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ArcelorMittal’s 3Q17 Earnings: The Word on Wall Street

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ArcelorMittal’s 3Q17 earnings

Previously in this series, we’ve looked at ArcelorMittal’s (MT) 3Q17 revenue estimates. In this article, we’ll look at several other earnings metrics. Specifically, we’ll look at ArcelorMittal’s 3Q17 adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] and adjusted net income estimates.

Consensus estimates

According to the consensus estimates compiled by Thomson Reuters, ArcelorMittal is expected to post adjusted EBITDA of $1.9 billion in 3Q17. The company posted EBITDA of $2.1 billion in 2Q17 and $1.9 billion in 3Q16. 

Analysts expect ArcelorMittal’s 3Q17 EBITDA to rise on a yearly basis while expecting it to fall on a quarter-over-quarter basis. Looking at net income, ArcelorMittal is expected to post adjusted net income of $687.0 million in 3Q17 compared to $1.1 billion in the sequential quarter. 

Expectations of higher year-over-year profitability are not surprising. Steel market conditions look much better now compared to 3Q16.

Key drivers

Several factors could be at play in ArcelorMittal’s 3Q17 earnings. We saw weakness in iron ore prices in the quarter, which could negatively impact the company’s Mining segment. ArcelorMittal mines a large part of its iron ore needs through captive mines whose profitability is negatively impacted when iron ore prices fall.

While European steel prices were strong in 3Q17, US steel prices were slightly lower compared to the sequential quarter. US-based steel companies U.S. Steel (X), AK Steel (AKS), and Nucor (NUE) reported sequentially lower earnings in the quarter. However, U.S. Steel’s Europe operations (VEU) posted sequentially higher earnings in the quarter.

In the final article in this series, we’ll see how markets are valuing ArcelorMittal ahead of its 3Q17 earnings.

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