Earnings Preview : ArcelorMittal (NYSE: MT) First Quarter 2010
Thursday, April 22, 2010 10:58 AM

ArcelorMittal (NYSE: MT)  is scheduled to reports its Q1 2010 results after the market closes on April 28, 2010. The management expects Q1 2010 EBITDA to be in the range of $1.8bn-$2.2bn. A sharp recovery in 2Q results is expected as a lag in realizing recent steel price hikes and fully benefits 2Q, leaving 1Q results subject to a margin squeeze and certain input costs spiked like coking coal for Kryviy Rih or natural gas prices in Brazil and Mexico. 1Q 2010 EPS will be $0.24 compared to $0.71 in 4Q 2009 and a loss of -$0.78 in 1Q 2009 (4Q 2010 EPS reflects a $1.3 billion tax benefit).
ArcelorMittal is one of the largest steelmakers in the world. 
As for Q4 2009, ArcelorMittal reported a health and safety rate improvement by 24% in 2009 and shipments of 71.1 million tonnes in 2009 and of 20 million tonnes in Q4 2009, up 10% compared to Q3 2009. An EBITDA of $2.1 billion in Q4 2009, up 34% compared to Q3 2009, and an operating income of $684 million. Iron Ore production hit 15.6 million metric tones and crude steel production reached 22.5 million metric tones. The EPS rolled in at $0.71.
Analysts' estimates for Q1 2010 range from a low of $0.10 to a high of $0.34, compared to a consensus estimate of $0.25, with number of estimates being 7and the co-efficient variance of 33.09. Shipments in the quarter are expected to increase 6% QoQ on the back of the ongoing restocking process in Europe and in the US. The Flat Carbon America division is expected to post a Q1 2010 EBITDA of $515 million (down 2% QoQ). The Flat Carbon Europe division is expected to post an EBITDA of $563 million in 1Q 2010 (compared to $657 million in 4Q 2009 and $462 million in 1Q 2009) primarily due to lower average selling prices and increasing costs. Long Carbon will post Q1 2010 EBITDA of $453 million compared to $482 million in 4Q 2009 and $268 million in 1Q 2009. The AAandCIS division will record EBITDA of $433million in 1Q 2010 (compared to $310 million in 4Q 2009 and $184 million in 1Q 2009) due to lower average selling prices and higher costs, with Stainless Steel contributing $104 million and AM3S $12 million.
The stock closed at $43.85 on April 20, 2010 and most analysts' rate this stock as a relative Overweight with an average price target of $45.24.


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