ArcelorMittal Inks Deal with Sider - Analyst Blog

By
A A A

Steel giant ArcelorMittal ( MT ) announced that it has signed a strategic agreement with Algerian company Sider. The deal includes an investment plan of $763 million for the steel complex at Annaba and mines in Ouenza and Boukhadra. It also includes plans of selling part of the company's stake in two steel joint ventures in Annaba and Tebessa to state-owned Sider.

Per the agreement, ArcelorMittal will reduce its stake in both ArcelorMittal Annaba and ArcelorMittal Tebessa to 49%, with the state of Algeria owning the remaining 51%. ArcelorMittal's investment project plan includes more than doubling the Annaba steel plant's annual production capacity from 1 million ton to 2.2 million tons by 2017. The company stated that the plan will be funded by equity contributions from shareholders and bank financing.

ArcelorMittal plans to build a rolling mill for rebar and wire rod with a production capacity of 1 million tons. Also, the investment will ensure a long term future for steel making in Annaba and mining in Tebessa. Through this investment, ArcelorMittal Annaba will be able to cater to the increased domestic demand for steel products in Algeria and support the government to become self sufficient in steel.

ArcelorMittal, the world's largest steel maker, released its second-quarter 2013 results in August. The company posted a net loss of $0.8 billion or 44 cents per share in the quarter compared with a net income of $1 billion or 66 cents per share a year ago. Barring one-time items (restructuring and impairment charges), loss was 32 cents per share. Analysts polled by Zacks were expecting earnings of 9 cents a share on average for the quarter. The results were impacted by lower pricing and weak demand.

Revenues declined 10.1% year over year to $20.2 billion in the reported quarter and missed the Zacks Consensus Estimate of $20.7 billion. Sales increased 2.3% on a sequential basis due to higher steel shipment volumes. Shipments declined 1.8% year over year to 21.3 million metric tons in the quarter.

ArcelorMittal currently maintains a Zacks Rank #3 (Hold).

Other companies in the steel industry with favorable Zacks Rank are Companhia Siderurgica Nacional ( SID ), Shiloh Industries Inc. ( SHLO ) and Kobe Steel Ltd. ( KBSTY ). While Companhia Siderurgica and Shiloh Industries maintain a Zacks Rank #1 (Strong Buy), Kobe Steel holds Zacks Rank #2 (Buy).



KOBE STEEL-ADR (KBSTY): Get Free Report

ARCELOR MITTAL (MT): Free Stock Analysis Report

SHILOH INDS INC (SHLO): Get Free Report

CIA SIDERUR-ADR (SID): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: KBSTY , MT , SHLO , SID

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

94%
100%
86%

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com