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ArcelorMittal (MT) Buys Riwald Recycling to Access Scrap Steel

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ArcelorMittal (MT - Free Report) announced that it signed a deal to acquire a ferrous scrap metal recycling business, Riwald Recycling. This marks MT’s third metal recycling acquisition this year, which will further secure its access to scrap steel required for low-carbon-emission steelmaking.

The deal is subject to customary regulatory approvals. The company expects the transaction to close in January 2023.

The Netherlands-based Riwald Recycling operates two scrap metal yards in Almelo and Beverwijk. Both scrap metal yards are fully certified and have direct port access. Riwald purchases materials from various providers, including industrial firms, original equipment manufacturers, merchants, auto-wrecking yards, demolition firms, and local and federal governments.

Riwald uses high-tech equipment with strict specifications to separate materials, ensuring materials’ purity at the end of the process. It processed about 330,000 tons of ferrous scrap metal in 2021.

In order to achieve carbon neutrality by 2050, MT is increasing the use of scrap steel. ArcelorMittal anticipates various low-carbon-emission steelmaking technologies being developed to help achieve its target of reducing carbon intensity.

The Riwald acquisition follows the acquisition of John Lawrie Metals and several metal-recycling facilities from ALBA International Recycling. The three businesses combined processed approximately 1 million tons of scrap steel in 2021.

Luxembourg-based ArcelorMittal is the world’s leading steel and mining company. In the third quarter of 2022, the company posted adjusted earnings of $1.54 per share, beating the Zacks Consensus Estimates of $1.26 per share. It reported adjusted earnings of $4.27 in the year-ago quarter. Net sales for the quarter totaled $18.9 million, beating the Zacks Consensus Estimates of $17.2 million. This compares unfavorably with the year-ago quarter’s revenues of $20.2 million.

Price Performance

Shares of ArcelorMittal have declined 15.6% in the past year compared with 4.1% growth of the industry.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank & Key Picks

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

Some better-ranked stocks from the basic materials space are Sociedad Quimica y Minera (SQM - Free Report) , Bunge Limited (BG - Free Report) and Reliance Steel (RS - Free Report) . While SQM and BG flaunt a Zacks Rank #1 (Strong Buy) at present, RS has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sociedad’s 2022 earnings per share is $13.13, suggesting 540.5% growth from the year-ago reported figure. Earnings estimates have moved 1.5% north in the past 60 days. SQM has a trailing four-quarter earnings surprise of 37.4%, on average. Its shares have surged 62.8% in the past year.

Bunge Limited has an expected earnings growth rate of 7.4% for the current year. Its earnings estimates for 2022 are pegged at $13.89 per share. BG’s earnings estimates have been revised 9.3% upward in the past 60 days. It has a trailing four-quarter average surprise of 18.7%. The stock has gained 9.6% in a year.

Reliance Steel expects earnings of $28.71 for the current year, indicating a year-over-year growth rate of 29.8%. The consensus estimate for RS’ earnings for the current year has been revised 0.06% upward in the past 60 days. It has a trailing four-quarter average surprise of 13.6% on average. RS has gained 31.3% in a year.

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