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ArcelorMittal reports Q4 loss, sees improving demand outlook

AInvestThursday, Feb 8, 2024 1:28 pm ET
2min read

Pouncing into the fiscal fray with the agility of a jaguar, ArcelorMittal, the globe's steel-producing titan, has disclosed a Q4 financial snapshot colored by a net loss of $2.97 billion for the final quarter of 2023, a stark contrast to the net profit of $261 million tallied in the corresponding quarter of yesteryear. This Luxembourg-based behemoth also unveiled a 12% sales dip to $14.55 billion, largely attributed to the dwindling average steel prices and shipment volumes.

This downturn in net income principally stems from a hefty impairment charge of $1.4 billion linked to the company's stake in Acciaierie d'Italia, alongside a $2.43 billion deduction from the divestiture of its Kazakhstan operations in December.

An impairment concerning Acciaierie d'Italia had been previously signposted by the company, which also indicated that this charge would not reflect in the consensus figure for net income.

These factors contributed to an expanded operating loss, ballooning to $1.98 billion from a prior $306 million operating loss. However, earnings before interest, taxes, depreciation, and amortization (EBITDA) hovered close to the prior year's mark, registering at $1.27 billion against $1.26 billion, and outpacing a consensus forecast of $1.20 billion.

The company witnessed a quarterly steel shipment slide to 13.3 million metric tons from 13.7 million tons in the preceding quarter.

Gazing into the future, ArcelorMittal anticipates a 3% to 4% growth in the apparent steel consumption across the globe, excluding China, compared with 2023. The company forecasts an easing of the destocking trend that weighed on the previous quarter.

ArcelorMittal sketches the ensuing demand landscape across critical regions:

* In the US, real demand growth may continue to be muted due to the delayed repercussions of elevated interest rates. Nevertheless, the destocking that dented apparent demand in 2023 is unlikely to persist into 2024, setting the stage for a 1.5% to 3.5% ascent in apparent steel consumption of flat products.

* In Europe, despite a projected slight real demand dip chiefly in construction, the destocking that marred apparent demand in 2023 is anticipated to halt in 2024, potentially elevating apparent demand for flat products by 2.0% to 4.0%.

* Brazil might witness a modest rebound in real steel consumption, nudging apparent steel consumption growth to range between 0.5% and 2.5%.

* India is poised for another robust year, with apparent steel consumption growth pegged at 6.5% to 8.5%.

* China's economic vigor is expected to wane. Yet, despite the ongoing real estate frailty, stimulus-announced impacts are foreseen to bolster demand growth through infrastructure spending, leading to a relatively stable/slightly positive steel consumption (+0% to +2%).

Firm in its belief in the medium/long-term steel demand outlook, ArcelorMittal, buoyed by its formidable market stance, remains dedicated to propelling its growth with capital returns strategy. The company earmarks capex for 2024 to hover within the $4.5-$5.0 billion corridor (inclusive of $1.4-$1.5 billion tagged as strategic growth capex).

To encapsulate, ArcelorMittal's Q4 exposition mirrors the trials the entity has navigated over the previous year, including the ramifications of its Kazakhstan exit and the Acciaierie d'Italia impairment charge. Nevertheless, the firm's 2024 vista beams with optimism, buoyed by forecasts of blossoming steel demand and expansion across pivotal markets. ArcelorMittal's unwavering commitment to its growth with capital returns credo and its stalwart steel industry presence promises to underpin its enduring prosperity.

MT shares are up over 4% in Thursday trade following the premarket release.


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