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    5401   JP3381000003

NIPPON STEEL CORPORATION

(5401)
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ArcelorMittal says strength in key steel markets offsets mine pain

11/07/2014 | 06:55am EST
General view of the ArcelorMittal steel plant in Liege

BRUSSELS (Reuters) - ArcelorMittal (>> ARCELORMITTAL), the world's largest steelmaker, pointed to rising demand in its key markets next year and confirmed its profit forecast for 2014 on Friday, as improvements in U.S. and European steel more than offset plunging iron ore prices.

BRUSSELS (Reuters) - ArcelorMittal (>> ARCELORMITTAL), the world's largest steelmaker, pointed to rising demand in its key markets next year and confirmed its profit forecast for 2014 on Friday, as improvements in U.S. and European steel more than offset plunging iron ore prices.

Analysts had feared that the company -- which makes about 6 percent of global steel and is one of the world's largest iron ore producers -- would temper its outlook given the impact on its mining operations of iron ore prices at five-year lows.

"The steel business is strong enough -- due to volume improvements, cost improvements we have made, as well as the overall steel market -- to offset the price decline in iron ore," Chief Financial Officer Aditya Mittal said.

ArcelorMittal shares were up 3.3 percent at 10.21 euros (7.998 British pounds) at 1120 GMT, making them the top riser in the STOXX Europe 600 basic resources index <.SXPP> and among the best performers in the FTSEurofirst index <.FTEU3> of leading European stocks.

"They've beaten market consensus by 5 percent. There had also been some doubt as to whether they would be able to hold on to their guidance," said ING analyst Jaap Kuin, who has a 'buy' recommendation and 13 euro price target.

ArcelorMittal, a benchmark for worldwide manufacturing, cut its estimate for 2014 global steel consumption growth to 2.25-2.75 percent from 3.0-3.5 percent because of a slowdown in China and heavy declines in Brazil and former Soviet states.

Importantly, however, it made a sharp upward revision of its overall market estimate for U.S. steel consumption, while that for Europe was left little changed. The two regions account for about two-thirds of ArcelorMittal's steel shipments.

"What we say, which is important, is that we are constructive on the U.S. economy and the European economy next year," Mittal said, adding he also saw a steel rebound next year in Brazil, which fell into recession in the first half of 2014.

ArcelorMittal expects a core profit (EBITDA) this year of above $7 billion. The "smart" estimate of Thomson Reuters's StarMine, which weights analyst's forecasts according to past performance, had been for core profit of $7.2 billion.

In the third quarter it beat estimates, with earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.91 billion, above the average $1.82 billion in a Reuters poll of brokers and up nearly 12 percent on the same period last year.

The company said it had fared well in Europe, partly due to an improved market but also due to savings from past years of plant closures and job cuts.

North America, dampened earlier in the year by a harsh and extended winter, had increased profit from higher steel shipments and average prices even as fixed costs rose.

ROARING U.S. DEMAND

The group, double the size of rival Nippon Steel and Sumitomo Metal Corp (>> Nippon Steel & Sumitomo Metal Corp), said U.S. steel consumption would be 8.25-8.75 percent higher this year, buoyed by a broad-based recovery and the building of inventories for next year.

Top U.S. steelmakers, such as Nucor (>> Nucor Corporation) and U.S. Steel Corp (>> United States Steel Corporation), have cited strong demand from the auto, appliance and oil and gas industries, as well as lower energy costs.

The construction sector, which uses about half of the world's steel, has also improved from 2013.

ArcelorMittal said that strong demand in key developed markets meant it would maintain its forecast that steel shipments would be 3 percent higher this year than last.

Iron ore shipments, it said, would be up 15 percent after the ramp-up of capacity at its mines in eastern Canada.

The company has, however, suffered from sharply lower iron ore prices, largely the result of the slowdown in China weakening demand while miners have boosted output.

The spot benchmark Asian iron ore price <.IO62-CNO=MB> has fallen by about 40 percent this year to below $80 a tonne, prompting ArcelorMittal in August to cut its 2014 group profit estimate.

(Editing by David Goodman and Clara Ferreira Marques)

By Philip Blenkinsop


ę Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
ARCELORMITTAL 0.80% 24.44 Real-time Quote.28.42%
BEST INC. -5.91% 1.035 Delayed Quote.-46.08%
BHP GROUP 1.42% 38.57 End-of-day quote.-9.10%
EURO / BRAZILIAN REAL (EUR/BRL) 0.28% 6.3235 Delayed Quote.0.06%
GOLD -0.67% 1783.618 Delayed Quote.-5.60%
ING GROEP N.V. 0.51% 12.158 Real-time Quote.58.30%
NIPPON STEEL CORPORATION -3.27% 1747.5 End-of-day quote.31.59%
NUCOR CORPORATION 0.84% 114.8337 Delayed Quote.114.29%
RIO TINTO GROUP 0.98% 95.39 End-of-day quote.-16.20%
RIO TINTO PLC 1.78% 4623.5 Delayed Quote.-16.96%
SILVER -2.11% 22.8354 Delayed Quote.-12.25%
THE EASTERN COMPANY 2.49% 25.48 Delayed Quote.3.15%
UNITED STATES STEEL CORPORATION -2.14% 23.72 Delayed Quote.44.72%
VALE S.A. 0.00%End-of-day quote.0.00%
VALE S.A. -2.64% 68.64 End-of-day quote.-21.51%
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Analyst Recommendations on NIPPON STEEL CORPORATION
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Financials
Sales 2022 6 588 B 57 957 M 57 957 M
Net income 2022 489 B 4 302 M 4 302 M
Net Debt 2022 2 378 B 20 918 M 20 918 M
P/E ratio 2022 3,39x
Yield 2022 8,30%
Capitalization 1 609 B 14 194 M 14 156 M
EV / Sales 2022 0,61x
EV / Sales 2023 0,61x
Nbr of Employees 106 226
Free-Float 91,1%
Chart NIPPON STEEL CORPORATION
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Nippon Steel Corporation Technical Analysis Chart | 5401 | JP3381000003 | MarketScreener
Technical analysis trends NIPPON STEEL CORPORATION
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TrendsBearishNeutralBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus BUY
Number of Analysts 9
Last Close Price 1 747,50 JPY
Average target price 2 730,00 JPY
Spread / Average Target 56,2%
EPS Revisions
Managers and Directors
Eiji Hashimoto President & Representative Director
Kosei Shindo Chairman
Shuhei Onoyama Representative Director & Vice President
Mutsutake Otsuka Independent Outside Director
Ichiro Fujisaki Independent Outside Director
Sector and Competitors
1st jan.Capi. (M$)
NIPPON STEEL CORPORATION31.59%14 674
NUCOR CORPORATION114.29%32 575
ARCELORMITTAL28.42%25 940
TATA STEEL LIMITED72.83%18 111
POSCO0.00%17 188
STEEL DYNAMICS, INC.72.25%12 604