Charges Hit ArcelorMittal in 4Q - Analyst Blog
07 Febrero 2013 - 3:10AM
Zacks
Steel bellwether ArcelorMittal (MT) posted a
net loss of $4 billion or $2.58 per share in the fourth quarter of
2012 compared with a net loss of $1 billion or 65 cents per share a
year ago. The bottom line was hurt by hefty charges and challenging
economic conditions in Europe where the demand for steel dropped
8.8% last year.
Adjusted loss of $1.47 cents a share for the quarter exceeded
the Zacks Consensus Estimate of a loss of 15 cents per share. The
adjusted loss excludes $4.8 billion of goodwill impairment charges
associated with the company’s European businesses and $192 million
of restructuring charges.
For full-year 2012, the company posted a net loss of $2.41 per
share compared with an income of $1.46 in 2011. Adjusted loss was
$1.05 per share, missing the Zacks Consensus Estimate of a loss of
4 cents per share.
Revenues declined 14% year over year to $19,309 million in the
reported quarter, trailing the Zacks Consensus Estimate of $20,168
million. Sales also declined 2.1% on a sequential basis due to
lower average steel selling prices. Shipments declined 2.9% to 20
million metric tons in the quarter.
For the full year, sales were $84,213 million, up 10.4% year
over year, but missed the Zacks Consensus Estimate of $84,902
million.
Segment Review
Flat Carbon Americas: Higher production in
South America, after the reline of a blast furnace in Tubarao,
Brazil, led to a 3.6% sequential increase in steel production to
5.9 million tons in the fourth quarter. However, production
declined 1.3% on a year-over-year basis. Average selling prices
went down 8.2% year over year to $797 per ton.
Sales went down 6.9% annually and 3.2% sequentially to $4,683
million due to lower steel selling prices in North America and
weakening slab pricing in Brazil and Mexico.
Flat Carbon Europe: Revenues slid 12.3% year
over year and were almost flat sequentially at $6,142 million in
the quarter as lower average steel selling prices offset the
increase in shipment volumes. Steel production fell 3.7% from last
year and 5.1% sequentially due to reduced inventory levels and
output was aligned with local market levels. Average selling prices
went down 11.2% from last year to $847 per ton.
Long Carbon Americas and Europe: Revenues from
the segment dropped 11.9% year over year and were almost flat
sequentially at $5,232 million. Sales were affected by a decrease
in average steel selling prices. Average selling prices fell around
5.4% year over year to $857 per ton. Production declined 4.3% on a
year over year basis and 8.3% sequentially, due to lower market
demand as well as operational issues.
Asia Africa and CIS (AACIS): Sales slipped
22.1% from the year-ago quarter and 13.3% from the previous quarter
to $2,130 million due to lower steel shipments and average steel
selling prices. Average selling price was $611 per ton compared
with $713 per ton in the year-ago quarter.
Distribution Solutions: Revenues declined
almost 20.9% year over year but were up 3.7% on a sequential basis
to $3,855 million. The sequential improvement reflected higher
steel shipment volumes. Average steel selling prices declined 12%
year over year to $834 per ton.
Mining: Iron ore production plunged 7.3% year
over year and 2.1% from the previous quarter to 14 million tons in
the reported quarter. Coal production declined 9.1% year over year
and was flat sequentially at 2 million tons.
Balance Sheet
Cash and cash equivalents (including restricted cash) amounted
to $4.5 billion as of Dec 31, 2012, compared with $3.9 billion as
of Dec 31, 2011. The company’s net debt decreased by $1.4 billion
to $21.8 billion as of Dec 31, 2012, as compared with $23.2 billion
as of Sept 30, 2012, driven by positive operating cash flow and
recovery of subsidiary financing.
Dividend
The company announced during third-quarter 2012 that it will
reduce the annual dividend payment to 20 cents per share in 2013
from 75 cents per share in 2012. The reduced dividend will be paid
in Jul 2013 once approved by the shareholders at the next annual
general meeting in May 2013.
Outlook
The company anticipates steel shipments to increase by
approximately 2%-3% from last year in 2013. Capital expenditure has
been projected to be approximately $3.5 billion for the year. Also,
the company expects EBITDA to be higher in 2013 than 2012.
About $5 billion of cash receipts is expected from the capital
raised in Jan 2013 and the announced sale of a 15% stake in
ArcelorMittal Mines Canada expansion is expected to reduce net debt
to approximately $17 billion by Jun 30, 2013.
ArcelorMittal remains affected by the challenging economic
conditions in Europe. It is also exposed to volatility in steel
pricing and tough competition and has significant debt. The company
is highly focused on reducing debt, lowering costs and improving
efficiency.
ArcelorMittalcurrently maintains a Zacks Rank #3 (Hold).
Other companies in the steel industry with favorable Zacks Ranks
are Gibraltar Industries Inc. (ROCK),
POSCO (PKX) and ArcelorMittal
South Africa (AMSIY). All of them hold a Zacks
Rank #2 (Buy).
(AMSIY): ETF Research Reports
ARCELOR MITTAL (MT): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis Report
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