4Q15 EBITDAs for steelmakers
Previously in this series, we talked about how steel companies reported a lower volume of shipments and lower average steel selling prices in 4Q15. But steelmaking raw materials including iron ore, steel scrap, and coal have also fallen, and steel companies are trying to reduce their costs across operations. Lower unit production costs have helped steelmakers protect their earnings to some extent. In this part of our series, we’ll look at steel companies’ 4Q15 EBITDA (earnings before interest, tax, depreciation, and amortization).
AK Steel reports higher EBITDA
The graph above shows the 4Q15 EBITDAs of different steel companies. As you can see, all steel companies except AK Steel (AKS) reported lower EBITDAs in 4Q15 over the previous quarter. Below is the breakdown:
- Nucor Corporation (NUE) reported adjusted EBITDA of $469 million in 4Q15, which represents a YoY (year-over-year) decline of 18%. The EBITDA fell by a similar percentage over 3Q15. Currently, Nucor forms ~3% of the Materials Select Sector SPDR ETF (XLB).
- Steel Dynamics’ (STLD) 4Q15 EBITDA fell by 54% YoY in 4Q15.
- U.S. Steel Corporation (X) delivered a negative EBITDA in 4Q15. The company had posted positive adjusted EBITDA in the corresponding quarter last year, but the company’s adjusted EBITDA fell by more than 100% in 4Q15, both on a YoY basis as well as on sequential basis. Then U.S. Steel saw sharp downward price action after its 4Q15 earnings release. (You can read more about U.S. Steel’s 4Q15 earnings in our series Why U.S. Steel’s 4Q15 Results Sparked a Selling Spree.)
All that said, AK Steel managed to deliver higher EBITDA in 4Q15 over its previous quarter, reporting adjusted EBITDA of $168 million in 4Q15, which represents a YoY increase of almost 52%. Apparently, this is the highest quarterly EBITDA that AK Steel has generated since the third quarter of 2008.
In the next part, we’ll explore what analysts are forecasting for steel companies in 2016.