On a comparable basis, excluding shipments from assets sold during the comparable period (i.e. considering the sale of Zaragoza in Spain), and excluding the impact of the optimization at Zumarraga in Spain (Europe segment), total steel shipments for 3Q 2017 were 7.5% higher as compared to 3Q 2016, primarily due to higher steel shipment volumes in NAFTA (+5.4%), Brazil (+6.9%) and Europe (+9.2%) offset by weaker steel shipment volumes in ACIS (down -1.3% due to weak South Africa market and lower shipments in Ukraine).
Sales for 3Q 2017 were $17.6 billion as compared to $17.2 billion for 2Q 2017 and $14.5 billion for 3Q 2016. Sales in 3Q 2017 were 2.3% higher as compared to 2Q 2017, primarily due to higher steel shipments (+1.0%), higher average steel selling prices (+1.5%), higher iron ore reference prices (+12.7%) offset in part by lower market-priced iron ore shipments (-3.9%). Sales in 3Q 2017 were 21.5% higher as compared to 3Q 2016 primarily due to higher steel shipments (+6.8%), higher average steel selling prices (+14.8%), higher seaborne iron ore reference prices (21%) and higher market-priced iron ore shipments (+12.3%).
Depreciation for 3Q 2017 was higher at $690 million as compared to $676 million for 2Q 2017 and stable as compared to $693 million in 3Q 2016. Depreciation increased in 3Q 2017 as compared to 2Q 2017, primarily on account of foreign exchange differences following the depreciation of USD vs major currencies.
Impairment charges for 3Q 2017 and 3Q 2016 were nil. Impairment charges for 2Q 2017 were $46 million related to a downward revision of cash flow projections in South Africa.
Operating income for 3Q 2017 was lower at $1.2 billion as compared to $1.4 billion in 2Q 2017, and stable as compared to 3Q 2016.
Income from associates, joint ventures and other investments for 3Q 2017 was $117 million as compared to $120 million for 2Q 2017 and $109 million in 3Q 2016. Income from associates, joint ventures and other investments for 3Q 2017 includes the recycling of the cumulative foreign exchange translation losses following the disposal of 50% stake in Kalagadi ($187 million) offset by a gain on disposal of ArcelorMittal USA’s 21% stake in the Empire Iron Mining Partnership ($133 million) and improved performance of Chinese investees.
Net interest expense in 3Q 2017 was $205 million as compared to $207 million in 2Q 2017 and $255 million in 3Q 2016. Net interest expense was lower in 3Q 2017 as compared to 3Q 2016 primarily due to debt reduction including early bond repayment via debt tenders.
Foreign exchange and other net financing gains in 3Q 2017 were $132 million as compared to $210 million for 2Q 2017 and losses of $223 million in 3Q 2016. For 3Q 2017 a foreign exchange gain of $181 million was recorded (as compared to a gain of $247 million for 2Q 2017) mainly on account of a 3.5% depreciation of the USD against the Euro (versus 6.7% depreciation in 2Q 2017). Both 3Q 2017 and 2Q 2017 include non-cash mark-to-market gains on derivatives (primarily mandatory convertible bonds call options following the market price increase in the underlying shares) of $327 million and $150 million, respectively. 3Q 2017 includes $218 million on premium expenses accrued in connection with the early repayment of bonds (settled in October 2017). Foreign exchange and other net financing costs in 3Q 2016 was $223 million and included a foreign exchange gain of $65 million mainly on account of USD depreciation of 0.5% against the Euro. 3Q 2016 also includes $158 million on premium expenses accrued on the bond repayments via debt tenders.
ArcelorMittal recorded an income tax expense of $71 million for 3Q 2017 as compared to $197 million for 2Q 2017 and $146 million in 3Q 2016.
ArcelorMittal recorded net income for 3Q 2017 of $1,205 million, or $1.18 earnings per share, as compared to net income for 2Q 2017 of $1,322 million, or $1.30 earnings per share, and a net income for 3Q 2016 of $680 million, or $0.67 earnings per share.