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ArcelorMittal reports $1.77B profit in 2016

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By KEVIN NEVERS

ArcelorMittal (AM) is reporting a net income in 2016 of $1.77 billion or 62 cents per share, compared to a net loss in 2015 of $7.94 billion or $3.43.

Those results include impairment charges of $205 million ($4.8 billion in 2015); and exceptional income of $832 million “relating to a one-time gain on employee benefits following the signing of the new U.S. labor contract” (exceptional charges of $1.4 billion in 2015).

ArcelorMittal is also reporting a net income in the fourth quarter of $403 million or 13 cents per share, compared to a net income of $680 million or 22 cents in the third quarter and a net loss of $6.68 billion or $2.89 in the year-ago period.

“2016 was a year of progress for ArcelorMittal, characterized by improving market conditions, a strong contribution from our Action 2020 program, and steps from governments to address unfair trade,” AM Chair and CEO Lakshmi Mittal said in a statement released today. “As a result, EBITDA was comfortably in excess of initial expectations and, furthermore, we have delivered on our commitment to prioritize debt reduction, significantly strengthening our balance sheet, and ending the year with the lowest level of net debt since the creation of the company.”

“We enter 2017 with good momentum in the business and the market,” Mittal added. “Our increased confidence is reflected in the board’s decision to increase capital expenditure for 2017. The improvement in performance is, however, from a low base, so we will need to continue to prioritize improved returns. Central to this will be our Action 2020 program, which will sustainably improve the underlying performance of our business.”

“We will remain fully focused on continuing the good progress in the three areas of cost optimization, product mix, and volume growth,” Mittal noted. “In addition, given global overcapacity, ensuring fair trade remains crucial and we will continue to call for a comprehensive solution to unfair trade practices.”

Outlook

Global apparent steel consumption (ASC) expanded by approximately 1 percent in 2016, the company said. “Based on the current outlook, ArcelorMittal expects ASC to grow further in 2017 by between 0.5 to 1.5 percent,”

ASC did decline in the U.S. in 2016 by 1 to 1.5 percent, “driven in large part of a significant destock” in the second half of the year, the company said. “However, underlying demand continues to expand, and the expected absence of a further destock in 2017 should support ASC growth in the U.S. of approximately 3 to 4 percent.”

ArcelorMittal estimates an increase of capital expenditures in 2017 to $2.9 billion, from $2.4 billion in 2016; a decrease of interest expense to $900 million, from $1.1 billion in 2016; and an increase in taxes and pension-fund contributions of $200 million.

“As result, the company expects the cash needs of the business in 2017 to increase to $5 billion, from $4.5 billion in 2016,” ArcelorMittal said.

Footprint Optimization

at Indiana Harbor

Meanwhile, ArcelorMittal is reporting that its footprint optimization program at its Indiana Harbor facility in East Chicago is well under way and should be completed in 2018.

The plan calls for the following:

* Idling these “redundant operations”: the No. 1 aluminize line, the 84-inch hot strip mill, the No. 5 continuous galvanizing line, and the No. 2 steel shop.

* Making $200 million in capital investments: a new caster at the No. 3 steel shop (completed in the fourth quarter of 2016), restoration of the 80-inch hot strip mill, and various finishing and logistics upgrades at the facility.

2016 Numbers

* Sales of $56.79 billion ($63.57 billion in 2015).

* EBITDA (earnings before interest, taxes, depreciation) of $6.25 billion ($5.23 billion in 2015).

* Operating income of $4.16 billion (an operating loss of $4.16 billion in 2015).

* Shipments of 83.9 million metric tons (84.6 million in 2015).

* Crude steel production of 90.8 million metric tons (92.5 million in 2015).

2016 NAFTA, Including U.S. Flat, Long, and Tubular

* Sales of $15.8 billion ($17.29 billion in 2015).

* EBITDA of $1.71 billion ($891 million in 2015).

* Operating income of $2 billion (operating loss of $705 million in 2015).

* Exceptional income of $832 million (exceptional charges of $454 million in 2015).

* Steel shipments of 21.28 million metric tons (21.3 million in 2015).

* Crude steel production of 22.2 million metric tons (22.79 million in 2015).

* Average steel selling price of $672 per ton ($732 per ton in 2015).

 

US mills ship more steel in December

The American Iron and Steel Institute (AISI) is reporting that, in December, U.S. steel mills shipped 7,173,245 net tons, 6.7 percent more than in November and 9.4 more than in the year-ago period.

A breakdown of December shipments: hot rolled sheet, up 11 percent from November; cold rolled sheet, up 4 percent; and hot dipped galvanized sheet and strip, down 3 percent.

Total shipments for full year 2016 were 86,533,341 net tons, fractionally down from the 86,546,657 net tons shipped in 2015.

 

 

Posted 2/10/2017

 
 
 
 

 

 

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