Investing.com -- ArcelorMittal (AS:MT) stock jumped over 6% on Thursday after the steelmaker reported stronger-than-expected fourth-quarter earnings, with adjusted EBITDA beating analyst estimates by 6-8%, driven largely by a rebound in mining volumes.
The steel production company also signaled a more optimistic outlook for 2025, citing potential demand recovery on the back of restocking trends and EBITDA growth.
ArcelorMittal posted an adjusted EBITDA of $1.65 billion for the quarter, exceeding Visible Alpha consensus estimates of $1.53 billion and Barclays’ forecast of $1.58 billion.
The earnings beat was primarily attributed to a surge in mining volumes, with shipments 12% above consensus, particularly from Canada and Liberia, marking the highest quarterly figure since late 2020.
Contributions from the company’s Sustainable Solutions division and joint ventures also provided a modest lift.
The report included several one-time charges, including $80 million in impairments tied to operations in South Africa and a canceled project in Monlevade, as well as $142 million in restructuring costs.
Additionally, a $400 million one-off reduction in deferred tax assets due to Luxembourg’s lower statutory tax rate and other tax litigation provisions weighed on the bottom line, leading to a reported loss of $0.51 per share.
Adjusted for these charges, earnings per share came in at $0.52, ahead of consensus expectations of $0.41.
Cash flow generation also exceeded estimates, with free cash flow reaching $1.3 billion, compared to Barclays’ estimate of $987 million and Bloomberg’s consensus forecast of $1.18 billion.
The company benefited from a $1.6 billion release in net working capital, driven in part by lower-than-expected capital expenditures, which came in at $4.4 billion for the year—below guidance of $4.5 billion to $5.0 billion.
As a result, net debt declined to $5.1 billion, below Visible Alpha consensus of $5.3 billion and Morgan Stanley’s estimate of $5.5 billion, implying a net debt-to-EBITDA ratio of 0.8x.
ArcelorMittal raised its quarterly base dividend to $0.55 per share, up from $0.50, slightly above the $0.52 consensus.
The dividend will be paid in two installments in June and December 2025. However, there was no update on share buybacks, as expected.
The company still has about 7 million shares, or $165 million, remaining under its existing program, with analysts anticipating further details in May.
As for 2025, management expects shipments to increase and has reaffirmed its guidance for positive free cash flow, supported by further optimization of net working capital and growth in EBITDA.
The current consensus for Q1 2025 EBITDA is approximately $1.63 billion, which analysts see as achievable, with spot run rates suggesting up to $1.8 billion.
The full-year 2025 capital expenditure budget is set at $4.5 billion to $5.0 billion, in line with Morgan Stanley’s estimate of $4.7 billion and consensus of $4.6 billion, easing concerns around potential spending increases related to decarbonization initiatives.
On the growth front, the Liberia expansion scope has been increased from 15 million metric tons per year to 20 million, with completion of a concentrator in Q4 2024 and full ramp-up expected by the end of 2025.
Project capital expenditure has risen from $1.4 billion to $1.8 billion, but projected EBITDA contributions have also increased from $350 million to $450 million.
Additionally, a new $900 million electrical steels facility in Calvert, fully owned by ArcelorMittal, is expected to generate $200 million in EBITDA once production begins in the second half of 2027.
Barclays (LON:BARC) analysts described the earnings report as "solid," flagging mining volumes as a key positive surprise. Whether this improvement is a temporary catch-up or reflects structural enhancements under new divisional leadership remains to be seen.
Morgan Stanley (NYSE:MS) analysts echoed this sentiment, noting that while there were no immediate buyback updates, the company’s guidance for positive free cash flow and ongoing net working capital efficiencies should be well received by investors.
Recent steel price hikes—such as the €30 per ton increase in Europe and the $70 per ton increase in Canada—further suggest that the steel cycle may be turning upward.
“With steel prices & demand (boosted by restock) rising off cyclical lows in 2025 and $0.4bn EBITDA from capex we see 2025 cons EBITDA of $7.3bn supported (JEFe: $7bn),” said analysts at Jefferies in a note.