ArcelorMittal reports $780 mn loss for Apr-Jun qtr
Luxembourg/New Delhi: ArcelorMittal, world's largest steelmaker, Thursday reported net loss of USD 780 million for the April-June quarter on lower sales and margins, but said outlook might be better in the second half of the year.
The billionaire NRI Laxmi Mittal-led company, however, cut its operating profit (EBITDA) guidance for the year to USD 6.5 billion from its earlier forecast of USD 7.1 billion due to weaker-than-projected steel demand and lower-than- anticipated raw material prices.
The company had clocked net profit of USD 1.016 billion in the same period last year.
"While the second quarter (2013) market trends were not favourable, the outlook Thursday is better than what it was couple of months back. Recent trends have been more positive, particularly in developed markets," company Chairman and CEO Lakshmi Mittal said in a conference call.
He said there could be recovery in European steel demand this year, particularly from the October-December quarter.
"Hopefully, in the fourth quarter, we should see some recovery in Europe because the politicians have also started talking that austerity is not enough and we also need growth in Europe," Mittal said.
During Q2, ArcelorMittal's sales dipped over 10 per cent to USD 20.197 billion due to subdued price and lower shipments. Its steel production also declined marginally to 22.5 million tonnes.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) of the company were down at USD 1.7 billion, compared to USD 2.559 billion a year ago. Its margins (EBITDA per tonne) were down over 32 per cent at USD 80.
Foreign exchange and other net financing costs, up by USD 375 million over a year ago; USD 39 million impairment charges, and USD 173 million restructuring charges also impacted the bottomline of the company.
"The benefits of our restructuring efforts - particularly in Europe - are evident; strong cash-flow performance has enabled us to reduce net debt to below our mid-year target," Mittal said.
During the first half, ArcelorMittal's net loss stood at USD 1.125 billion as compared to net income of USD 1.108 billion of first half 2013.
Total steel shipments for the January-June period were lower at 42.3 million tonnes, compared to 43.9 million tonnes in the first of the last year.
ArcelorMittal said underlying profitability of the firm was expected to improve in 2013, driven by 1-2 per cent rise in steel shipments, an approximate 20 per cent increase in marketable iron ore shipments and the realised benefits from Asset Optimisation and Management Gains initiatives.
Net debt of the company decreased to USD 16.2 billion as on June 30. However, due to an expected investment in working capital and payment of the annual dividend, it is expected to increase in H2, 2013 to approximately USD 17 billion.
The company said that rise in net debt is in line with the targets.
It expects USD 3.7 billion capital expenditures for the current year and is planning to complete expansion of its iron ore operations in Canada during the second half of the year.
Post expansion, ArcelorMittal Mines Canada will have a production capacity of 24 million tonnes.