Global steel giant ArcelorMittal announced results for the first quarter of the fiscal ended March 31, 2020. The world’s leading integrated steelmaker reported a net loss of USD 1.1 billion for the first quarter as compared to a net income of USD 0.4 billion registered in the year-ago quarter.
ArcelorMittal Chairman and CEO Lakshmi N Mittal said, “The improved operating performance in the first quarter has been considerably overshadowed by the COVID-19 crisis. Faced with a significant humanitarian challenge, the company’s first priority has been to take all the necessary actions to safeguard the wellbeing of our people and to provide support to the extent required in the communities in which we operate”. He further added, “We have also moved decisively to protect the business in the face of the completely unprecedented scenario we are facing where social and economic lockdown has contributed to a significant decline in demand. The company also had to reduce production due to reduced demand. There are still too many uncertainties to accurately predict what the rest of the year holds. However, it seems likely that over the course of this month countries will start to announce details of their exit strategies”.
He added, “The remainder of this year will be challenging, but I am confident that ArcelorMittal has the experience and inherent resilience, to manage through these difficult times”.
The Company has responded swiftly by aligning production to a lower order book and taking measures to reduce all costs in line with exceptionally low capacity utilization levels. Strong cash management was made during the quarter, including a working capital investment limited to $0.1bn; gross debt of $13.8bn, and a marginal increase in net debt to $9.5bn (down $1.7bn vs Q1 2019). The liquidity at the end of 1Q 2020 stood at $9.8bn (consisting of cash and cash equivalents of $4.3bn and $5.5bn of available credit lines5) and was further supplemented by a recently signed new $3bn credit facility.
Outlook and guidance
The Company has moved swiftly to secure its assets and match production to the evolving order book, with steel shipments for 2Q 2020 expected within the range of 13.5Mt to 14.5Mt; the actions taken to reduce all costs in line with reduced operating rates are expected to yield a reduction in fixed costs10 by 25%-30% in 2Q 2020, essentially maintaining fixed costs per-tonne at the 1Q 2020 level; EBITDA for 2Q 2020 is expected to be within the range of $0.4bn to $0.6bn.
Source: The Economic Times
