Steel companies’ 4Q16 EBITDA
Investors can use several metrics to measure a company’s profitability. However, for companies in the commodity space, EBITDA[1. earnings before interest, tax, depreciation, and amortization] is the most common metric. In this series, we’ll look at leading steel companies’ 4Q16 EBITDA.
U.S. Steel Corporation (X) generated adjusted EBITDA of $211 million in 4Q16, compared with an adjusted EBITDA of -$13 million in 4Q15. However, U.S. Steel’s 4Q16 EBITDA fell compared to 3Q16, when the company posted adjusted EBITDA of $272 million.
ArcelorMittal (MT) generated adjusted EBITDA of ~$1.7 billion in 4Q16. In contrast, the company posted adjusted EBITDA of $1.1 billion in 4Q15 and ~$1.9 billion in 3Q16.
AK Steel (AKS) posted adjusted EBITDA of $151 million in 4Q16. To put this in context, the company had posted adjusted EBITDA of $156 million in 3Q16 and $168 million in 4Q15. AK Steel’s 4Q16 EBITDA fell on a year-over-year and sequential basis. However, in AK Steel’s case, the sequential decline was not as stark as some of the other steel companies.
Steel Dynamics (STLD) reported adjusted EBITDA of $267 million in 4Q16 versus $358 million in 3Q16 and $120 million in 4Q15.
Nucor (NUE) reported adjusted EBITDA of $425 million in 4Q16 versus $649 million in 3Q16 and $468 million in 4Q15.
The sequential decline in 4Q16 EBITDA was largely expected given the trend in spot steel prices and weak seasonal US steel demand in the fourth quarter. However, Nucor and AK Steel also reported a yearly decline in their respective 4Q16 EBITDA metrics.
Along with earnings, investors should also follow cash flow metrics. We’ll discuss this more in the next article.