EUR 100.00 For Business Accounts Only

ARCELOR MITTAL: 3Q’19 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
Sales: US$ 16.634 Bn (-10.2% vs. -5.1% BS(e));
EBITDA: US$ 1.063 Bn (-61.0% vs. -68.7% BS(e) and -65.9% consensus);
Net Profit: US$ -539.0 M (US$ 899.0 M in 9M'18 vs. US$ -120.0 M BS(e));
9M'19 vs. 9M'18 Results
Sales: US$ 55.101 Bn (-4.5% vs. -2.9% BS(e));
EBITDA: US$ 4.27 Bn (-48.6% vs. -51.2% BS(e) and -50.2% consensus);
Net Profit: US$ -572.0 M (US$ 3.956 Bn in 9M'18 vs. US$ -153.0 M BS(e));
The 3Q'19 results came in above our forecast and consensus in terms of EBITDA (US$ 1.06 Bn vs. US$ 853 M BS(e) and US$ 930 M consensus). Only the Mining business (~15% EBITDA) performed worse than expected, while the steel business (~85% EBITDA) beat our estimates in all geographical areas.
As for the outlook, the company has cut its global apparent steel consumption forecast from +0.5%/+1.5% to +0.5%/+1% due to a worse forecast than expected in the US and Europe (jointly they account for ~65% of group EBITDA). All this leads to a lower guidance for volumes on the year, from “growth” to stable (and vs. +2.5% BS(e)).
We believe that these better-than-expected results do not represent a game changer, but they should underpin the stock to a greater extent, following the excessive correction seen in 2019 (-30% vs. IBEX). We will cut our estimates for a 2019 that is somewhat worse on the whole but we continue to see significant upside (>25% from current levels), and maintain our BUY recommendation. We expect further details on the real business situation at the conference call to be held today at 15:30 (CET). T.P. € 23.00/sh. (+58.36% upside).