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ArcelorMittal's (MT) Q3 Earnings Beat Estimates, Sales Miss
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ArcelorMittal (MT - Free Report) recorded profits of $929 million or $1.10 per share in third-quarter 2023 compared with $993 million or $1.11 in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.03.
Total sales fell around 12% year over year to $16,616 million in the quarter. The figure missed the Zacks Consensus Estimate of $17,075.1 million. The downside was primarily due to a decline in average steel selling prices.
Total steel shipments rose 0.8% year over year to 13.7 million metric tons in the reported quarter. It was above our estimate of 13.3 million metric tons.
NAFTA: Sales fell nearly 7.3% year over year to $3,188 million in the reported quarter. Crude steel production remained flat year over year at 2,122 million metric tons. Steel shipments increased around 8% year over year to 2,527 million metric tons, lower than our estimate of 2,225 million metric tons. The average steel selling price declined 12.4% to $1,043 per ton.
Brazil: Sales increased around 2% year over year to $3,560 million. Crude steel production rose 23.6% year over year to 3,669 million metric tons. Shipments increased 26.8% year over year to 3,599 million metric tons, higher than our estimate of 2,697 million metric tons. Average steel selling prices fell 18% to $932 per ton.
Europe: Sales declined around 16.8% year over year to $8,894 million. Crude steel production fell roughly 6.5% to 7,475 million metric tons in the reported quarter. Shipments declined around 7.7% to 6,538 million metric tons, lower than our estimate of 6,876 million metric tons. The average steel selling price went down roughly 11% year over year to $1,020 per ton.
Asia Africa and CIS (ACIS): Sales fell around 11.5% year over year to $1,389 million. Crude steel production totaled 1,925 million metric tons, up about 4.5%. Shipments increased 1.4% year over year to around 1,698 million metric tons, higher than our estimate of 1,605 million metric tons. Average selling prices dropped about 12% to $681 per ton.
Mining: Sales declined 1.8% year over year to $729 million. Iron ore production totaled 6.7 million metric tons, down around 2.9% from the year-ago quarter’s levels. Iron ore shipments were down 8.7% to 6.3 million metric tons.
Financials
In the reported quarter, net cash provided by operating activities was $1,281 million compared with $1,981 million in the year-ago quarter. The company’s net debt was around $4.3 billion, down roughly 6% sequentially.
Outlook
ArcelorMittal continues to expect global apparent steel consumption (excluding China) to rise 1-2% in 2023 on a year-over-year basis.
The company maintains a positive outlook on the medium to long-term demand for steel, supported by its strong financial position. For fiscal 2023, capital expenditures are anticipated to be near the mid-point of the previously communicated guidance of $4.5-$5 billion. The company's strategic growth projects are progressing as planned and are estimated to generate an additional $1.3 billion in normalized EBITDA.
The company anticipates a working capital release for the year, with a working capital investment of $0.9 billion for the first nine months of 2023. The fourth-quarter 2023 free cash flow is expected to remain healthy.
Price Performance
Shares of ArcelorMittal have lost 19.4% in the past year compared with a 13.9% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
ArcelorMittal currently carries a Zacks Rank #5 (Strong Sell).
The consensus estimate for CRS’s current fiscal year earnings is pegged at $3.57, indicating year-over-year growth of 213.2%. CRS beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have surged 65.6% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised 3.3% upward in the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4% on average. ANDE shares have rallied around 27.8% in a year.
The consensus estimate for Linde’s current fiscal year earnings is pegged at $14.08, indicating a year-over-year growth of 14.6%. LIN beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 5.7%. The company’s shares have rallied 18.4% in the past year.
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ArcelorMittal's (MT) Q3 Earnings Beat Estimates, Sales Miss
ArcelorMittal (MT - Free Report) recorded profits of $929 million or $1.10 per share in third-quarter 2023 compared with $993 million or $1.11 in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.03.
Total sales fell around 12% year over year to $16,616 million in the quarter. The figure missed the Zacks Consensus Estimate of $17,075.1 million. The downside was primarily due to a decline in average steel selling prices.
Total steel shipments rose 0.8% year over year to 13.7 million metric tons in the reported quarter. It was above our estimate of 13.3 million metric tons.
ArcelorMittal Price, Consensus and EPS Surprise
ArcelorMittal price-consensus-eps-surprise-chart | ArcelorMittal Quote
Segment Review
NAFTA: Sales fell nearly 7.3% year over year to $3,188 million in the reported quarter. Crude steel production remained flat year over year at 2,122 million metric tons. Steel shipments increased around 8% year over year to 2,527 million metric tons, lower than our estimate of 2,225 million metric tons. The average steel selling price declined 12.4% to $1,043 per ton.
Brazil: Sales increased around 2% year over year to $3,560 million. Crude steel production rose 23.6% year over year to 3,669 million metric tons. Shipments increased 26.8% year over year to 3,599 million metric tons, higher than our estimate of 2,697 million metric tons. Average steel selling prices fell 18% to $932 per ton.
Europe: Sales declined around 16.8% year over year to $8,894 million. Crude steel production fell roughly 6.5% to 7,475 million metric tons in the reported quarter. Shipments declined around 7.7% to 6,538 million metric tons, lower than our estimate of 6,876 million metric tons. The average steel selling price went down roughly 11% year over year to $1,020 per ton.
Asia Africa and CIS (ACIS): Sales fell around 11.5% year over year to $1,389 million. Crude steel production totaled 1,925 million metric tons, up about 4.5%. Shipments increased 1.4% year over year to around 1,698 million metric tons, higher than our estimate of 1,605 million metric tons. Average selling prices dropped about 12% to $681 per ton.
Mining: Sales declined 1.8% year over year to $729 million. Iron ore production totaled 6.7 million metric tons, down around 2.9% from the year-ago quarter’s levels. Iron ore shipments were down 8.7% to 6.3 million metric tons.
Financials
In the reported quarter, net cash provided by operating activities was $1,281 million compared with $1,981 million in the year-ago quarter. The company’s net debt was around $4.3 billion, down roughly 6% sequentially.
Outlook
ArcelorMittal continues to expect global apparent steel consumption (excluding China) to rise 1-2% in 2023 on a year-over-year basis.
The company maintains a positive outlook on the medium to long-term demand for steel, supported by its strong financial position. For fiscal 2023, capital expenditures are anticipated to be near the mid-point of the previously communicated guidance of $4.5-$5 billion. The company's strategic growth projects are progressing as planned and are estimated to generate an additional $1.3 billion in normalized EBITDA.
The company anticipates a working capital release for the year, with a working capital investment of $0.9 billion for the first nine months of 2023. The fourth-quarter 2023 free cash flow is expected to remain healthy.
Price Performance
Shares of ArcelorMittal have lost 19.4% in the past year compared with a 13.9% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
ArcelorMittal currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS - Free Report) and The Andersons Inc. (ANDE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and Linde plc (LIN - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CRS’s current fiscal year earnings is pegged at $3.57, indicating year-over-year growth of 213.2%. CRS beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have surged 65.6% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised 3.3% upward in the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4% on average. ANDE shares have rallied around 27.8% in a year.
The consensus estimate for Linde’s current fiscal year earnings is pegged at $14.08, indicating a year-over-year growth of 14.6%. LIN beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 5.7%. The company’s shares have rallied 18.4% in the past year.