Bankinter | 4Q2024 EBITDA better by Joint Venture. Raises dividend and expects demand to improve in 2025. Tariff risk and overcapacity in the sector remain.
Key figures compared to the company’s consensus for 4Q24: Revenues $14,714m (+1.1% year-on-year, -3.2% year-on-year); EBITDA $1,654m (versus +13.8% year-on-year and +4.6% year-on-year) versus $1,529m estimate (margin stood at 11.2% from 10.4% 3Q2024). NAB -$390m (versus $2,966m in 4Q 2023 and +$287m in 3Q 2024) and +$319m estimated. Profit was impacted by value adjustments of -$80M and -$142M of one-off charges (restructuring costs related to business optimisation). EBITDA for the full year 2024 was $7,053m, with a margin of 11.3% versus 12.8% in the previous year.
Net debt rises to $5,079M, or 0.72x trailing 12M EBITDA (with JVs), from $6,165M at 2023 (0.71x EBITDA). The board will propose to increase the dividend to $0.55/share in 2025 (from $0.50/sh. prev. +10% year-on-year), implies a 2.3% RpD and will continue with the share buyback policy for 50% of the post-dividend cash flow. So far it has executed -78M shares of the current programme of 85M shares, which brings the number of diluted shares at year-end to 769M (-6% from 819M as of Dec 2023 and from 1,224 -37% from Sept 2020).
ArcelorMittal expects demand to improve in 2025 (estimates apparent steel demand between +2.5% and +3.5% global ex-China) and generate free cash flow, supported by working capital optimisation. The weakness of inventories in Europe leads it to expect the recomposition to add to the improvement in real demand. Capex target for 2025 remains in the range of $4.5bn and $5bn (from $4.4bn in 2024).
Bankinter’s analysis team’s opinion: 4Q2024 results show weakness in operating terms due to additional charges (EBIT $529M, the lowest of the year. Margin 3.6% vs 4.4% 3Q2024). However, EBITDA exceeds expectations (EBITDA $1,654m versus $1,529m expected) due to improved JV and equity-accounted results, incorporated into the new EBITDA definition. Net Financial Debt remains at very limited levels, stable at around 0.7x in terms of DFN/EBITDA, which allows the company to maintain its shareholder remuneration policy (via dividend RpD ~2.3% and share buyback -6% in 2024). We value positively the good balance sheet management shown in recent years and the company’s expectations of improving demand (ex-China). However, in the short term, we would be cautious given the global overcapacity and especially the risk of the US tariff environment.
