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Steel bellwether ArcelorMittal (MT) posted a net loss of $0.3 billion or 21 cents per share in the first quarter of 2013 compared with a net income of $92 million or 6 cents per share a year ago. Analysts polled by Zacks were expecting earnings of 7 cents a share on an average for the quarter. Challenging economic conditions, especially in Europe, weighed on the bottom line in the quarter.
Revenues declined 13% year over year to $19.8 billion in the reported quarter. Sales increased 2.3% on a sequential basis due to higher steel shipment volumes. Shipments declined 5.9% year over year to 20.9 million metric tons in the quarter.
Flat Carbon Americas: Production declined 0.8% year over year to 6.2 million tons but increased sequentially by 12% due tohigher production in North America. Average selling prices went down 7.6% year over year to $819 per ton. Sales went down 7.8% annually, but were up 3.8% sequentially to $4,859 million due to due primarily to higher steel selling prices in South America and Mexico.
Flat Carbon Europe: Revenues slid 11.5% year over year but jumped 11.3% sequentially to $6,834 million mainly due to higher steel shipment volumes. Steel production fell 1.4% from the last year and increased 14.2% sequentially due to the restart of furnaces at Asturias and blast Dunkerque. Average selling prices went down 3.5% from the last year to $831 per ton.
Long Carbon Americas and Europe: Revenues from the segment dropped 11.5% year over year and 2.5% sequentially to $5,103 million. Sales were affected by reduced prices in the Tubular business. Average selling prices fell around 5.7% year over year to $858 per ton. Production declined 1.1% on a year over year basis while increased 9.2% sequentially, due to a stock rebuild following weak demand in the fourth quarter of and recovery from operational issues that had impacted output in Poland during the fourth quarter.
Asia Africa and CIS (AACIS): Sales slipped 23.6% from the year-ago quarter and were almost flat from the previous quarter at $2,129 million. Sales were positively affected by higher average steel selling prices in South Africa and Kazakhstan.Average selling price was $620 per ton compared with $705 per ton in the year-ago quarter.
Distribution Solutions: Revenues declined almost 19.8% year over year and 7.7% on a sequential basis to $3,553 million. The sequential decline reflected lower steel shipment volumes. Average steel selling prices declined 7.4% year over year to $851 per ton.
Mining: Iron ore production fell 0.8% year over year and 6.4% from the previous quarter to 13.1 million tons in the reported quarter. Coal production declined 4.8% year over year and was flat sequentially at 2 million tons. Revenues fell 7.6% year over year and 6.3% sequentially to $1,199 million.
Cash and cash equivalents (including restricted cash) amounted to $8 billion as of Mar 31, 2013, compared with $4.9 billion as of Mar 31, 2012. The company’s net debt was $18 billion as of Mar 31, 2013, as compared with $23.6 billion as of Mar 31, 2012.
ArcelorMittal announced, during third-quarter 2012, that it will reduce the annual dividend to 20 cents per share in 2013 from 75 cents per share in 2012. The reduced dividend will be paid in Jul 2013. During the reported quarter, the company paid dividends worth $34 million including $28 million for the perpetual bond as compared with $294 million in the year ago quarter.
ArcelorMittal reiterated its outlook for 2013 and expects to report earnings before interest, tax, depreciation and amortization (EBITDA) above $7.1 billion assuming that the prices of iron ore and the margin of steel prices over raw material costs in 2013 will be similar to 2012 levels. The company expects that profitability will be driven by a 2% increase in steel shipments, about 20% increase in marketable iron ore shipments, and the realized benefits from Asset Optimization and Management Gains initiatives.
ArcelorMittal forecasts to spend about $3.5 billion on capital expenditures in 2013, of which, $2.7 billion is non-growth related.
For the second quarter of 2013, ArcelorMittal expects EBITDA to be higher than the first quarter of 2013 leading to a reduction in net debt to roughly $17 billion by end-June 2013.
At its investor day in March 2013, ArcelorMittal laid down a new management gains improvement target of $3 billion by the end of 2015, which is expected to yield roughly $1 billion of savings over each of the next 3 years.
ArcelorMittal currently maintains a Zacks Rank #3 (Hold).
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