ArcelorMittal on Thursday reported a net loss of $1.1 billion for the first quarter ended March 31, 2020 amid the coronavirus crisis. The world’s largest steel maker had posted a net income of $0.4 billion in the year-ago quarter.
The Luxembourg-based company scrapped the dividend for 2019 and cut its guidance. However, the India operations showed a favourable uptick in demand but got squelched after the lockdown.
To align with the shrunken demand, the company has brought down capacity utilisation to “exceptionally low” levels and decided to cut costs, both fixed and variable, such as capex. It is expecting shipments to fall to 13.5-14.5 million tonnes in the April-June quarter from the high of 19.5 million tonnes in January-March, a fall of 25-30 per cent.
“The improved operating performance in the first quarter has been considerably overshadowed by the Covid-19 crisis. Faced with a significant humanitarian challenge, our first priority has been to take all the necessary actions to safeguard the well-being of our people and to provide support to the extent required in the communities in which we operate,” chairman and CEO Lakshmi N. Mittal said.
“But 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,” Mittal said.
“We moved swiftly to temporary idle furnaces, cutting production across markets and reducing operating and capital costs to match this environment. We have continued to meet remaining customer demand from a reduced level of production and are very thankful to our employees and stakeholders for their support in enabling plants to keep running.”
The company says there are strong parallels with the impact faced during the global financial crisis in 2008-2009 and hopes to draw on the experience of “successfully navigating this period”.
India show
The Indian operation, renamed as AM/NS India to reflect the joint venture with Nippon Steel, performed well in January-March, producing 1.7 million tonnes (annualised 7 million tonnes) and EBIDTA of $140 million ($560 million annualised).
The company, formerly Essar Steel before the acquisition in December through bankruptcy court, signed a $5.1-billion loan with JBIC and four Japanese banks at a very competitive rate to refinance bridge loan.
It also acquired a 5.5-million-tonne per annum capacity iron ore mine (Thakurani) in Odisha for $15 million and a natural gas based 500 megawatt power plant at Gujarat’s (Bhander) for $70 million.
