Steel Giant ArcelorMittal Swings to Loss -- 2nd Update
August 01 2019 - 8:07AM
Dow Jones News
By Alistair MacDonald and Olivia Bugault
ArcelorMittal, the world's largest steelmaker, swung to a loss
in the second quarter and said it plans to shed about $2 billion in
assets, as the beleaguered industry suffers a fall in demand in
Europe and the U.S.
The global steel industry has been hit by overcapacity and gains
in the price of iron ore, a central ingredient in production, after
the Brumadinho tailings dam disaster curbed mining of the resource
in Brazil.
Chief Executive Lakshmi Mittal called for tougher protective
measures to help Europe-based steelmakers compete against imports,
but also said that U.S. tariffs on imports of the metal have pushed
domestic production above demand, putting pressure on prices.
"All these pressures [in Europe] have created an unsustainable
situation that we have not seen in many years," he said in an
interview. Mr. Mittal noted that European and Chinese steel prices
at around the same level for the first time, a sign of the
unfavorable conditions for Europe.
In the U.S., due to tariffs, "we saw the domestic supply outpace
demand, and suddenly we have seen prices plummeting," he said.
Last year, President Trump announced a 25% tariff on steel
imports. The European Union retaliated with measures to protect it
against steel that was being deflected from the U.S. into
Europe.
ArcelorMittal recorded a net loss for the quarter of $447
million, compared with a profit of $1.87 billion a year earlier, as
it booked $900 million in impairments, it said.
The company, though, promised further debt reduction and asset
sales of around $2 billion over the next two years. Earnings before
interest, taxes, depreciation and amortization totaled $1.6
billion, ahead of a company-compiled consensus. Sales totaled
$19.28 billion, down from $20 billion a year earlier, the company
said.
ArcelorMittal expects global steel demand in 2019 to grow
between 0.5% and 1.5%, a half-percentage-point fall in its
forecast.
Much of that gain, though, is expected to be in China, where
ArcelorMittal doesn't have a large presence. Demand in Europe,
where it does, has been particularly weak, dragged down by a fall
in demand from Germany's auto and machine sectors.
The Luxembourg-based company said that there are signs of
improvement in the U.S., but it expects continued weakness in
Europe.
Mr. Mittal said the company's debt levels were at the lowest in
the company's history.
Write to Alistair MacDonald at alistair.macdonald@wsj.com
(END) Dow Jones Newswires
August 01, 2019 07:52 ET (11:52 GMT)
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