ArcelorMittal (MT - Free Report) reported net loss of $539 million or 53 cents per share in third-quarter 2019 against net income of $899 million or 89 cents in the year-ago quarter. The results were impacted by higher raw material costs and lower steel prices. Loss per share was wider than the Zacks Consensus Estimate of a loss of 29 cents.
Total sales fell 10.2% year over year to $16,634 million in the quarter. The figure also trailed the Zacks Consensus Estimate of $16,655.5 million.
Total steel shipments fell 1.7% year over year to 20.2 million metric tons. Excluding the impact of the ArcelorMittal Italia buyout, steel shipments dropped 1.6%. Average steel selling prices fell around 11.1% year over year.
NAFTA: Crude steel production fell 1.1% year over year to 5.7 million metric tons. Steel shipments fell around 6.8% year over year to 5.1 million metric tons. Sales fell nearly 18.1% year over year to roughly $4.4 billion. Average steel selling price declined nearly 11.6% year over year to $792 per ton.
Brazil: Crude steel production fell roughly 15.5% year over year to 2.7 million metric tons. Shipments fell around 9.3% year over year to 2.8 million metric tons. Sales declined nearly 8.3% year over year to $1.9 billion. Average steel selling price fell roughly 5.3% year over year to $676 per ton.
Europe: Crude steel production fell 3.8% year over year to 10.4 million metric tons in the reported quarter. Shipments inched down around 0.1% year over year to roughly 9.7 million metric tons. Sales fell around 8% year over year to $8.8 billion, while average steel selling price declined 11.6% year over year to $686 per ton.
Asia Africa and CIS (ACIS): Sales fell around 16.8% year over year to $1.7 billion. Crude steel production totaled roughly 3.5 million metric tons, down around 3.1% year over year. Shipments fell around 9% year over year to 2.7 million metric tons. Average selling prices declined roughly 10.9% year over year to $532 per ton.
Mining: Iron ore production totaled 13.6 million metric tons, down from 14.5 million metric tons in the year-ago quarter. Coal production totaled 1.4 million metric tons, down from 1.5 million metric tons in the prior-year quarter. Sales rose 17.3% year over year to $1.2 billion.
At the end of the third quarter, ArcelorMittal had cash and cash equivalents of roughly $3.6 billion, up from $2.5 billion in the prior-year quarter. The company’s long-term debt was around $11 billion, up roughly 32.5% year over year.
Net cash from operating activities fell nearly 48.3% year over year to $328 million.
On the basis of year-to-date growth and the current economic outlook, ArcelorMittal revised expectations for global apparent steel consumption (ASC) growth for 2019. It now sees global ASC to increase in the range of 0.5-1% compared with 0.5-1.5% growth expected earlier.
In the United States, the company expects ASC to contract by 0.5-1% compared with prior range of flat to 1% growth. Healthy growth in non-residential construction demand is likely to be offset by ongoing weakness in automotive demand and a slowdown in machinery demand.
In Europe, ongoing automotive demand weakness and slowing construction is expected to dent ASC growth. These factors are expected to contract ASC by up to 3% compared with prior view of 1-2% decline.
In Brazil, ASC is expected to rise 0.5-1%, down from 1.5-2.5% growth expected earlier. In China, the company expects overall ASC to grow 1.5% to 2%, up from 0.5% to 1.5% expected earlier. Real estate demand is expected to drive the upside.
The company now expects to witness stable steel shipments in 2019 on a year-over-year basis. Capital expenditure guidance for the year has been trimmed to $3.5 billion for 2019 compared with $3.8 billion expected earlier.
ArcelorMittal’s shares have plunged 32.3% in the past year compared with 25.6% decline of the industry.
Zacks Rank & Stocks to Consider
ArcelorMittal currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are Impala Platinum Holdings Ltd (IMPUY - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Impala Platinum has an expected earnings growth rate of 248.3% for the current fiscal year. The company’s shares have surged 293% in the past year.
Franco-Nevada has projected earnings growth rate of 39.3% for 2019. The company’s shares have rallied 47.7% in a year.
Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 70% in the past year.
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