International Steel Mills

ArcelorMittal Q2 earnings dive, Mexican strike hits profits

August 1, 2024

ArcelorMittal SA

Second quarter ended June 30	2024	2023	% Change
Net sales	$16,249	$18,606	-12.7%
Net earnings (loss)	$504	$1,860	-72.9%
Per diluted share	$0.63	$2.20	-71.4%
Six months ended June 30
Net sales	$32,531	$37,107	-12.3%
Net earnings (loss)	$1,442	$2,956	-51.2%
Per diluted share	$1.79	$3.46	-48.3%

(in millions of dollars except per share)

ArcelorMittal’s earnings fell precipitously from a year earlier as the company said current market conditions are unsustainable.

“China’s excess production relative to demand is resulting in very low domestic steel spreads and aggressive exports; steel prices in both Europe and US are below the marginal cost,” the company said in a statement on Tuesday.

The Luxembourg-based steelmaker reported net income (attributable to equity holders of the parent) of $504 million in Q2’24, tumbling 73% from $1.86 billion a year earlier. Sales slid 13% to $16.2 billion in the same comparison.

The company said Ebitda in Q2’24 slipped 4.8% to $1.86 billion vs. $1.96 billion the previous quarter, primarily due to weaker results in North America impacted by the labor action at its Mexican operations.

However, ArcelorMittal expects apparent demand to be higher in 2H’24 vs. 2H’23.

Impact from Mexico strike/North American operations

Sales at ArcelorMittal’s North American operations fell 5.5% in Q2’24 to $3.2 billion vs. the previous quarter. The company cited an 11.7% decline in steel shipments, primarily flat products, “impacted by an illegal blockade at our Mexican operations.”

A labor action started on May 24 at ArcelorMittal Mexico’s steel plant in Lazaro Cardenas and La Mira mine located in the state of Michoacán. On July 19, the company announced that an agreement was reached with the workers, ending the strike and leading to a gradual restart of production and shipments.

The company halted the blast furnace and mining operations during the work stoppage, and ArcelorMittal estimated a loss of 400,000 tons of volume and an Ebitda loss of $100 million in the quarter.

ArcelorMittal CFO Genuino Christino said in a Q2 earnings call on Tuesday that the company will see an impact from the strike in the third quarter as well. “But that business is up and running,” he noted.

However, he said the blast furnace, dedicated to its longs business, will take a little bit longer to restart.

“It should take us about two months to be able to restart that part of the business,” Christino said.

Regarding new measures announced by the US and Mexican governments to prevent tariff evasion and protect North America’s steel and aluminum industries, Christino said they didn’t concern the company.

“So we are not really part of this debate, because all of our steel is melted and poured in Mexico,” he said.

AM/NS Calvert

At AM/NS Calvert, its 50/50 joint venture with Nippon Steel in Calvert, Ala., the company said production, shipments, and sales in Q2’24 were stable compared to the previous quarter.

The mill has the capacity to produce 5.3 million tons of flat-rolled carbon steel products annually, according to its website.

Calvert Ebitda of $166 million fell 11.6% quarter over quarter, “primarily due to negative price-cost effect,” ArcelorMittal said.

ArcelorMittal

Ethan Bernard

Ethan Bernard is a reporter and editor for Steel Market Update. He previously worked for American Metal Market as a copy editor in the New York office for two years starting in 2008. Later, he copy edited AMM’s monthly magazine on a freelance basis from 2015 until 2017. With experience in financial copywriting and textbook publishing, he holds a BA in Comparative Literature from UC Berkeley, and an MFA. in Creative Writing from New York University. He can be reached at ethan@steelmarketupdate.com or 724-759-7871.