Steel Giant ArcelorMittal Suffers $1.1 Billion First-Quarter Loss

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Steelmaker ArcelorMittal (NYSE:MT) posted a first-quarter 2020 loss of $1.1 billion and expects a sharp falloff for Q2 due to falling steel demand and the COVID-19 pandemic.

Announcing its first-quarter financial results, the world's largest steel producer said the Q1 loss compared to a worse net loss of $1.88 billion in Q4 2019 and a net profit of $414 million for the same quarter a year ago. Revenues for Q1 revenues fell 22% year-on-year to $14.8 billion from $19.2 billion. Capital spending will be reduced to $2.4 billion, from its prior estimate of $3.2 billion. The company also suspended its dividend, withdrawing its guidance for global steel consumption, stating that the full impact of the pandemic is highly uncertain and varies from region to region. The negative outlook comes just a month after Industrial Info reported that that the company was reducing production from its European operations "to ensure the wellbeing of our employees is maintained and that production is aligned with demand." In Europe, ArcelorMittal employs 74,000 people, working in 400 locations and has an industrial presence in 18 countries. For additional information, see April 6, 2020, article - European Steel Industry Hammered by Coronavirus.

"The improved operating performance in the first quarter has been considerably overshadowed by the COVID-19 crisis," explained Lakshmi N. Mittal, ArcelorMittal chairman and chief executive officer. "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. We moved swiftly to temporarily idle furnaces, cutting production across markets and reducing operating and capital costs to match this environment."

He added: "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. Whilst these are likely to be an easing, not an immediate ending of lockdown, construction and manufacturing are expected to be among the first sectors to be permitted to restart operations and indeed we are seeing signs of customers re-starting production."

According to ResearchAndMarkets.com, global crude steel production decreased by 1.4% in the first quarter of this year, compared with the same period in 2019. Despite steel being declared an "essential industry" in several countries, demand for steel production dropped sharply during the pandemic with automotive manufacturing--one of the largest consumers of steel--being severely reduced to slow the spread of COVID-19. Collapsing energy prices also severely impacted demand for steel from the oil and gas sector. There are some signs of a slow recovery, with automakers including Volvo, Toyota, VW, Nissan and Seat announcing plans to begin reopening factories and restarting vehicle production in the European Union and the U.K. Also China, the largest metal consumer in the world, is moving toward recovery with imports of semi-finished steel increasing over the last two months.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.