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ArcelorMittal's (MT) Q2 Earnings Beat, Revenues Lag Estimates

·5 min read

ArcelorMittal MT recorded profits of $3,923 million or $4.25 per share in the second quarter of 2022, compared with $4,005 million or $3.47 in the year-ago quarter.

Barring one-time items, earnings per share came in at $4.24, beating the Zacks Consensus Estimate of $3.90.

Total sales increased around 14.5% year over year to $22,142 million in the quarter. The figure missed the Zacks Consensus Estimate of $22,314.5 million. Sales were driven by higher average steel selling prices, which offset lower iron ore prices.

Total steel shipments declined around 10.6% year over year to 14.4 million metric tons in the reported quarter.

ArcelorMittal Price, Consensus and EPS Surprise

 

ArcelorMittal Price, Consensus and EPS Surprise
ArcelorMittal Price, Consensus and EPS Surprise

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

 

Segment Review

NAFTA: Sales increased roughly 12.7% year over year to $3.7 billion in the reported quarter. Crude steel production declined roughly 10.1% year over year to 2 million metric tons. Steel shipments fell around 5.3% year over year to 2.5 million metric tons. The average steel selling price increased 24% year over year to $1,317 per ton.

Brazil: Sales increased around 22.1% year over year to $3.9 billion. Crude steel production declined 2% year over year to 3 million metric tons. Shipments increased 1.3% year over year to 3 million metric tons. The average steel selling price rose 18.9% year over year to $1,234 per ton.

Europe: Sales increased around 26% year over year to $13.5 billion. Crude steel production fell roughly 12% year over year to 8.3 million metric tons in the reported quarter. Shipments fell around 3.9% year over year to 8 million metric tons. The average steel selling price went up roughly 36.3% year over year to $1,292 per ton.

Asia Africa and CIS (ACIS): Sales fell around 46.4% year over year to $1.5 billion. Crude steel production totaled 1.3 million metric tons, down about 57.6% year over year. Shipments declined 56.5% year over year to around 1.2 million metric tons. Average selling prices rose around 14.8% year over year to $925 per ton.

Mining: Sales rose 13% year over year to $1,005 million. Iron ore production totaled 7.3 million metric tons, up around 48.9% from the year-ago quarter’s levels. Iron ore shipments increased 63% year over year to 7.5 million metric tons.

Financials

At the end of the quarter, ArcelorMittal had cash and cash equivalents of around $4.6 billion, up around 1.8% year over year. The company’s long-term debt was around $6 billion, down roughly 9% on a year-over-year basis.

Net cash from operating activities rose 10.5% year over year to $2,554 million for the second quarter.

Outlook

The company noted that the inflationary pressures increased during the first half of 2022 presenting significant headwinds to economic activity. The impacts on consumer and business confidence are leading to a slowdown in real demand, which has been made worse by destocking activity. The deterioration caused apparent demand to fall below real demand levels and a normalization of steel spreads, it noted.

ArcelorMittal is well positioned to steer the uncertainties around European gas supply given its predominantly blast furnace-based capacity across multiple sites in nine EU countries.

The company stated that the longer-term fundamental outlook for steel is favorable. China’s focus on decarbonization and removal of VAT-rebates on steel exports are encouraging, coupled with actions by governments to protect against the threats of unfair trade. Steel is expected to play a key role in the transition to a decarbonized and circular economy.

Price Performance

Shares of ArcelorMittal have declined 27.8% in the past year compared with a 18.6% fall of the industry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Albemarle Corporation ALB, Cabot Corporation CBT and Sociedad Quimica y Minera de Chile S.A. SQM.

Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 7.8% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 22.5%, on average. ALB has gained around 18.1% in a year and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current year. The Zacks Consensus Estimate for CBT's earnings for the current year has been revised 6% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 36.3% over a year.

Sociedad has a projected earnings growth rate of 513.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 57.8% upward in the past 60 days.

Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has gained 107.5% in a year. The company sports a Zacks Rank #1.


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