Corporate Watch

ArcelorMittal posts net loss of $0.447 billion in Q1FY20

The company had registered a net income of $1.865 billion in the year-ago period, ArcelorMittal said while announcing its Q1FY20 results

PSU Watch Bureau

New Delhi: In the June quarter of financial year 2019-20, global major ArcelorMittal posted a net loss of $0.447 billion primarily because of the higher cost of raw materials and low steel prices.
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The company had registered a net income (attributable to equity holders of the parent) of $1.865 billion in the year-ago period, ArcelorMittal said in a statement.

It must be noted that ArcelorMittal follows the January-December financial year pattern. Sales rose to $19.3 billion during the quarter as opposed to $19.2 billion in the year-ago period, marking a small rise of 0.5 percent.

On the issue of Essar acquisition

Commenting on the plans to acquire debt-ridden Essar Steel, the company said, "Net cash provided by other investing activities in 1Q 2019 of $254 million primarily includes $0.3 billion due to the rollover of the Indian rupee hedge at market price, which protects the dollar funds needed for the Essar transaction as per the resolution plan approved by the Committee of Creditors and the National Company Law Tribunal in Ahmedabad, offset in part by the quarterly lease payment for the ArcelorMittal Italia acquisition ($51 million)."

A resolution plan has been submitted by ArcelorMittal India — a subsidiary of ArcelorMittal — to acquire Essar.

CEO says lower steel prices, global overcapacity to blame

ArcelorMittal's Chairman and CEO Lakshmi N Mittal said that after a strong 2018, market conditions in the first half of 2019 have been very tough with the profitability of the company's steel segments suffering due to lower steel prices combined with higher raw material costs.

This, he said, has been only partially offset by improved profitability from our mining segment, and the company has generated healthy free cash flow, demonstrating the improved robustness of the business following Action 2020 plan.

Mittal also said that "global overcapacity remains a clear challenge. We have reduced capacity in Europe in response to the current weak demand environment, which has also impacted the turnaround of the ex-Ilva facilities in Italy."

"Further action needs to be taken to address the increasing level of imports entering the continent due to ineffective safeguard measures and we continue to engage with the European Commission to create a level playing field for the sector," he added.

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