AM/NS India EBITDA drops 62.98% to $204 million in September quarter

ArcelorMittal Nippon Steel India (AM/NS India), a joint venture between ArcelorMittal and Nippon Steel, reported a 62.98 per cent year-on-year drop (YoY) in EBITDA (earnings before interest, taxes, depreciation and amortization) at $204 million in the September quarter due to lower selling price and higher cost. In the year-ago period, EBITDA was at $551 million.
 

Sequentially, EBITDA was lower by 44.11 per cent. Crude steel production and steel shipments in the quarter were lower on a YoY basis.

Crude steel production at 1.7 mt was 12.1 per cent lower as compared to 1.9 mt a year back; steel shipments at 1.6 mt was lower compared to 1.8 mt in the year-ago period.

The company attributed the performance to lower average selling price, higher coal costs and lower pellet sales contribution, following the introduction of export duty during the prior quarter. It was offset in part by higher steel shipments quarter-on-quarter (QoQ).

The AM/NS India numbers were disclosed as part of ArcelorMittal’s Q3 2022 financial results. The global steel major follows a January-December fiscal year. ArcelorMittal has a 60 per cent equity interest in AM/NS India.

The Indian joint venture is working on a major expansion plan. In the near term, it is ramping up Hazira production capacity to 8.6 mt by the end of 2024.

Expansion of the Hazira plant to a 15 mt capacity by early 2026 is underway including automotive downstream and enhancements to iron ore operations, with capex of $7.4billion and targeting to increase the EBITDA capacity by 2.5x, ArcelorMittal mentioned in its earnings release.

In line with the trend in the industry, the financial performance of ArcelorMittal, the world’s second largest steelmaker, reflected the compression in steel spread.

EBITDA in the quarter was at $2.7 billion compared to $6.05 billion in the year-ago period. It had stood at $5.2 billion in the previous quarter. Net income was at $993 million compared to $4.6 billion a year back.

Commenting, Aditya Mittal, ArcelorMittal chief executive officer, said, “The strong market conditions enjoyed for much of the past two years deteriorated in the third quarter as seasonally lower shipments, a reduction in exceptional price levels, destocking and higher energy costs combined to put profits under pressure.”

He also said that the short-term outlook for the industry remains uncertain and caution was appropriate.

“But, ArcelorMittal has the strength, resilience and experience to face the future with confidence. Supported by a strong balance sheet, we will continue to focus on executing our strategy, designed to ensure our long-term sector leadership, as well as deliver sustainable investor returns,” Mittal added.