ArcelorMittal Shares Rise on Raised Outlook, 2Q Earnings Beat
By Ed Frankl
ArcelorMittal shares rose in Thursday trading after it lifted
its steel-demand outlook and posted results that beat expectations
as the market recovers from pandemic-related slumps.
At 1020 GMT, ArcelorMittal shares were up 3.4% at EUR29.46.
The Luxembourg-based company, one of the world's biggest steel
producers, raised its 2021 growth outlook on global steel
consumption to between 7.5% and 8.5%, above previous estimates of
4.5% to 5.5%.
It posted a swing to second-quarter net profit of $4.01 billion
in the quarter, well above analysts' estimates of $3.10 billion,
polled by FactSet.
Earnings before interest, taxes, depreciation and amortization
rocketed to $5.05 billion from $707 million last year, in its best
quarter and strongest six-month performance since 2008, the company
"Our performance is clearly very welcome after the unprecedented
disruption the business faced in 2020," ArcelorMittal Chief
Executive Aditya Mittal said.
Strong demand, coupled with low inventories in the supply chain,
led to significant increases in steel spreads, ArcelorMittal said.
Actions by the Chinese government to subdue steel manufacturing to
meet climate targets also helped prices to rise.
"Steel margin spreads increased significantly in the quarter
[...] while spot steel prices are implying a potential for even
better magnitude of increase in margins in 3Q," analysts at Citi
Given order book and contract lags, the improvement in the
market isn't yet fully reflected in 2Q results, ArcelorMittal
"That ArcelorMittal sees demand further improving into the
second half is another positive sign for the sustainability of
current supply-demand balance and robust pricing/margins," the U.S.
bank Jefferies said.
The company also launched a $2.2 billion share-buyback program
given its strong performance and cash generation, as well as the
redemption of Cleveland Cliffs preference shares following
ArcelorMittal USA's sale late last year.
However, mining results were disappointing, with strikes in
Canada and a rail accident in Liberia leading to loss of volume,
the company said.
ArcelorMittal also pledged to invest $10 billion in low-carbon
investments to reduce carbon intensity --a measure of the emissions
companies add to the atmosphere for every dollar of sales-- by 25%
Executive pay would be linked to hitting emissions targets, as
ArcelorMittal aims to provide "compelling commercial opportunities
given the evident customer appetite for green steel solutions."
Earlier this month, the company said it would open its first
zero-carbon-emissions steel plant in northern Spain, switching to
renewable energy and introducing new technologies that replace the
use of fossil fuels in the steel-making process.
Write to Ed Frankl at email@example.com
(END) Dow Jones Newswires
July 29, 2021 06:53 ET (10:53 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Historical Stock Chart
From Aug 2021 to Sep 2021
Historical Stock Chart
From Sep 2020 to Sep 2021