29 July : Hit by the global economic slowdown, steel behemoth ArcelorMittal on Wednesday reported a USD 792 million net loss for the second quarter of the current fiscal, a third in a row.
However, the company said it is hopeful of demand revival in the second half of the year. The company had a USD 5.8 billion profit in the April-June quarter last year.
The world’s largest steel maker attributed the net loss to the charges incurred on heavy write-downs on account of inventory and payouts due to downsizing.
“The loss in the second quarter of 2009 resulted from exceptional charges amounting to USD 1.2 billion primarily related to write-downs of inventory (USD 0.9 billion) and provisions for workforce reductions (USD 0.3 billion),” the company said in a statement.
ArcelorMittal saw its sales plunging by nearly 60 per cent to USD 15.2 billion in the second quarter compared to the period a year ago due to fall in steel demand and consequently prices.
“The main reason for the decline continues to be the extreme weakness in demand for steel products in 2009 as a result of the global economic crisis, along with a steep fall in prices,” it added.
The company made a net loss of USD 1.8 billion in the first half of the year. The steel major had a profit of USD 8.2 billion in H1 last year.
The company saw its steel shipment for the three months ended June 30, 2009, at 17 million tonnes as compared with 29.8 million tonnes in the second quarter of 2008.
“The sharp decrease year-on-year resulted from reduced steel production in response to falling demand amid the global economic crisis,” the company said.
But the company is optimistic on the outlook for the coming quarters and has rolled back the 50 per cent production cuts at some of its facilities.”Recovery has started in major markets including the US and Europe. We have restarted three of our blast furnaces in Europe and two in the US. Demand in some of the emerging markets is very strong. We are ramping up production capacity in emerging markets. China is growing by about 10 per cent,”ArcelorMittal CFO Aditya Mittal said during a call conference.
With demand reviving, the company is mulling restarting blast furnaces at its other facilities as well.
“In recent weeks we have started to see some initial signs of recovery, as a result of which we are now planning to re-start production at some facilities.
Provided there are no further unexpected economic deteriorations, we should see continued gradual improvement throughout the second half of the year,” ArcelorMittal CEO and Chairman L N Mittal said.
The company said it would continue with cost-cutting measures aimed at saving USD 2 billion in the current fiscal.
“As of the end of the second quarter of 2009, the company is on track to meet this commitment and has achieved annualised savings of USD 1.7 billion,” it said.