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6 Months : From May 2019 to Nov 2019
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 email@example.com
(END) Dow Jones Newswires
August 01, 2019 07:52 ET (11:52 GMT)
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