Luxembourg-based ArcelorMittal on Thursday reported a net loss of USD 1.1 billion for the first quarter ended March 31, 2020 amid coronavirus pandemic.
The world's largest steelmaker had posted a net income of USD 0.4 billion in the year-ago quarter, the company said in a statement.
"ArcelorMittal recorded a net loss for quarter 1, 2020 of USD 1.1 billion... as compared to a net loss for quarter 4, 2019 of USD 1.9 billion and a net income for quarter 1, 2019 of USD 0.4 billion," the company said.
The world's leading integrated steel and mining company follows January-December fiscal year. "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," ArcelorMittal Chairman and CEO Lakshmi N Mittal said.
Mittal further said: "We have also moved decisively to protect the business in the face of 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, he said.
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, Mittal said.
"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," he said.
The gross debt stood at USD 13.8 billion as of March 31, 2020, the company said. The company further said, its crude steel production came down to 21.1 million tonne (MT) from 24.1 MT in January-March 2019. Sales stood at USD 14.8 billion as compared to USD 19.2 billion in first quarter of 2019, due to lower steel shipments owing to COVID-19 crisis.
Total steel shipments in January-March 2020 were at 19.5 MT compared with to 21.8 MT for first quarter of 2019. The global escalation of the COVID-19 pandemic and subsequent measures introduced by governments worldwide to contain it, has negatively impacted economic activity and industrial supply chains across the world, the company said adding that it is experiencing a significant decline in industrial activity in all geographic markets in which it operates.
"The company has responded swiftly by significantly reducing production including temporarily idling steel making and finishing assets globally in alignment with reduced demand and government requirements. As a result, the company expects a significant negative impact on volumes until industrial activity normalizes," the company said.
On the outlook for the sector, it said, steel shipments for the second quarter of 2020 is expected to be within the range of 13.5 MT to 14.5 MT, while the actions taken to reduce all costs in line with reduced operating rates are expected to yield a reduction in fixed, essentially maintaining fixed costs per-tonne at the first quarter of 2020 level.
As a result EBITDA (earnings before interest, taxes, depreciation, and amortization), which was USD 1 billion in the first quarter, is expected to be within the range of USD 0.4 billion to USD 0.6 billion in the second quarter of 2020.
Given this uncertainty, the company has withdrawn its forecasts for apparent steel consumption and consequently expects steel shipments in 2020 to be below the 2019 level.
The company will continue to make ongoing decisions to adjust production in various geographies in accordance with the level of steel demand and government requirements.
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