Key Takeaways from ArcelorMittal’s Q4 2017 Results

February 2nd, 2018 by Trefis Team
+25.01%
Upside
25.15
Market
31.44
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MT
Arcelor Mittal

ArcelorMittal (NYSE: MT) released its Q4 2017 and full year earnings results and conducted a conference call with analysts on January 31. The company displayed a Year-on-Year (Y-o-Y) revenue growth rate of 25% in Q4 driven largely by a significant growth in its key markets. However, the EPS value in Q4 was down sequentially. The company realized $0.6 billion improvements in EBITDA value driven by the company’s Action 2020 plan.

The graph below highlights the company’s performance in Q4. These have been created using our new interactive platform.

The rise in revenue was realized through a rise in shipment volume and price realization across all regions in which the company operates. However, a major highlight for this quarter has been a significant improvement in pricing position in three of the company’s key markets, namely, Europe, Brazil, and the Africa & CIS (ACIS) region. The average price realized grew by more than 20% in all the 3 regions. These markets have enjoyed a significant improvement in their economic condition which has in turn translated into higher price levels as well as increased shipment volumes.

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Additionally, ArcelorMittal’s ambitions Action 2020 Plan which seeks to realize $3 billion in positive margin impact from 2016 to 2020 through a combination of cost reduction, improved product mix, and higher volumes has resulted in $0.6 billion benefits in 2017 and is expected to realize the remainder $1.5 billion EBITDA improvement over the next 3 years. The impact of these initiatives certainly helped boost the company’s Q4 results and should help prop up results in the coming quarters.

Looking forward, the company is very confident in the global growth especially ex-China. A possibility of stricter trade regulations implemented in the U.S. with respect to the findings of the Section 232 probe would be advantageous to the North American operations of the company. The company is expected to report strong quarters going forward with a possibility of a dividend announcement in 2018 given the targeted balance sheet position is met.

We have a price estimate of $28 for ArcelorMittal which is below the market price.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking and encourages readers to comment and ask questions in 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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