ArcelorMittal SA (ADR) (NYSE:MT) Releases Q1 2018 Results, Provides Positive Outlook For The Year

The company revealed on Friday that its performance in the first quarter of 2018 surpassed expectations, courtesy of the boost on iron ore shipments and also as a result of better prices. ArcelorMittal reported that its Q1 earnings came in at $1.17 per share ($1.19 billion), a noteworthy improvement compared to the 98 cents per share ($1.02 billion) that was reported in Q1 of 2017.

The steelmaker had an operating income of $1.57 billion in Q1 2018 compared to $1.58 billion in Q1 of the previous year. Its revenue for the quarter was $19.19 billion, marking a significant jump in revenue compared to the $16.09 billion that the company made in the first quarter of 2017.

Although no official forecast figures were given, ArcelorMittal revealed that Q1 2018 was characterized by impressive growth in steal consumption on a global scale. As a result, the firm boosted its inventory by around 1.5 and 2.5 percent. The global steel industry is currently valued at roughly $900 billion annually with some of the highest demand coming from Brazil, Europe, and the U.S. The company also reported that there was a healthy spread between the raw steel prices and raw materials, thus contributing to the positive performance within the first quarter.

Lakshmi Mittal, the CEO of ArcelorMittal stated that the firm has seen a stronger outlook for 2018 courtesy of the growth in supply and demand. This has in turn been pushing higher capacity utilization rates as well as healthy spreads in the global steel market.

ArcelorMittal stated that the average selling price for steel in the first quarter of 2018 was higher than the price in the Q1 2017. The company mines over 50 million tons of iron ore per year and shipments have gone up by 1.4 percent which is great news for production. ArcelorMittal has also been one of the companies that have been campaigning heavily against cheap imports in the European Union and the U.S.

Ingo-Martin Schachel, an analyst at Commerzbank stated that the strong results from the company were observed at every level and have also been tied to higher profit margins. The steel company was also able to achieve this with its plants operating at full capacity. This was an interesting observation considering the implementation of protective trade measures and the reduced capacity in North America and Europe.

ArcelorMittal stated that U.S President Donald Trump implemented 25 percent import tariffs in March as part of the overview measures in Europe and the U.S. However, temporary measures were allowed with EU steel being one of the examples. Such measures have mainly been targeting China which is currently the largest producer and consumer of steel. China’s steel exports experienced a decline as a result of the increasing demand from its local market. However, it is worth noting that ArcelorMittal does not have direct exposure to China’s steel market.