ArcelorMittal Posts Profit In Q3, Sales Down; Warns On Q4 Profit

Steel and mining company ArcelorMittal (MT) Tuesday reported profit in its third quarter, compared to last year's loss, on the absence of prior year's charges. Net sales declined due to lower steel shipments and prices.

Looking ahead, the company said it expect a sequential decline in fourth-quarter profitability. The forecast reflects lower steel prices in the US, together with the impact of rapidly rising metallurgical coal prices on steel spreads in other geographies. The company also expects fourth-quarter steel shipments to be similar to that of third quarter.

In Amsterdam, ArcelorMittal shares were losing around 5.02 percent to 5.82 euros.

Lakshmi Mittal, chairman and CEO of ArcelorMittal said, "Looking ahead, while real demand remains stable, we will be impacted by the unexpected significant increase in the price of coal. While expectations are for steel prices to align with the increased costs, in the interim the higher coal price will impact steel spreads and fourth quarter performance."

The company expects cash flows from operating activities to exceed capex in 2016.

Based on the current economic outlook, ArcelorMittal expects global apparent steel consumption to grow slightly in 2016 as compared to 2015



to about 0.5 percent, compared to previous forecast of 0 percent to plus 0.5 percent.

 

In its third quarter, ArcelorMittal's net income attributable to equity holders was $680 million or $0.22 per share, compared to last year's net loss of $711 million or $0.31 per share. The prior year's results were hurt by exceptional charges of $527 million, including $0.5 billion related to the write-down of inventory.

Operating income soared to $1.20 billion from $20 million a year ago. EBITDA, a key earnings metric, was $1.90 billion in the latest quarter, 40.4 percent higher than the prior year. EBITDA margin was 13.1 percent, higher than last year's 8.7 percent.

Net sales declined 6.8 percent to $14.52 billion from $15.59 billion last year. The drop in sales mainly reflected decline in steel shipment volumes, average steel selling prices, and market-priced iron ore shipments. These were partly offset by higher iron ore reference prices.

Steel shipments were 20.3 million metric tonnes in the third quarter, down 3.6 percent from last year. Crude steel production dropped to 22.6 million tonnes from 23.1 million tonnes a year ago. Own iron ore production was down to 13.7 million metric tonnes from 15.4 million metric tonnes last year.