ArcelorMittal to increase its share buyback program by $1 billion after the steel group posted its highest quarterly profit since 2008.
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Third-quarter revenue rose by more than half to $20.2 billion. Net income in the third quarter was $4.6 billion. In the same period last year, ArcelorMittal suffered a loss of $261 million.
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The strong results are due to high steel prices. The average price for a tonne of steel is 76 percent higher than a year ago. “That resulted in the highest net profit and lowest net debt since 2008,” emphasizes CEO Aditya Mittal.
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Nine months into the year, net profit stands at nearly $11 billion, compared to a loss of about $2 billion last year. In the third quarter, net profit came in at $4.6 billion, gross operating profit increased sixfold to $6.06 billion. Net debt fell to $3.9 billion, the lowest level since 2006 and more than $5 billion lower than at the end of June this year.
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The outlook remains positive: underlying demand is expected to continue to improve, and steel prices remain at a high level.
Aditya Mittal
CEO ArcelorMittal
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Despite the sharp increase in profits, the quarterly performance was less than analysts’ expectations, as volumes were lower than expected. The volume of shipped steel fell by 9 percent. ‘The cause is a combination of on the one hand more cancellations of orders from the car sector, delays in deliveries and our own limited production as a result of the high energy prices,’ explains ING analyst Stijn Demeester.
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Positive for the future
Still, CEO Aditya Mittal remains positive for the foreseeable future. “Despite the volatility we continue to see from Covid-19, this is a very strong year for us. The outlook remains positive: underlying demand is expected to continue to improve, and steel prices remain at a high level. This will be reflected in the annual contracts for 2022.’
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He expects the demand for steel, outside of gulp China, to increase by 12 to 13 percent thanks to the economic recovery. In China, which accounts for more than half of the demand, Mittal expects a contraction this year. This is mainly due to the debt crisis weighing on the real estate market.
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Additional shopping
The good results allow ArcelorMittal to pamper its shareholders. For example, the current, ongoing purchasing program will be increased by an additional billion euros. That brings the total capital distributions since September 2020 to $6 billion.
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Of this, 1.8 billion euros is still available to buy back own shares. The increase in the buyback program was enthusiastically received on the stock exchange, because the share price on the Amsterdam stock exchange was 3.7 percent higher on Thursday.
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greening
The company aims to reduce its CO2 emissions by 3.9 million tons per year. That is about 4 percent of the total CO2 emissions of Flanders. The entire group aims to reduce its CO2 emissions by 30 percent by 2030 and to produce climate neutrally by 2050.
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