ArcelorMittal's Q1 2025 Sell-Side Consensus: A Glimmer of Growth Amid Steel Industry Headwinds?

The sell-side analyst consensus for ArcelorMittal’s first quarter of 2025, released this week, paints a picture of a global steel giant navigating choppy waters. With estimates pointing to a year-over-year decline in profitability but hints of stabilization ahead, the figures underscore both the challenges facing the industry and the company’s strategic bets on long-term growth.

The Numbers: A Mixed Start to 2025

Analysts project Q1 2025 EBITDA of $1.55 billion, net income of $504 million, and an EPS of $0.66, all below the same quarter in 2024, when the company reported EBITDA of $2.0 billion, net income of $900 million, and an EPS of $1.16. While the decline is steep, the figures are slightly better than the fourth quarter of 2024, when EBITDA came in at $1.53 billion and EPS at $0.41, suggesting a modest stabilization in margins.

The sell-side consensus also offers a cautiously optimistic outlook for the full year: 2025 revenue is expected to dip to $61.03 billion—a 2.26% decline from 2024’s $62.4 billion—but EPS is projected to rebound to $3.45, a 16.86% rise over 2024’s $2.95. Analysts anticipate stronger growth in 2026, with revenue hitting $62.83 billion and EPS jumping to $4.83, reflecting hopes for an industry-wide recovery.

The Drivers—and the Drag

The downward trajectory in Q1 2025 results stems from familiar headwinds: steel demand volatility, input cost pressures, and geopolitical risks. Steel spreads—the critical profit margin between steel prices and raw materials like iron ore—remain under strain. Analysts note that while ArcelorMittal has made progress in reducing debt and optimizing operations, cost inflation for energy and raw materials continues to eat into margins.

Yet, the company’s strategic moves are designed to counter these challenges. Its commitment to returning 50% of post-dividend free cash flow to shareholders via buybacks has already reduced diluted shares by 35% since 2020, boosting book value per share to $67. Additionally, high-stakes projects like the Vega CMC steel plant in Brazil and a 1GW renewables initiative in India are expected to add $1.8 billion to EBITDA by 2026, a critical step toward reducing reliance on high-cost European operations.

Risks on the Horizon

The path forward is fraught with obstacles. ArcelorMittal faces an indictment in France over environmental damages at its Fos-sur-Mer plant, which could lead to fines or operational disruptions. In India, regulatory hurdles around raw material imports threaten production efficiency, while global steel demand remains uncertain amid economic slowdowns in key markets.

Analysts also caution that the steel industry’s cyclical nature makes forecasts risky. “ArcelorMittal’s performance hinges on whether steel spreads can rebound,” said one analyst, noting that the company’s exposure to volatile regions like Europe amplifies this risk.

Analysts and Investors: Buying the Dip?

Despite the risks, the sell-side consensus reflects a “Buy” rating with an average price target of $32.97, implying a 21% upside from April’s closing price of $27.25. The optimism is tempered, however: over the past 90 days, EPS estimates for Q1 2025 have been revised downward, signaling analysts’ growing caution.

The company’s shareholder-friendly stance and long-term growth projects provide a floor for optimism. Yet investors must weigh these positives against near-term execution risks. “ArcelorMittal’s success will depend on how quickly it can shift its cost structure and capitalize on emerging markets,” said another analyst.

Conclusion: A Balancing Act

ArcelorMittal’s Q1 2025 estimates are a reminder that the steel industry’s recovery remains fragile. While the company’s strategic investments and shareholder returns offer hope, the path to sustained growth is littered with regulatory, operational, and macroeconomic pitfalls.

The numbers tell a story of resilience amid decline: the projected $4.83 EPS in 2026 would mark a 63% increase from 2024’s level, a sign that analysts see potential in ArcelorMittal’s restructuring efforts. However, the company must deliver on its projects—like the Brazil and India initiatives—to justify this optimism.

Investors should monitor two key metrics: the steel spread trends in Europe and Asia, and regulatory outcomes in France and India. If ArcelorMittal can stabilize margins and execute its growth strategy, the $32.97 price target may prove achievable. Until then, the stock remains a bet on the steel industry’s ability to weather its current storm—and emerge stronger.

ArcelorMittal’s Q1 2025 results, due out on May 2, will be a critical test of whether this cautious optimism is warranted.