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ArcelorMittal Posts US$7.9B Loss in 2015
02/05/2016 - ArcelorMittal, the world’s largest steelmaker, lost US$7.9 billion in 2015 on lower prices and large write-downs in its iron ore business.
“2015 was a very difficult year for the steel and mining industries,” said chairman and CEO Lakshmi Mittal in a statement.
“Although demand in our core markets remained strong, prices deteriorated significantly during the year as a result of excess capacity in China.”
The loss included US$4.8 billion worth of impairments, mostly related to the company’s mining operations, and US$1.4 billion worth of exceptional charges, mostly inventory write-downs spurred by the drop in international steel prices.
Mittal said that as the company looks ahead, 2016 is likely to be another difficult year. However, he suggested that perhaps the worst is in the past, noting that the company has begun to see Chinese steel spreads tick up from 2015 lows.
“It is clear that China has a challenge to restructure its steel industry for a lower growth economy, but we are somewhat encouraged by recent comments concerning capacity closures. Until this situation is fully addressed, the effective and swift implementation of trade defense instruments will be critical, and we expect to see more positive rulings in this regard during the year,” Mittal said.
In the meantime, the company said it will begin acting on a plan it has dubbed Action 2020, which is intended to improve its EBITDA by US$3 billion over the next four years. In the U.S., the plan will entail optimizing its footprint and continuing to ramp up its AM/NS joint venture. In Europe, the plan includes a US$1 billion transformation and making gains in volume.
Additionally, the company laid out a plan to raise US$3 billion in capital. As part of that plan, it said it has sold its 35 percent stake in Spain’s Gestamp Automocion for 875 million euros. The company, which operates 95 plants in 20 countries, makes metal components for automakers.
“This capital raise, combined with the sale of our minority shareholding in Gestamp, 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,” Mittal said.
“Although demand in our core markets remained strong, prices deteriorated significantly during the year as a result of excess capacity in China.”
The loss included US$4.8 billion worth of impairments, mostly related to the company’s mining operations, and US$1.4 billion worth of exceptional charges, mostly inventory write-downs spurred by the drop in international steel prices.
Mittal said that as the company looks ahead, 2016 is likely to be another difficult year. However, he suggested that perhaps the worst is in the past, noting that the company has begun to see Chinese steel spreads tick up from 2015 lows.
“It is clear that China has a challenge to restructure its steel industry for a lower growth economy, but we are somewhat encouraged by recent comments concerning capacity closures. Until this situation is fully addressed, the effective and swift implementation of trade defense instruments will be critical, and we expect to see more positive rulings in this regard during the year,” Mittal said.
In the meantime, the company said it will begin acting on a plan it has dubbed Action 2020, which is intended to improve its EBITDA by US$3 billion over the next four years. In the U.S., the plan will entail optimizing its footprint and continuing to ramp up its AM/NS joint venture. In Europe, the plan includes a US$1 billion transformation and making gains in volume.
Additionally, the company laid out a plan to raise US$3 billion in capital. As part of that plan, it said it has sold its 35 percent stake in Spain’s Gestamp Automocion for 875 million euros. The company, which operates 95 plants in 20 countries, makes metal components for automakers.
“This capital raise, combined with the sale of our minority shareholding in Gestamp, 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,” Mittal said.
