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Why U.S. Steel Corporation and AK Steel Look Like Outliers

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Profitability

Investors can use several metrics to measure a company’s profitability. For companies in the commodity space, EBITDA (earnings before interest, tax, depreciation, and amortization) is the most common metric. In this series, we’ll look at leading steel companies’ 1Q17 EBITDA and see how different companies fared during the quarter.

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Key takeaways

  • Steel Dynamics’ (STLD) EBITDA rose to $421 million in 1Q17—compared to $214 million in the sequential quarter.
  • Nucor (NUE) reported EBITDA of $773 million in 1Q17. The company posted adjusted EBITDA of $425 million in 4Q16 and $347 million in 1Q16.
  • ArcelorMittal (MT) generated adjusted EBITDA of $2.2 billion in 1Q17. In contrast, the company posted adjusted EBITDA of $1.7 billion in 4Q16 and $927 million in 1Q16.
  • AK Steel (AKS) generated adjusted EBITDA of $143 million in 1Q17—compared to $151 million in 4Q16 and $81 million in 1Q16.
  • U.S. Steel Corporation (X) generated adjusted EBITDA of $74 million in 1Q17. Its 1Q17 EBITDA fell steeply on a sequential basis.

Outliers

Notably, U.S. Steel Corporation and AK Steel posted a sequential decline in their 1Q17 EBITDA, while other steel companies that we’re covering in this series managed to post a significant increase in their 1Q17 EBITDA. U.S. Steel Corporation and AK Steel expect their maintenance costs to be higher this year, which is having a negative impact on their profitability.

In the next part, we’ll discuss analysts’ projections for steel companies’ 2Q17 profitability.

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