ArcelorMittal said its loss, including a $6.7 billion retreat in the fourth quarter a year ago, was mainly due to falling steel prices that were depressed by a surge in imports, and write-offs in the company’s large mining business. Annual Earnings before Taxation, Interest, Depreciation and Amortization (EBITDA) were $5.2 billion, a decline of 32% from last year’s results of $7.2 billion.
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“This will help ensure that the business is resilient in any market environment and puts ArcelorMittal in a position of strength from which to further improve performance”, Lakshmi Mittal, the company’s chairman and CEO, said of the financial moves in a written statement. Sales fell 20% to $63.6bn, with the company producing 92.5m tonnes of steel and 62.8m tonnes of iron ore over the year.
While, steel segments’ hit of Dollars 1.4 billion consists of fixed asset impairment charges of USD 0.2 billion on intended sale of the Long Carbon facilities in the US (ArcelorMittal La Place, Steelton and Vinton within the NAFTA segment).
ArcelorMittal will cut its net debt by $4 billion to below $12 billion through the capital raising and sale of the stake in Gestamp Automacion.
The cost of insuring $US10 million of the company’s debt against default over a five-year period dropped 12 per cent to $US869,000.
ArcelorMittal today said its net loss widened to Dollars 6.69 billion in the December quarter as it faced a “very difficult” 2015, which witnessed iron ore and steel prices slide further. China has exported record amounts of the metal to Europe and other markets amid shrinking demand at home. The company is pushing ahead with cost reductions.
In terms of the economic outlook, ArcelorMittal expects the modest European economic recovery to continue in 2016, with EU28 GDP growth up to 1.9% year-on-year from 1.8% in 2015. Although demand in the company’s core markets remained strong, he said “prices deteriorated significantly during the year as a result of excess capacity in China”. It reported net debt of $15.7 billion.
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It also unveiled a plan to make more than $85 profit per ton of steel produced and eventually deliver $2 billion of free cash flow a year. “It is clear that China has a challenge to restructure its steel industry…Until this situation is fully addressed the effective and swift implementation of trade defense instruments will be critical”, he said.
