ArcelorMittal

ArcelorMittal

20 November 2018Reading time: 2 minutes

This year’s third quarter results of ArcelorMittal where a mixed bag. The revenue decreased on a quarterly basis with 7,3 percent to 18,5 billion dollar. However on an annual basis the revenue increased with 5 percent. Also the ebitda stayed a little behind compared to the second quarter of this year at 2,7 billion dollar. The net profit was lower as well, which was according to ArcelorMittal, due to a one-off depreciation on the acquisition of the Italian steel company Ilva.

Furthermore, ArcelorMittal shipped approximately 5,5 percent less steel over the third quarter, compared to the same period last year. Also the work capital was higher than expected, which caused the net debt to increase to 10,5 billion dollar. Nevertheless the company holds on to the Action 2020 plan, which main goal is to improve the profitability.

Besides the acquisition of Ilva ArcelorMittal also recently won the takeover battle for the bankrupt Indian steel company Essar Steel. This gives ArcelorMittal the opportunity to strengthen its market position in India, which is the fastest growing steel market of the world at this moment. The steel company expects that the worldwide demand for steel will grow in the coming period with approximately 2 to 3 percent.

However, ArcelorMittal does have concerns about the development of the steel prices. Partly because of the geopolitical tensions and worldwide overproduction, the prices have come under pressure. Earlier this year the American president Donald Trumps implemented higher import tariffs on steel and aluminium from, among others, the European Union. It remains to be seen how the steel prices will develop in the coming period.

The slightly disappointing third quarter results were no direct reason for investors to lose trust in the share. However, the stock price did plummeted over the past weeks after the news about fellow steel company ThyssenKrupp. The German company became discredited after the announcement of a cartel investigation by the Bundeskartellamt. Because of this situation, ThyssenKrupp recently issued a profit warning. ArcelorMittal also received a large fine earlier this year because of cartel agreements. It remains to be seen how this case will end for ThyssenKrupp and if this will have further effects for ArcelorMittal.

At this moment (13.11.2018) the stock price of ArcelorMittal is 21,75 euro, which is more than 12 percent lower compared to a year earlier. The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider such risk when making their investment decisions. Developments can be different at any time than investors expect, which can result in capital losses.

Vontobel products on ArcelorMittal are tradable at DEGIRO.



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21/09/2019 19:47:41