ArcelorMittal MT recently received underwriting commitments for a new $3-billion credit facility. Notably, this confirms the sustained strong support of its main relationship banks.
The credit facility reflects a new commitment from BNP Paribas, Credit Agricole Corporate & investment Bank, Societe Generale, and J.P. Morgan. However, ArcelorMittal presently has no immediate requirement to draw on the credit facility.
Notably, the credit facility is expected to have the maturity of 12 months and will likely be utilized for general corporate purposes.
The credit facility offers additional financial flexibility in the current extraordinary circumstances. Moreover, it strengthens ArcelorMittal’s already strong liquidity position of $10.5 billion as of Dec 31, 2019, which includes a €5.5-billion revolving credit facility that remains undrawn and completely available until December 2024.
ArcelorMittal’s shares have lost 58.1% in the past year compared with a 44.4% decline of the industry.
On its fourth-quarter earnings call, the company expected apparent steel consumption (“ASC”) in the core markets to grow in 2020.
For 2020, ArcelorMittal expects global ASC growth of 1-2%, whereas it reported 1.1% in 2019.
In the United States, the company projects ASC of flat to 1% growth for 2020. ASC growth in flat products is expected to offset the anticipated decline for long products.
In Europe, the company expects the end of destocking to support improved ASC for flat products amid anticipated weakness in automotive. Similarly, it expects the end of destocking to offset the impacts of the slowdown in construction activity on long product ASC. The net effect of the factors is expected to support ASC growth of 1-2% for 2020 in the region.
ASC is expected to rise 4-5% in Brazil, following an expected growth in construction activity.
In China, the company expects overall demand growth to be flat to 1% for 2020 compared with an estimated growth of 3.2% in 2019. This is likely to be driven by strong real estate activities. The company also expects the coronavirus outbreak to have a short-term negative impact on steel demand in China.
ArcelorMittal Price and Consensus
ArcelorMittal price-consensus-chart | ArcelorMittal Quote
Zacks Rank & Stocks to Consider
ArcelorMittal currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Franco-Nevada Corporation FNV and Barrick Gold Corporation GOLD.
Kinross has a projected earnings growth rate of 41.2% for 2020. The company’s shares have surged 91.2% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has a projected earnings growth rate of 15.9% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 77.1% in a year.
Barrick Gold currently has a Zacks Rank #2 and a projected earnings growth rate of 51% for 2020. The company’s shares have gained 89.2% in a year.
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