ArcelorMittal MT

ArcelorMittal highlighted structural improvements in its Q3 FY25 results, with EBITDA per tonne reaching $111, representing a 25% increase above its historical average margin. The company attributes this to its asset optimization and growth strategy, including strategic projects and recent M&A activities. Management expects these initiatives to drive structurally higher margins and returns on capital employed throughout the cycle, targeting $0.7 billion in structural EBITDA improvement this year and maintaining a medium-term impact target of $2.1 billion.

The underlying business demonstrated healthy cash flow generation, with approximately $0.5 billion in positive free cash flow for the first nine months, excluding working capital. This was achieved despite significant investments of nearly $1 billion in strategic growth projects. The company anticipates a substantial working capital unwind in Q4 FY25, driven by seasonal factors and specific one-off^📎 events such as the Dunkirk blast furnace reline and normalization of raw material accumulation in Mexico. For 2026, management expects potential working capital investments if market conditions strengthen.

ArcelorMittal expressed optimism regarding the new trade tools proposed by the European Commission, viewing them as crucial for fostering a more sustainable European steel sector and improving capacity utilization. The company believes that these measures, coupled with an effective Carbon Border Adjustment Mechanism (CBAM), will enable its European business to earn its cost of capital. Management hopes for an accelerated legislative approval process to implement these measures as soon as possible, noting that CBAM will be effective from January 1st, 2026, making imports less competitive.

Mexico operations faced significant headwinds, incurring $40 million in costs in Q2 FY25, $90 million in Q3 FY25, and an anticipated $60 million-$65 million in Q4 FY25 due to stoppages and a DRI plant problem. These issues are partly attributed to a legal blockade from the previous year. In response, management is conducting a comprehensive review of standard operating procedures (SOPs) with its CTO group and local teams to prevent recurrence and restore normalized productivity and performance in 2026.

The company reiterated its commitment to a clear capital return policy, which has resulted in a 16% compound annual growth rate for its dividend over the past five years. ArcelorMittal has also repurchased 38% of its equity, including 9 million shares this year at a low average price, effectively increasing shareholder ownership in its capacity, franchise businesses, growth projects, and Indian operations. The capital expenditure outlook for the next couple of years is projected to remain within the $4.5 billion to $5 billion range.

Both India and Brazil are experiencing import pressures, contributing to low steel prices. In Brazil, the company is engaged in dialogue with the government, and antidumping measures are expected to take effect by the end of 2025 or early 2026, which should positively impact the market. India continues to exhibit strong demand and economic performance, but the market is currently absorbing new capacity, which is influencing pricing. ArcelorMittal maintains a bullish mid- to long-term outlook for Brazil.

The North America segment demonstrated strong performance, with the Calvert facility achieving record shipment levels and Canadian operations effectively managing costs. The HBI DRI plant in Texas also performed well. The Calvert EAF ramp-up is progressing, with an expected run rate of 40% to 50% by year-end. This ramp-up, along with the full-year consolidation of Calvert, is anticipated to contribute to the 2026 EBITDA bridge, particularly by offsetting tariff costs on slabs.