ArcelorMittal stock falls after lowering outlook due to tariff headwinds

Investing.com -- ArcelorMittal SA (AS:MT) stock fell 4% on Thursday after the steel giant maintained its second-quarter EBITDA in line with expectations but lowered its outlook due to tariff headwinds and subdued economic activity.

The Luxembourg-based steelmaker reported second-quarter EBITDA of $1.86 billion, matching the consensus estimate of $1.85 billion and up from $1.58 billion in the first quarter. Free cash flow came in at $530 million, significantly above the consensus of $161 million.

Despite the in-line results, ArcelorMittal reduced its 2025 global steel demand forecast (excluding China) to growth of 1.5-2.5%, down from its previous projection of 2.5-3.5%.

The company cited tariff headwinds, subdued economic activity with no de-stocking, and customers in a "wait and see" mode as reasons for the downward revision.

On a positive note, the company maintained its capital expenditure guidance of $4.5-5 billion and reiterated its commitment to return more than 50% of post-dividend free cash flow via share buybacks. Management also highlighted that strategic projects are expected to contribute $0.6-0.7 billion annually to EBITDA from 2025 to 2027.

ArcelorMittal reported a second-quarter profit of $1.8 billion, more than doubling from the prior quarter, driven by a $1.7 billion gain from acquiring full ownership of the AM/NS Calvert steel plant in the U.S. 

The result topped adjusted forecasts, with core earnings also rising on stronger steel prices. The world’s second-largest steelmaker posted earnings of $2.35 per share for the three months ended June 30, compared with $1.05 per share in the first quarter. 

Excluding exceptional items and impairments, adjusted net income was $1 billion, or $1.32 per share, up from $805 million, or $1.05 per share.

Revenue rose 7.6% to $15.93 billion, as average steel selling prices increased 6.8%. Operating income more than doubled to $1.93 billion from $825 million in the previous quarter, while EBITDA rose 17.7% to $1.86 billion. EBITDA per tonne increased to $135 from $116.

ArcelorMittal completed its purchase of Nippon Steel’s 50% stake in Calvert on June 18, gaining full control of the Alabama-based facility. 

The consolidation contributed a $1.7 billion exceptional gain to net income. The company said Calvert added approximately $614 million in annual EBITDA. Calvert’s standalone EBITDA was $224 million in the quarter, up 41.5% from the previous period.

North America segment EBITDA dropped to $258 million from $475 million, affected by higher Section 232 tariffs, weaker demand, and unplanned maintenance in Mexico. 

The region’s sales rose 7.8% to $3.1 billion and included Calvert’s full results after the June consolidation.

In Brazil, segment sales rose 6.4% to $2.8 billion, with a 10.8% increase in shipments offsetting a 3.5% decline in average selling prices. 

EBITDA edged up to $407 million from $391 million. An exceptional charge of $453 million related to a prior acquisition led to a $137 million operating loss.

The European business reported a 69.7% increase in EBITDA to $627 million, as higher prices offset lower volumes. 

The mining segment reported EBITDA of $262 million, down from $320 million, as a 6% drop in iron ore prices and higher costs outweighed a 22.7% rise in shipment volumes. Production in Liberia reached record levels, supported by new infrastructure.

Free cash flow was $514 million, compared with an outflow of $1.4 billion in the first quarter.  Operating cash flow improved to $1.4 billion, helped by a $200 million release in working capital. Capital expenditures totaled $886 million.

Net debt increased to $8.3 billion from $6.7 billion, following $1.4 billion in acquisitions and $262 million in share buybacks.