ArcelorMittal’s Back To Normal: Posts 157% Rise In Net Profit In 2017 To 3.670 Bn Euros; Reinstates Dividend

Acerinox and Arcelor against US tariffs on steelAcerinox and Arcelor against US tariffs on steel

ArcelorMittal, the leading global integrated steel and mining firm, said it posted net profit of 4.568 billion dollars in 2017 (3.670 billion euros), 157% up from a year earlier. It will also pay a dividend again for the first time since 2015.

Revenues at the steel group rose 20.9% to 68.679 billion dollars (55.172 billion euros) in 2017, while EBITDA improved 34.4% to 8.408 billion dollars (6.755 billion euros).

The results are solid, with growth in both volumes and prices, and beat analysts estimates. The company said its cash requirements (investments, interest payments on debt, taxes, pensions and other costs) total 5.6 billion dollars vs 4.6 billion in 2017.

The increase is mainly the result of the rise in capex, from 2.8 billion dollars to 3.8 billion. In addition, the company has met its objective of reducing debt, with its Net Financial Debt/EBITDA ratio standing at 1,2x vs 1,8x in 2016. Looking ahead to 2018, ArcelorMittal is optimistic although it expects that apparent steel consumption will slow slightly compared to 2017, to between the range of +1,5/+2,5 (vs+3,2 in 2017). Expansion is predicted in all markets except for China.

Another positive aspect is that the company has reinstated its dividend after it suspended payment in 2015 and 2016. Part of the market did predict it would pay a dividend against 2017 results. But it is reinstating the dividend slowly, with payout of just 2%. Bankinter analysts evaluate it as a sign that the company is getting back to normal, although it prefers to earmark the resources for other things.

This year it has to invest in Ilva and the project in Mexico (3.8 billion dollars), while still focusing on reducing debt. Its objective is for net financial debt to reach at 6 billion dollars.