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ARCELOR MITTAL: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Sales: € 14.184 Bn (-8.6% vs. -0.5% expected and -2.5% expected by the market consensus);
EBITDA: € 1.726 Bn (+86.6% vs. +49.0% expected and +59.1% expected by the market consensus);
Net Profit: € 1.207 Bn (€ -1.882.0 M in FY2019 vs. € 307.9 M expected and € 293.0 M expected by the market consensus);
FY2020 vs. FY2019 Results
Sales: € 53.27 Bn (-24.6% vs. -22.8% expected and -23.2% expected by the market consensus);
EBITDA: € 4.301 Bn (-17.2% vs. -23.9% expected and -22.1% expected by the market consensus);
Net Profit: € -733.0 M (€ -2.454.0 M in FY2019 vs. € -1.632.1 M expected and € -1.647.0 M expected by the market consensus).
The results clearly beat expectations in both EBITDA and Net Profit thanks to the better price and volumes performance in Europe (22% EBITDA) ACIS (15% EBITDA) and Mines (42% EBITDA). The rest of divisions were in line with expectations, leaving the EBITDA/Mt on the quarter at US$ 100.00/Mt (vs. US$ 75.00 BS(e) and 51.00 in 3Q’20).
As for the outlook, the company expects the apparent demand to increase by between +4.5% and +5.5% globally in 2021, except in China (where MTS has a low direct exposure), where this growth will be +8.5%/+9.5%. It expects to increase business volumes in 2021 despite asset deconsolidations in the US and Italy, which in our view means a >+11% increase (adjusted), which would stand +8% above our estimate.
Lastly, the company has announced a resumption of the dividend. Thus, the DPS’20 will stand at US$ 0.30/sh. (1.5% yield), and although it is below expectations (US$ 0.45/sh. BS(e)), it will come with a share buyback totalling US$ 1.22 Bn in 2021 (5.8% market cap). Of this amount, US$ 650 M will stem from the sale of its stake in Cleveland Cliff announced this week and additional € 570 M from its new policy of earmarking 50% of the FCF excess after the dividend payment to share buyback. We expect further details in this regard and on the business situation (including the sustainability of steel prices) at the conference call to be held at 15:30 (CET). We expect these announcements to be received warmly. BUY. Target Price: € 22.00/sh (upside 14.46%)