ArcelorMittal revenue was down, but its core profit was better than expected for the third quarter of 2019. Pictured: ArcelorMittal’s logo is seen at the Ilva steelworks in Taranto, Italy, 5 November 2019. Photo credit: Massimo Todaro/Shutterstock.com
ArcelorMittal reported lower revenue and cut its forecast for 2019, but posted higher than expected operating profit for the third quarter.
The world’s largest steelmaker reported a 3Q 2019 net loss of $539m, larger than the 2Q 2019 net loss of $447m.
However, the Luxembourg-based company said Ebitda (a measure of operating profitability) was $1.06bn, down from $1.56bn in the second quarter. Financial analysts had expected the third quarter figure to be $930m.
Gross debt rose from $13.7bn as of 30 June 2019 to $14.3bn as of 30 September 2019, and net debt increased from $10.3bn to $10.7bn during the same timeframe.
ArcelorMittal shifted its 2019 guidance slightly downwards, saying steel consumption would “grow in 2019 by between +0.5% to +1.0%” (earlier this year it had forecast +0.5% to 1.5%). “Demand is expected to contact” by between -0.5% to -1% in the US and “by up to -3%” in Europe, although sales in Brazil, China and Russia are expected to expand.
Lakshmi N. Mittal, ArcelorMittal chairman and CEO, stated in a press release:
“As anticipated, we continued to face tough market conditions in the third quarter, characterized by low steel prices coupled with high raw material costs. In these markets, we remain focused on our own initiatives to improve performance and our priority is to reduce costs, adapt production and focus on ensuring the business remains cash flow positive. We continue to expect a substantial working capital release in the fourth quarter which should enable us to further reduce net debt year on year.”
Reuters quoted Ingo Schachel, an analyst at Commerzbank, as saying:
“There is a lot of pressure on European steel spreads. There’s nothing positive on selling prices. Clearly they have done a good job managing their cost base.”
ArcelorMittal also addressed its recent decision to cancel a takeover of the Ilva steelworks in Italy, though its holding vehicle AMInvestCo. The company stated:
“Effective on November 3, 2019, the Italian Parliament has removed the legal protection necessary for AMInvestCo to implement its environmental plan without the risk of criminal liability, thus justifying the withdrawal notice.”