Back to top

Image: Bigstock

ArcelorMittal's (MT) Q1 Earnings Miss, Sales Top Estimates

Read MoreHide Full Article

ArcelorMittal (MT - Free Report) recorded lower profits in first-quarter 2019. The company generated net income of $414 million or 41 cents per share, down from $1,192 million or $1.17 in the year-ago quarter. The results were impacted by higher raw material costs and lower steel prices.

Barring one-time items, adjusted earnings per share (EPS) came in at 53 cents, which missed the Zacks Consensus Estimate of 88 cents.

Total sales rose modestly to $19,188 million in the quarter from $19,186 million in the year-ago quarter. The figure beat the Zacks Consensus Estimate of $18,825 million.

Total steel shipments rose to 21.8 million metric tons from 21.3 million in the year-ago quarter. The upside can be attributed to higher steel shipments in Europe, partly offset by lower steel shipments in ACIS and NAFTA. Average steel selling prices fell 3.1% year over year in the quarter.

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 8.1% year over year to 5.4 million metric tons. Steel shipments fell 4.3% year over year to 5.3 million metric tons. Sales increased roughly 7% year over year to roughly $5.1 billion. Average steel selling price rose 12.2% year over year to $874 per ton.

Brazil: Crude steel production rose roughly 7.6% year over year to 3 million metric tons. Shipments rose around 16% year over year to 2.9 million metric tons. Sales increased 8.5% year over year to $2.2 billion. Average steel selling price fell roughly 6.4% year over year to $704 per ton.

Europe: Crude steel production rose 10% year over year to 12.4 million metric tons in the reported quarter. Shipments rose 8% year over year to roughly 11.6 million metric tons. Sales fell around 1.4% year over year to $10.5 billion, while average steel selling price fell 9% year over year to $729 per ton.

Asia Africa and CIS (ACIS): Sales fell around 20.9% year over year to $1.6 billion. Crude steel production totaled roughly 3.3 million metric tons, down around 2.3% year over year. Shipments fell around 12.1% year over year to 2.7 million metric tons. Average selling prices declined roughly 11.3% year over year to $541 per ton.

Mining: Iron ore production totaled 14.1 million metric tons, down from 14.6 million metric tons a year ago. Coal production totaled 1.2 million metric tons, down from 1.5 million metric tons a year ago. Sales were up 10.1% year over year to $1.1 billion.

Financials

As of Mar 31, 2019, ArcelorMittal had cash and cash equivalents of roughly $2.2 billion, down from $2.3 billion a year ago. The company’s long-term debt was around $10.6 billion, up roughly 13.8% year over year.

Net cash from operating activities amounted to $971 million compared with $160 million in the year-ago quarter.

Outlook
 
In 2019, ArcelorMittal anticipates global apparent steel consumption (ASC) growth in the range of 1-1.5%, up from 0.5-1% growth expected earlier.

In the United States, the company projects ASC growth of 0.5-1.5% in 2019, unchanged from prior view. This is expected to be driven by persistent growth in non-residential construction and machinery.  

In Europe, weak manufacturing and falling automotive production are expected to weigh on ASC growth. These factors are expected to contract ASC up to 1% in 2019, against rise of up to 1% expected earlier.

In Brazil, ASC is expected to rise 3-4%, down from 3.5-4.5% increase expected earlier. The downside is likely to stemming from weaker-than-expected economic growth early in 2019.

In China, the company expects overall demand to grow flat to 1% in 2019, up from a decline of -0.5% to -1.5% expected earlier. Real estate demand along with economic stimulus is expected to drive the upside.  

The company expects to witness higher steel shipments in 2019 on year-over-year basis. Capital expenditure for the year is expected to increase to $4.3 billion from $3.3 billion in 2018.  

Price Performance

ArcelorMittal’s shares have lost 46.5% in the past year compared with 33.6% decline of the industry.



Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Materion Corporation (MTRN - Free Report) , Verso Corporation and AngloGold Ashanti Limited (AU - Free Report) , all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Materion has an expected earnings growth rate of 16.4% for 2019. The company’s shares have gained 25% in the past year.

Verso has an expected earnings growth rate of 7% for the current year. The company’s shares have appreciated 17.1% in a year’s time.

AngloGold has an expected earnings growth rate of 86.8% for 2019. Its shares have rallied 30.7% in a year’s time.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.

See 7 breakthrough stocks now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ArcelorMittal (MT) - free report >>

AngloGold Ashanti PLC (AU) - free report >>

Materion Corporation (MTRN) - free report >>

Published in