What Are ArcelorMittal’s Key Sources of Revenue?
ArcelorMittal (NYSE: MT), the world’s largest steel producer, reported a 20% rise in revenue in 2017 owing to a favorable demand environment for steel in the global economy. ArcelorMittal had experienced declining revenue until 2016 largely due to cumulative factors such a a weak global economy and increased share of steel imports in the company’s developed markets, such as North America and Europe.
However, the imposition of anti-dumping duties on steel imports from a number of countries engaging in unfair trade practices, has created a more level playing field for domestic steel producers in these geographies. This has enabled steel companies such as ArcelorMittal to benefit from improving demand conditions in these markets as can been seen from the company’s recent rise in revenue. The NAFTA division of the company is expected to further strengthen with a desirable outcome of the Section 232 probe and the implementation of the planned $1.5 trillion infrastructure spending in the U.S.
A significant highlight for the company has remained its Brazilian and the African & Commonwealth of Independent States (ACIS) markets which has displayed a prominent revenue growth rate of 25% and 30%, respectively in 2017 . These divisions have historically displayed several years of subdued performances due to weaker economic strength in these countries. Brazil’s economy displayed a revival from its economic depression in 2017, which has helped boost the country’s demand for steel. The Brazilian economy grew by ~ 1.1% in 2017, and is expected to display further strength in the upcoming year. CIS grew by ~1.9% in 2017 and is expected to display continuous improvement in the upcoming year with an increasing stability in oil and commodity prices.
Going forward, we expect the company to display a 5% growth in its revenue. The World Steel Association anticipates the demand for steel to grow by 1.4% in the European Union and 1.2% in the NAFTA region (ArcelorMittal’s key markets). Growth in the Commonwealth of Independent States (CIS) region is expected to display the largest strength with a growth rate of 3.8%. These factors should ultimately lead to a strong year for ArcelorMittal in 2018. We have summarized the details of our analysis in our interactive dashboard which should provide greater clarity on the company’s historic trends and future forecasts.
Have more questions about ArcelorMittal? See the links below.
- Key Takeaways from ArcelorMittal’s Q4 2017 Results
- A Deeper Insight into ArcelorMittal’s Acquisition of Exosun
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