Friday, December 3

Arcelormittal aims for another record quarter

Arcelormittal It will present its third quarter results this Thursday and analysts believe the steelmaker could beat the good figures presented in July.

In the first six months of the year, the company made a net profit of 5.3 billion euros, thanks to a “strong and continuous” recovery, according to CEO Aditya Mittal.

“It supported the best quarterly and semi-annual result that we have reported since 2008,” explained the manager of the Indian steel giant.

4 billion in Q3

The consensus consulted by He estimates that the good path will not only continue in the third quarter, but that it will improve substantially.

The panel of analysts points to a net profit of 4,092 million euros, about a billion more than the earnings in the first half.

Sales would skyrocket to 18,915 million, which represents more than half of the 29,940 million in revenue between January and June. In year-on-year terms, the forecasts raise this section by about 7,000 million compared to the 11,300 million in sales in the third quarter of last year.

“The delay in prices could make the third quarter the best result of 2021 for the European and Mining divisions of Arcelormittal, despite the fact that the spot prices of the rolled coil (HRC) have fallen since August,” they explain at Bloomberg Intelligence.

“Significant” increase in ebitda

Analysts highlight the behavior in two regions, the United States and Brazil, where “steel values ​​continue to be high.”

Something that will improve the company’s ebitda thanks to a boost that “could even be carried into the fourth quarter”, they explain in Bloomberg Intelligence.

Adjusted ebitda would have grown 8.7 percent”, They specify in Rent 4 in a report prior to the results in which they highlight the“ greater contribution of network assets in the United States and Brazil ”as well as“ a greater renewable installed capacity ”.

“The strength of the order book will be observed, especially in the automotive sector. In addition, Arcelormittal will apply a surcharge for certain grades of steel due to the inflation of the cost of energy ”, detail the experts of Bloomberg.

“We expect a significant increase in ebitda,” say Deutsche Bank analysts, whose estimates indicate that it will stand at 6,100 million euros. The consensus consulted, for its part, places the quarterly ebitda at 5,330 million at the end of the quarter compared to 6,800 million in the first half of 2021.

According to analysts at the German bank, the improvement in ebitda should “offset the price of iron ore,” which recently registered the biggest drop in China in the past year, plummeting 10 percent.

“Although we believe that the steel cycle has peaked near the presentation of results, and volatility in energy prices is affecting sentiment, strong prices from China coupled with the export tax should provide support,” they claim in Deutsche Bank.

Precisely, Arcelormittal stopped production a few weeks ago in several of its factories in Europe due to high energy prices, which have climbed since the summer to reach all-time highs.

Potential for highs since 2008

But not only have energy prices gone up; Raw materials have also staged a bullish rally in the year that has intensified in the last quarter.

Steel coil futures, one of the indispensable references for Arcelormittal, have soared more than 80 percent in the accumulated of the year, reaching more than 1,880 dollars per ton.

Something that has left a strong revaluation for the shares of the steel companies, with Arcelormittal adding a revaluation of more than 40 percent in the year. Acerinox, the other listed company in the IBEX 35 sector, adds more than 20 percent.

The increases will continue according to the panel of experts consulted. Specifically, analysts give potential for Arcelormittal shares of 46 percent, which shows a target price of 41.71 euros per share compared to the 28.50 in which they are listed now. If they reached that level, the titles would mark their highest since precisely 2008.

In this sense, Deutsche Bank experts point out that the market will also be pending the ongoing share buy-back program of $ 1,600 million – about 1,300 million euros – as well as the “inflow of cash after the sale of shares of CLF for 1,200 million dollars ”.

Something that could reduce the company’s net debt to 3,300 million dollars, about 2,800 million euros, compared to the 5,000 million to which this indicator fell in the first half of the year.

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