Steel giant ArcelorMittal (MT) announced that it has completed the issuance €750 million ($882 million) 3.125% Notes due Jan 14, 2022 under its €3 billion (roughly $4 billion) wholesale Euro Medium Term Notes (“EMTN”) Program. ArcelorMittal said that the proceeds of the issuance will be used for general corporate purposes.
ArcelorMittal posted healthy third-quarter 2014 results in November. The company reported net income of $22 million or a penny per share in third quarter 2014 as against a loss of $193 million or 12 cents per share in the year-ago quarter.
Revenues went up 2.2% year over year to $20.1 billion in the reported quarter owing to increased steel shipments and higher marketable iron ore shipments. Total shipments rose 3.9% year over year to 21.5 million metric tons in the quarter.
ArcelorMittal expects earnings before interest, taxes, depreciation and amortization (EBITDA) in excess of $7 billion for 2014. However, the steel industry is still affected by overcapacity. Also the tough pricing environment remains another concern.
Although ArcelorMittal remains committed to pare debt, it continues to operate with a high debt level. Its total debt at the end of the third quarter was roughly $21.9 billion against a cash balance of $4.4 billion. As such, high interest expense may weigh on its bottom line.
Moreover the unfavorable impact of real estate has prompted the company to cut its demand growth outlook for steel in China to 1.5%–2% for 2014 as compared to its earlier view of 3% provided during the announcement of second-quarter 2014 results.
ArcelorMittal currently carries a Zacks Rank #4 (Sell).
Better-ranked companies in the basic materials sector include LB Foster Co. (FSTR), Mechel OAO (MTL) and Golden Star Resources, Ltd. (GSS), all carrying a Zacks Rank #2 (Buy).
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