Steel giant ArcelorMittal Thursday reported a 15.53 per cent jump in its net income to USD 1.19 billion for the quarter ended December 31, 2018, backed by higher sales among other factors.
The world's largest steel-maker had posted a net income of USD 1.03 billion in the year-ago quarter, the company said in a statement.
The company reported a "net income attributable to equity holders of the parent" of USD 1.19 billion in the fourth quarter.
World's leading integrated steel and mining company which follows January-December calendar, reported FY2018 net income of USD 5.1 billion, 12.7 per cent higher as compared to USD 4.6 billion for FY2017.
"Sales in 4Q 2018 were 3.5 per cent higher as compared to 4Q 2017 primarily due to higher average steel selling prices (8.2 per cent) and higher market-priced iron ore shipments (18.2 per cent), offset in part by lower steel shipments (-) 3.6 per cent," the company said.
During the quarter the company recorded sales to the tune of USD 18.32 billion as against USD 17.71 billion in the corresponding quarter a year-ago.
It also said that exceptional net gains for the quarter under review were USD 29 million while the same for the year-ago quarter was "nil".
ArcelorMittal Chairman and CEO Lakshmi N Mittal said: "2018 was a year of positive momentum for ArcelorMittal characterised by important strategic and financial progress. Operating in a healthy market environment, the company enjoyed a strong financial performance, delivering substantial profitability improvement,"
He said having considerably strengthened its balance sheet in recent years, the company also regained its investment grade credit rating.
Moreover, the acquisitions of Votorantim and Ilva, both completed in 2018, provide the company with enhanced leadership positions in key markets, he added.
On Essar Steel, Mittal said "...our bid for Essar can provide us with a quality, scalable presence in the rapidly expanding India steel market."
The company further said that improved asset portfolio through the completed acquisitions of Votorantim in Brazil and Ilva in Italy, as well as "being selected as the successful bidder for Essar Steel India Limited (ESIL) in partnership with Nippon Steel & Sumitomo Metal Corporation Group (NSSMC), which subject to completion, would provide improvement potential and growth optionality."
On November 20, 2018, ArcelorMittal entered into a USD 7 billion term facilities agreement with a group of lenders in connection with the acquisition of ESIL. The agreement has a term of one year till November 20, 2019 subject to ArcelorMittal's option to extend the term by six months.
"The facility may be used for certain payments by ArcelorMittal as well as by the joint venture through which the Company expects jointly to own and operate ESIL in partnership with Nippon Steel & NSSMC," the statment said.
Commenting on the results Mittal further said although the issue of global overcapacity persists, there are well publicised macro-economic risks, the company expects further, moderate global steel demand growth this year.
"Having considerably strengthened the company in recent years, we are in a strong position to generate healthy levels of free cash and prosper through the cycle," he said.
The company said an investment grade credit rating remains ArcelorMittal's financial priority, with a target to reduce net debt to below USD 6 billion.
The company had a gross debt of USD 12.6 billion as of December 31, 2018. Its net debt as of December 31, 2018 stood at USD 10.2 billion as against USD 10.1 billion as of December 31, 2017.
The steel shipments during the year stood at 83.9 million tonnes (MT) while during the quarter it stood at 20.2 MT.
Crude steel production was recorded at 92.5 MT during the year while for the quarter it was at 22.8 MT. The company said its iron ore shipments were at 58.3 MT during the year of which 37.6 MT were shipped at market prices. During the quarter iron ore shipments was 15.7 MT of which 10 MT was shipped at market prices.
ArcelorMittal said it expects certain cash needs of the business to increase in 2019 to around USD 6.4 billion while capex is expected to rise to USD 4.3 billion (versus USD 3.3 bn in FY2018) including USD 0.4 billion carried over from 2018, the impact of Ilva (USD 0.4 billion) and the continued investment in high returns projects in Mexico and Brazil.
ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and an industrial footprint in 18 countries.
It had revenues of USD 76.0 billion and crude steel production of 92.5 million tonnes, while own iron ore production reached 58.5 million tonnes.
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