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ArcelorMittal (MT) Posts Q1 Loss, Misses Sales Estimates

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ArcelorMittal (MT - Free Report) reported a net loss of $1,120 million or $1.11 per share in first-quarter 2020 against a profit of $414 million or 41 cents in the year-ago quarter.  

Barring one-time items, adjusted loss per share were 60 cents against the Zacks Consensus Estimate of earnings of 5 cents.

Total sales fell 22.6% year over year to $14,844 million in the quarter. The figure also trailed the Zacks Consensus Estimate of $15,509.5 million.

Total steel shipments fell 10.6% year over year to 19.5 million metric tons.

 ArcelorMittal Price, Consensus and EPS Surprise

 

 

Segment Review

NAFTA: Crude steel production rose 2.1% year over year to 5.5 million metric tons in the reported quarter. Steel shipments rose 4.1% year over year to 5.5 million metric tons. Sales fell 15.4% year over year to $4.3 billion. Average steel selling price declined 18.2% year over year to $715 per ton.

Brazil: Crude steel production fell 11.1% year over year to 2.7 million metric tons. Shipments fell 18.4% year over year to 2.4 million metric tons. Sales declined 26.2% year over year to $1.6 billion. Average steel selling price fell 8.8% year over year to $642 per ton.

Europe: Crude steel production fell 19.9% year over year to 9.9 million metric tons in the reported quarter. Shipments fell 19.5% year over year to nearly 9.3 million metric tons. Sales fell 27.1% year over year to $7.7 billion, while average steel selling price declined 12.5% year over year to $638 per ton.

Asia Africa and CIS (ACIS): Sales fell 12.1% year over year to $1.4 billion. Crude steel production totaled nearly 3 million metric tons, down 9.8% year over year. Shipments fell 1.8% year over year to around 2.6 million metric tons. Average selling prices declined 12.9% year over year to $471 per ton.

Mining: Iron ore production totaled 14.4 million metric tons, up from 14.1 million metric tons in the year-ago quarter. Coal production totaled 1.3 million metric tons, up from 1.2 million metric tons in the prior-year quarter. Sales fell 12.2% year over year to $990 million.

Financials

At the end of the first quarter of 2020, ArcelorMittal had cash and cash equivalents of around $4.3 billion, up from $2.2 billion in first-quarter 2019. The company’s long-term debt was $10.7 billion, up 0.6% year over year.

Net cash from operating activities fell 38.8% year over year to $594 million in the first quarter.

Outlook

The company expects steel shipments for the second quarter in the range 13.5-14.5 million metric tons. It expects fixed costs to decline 25-30% in the second quarter resulting from the actions taken by the company to reduce all costs in-line with reduced operating rates. EBITDA for the second quarter is expected to between $0.4 billion and $0.6 billion.

Moreover, the company’s board has suspended dividend payments until the operating environment normalizes. The company also withdrew its guidance for apparent steel consumption.

Price Performance

ArcelorMittal’s shares have lost 33.8% in the past year compared with 30.2% decline of the industry.



Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited (AEM - Free Report) , Newmont Corporation (NEM - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 74.2% for 2020. The company’s shares have surged 58.7% in the past year.

Newmont has an expected earnings growth rate of 96.2% for 2020. Its shares have returned 108.8% in the past year.    

Franco-Nevada has an expected earnings growth rate of 22% for 2020. The company’s shares have surged 89.2% in the past year.

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