ArcelorMittal’s 2Q17 consensus estimates
Previously, we looked at ArcelorMittal’s (MT) 2Q17 revenue estimates. In this article, we’ll look at the company’s 2Q17 consensus EBITDA (earnings before interest, tax, depreciation, and amortization) estimates. EBITDA is the preferred metric for the steel industry.
According to the consensus estimates compiled by Thomson Reuters, ArcelorMittal is expected to post adjusted EBITDA of $2.3 billion in 2Q17. The company posted EBITDA of $2.2 billion in 1Q17 and $1.8 billion in 2Q16. As you can see, analysts expect ArcelorMittal’s 2Q17 EBITDA to rise on a yearly basis while expecting it to be flat on a quarter-over-quarter basis.
Expectations of a sharp increase in year-over-year profitability are not surprising. Steel market conditions look much better now as compared to the corresponding period last year. However, we saw some deterioration in market conditions on a quarter-over-quarter basis.
Steel prices weakened in ArcelorMittal’s key end markets of Europe and the United States in 2Q17. Although US steel prices came off their lows at the end of June, this trend might not fully reflect in steel companies’ 2Q17 earnings due to the lag impact in spot sales. It’s worth noting that both Nucor (NUE) and Steel Dynamics (STLD) reported worse-than-expected earnings in 2Q17. Previously, both these companies’ 2Q17 guidance had also fallen short of the consensus view.
Meanwhile, along with softness in steel prices (AKS) (CLF), falling iron ore prices might also dent ArcelorMittal’s 2Q17 profitability. In the next article, we’ll see how ArcelorMittal’s different business segments could fare in the quarter.