Summary
- ArcelorMittal is no longer just a cyclical steel producer; its global diversification and mining integration have structurally improved profitability and resilience.
- Growth in India, disciplined capital returns, and $1.8B in expected EBITDA upside from strategic projects remain underappreciated by the market.
- Despite strong Q1 results and a healthy balance sheet, ArcelorMittal trades at a forward P/E of 8x, offering compelling value for long term investors.
Introduction
ArcelorMittal is not just any steel company. It is a company that has been operating at the cyclical heart of the global economy for years and has had to reinvent itself time and again since the merger in 2006. The recent share price drop of around 4% after the quarterly update in April is indicative of the distrust that investors still feel. Yet it is precisely at this moment that investors should pay attention. Because behind the label of cyclical steel company there is now a much more robust, international and profitable company than before.
ArcelorMittal is undervalued in 2025, operationally strong and financially healthy. And while the market focuses on short term concerns such as trade tensions and weak steel prices, there are opportunities in the medium term through structural improvements, geographical diversification and an impressive growth pipeline.
ArcelorMittal Wins With Global Diversification
The global economic and political situation is currently full of uncertainties. The European steel industry has been struggling for years because of Chinese overcapacity, high energy prices and a lack of protective measures. But in 2025, something has changed. The European Commission has launched a steel action plan that includes anti-dumping measures, stricter import regulations and a strengthened position for domestic producers. ArcelorMittal welcomes this development but also states that words alone are not enough. Structural investments in reducing emissions such as the construction of electric furnaces in Europe require guarantees: fair competition, affordable energy and a clear implementation of CBAM.
In India, the winds of growth have been blowing for years. ArcelorMittal’s joint venture AMNS India is working on an ambitious capacity expansion in Hazira, and is also developing a completely new plant in Andhra Pradesh. Indian steel demand is growing by 6 to 7% per year and is driven by domestic consumption, infrastructure and housing construction. The great thing is: ArcelorMittal does not have to export there but produces locally for local use. This makes the company much less sensitive to global trade barriers than for example Chinese or Turkish competitors.
This spread is exactly what distinguishes ArcelorMittal from other steel companies. Where many competitors are dependent on one region or market, Arcelor is active in Europe, North and South America, India and Africa. And it also owns a significant portion of its own raw materials. The mines in Liberia and Brazil supply high quality iron ore at low costs. In Q1 2025, the mining division recorded a record quarter even before the Liberian expansion had fully started. This internal safety net makes the company much more resilient in periods when margins in the steel division are under pressure.
Competitors each have their own strength but often miss the bigger picture. SSAB is a leader in fossil-free steel and has a solid balance sheet but is sensitive to European cycles. Tata Steel dominates India but has old and loss-making factories in Europe. US Steel is investing in electric furnaces but had a net loss in Q1 2025. And Voestalpine is strong in niche products but lacks scale and global exposure. ArcelorMittal is at the intersection of economies of scale, geographic diversification and vertical integration. It is not the absolute specialist in one niche but excels in breadth, resilience and cash flow.
Operationally Strong, Strategically On Track: ArcelorMittal’s Q1 Proves It
That resilience was again evident in the first quarter of 2025. While revenues fell 9% YoY to $14.8 billion, EBITDA of $1.6 billion and profit of $805 million demonstrated the company’s continued profitability in a challenging market environment. EBITDA per tonne was $116 which is twice as high as at previous cycle bottoms. Operating performance was particularly strong in mining and North America where volumes and prices increased slightly. Europe was a more challenging market but mills there too continued to operate without significant losses.
The negative free cash flow of $1.4 billion in Q1 sounds alarming at first glance but it is largely seasonal. Working capital of $1.7 billion was built up, something that happens almost every first quarter and is usually released later in the year. Excluding that seasonal impact and growth capital investments, underlying free cash flow was still positive. Net debt increased from $5.1 to $6.7 billion but that is well within limits with an annual EBITDA of over $6 billion. In addition, the company has $10.8 billion in liquidity and no growth capex is being delayed.
The outlook for the second quarter is very positive. CFO Genuino Christino indicated during the earnings call that higher volumes in Brazil, a better price-cost ratio in Europe and recovering spreads will result in a significantly higher EBITDA. In addition, the strategic projects remain on track: the expansion of Liberia towards 20 million tons per year is on schedule, the new electric furnace in Calvert (US) will be operational soon, and the Indian expansions will provide more capacity by the end of this year.
Dividends and Valuation
Where ArcelorMittal really shines is in creating shareholder value through capital return. The fixed dividend of $0.55 per share has been steadily increased in recent years but it is the share buyback programs that are particularly impressive. Since 2020, 38% of the shares have been bought back. A new multi-year program has now started with the first tranche of 10 million shares. All this within the framework of a policy of paying out at least 50% of the free cash flow (after dividend).
Still, the stock still lags what you would expect based on profitability and capital return. With a price around $30 (or ~€28), ArcelorMittal trades on a forward P/E of around 8x and an EV/EBITDA of around 5.8x. That is well below the sector average, especially when you consider that the company itself is counting on an additional $1.8 billion in EBITDA by 2027 thanks to growth projects. The book value is also considerably higher than the market value. It seems that investors still see ArcelorMittal as the volatile, debt-laden company of 10 years ago. But that image is no longer true. The debt has been reduced, the portfolio has been optimized and profitability is more stable. The market also seems to attribute too little value to the improved cyclical position. Steel prices have demonstrably recovered in Europe and India while spreads are rising again. If the macroeconomic situation stabilizes margins will improve further. And if a net profit of $805 million is booked even at the bottom of the cycle, what is the profit capacity in a normal year?
Conclusion
My view is that ArcelorMittal is a compelling investment for those willing to look beyond the headline figures. The combination of operational strength, geographic diversification, own mining, active capital return and a cheap valuation makes the stock attractive on several fronts.
The risks are there of course. Trade wars could suddenly worsen. A global recession would slow steel demand. China could dump surpluses again. And a project delay in Liberia or India could postpone EBITDA growth. However, I see these risks as manageable. Local production makes ArcelorMittal less dependent on exports. The balance sheet is strong enough to absorb a temporary setback. And the investments are spread out and realistic, not all-in bets.
That is why I give ArcelorMittal a Strong Buy at this level. The price reflects a weakness that the company has largely overcome. In my opinion, this stock offers an excellent risk/reward for the next 1 to 3 years. Anyone who enters now is not buying a cyclical bet but a steel giant that is finally starting to convert its weight in gold.