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How ArcelorMittal’s Europe Operations Fared in 2Q16

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ArcelorMittal’s 2Q16 Europe operations

Previously, we looked at ArcelorMittal’s (MT) consolidated 2Q16 performance. Now, we’ll look at the breakup of different segments. Let’s begin by analyzing ArcelorMittal’s 2Q16 Europe performance. We should note that Europe (VGK) (FEZ) is MT’s biggest market, accounting for over half of its revenues.

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2Q16 performance

  • ArcelorMittal’s Europe segment reported revenues of $7.8 billion in 2Q16 as compared to $7.1 billion in 1Q16. The revenues in the corresponding quarter last year were $8.5 billion.
  • ArcelorMittal’s 2Q16 Europe shipments were almost flat as compared to 2Q15. However, the average steel selling prices fell almost 9% over this period. Average selling prices rose 5.6% as compared to the sequential quarter.
  • Note that 40% of ArcelorMittal’s Europe sales are to automotive companies, which usually buy steel under contract pricing. Since some of these contracts were rolled over earlier this year when steel pricing was quite depressed, the company hasn’t seen a complete follow-through of higher spot prices in its contract sales. AK Steel (AKS) also sells ~90% of its steel under contract pricing.
  • Nonetheless, ArcelorMittal posted an EBITDA (earnings before interest, tax, depreciation, and amortization) of $725 million in 2Q16, which is the highest that we have seen since 2Q12. The per-ton EBITDA also rose to $67, which is the highest since 2Q14.

U.S. Steel’s (X) Europe operations also saw their best quarter since 3Q08. U.S. Steel’s Europe plants operated at a utilization rate of 101%, which further boosted the segment’s 2Q16 profitability.

In the next part of the series, we’ll look at MT’s 2Q16 North America performance.

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