ArcelorMittal Posts Q1 Net Loss But Sticks to Full-Year Guidance

on May 10, 2013

Luxembourg-based ArcelorMittal (AMS:MT), the world’s largest steelmaker by sales, announced on Friday, May 10, its financial results for the three months ended March 31. The company posted a net loss for the quarter but EBITDA beat analysts’ estimates and boosted the miner’s share price.

ArcelorMittal’s net loss in the period was $345 million compared to a profit of $92 million last year, yet improved from the preceding fourth quarter’s net loss of $3.8 billion which included a hefty impairment charge related to the miner’s European businesses. First-quarter core profits — earnings before interest, taxes, depreciation and amortisation (EBITDA) — were slightly ahead of the previous quarter’s figure, standing at $1.57 billion and marking a 26 percent decline from the $2.12 billion recorder a year earlier. The latest EBITDA figure, however, was above analysts’ expectations of $1.32 billion based on a company consensus forecast of 22 analysts.

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First-quarter sales declined 13 percent to $19.752 billion from $22.703 billion in the previous year but were better than $19.3 billion generated in the fourth quarter. The steelmaker’s net debt fell by $3.8 billion in the first quarter to $18 billion. ArcelorMittal has idled production capacity, cut its dividend, sold billions of dollars in assets and raised $4.3 billion via a rights issue in order to pay down debt after earlier this year Moody’s Investors Service, Standard & Poor’s and Fitch Ratings downgraded its credit rating to below investment grade.

Lakshmi Mittal, ArcelorMittal’s Chairman and Chief Executive Officer said in a statement on Friday: “Economic conditions remain challenging but our performance in the quarter reflects the results of the management action we have taken to confront the effects of the financial crisis.” European steelmakers have been among the worst hit by the sovereign debt crisis in the Eurozone with the slowdown in the region’s manufacturing sector weighing on demand for the metal.

**Upbeat Q2 Outlook and Reiterated FY Guidance**
Looking ahead, ArcelorMittal said that its second-quarter EBITDA would exceed the first-quarter figure. The Luxembourg-based steelmaker also reiterated its guidance for 2013 EBIDTA in excess of $7.1 billion, assuming that iron ore prices and the margin of steel prices over raw material costs would be similar to the 2012 levels.

ArcelorMittal said in March that despite the tough market backdrop, global steel consumption would grow by three to 3.5 percent this year, while European demand would slide to a low before rebounding next year. Back then, the miner also predicted that its own shipments would rise two percent, which, coupled with a 20 percent growth in the volume of iron ore sold and the benefits from the company’s cost-cutting efforts, would boost ArcelorMittal’s full-year profitability.
!m[Steelmaker’s Shares Jump as Earnings Beat Estimates](/uploads/story/2203/thumbs/pic1_inline.png)
**ArcelorMittal Share Price Gains More Than 8%**
ArcelorMittal’s share price rose significantly on Friday after the company released its trading update. As of 13:26 CEST on May 10 the steelmaker’s stock was at €10.33 in Amsterdam, more than eight percent above the previous day’s closing level. Since the beginning of the year, however, the ArcelorMittal share price has declined by over 20 percent, reflecting tough market environment.


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