Monday, December 6

Arcelormittal achieves its highest income in 13 years thanks to high steel prices

Arcelormittal has registered strong increases in the results of its first nine months of the year, but it has fallen short of analysts’ forecasts.

The steel group obtained a net profit of 9,511 million euros, compared to losses of 1,680 million euros suffered during the same period of 2020.

Its net debt as of September 30, 2021, on the other hand, was reduced by 959 million euros only during the third quarter to stand at 3.4 billion euros in total.

The CEO of the firm, Aditya Mittal, has ensured that the results obtained by his company during the third quarter “were supported by the price environment, which resulted in highest net income and lowest net debt since 2008”.

Steel prices drive results

The Arcelormittal turnover from January to September 2021 was 48,297 million euros, which represents a year-on-year growth of 42% compared to 33,851 million euros last year.

The company’s ebitda reached 12,430 million euros, well above the 2,230 million euros in the same period of 2020.

The company’s good results have come on the back of high steel prices, despite the fact that total steel shipments between June and September experienced a drop.

Total steel shipments during the third quarter, the company states in your communication to the CNMV, were 14.6 million tons, 9% less than the 16.1 million of the second.

Arcelormittall attributes this drop to lower demand, especially in an auto industry that has canceled orders, to production limitations and shipping delays, which it expects to reverse during the fourth quarter of 2021.

A good result that falls short

Despite the good results achieved by the steelmaker, the figures presented are not as good as the analysts predicted.

Revenues are down 6 percent from expert consensus forecasts, and 3 percent with respect to Income4, while ebitda is 2 percent less than the consensus, and 1 percent less than that of Renta4.

Although it has not met expectations, Citi rates the results of Arcelormittal as strong, predicting that the results will be well received by investors.

Bloomberg Intelligence highlights the steelmaker’s confidence in recovering in the remainder of the year some of the shipments lost during the third quarter, noting that the company can still exceed the consensus forecasts.

Confidence for the future

Arcelormittal has indicated in its announcement of results that it trusts that global demand for steel grow between 12% and 13% this year, with the exception of China.

The CEO of the company has maintained that the price of steel, despite falling from recent record peaks, remains at high levels, which will be reflected in the annual contracts for 2022.

Aditya Mittal also emphasized the strength of the company during the year “despite the volatility they continue to see as a result of the presence and impact of Covid-19”, stressing that the company has repositioned its balance sheet and has reorganized for the transition to a low carbon economy.

The market has responded positively to the results of the company, which has registered increases of 2% during the first hour of trading on the IBEX 35.

Bankinter expects a more neutral reaction to the results after several quarters of surprises, but recommends your daily market analysis the purchase of shares in the company, pointing to the third quarter EBITDA, the highest since 2008, surpassing the previous quarter by 19.9%.

The results, argue from Bankinter, show a strong operating evolution compared to the previous quarter, despite the fact that this is based more on prices than on volumes.

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