On Thursday 1 August 2024, Luxembourg-headquartered steel manufacturer ArcelorMittal announced its results for the three- and six-month periods ended 30 June 2024.
Net income fell from $0.9 billion ($938 million) in the first quarter (Q1) of 2024 to $0.5 billion ($504 million) in the second quarter (Q2). ArcelorMittal attributed this to the impact of the non-cash mark-to-market on Vallourec shares. Net income stood at $1.4 billion in the first half (H1) of 2024 (H1 2023: $3 billion).
ArcelorMittal reported a 3.2% increase in steel shipments in Q2 2024 compared to Q1 2024. It said that higher steel shipments and lower costs helped offset the impact of lower steel prices. EBITDA decreased from $2 billion in Q1 2024 to $1.9 billion in Q2 2024 (Q2 2023: $3 billion) and from $5.1 billion in H1 2023 to $3.8 billion in H1 2024.
Sales reached over $16.2 billion in Q2 2024 (Q1 2024: $16.3 billion; Q2 2023: $18.6 billion) and $32.5 billion in the H1 2024 (H1 2023: $37.1 billion). Operating income stood at $1.05 billion in Q2 2024 (Q1 2024: $1.07 billion; Q2 2023: $1.9 billion) and at $2.1 billion in H1 2024 (H1 2023: $3.1 billion).
Net debt stood at $5.2 billion at the end of Q2 2024; gross debt reached $11.1 billion and cash and cash equivalents stood at $5.9 billion as of 30 June 2024.
Over the past twelve months, the steel manufacturer generated investable cash flow of $2.6 billion with $1.5 billion invested in strategic growth projects and $1.8 billion returned to ArcelorMittal shareholders.
Commenting on these results, Aditya Mittal, CEO of ArcelorMittal, said: "Financially, performance in the second quarter was broadly similar to the first, reflecting the continued subdued economic sentiment. Inventories are at a low level which will support apparent steel demand growth ex-China of between 2.5% and 3% this year." He added: "The company enjoys a healthy balance sheet, from which it can continue to invest for growth and market share and consistently return cash to shareholders."
Strategic objectives
ArcelorMittal reported that the Vega CMC (Brazil) project is "ramping up" and commissioning has begun for the 1GW renewables project in India. Strategic growth projects are estimated to add $1.8 billion to ArcelorMittal's EBITDA potential by the end of 2026.
Moreover, the steel manufacturer reported that the Sustainable Solutions segment is making progress towards the targeted doubling of EBITDA over the next five years.
In addition to its growing base dividend, ArcelorMittal said it would continue to return at least 50% of post-dividend FCF to shareholders through its share buyback programmes.
Outlook
ArcelorMittal described the current market conditions as "unsustainable", warning that "China's excess production relative to demand is resulting in very low domestic steel spreads and aggressive exports; steel prices in both Europe and US are below the marginal cost". However, the company expects demand to be higher in the second half of 2024 compared to the same period in 2023.
Capex in 2024 continues to be expected within the range of $4.5 to $5 billion range. ArcelorMittal stressed that a capital-efficient decarbonisation strategy was "essential to achieving appropriate returns on investment".
Moreover, the company expects the $1.6 billion investment in working capital in the first half of 2024 to reverse by year end, supporting the outlook for free cash flow generation. The completion of its strategic growth projects is expected to support structurally higher EBITDA and investable cash flow in future.
