What Are The Major Revenue Streams For ArcelorMittal?
ArcelorMittal (NYSE: MT) is the world’s leading steel and mining company, supplying quality steel in the global markets. In 2017, the company had revenues of $68.7 billion and crude steel production of 93.1 million metric tons. MT has had a good 2018 so far, posting better than expected results for both the quarters, driven by a favorable market environment, owing to the recent restrictive trade practices across the globe. The Trump administration’s policy against unfair trade practices has aided the company’s overall performance and has been applauded by the company. In this note, we discuss the key sources of revenue for MT. We expect the company’s revenue to be $83.37 billion, with around 88 million global steel shipments in 2018.
We have a $31 per share price estimate for the company, which is in line with the current market price. View our interactive dashboard – Revenue Estimation Model Of ArcelorMittal – and modify the key drivers to visualize the impact on the company’s revenue and price.
- Europe (~49%) – The Europe segment comprises the flat, long, and tubular operations of the European business, as well as ArcelorMittal Distribution Systems (AMDS). In 2017, steel shipments from the Europe segment totaled 40.94 million tons. We expect this figure to increase to 41.5 million tons in 2018 with an average price of $786.2 per shipment, translating into revenues of $32.6 billion in 2018. Further, we expect non-steel revenues from this segment to be $8.5 billion in 2018.
- NAFTA (~25%) – The North American Free Trade Agreement includes the flat, long, and tubular operations of the USA, Canada, and Mexico. Restrictive trade practices, particularly those pertaining to tariffs, have boosted the domestic demand environment in the US and caused steel prices to strengthen in 2018. In 2017, steel shipments from NAFTA totaled 21.83 million tons. We expect 22.3 million tons shipment in 2018, with an average steel price per shipment of $823, totaling to $18.3 billion revenues in 2018. Further, we expect non-steel revenues from this region to be $2.2 billion in 2018.
- ACIS (10%) – ArcelorMittal’s ACIS flat-rolled and tubular products division includes steel sheets and plates as well as tubular items like pipes, that are made by rolling processes, and are sold in Africa and the Commonwealth of Independent States (CIS). As Per World Steel Association (WSA) estimates, steel demand from emerging economies (excluding China) will accelerate to 4.9% in 2018. In 2017, shipments from Africa and CIS totaled approximately 13.09 million tons. We expect 13.22 million tons shipment in ACIS, with an average price $551 per shipment, totaling to $7.3 billion in revenues from steel shipments in 2018. Additionally, we expect non-steel revenues from this region to be $1 billion in 2018.
- Brazil(~10) – The Brazil segment includes the flat operations of Brazil, and the long and tubular operations of Brazil and its neighboring countries including Argentina, Costa Rica, Trinidad and Tobago, and Venezuela. In 2017, steel shipments from Brazil segment totaled 10.84 million tons. We expect 11 million shipments in 2018, with an average price per shipment of $733.7, totaling to $8 billion revenues. In addition to steel revenues, non-steel revenues of $666.6 million are expected in 2018.
- Mining (5%) – MT’s mining division primarily consists of iron ore and coal operations. MT owns mines in various countries, including Canada, US, Brazil, Russia, Ukraine, and Algeria. The company has also submitted a proposal for acquiring ESIL (Essar Steel India Limited), which would bring some other mines into its portfolio. Recovery in iron ore and coal prices will put pressure on revenues from this segment. We expect $4.6 billion in revenues from this segment in 2018.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
Like our charts? Explore example interactive dashboards and create your own.