 million metric tons. Shipments increased around 44% year over year to 3 million metric tons. Average steel selling price went up roughly 89% year over year to $1,038 per ton.

Europe: Sales increased around 84% year over year to $10.7 billion. Crude steel production rose roughly 33% year over year to 9.4 million metric tons in the reported quarter. Shipments rose around 22% year over year to 8.3 million metric tons. Average steel selling price went up roughly 50% year over year to $948 per ton.

ACIS: Sales rose around 126% year over year to $2.8 billion. Crude steel production totaled 3 million metric tons, up about 52% year over year. Shipments rose 17% year over year to around 2.8 million metric tons. Average selling prices went up around 98% year over year to $806 per ton.

Mining: Sales climbed around 46% year over year to $889 million. Iron ore production totaled 4.9 million metric tons, down around 27% from the year-ago quarter’s levels. Iron ore shipments fell roughly 32% year over year to 4.6 million metric tons.

Financials

At the end of the second quarter, ArcelorMittal had cash and cash equivalents of around $4.2 billion, down around 26.3% year over year. The company’s long-term debt was $6.6 billion, down roughly 37% on a year over year basis.

Net cash from operating activities jumped nearly eightfold year over year to $2.3 billion for the quarter. Free cash flow was $1.7 billion for the quarter. The company also announced a new share buyback program worth $2.2 billion, partly funded by the sale of its U.S. operations last year.

Outlook

ArcelorMittal raised its outlook for global apparent steel consumption (“ASC”) for 2021 as it expects demand to further improve in the second half. It now envisions ASC to increase 7.5-8.5% in 2021, up from its earlier growth expectation of 4.5-5.5%. A favorable supply demand balance and a low inventory environment are supporting higher utilization levels and healthy steel spreads, the company noted.

Price Performance

Shares of ArcelorMittal have surged 220.2% in a year compared with a 146.5% rise of the industry.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

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 Nucor Corporation (NUE - Free Report) , LyondellBasell Industries N.V. (LYB - Free Report)   and Cabot Corporation (CBT - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nucor has a projected earnings growth rate of 490.1% for the current year. The company’s shares have surged around 120% in a year.

LyondellBasell has an expected earnings growth rate of 222.6% for the current year. The company’s shares have shot up around 61% in the past year.

Cabot has an expected earnings growth rate of around 137.5% for the current fiscal. The company’s shares have gained roughly 40% in the past year.