Chesterton Tribune



Arcelor posts lower profit in third quarter

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ArcelorMittal is reporting a net income in the third quarter of 2018 of $899 million or 89 cents basic earnings per share, compared to a net income of $1.865 billion or $1.84 in the second quarter; and a net income of $1.205 billion or $1.18 in the year-ago period.

“As anticipated market conditions in the third quarter remained favorable, resulting in significantly improved EBITDA (earnings before interest, taxes, depreciation, and amortization) for the first nine months compared with 2017,” Chair and CEO Lakshmi Mittal said in a statement released today. “We continue to see robust real demand and healthy utilization rates across all steel segments.”

“We continue to make good progress with the implementation of our Action 2020 plan, which will improve the performance of our existing business and targets further growth in higher added value products,” Mittal added.

“The progress the industry and our company has made is significant but we remain cognizant of the challenges, including continued global overcapacity, and we remain concerned with the high level of imports in various markets,” Mittal said. “We continue to prioritize net debt reduction and a strong balance sheet to ensure we can prosper in all market conditions.”


“Market conditions remain favorable,” the company said, and “the demand environment remains positive.”

ArcelorMittal is projecting global apparent steel consumption (ASC) to grow further in 2018 by between 2 and 3 percent; and ASC in the U.S. to grow by the same, 2 to 3 percent, “driven by demand in machinery and construction.”

The company noted that it resumed dividends to shareholders in May and bought back $200 million in shares in March. “The company is committed to increase shareholder returns once (its) net debt target (of $6 billion) is achieved.”

3Q Numbers

* Sales: $18.52 billion (2Q $19.99, year-ago $17.63). Sales were 7.4 percent lower in 3Q compared to 2Q due to lower steel shipments (-5.5 percent), lower average steel selling prices (-0.7 percent) and lower market-priced iron ore shipments (-14.4 percent).

* Operating income: $1.56 billion (2Q $2.36 billion, year-ago $1.23 billion). Operating results in 3Q were impacted by impairment charges related to remedy asset sales for an acquisition.

* Operating income per ton: $76 (2Q $109, year-ago $57).

* Crude steel production: 23.3 million metric tons (2Q 23.2 million, year-ago 23.6 million).

* Steel shipments: 20.5 million metric tons (2Q 21.8 million, year-ago 21.7 million). The drop was due chiefly to lower steel shipments in Europe (-7.7 percent) and NAFTA (-5 percent); partially offset by an improvement in Brazil (+9.4 percent).

3Q NAFTA, Including U.S. Facilities

* Sales: $5.36 billion (2Q $5.35 billion, year-ago $4.63 billion). Sales were stable in 3Q due to higher average steel selling prices (+5 percent), offset by lower steel shipment volumes.

* Operating income: $612 million (2Q $660 million, year-ago $256 million).

* Crude steel production: 5.72 million tons (2Q 5.94 million, year-ago 5.9 million).

* Steel shipments: 5.51 million tons (2Q 5.8 million, year-ago 5.65 million). “Shipments were lower primarily due to weak market conditions in the U.S.,” the company said.

* Average steel selling price per ton: $896 (2Q $853, year-ago $741). Flat products sold 4.3 percent higher in 3Q than 2Q; long products, 5.2 percent higher.

Liquidity and Capital

* Net debt as of Sept. 30: $10.5 billion, the same as on June 30.

* Gross debt as of Sept. 30: $13 billion, compared to $13.6 billion on June 30.

* Net cash provided by operating activities in 3Q: $634 million, compared to $1.23 billion in 2Q and $763 million in the year-ago. The decrease reflects lower earnings and includes a working capital investment of $1.71 billion, largely reflecting a season inventory build in Europe.

* Liquidity as of Sept. 30: $8 billion, consisting of cash and cash equivalents of $2.5 billion and $5.5 billion in available credit lines.

Ongoing Capital Investment Projects

The restoration of the 80-inch hot strip mill and upgrades at Indiana Harbor finishing are expected to be completed this year.

Two new walking beam reheat furnaces at Burns Harbor are expected to be completed in 2021.



Posted 11/1/2018




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