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ArcelorMittal’s 3Q17 Earnings: What You Need to Know

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Part 2
ArcelorMittal’s 3Q17 Earnings: What You Need to Know PART 2 OF 3

What Drove ArcelorMittal’s 3Q17 Revenue Beat?

3Q17 revenue beat

ArcelorMittal (MT) reported revenues of $17.6 billion in 3Q17. To put this in context, the company posted revenues of $17.2 billion in 2Q17 and $14.5 billion in 3Q16. ArcelorMittal’s 3Q17 revenues were better than expected. Analysts polled by Thomson Reuters expected ArcelorMittal to post revenues of $16.7 billion in 3Q17. Looking at other steel producers, U.S. Steel Corporation (X) and Nucor (NUE) posted better-than-expected revenues, while AK Steel’s (AKS) 3Q17 revenues lagged analysts’ estimates. In this part, we’ll look at what drove ArcelorMittal’s 3Q17 revenue beat.

What Drove ArcelorMittal’s 3Q17 Revenue Beat?

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Shipments

ArcelorMittal shipped 21.7 million metric tons of steel in 3Q17, which is 1% higher compared to 2Q17. The sequential increase in ArcelorMittal’s 3Q17 shipments looks impressive given the seasonal slowdown in Europe—ArcelorMittal’s largest market. ArcelorMittal noted that “the decline in shipments was notably less than the typical seasonal effects, reflecting supportive market conditions.” Looking at other segments, ArcelorMittal’s NAFTA 3Q17 steel shipments rose 4.3% compared to 2Q17 led by a 16.6% increase in long steel volumes (CLF).

Selling prices

ArcelorMittal’s 3Q17 ASP (average selling price) rose 1.5%—compared to 2Q17. Higher ASPs were primarily driven by a 3.5% increase in its selling prices in Europe. ArcelorMittal’s ACIS (Africa and Commonwealth of Independent States) segment also posted a 3.3% sequential increase in 3Q17 ASP. However, the company’s NAFTA ASP fell 2.5% in 3Q17. We should remember that US steel prices weakened in 3Q17, which had a negative impact on US steel producers’ 3Q17 ASP. All US-based steel producers reported a sequentially lower ASP in the quarter. The dual impact of lower the ASP and higher input costs dented US-based steel companies’ 3Q17 profitability.

In the next part, we’ll look at ArcelorMittal’s 3Q17 profitability and cash flow metrics.

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