Tuesday, May 29, 2012

ArcelorMittal Surpasses Estimates

Recently, ArcelorMittal (MT) reported results for the fourth quarter and full year 2009. During the quarter, ArcelorMittal recorded net income of $1.1 billion, or 71 cents, as compared to a net loss of $2.6 billion, or $1.93 per share, for the fourth quarter of 2008.

Reported EPS was much higher than the Zacks Consensus Estimate of 19 cents. Net income for the twelve months ended December 31, 2009 was $0.1 billion, or 8 cents, versus $9.4 billion, or $6.80 per share, in 2008. Full year EPS was also well above the Zacks Consensus Estimate for a loss of 47 cents.

During the quarter, sales were $18.6 billion, down from $22.1 billion in the year-ago quarter. Despite the improvement in demand, sales remain substantially lower year-over-year due to the global economic crisis. Full year 2009 sales were $65.1 billion, versus $124.9 billion in 2008. Sales were lower due to lower average steel selling prices (-27%) and lower steel shipment volumes (-30%) based on a sharp drop in global steel demand following the global economic crisis.

Total steel shipments for the three months ended December 31, 2009 were 20.0 million metric tonnes, as compared with steel shipments of 17.1 million metric tonnes for the three months ended December 31, 2008. This increase results from improved demand across all segments in the fourth quarter of 2009, as compared with the third quarter of 2009.

Total steel shipments for the twelve months ended December 31, 2009 decreased to 71.1 million metric tonnes, as compared with total steel shipments of 101.7 million metric tonnes in 2008.

The first quarter of 2010 EBITDA is expected to be approximately $1.8 - $2.2 billion. Shipments are expected to be higher during the first quarter of 2010, as compared to the fourth quarter of 2009, but this increase is expected to be offset by slightly lower average selling prices and increased costs.

ArcelorMittal expects a surge in steel demand in the coming months, largely due to the technical recovery as inventory de-stocking nears completion. Although the steel sector scenario remains unpredictable, we also expect a gradual sales recovery in the next couple of quarters. However, we do not expect demand to return to the levels of 2008 in the medium term.

A reversal of global economic activity triggered by the intensification of the credit crisis last September led steelmakers to stop operations at several plants, lay off staff and refinance debt. The U.S. steelmakers are still operating at almost half their capacity. According to the American Iron and Steel Institute, U.S. plant capacity is at 53.9%, below 90.4% a year ago.

Global steel prices have fallen in some regions from their peak in mid-2008, as the recession triggers a reduction in demand from sectors such as construction and automotives. We believe this will continue in the very near term.

Author's Disclosure: none

No comments:

Post a Comment