ArcelorMittal’s Q2 2016 Earnings Review: Success Of Cost Reduction Initiatives To Stand Company In Good Stead With Steel Prices Set To Improve

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Arcelor Mittal

ArcelorMittal reported a significant improvement in its Q2 results despite a subdued steel pricing environment, driven by a sharp improvement in the results of its NAFTA division. An improved product mix with the ramp up of production from the company’s Calvert plant (which produces value-added steels used in automotive applications) in addition to the company’s cost reduction initiatives, translated into an improvement in the results of the NAFTA division. The success of the company’s cost reduction initiatives boosted the results of the Europe division as well. Steel prices remained lower on a year-over-year basis for all of the company’s major steelmaking divisions, despite the impact of regulatory intervention resulting in lower competition from cheap steel imports in the U.S. and Europe. However, pricing did improve sequentially indicating lower competition from steel imports, which bodes well for the rest of the year. An improving steel pricing environment coupled with the success of the company’s cost reduction initiatives should boost its results in the coming quarters. Weak macroeconomic conditions in Brazil negatively impacted the results of the company’s operations in the region, as reflected in the division’s shipment and realized price figures.

MT Q2 2016 Earnings 1

MT Q2 2016 Earnings 2

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1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for ArcelorMittal

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