ArcelorMittal's (MT) Earnings and Sales Beat Estimates in Q2

ArcelorMittal MT reported a net loss of $559 million or 50 cents per share in second-quarter 2020, wider than a loss of $447 million or 44 cents in the year-ago quarter.

Barring one-time items, adjusted loss per share was 30 cents that was narrower than the Zacks Consensus Estimate of a loss of 50 cents.

Total sales fell 43.1% year over year to $10,976 million in the quarter. The figure beat the Zacks Consensus Estimate of $10,404 million.

Total steel shipments fell 35.1% year over year to 14.8 million metric tons.

Operating performance in the second quarter reflects the impact of the coronavirus pandemic on steel business, which affected demand and steel shipments.

ArcelorMittal Price, Consensus and EPS Surprise

ArcelorMittal Price, Consensus and EPS Surprise

ArcelorMittal price-consensus-eps-surprise-chart | ArcelorMittal Quote

Segment Review

NAFTA: Crude steel production fell 33.8% year over year to 3.7 million metric tons in the reported quarter. Steel shipments fell 30.2% year over year to 3.8 million metric tons. Sales fell 45.2% year over year to $2.8 billion. Average steel selling price declined 19.9% year over year to $670 per ton.

Brazil: Crude steel production fell 40.2% year over year to 1.7 million metric tons. Shipments fell 26.1% year over year to 2.1 million metric tons. Sales declined 43.9% year over year to $1.2 billion. Average steel selling price fell 22% year over year to $550 per ton.

Europe: Crude steel production fell 41.4% year over year to 7.1 million metric tons in the reported quarter. Shipments fell 42.3% year over year to nearly 6.8 million metric tons. Sales declined 44.2% year over year to $5.8 billion, while average steel selling price dropped 10.1% year over year to $633 per ton.

Asia Africa and CIS (ACIS): Sales fell 37.9% year over year to $1.2 billion. Crude steel production totaled nearly 2 million metric tons, down 39.9% year over year. Shipments fell 24.7% year over year to around 2.4 million metric tons. Average selling prices declined 23.9% year over year to $408 per ton.

Mining: Iron ore production totaled 13.5 million metric tons, down from 14.6 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 fell 25.2% year over year to $1,064 million.

Financials

At the end of the second quarter of 2020, ArcelorMittal had cash and cash equivalents of around $5.7 billion, up from $4.3 billion in the first quarter. The company’s long-term debt was $10.4 billion, down 2.2% on a sequential-comparison basis.

Net cash from operating activities fell 49.2% sequentially to $302 million in the second quarter.

Outlook

ArcelorMittal stated that it will be prudent to remain cautious about the outlook despite signs of activity picking up, particularly in regions where lockdowns have ended. It is examining necessary structural changes to ensure that the company is well-positioned to prosper in the years ahead as demand recovers. The company expects the remainder of 2020 to be challenging. It is prepared to increase production and realize the improvement in demand as it comes.

Price Performance

ArcelorMittal’s shares have lost 23.3% in the past year compared with 15.9% decline of the industry.

Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, B2Gold Corp BTG and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 101.3% in the past year.

B2Gold has an expected earnings growth rate of 257.1% for 2020. Its shares have returned 100.1% in the past year.

Northern Dynasty has an expected earnings growth rate of 35.7% for 2020. The company’s shares have gained 94.2% in the past year.

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