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ARCELOR MITTAL: 3Q’20 RESULTS AND T.P. UPGRADE (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: US$ 13.266 Bn (-20.2% vs. -16.4% BS(e));
EBITDA: US$ 901.0 M (-15.2% vs. -25.3% BS(e) and -21.2% consensus);
Net Profit: US$ -261.0 M (US$ -539.0 M in 9M'19 vs. US$ -371.0 M BS(e));
9months'20 vs. 9m'19 Results
Sales: US$ 39.086 Bn (-29.1% vs. -27.9% BS(e));
EBITDA: US$ 2.575 Bn (-39.7% vs. -42.2% e BS(e) and -41.2% consensus);
Net Profit: US$ -1.940.0 M (US$ -572.0 M in 9M'19 vs. US$ -2.050.0 M BS(e));

The 3Q’20 results came in above expectations, with US$ 901 M of EBITDA (-15.2% vs. -25.3% BS(e) and -21.2% consensus), thanks to better performance than expected in Brazil (~20% of EBITDA) and ACIS (~8% of EBITDA), with higher margins as a result of a better price/mix performance than expected.
Although the company has talked about recovery and higher production levels, given the lack of visibility, it has not given a guidance (which was not expected in any case). The company has cut its working capital reduction target to US$ 600 M/US$ 1 Bn from US$ 1 Bn (although this was to be expected), and announced that, since the net debt target (US$ 7 Bn) has been met, its top priority will now be shareholder remuneration (a more specific announcement will be made in February). We expect to learn further details in the conference call (15:30 CET). Following these results, we will raise our estimates and increase our T.P. to € 15.00/sh. (+30%, +20% upside, see details below), and we maintain our BUY recommendation.