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ArcelorMittal (MT) Declares Pricing of Notes Due 2024 & 2029

Zacks Equity Research

ArcelorMittal MT recently closed the pricing of its offering of $500 million total principal amount of its 4.25% notes due 2029 and $750 million total principal amount of its 3.6% notes due 2024. The offering is slated to close on Jul 16, 2019, which is subject to satisfaction of customary conditions.

The company will use the proceeds of roughly $1.2 billion for general corporate purposes. It includes the repayment of existing debt in the future along with partly pre-funding commitments under the Essar acquisition financing facility.

ArcelorMittal’s shares have plunged 43.3% in the past year compared with 26.5% decline of the industry.

During first-quarter earnings call, ArcelorMittal stated that it anticipates global apparent steel consumption (ASC) growth for 2019 in the range of 1-1.5%, up from the previous projection of 0.5-1% growth.

In the United States, the company projects ASC growth in the range of 0.5-1.5% in 2019, unchanged from prior view. This is expected to be driven by consistent rise in non-residential construction and machinery.

In Europe, weak manufacturing and falling automotive production are expected to weigh on ASC growth. These factors are expected to contract ASC up to 1% in 2019 against rise of up to 1% as expected earlier.

In May 2019, the company announced that will undertake additional steps for adjusting its European production levels. The move will enable the company to align its production to the present market demand. The company is affected by higher import levels and weak market demand in Europe. As such, it will reduce primary steel production in its facilities in Eisenhuttenstadt, Germany and Dunkirk, France.

Moreover, it will lower the primary steel production at its Bremen facility during the fourth quarter of 2019. A planned blast furnace stoppage for repair works will be extended at the facility. The company will extend the planned stoppage at its facility in Asturias, Spain in the fourth quarter to repair a blast furnace.

Per management, these decisions to lower primary production in the region will be reversed when market conditions improve.

Zacks Rank & Key Picks

ArcelorMittal currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Materion Corporation MTRN, Flexible Solutions International Inc FSI and Rio Tinto plc RIO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Materion has an expected earnings growth rate of 30.3% for 2019. The company’s shares have gained 16.1% in the past year.

Flexible Solutions has projected earnings growth rate of 342.9% for the current year. The company’s shares have surged 159% in a year’s time.

Rio Tinto has an estimated earnings growth rate of 38.7% for the current year. Its shares have moved up 13.2% in the past year.

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