Steelmaker ArcelorMittal late last week released its Q1 2020 financial results, reporting a net loss of $1.1 billion amid challenges stemming from the COVID-19 crisis.
“There are still too many uncertainties to accurately predict what the rest of the year holds,” Chairman and CEO Lakshmi Mittal said. “However, it seems likely that over the course of this month countries will start to announce details of their ‘exit’ strategies. Whilst these are likely to be an easing, not an immediate ending of lockdown, construction and manufacturing are expected to be among the first sectors to be permitted to re-start operations and indeed we are seeing signs of customers re-starting production.
“Rigorous planning to ensure we can meet customer demand whilst protecting the health and safety of our people has been undertaken, leaning on the experience of our plants which have already been on this journey.”
In addition to other cost-saving measures, the company’s board decided to suspend dividend payments.
“Against the backdrop of significant cost savings measures being taken across the business, the Board determined it both appropriate and prudent to suspend dividend payments until such a time as the operating environment normalizes,” the company said in its quarterly earnings release.
The quarterly loss follows losses in the three previous quarters, including a net loss of $1.9 billion in Q4 2019.
The company forecast measures taken to mitigate the impact of the pandemic will lead to a significant reduction in fixed costs for the second quarter of this year.
“The Company has moved swiftly to secure its assets and match production to the evolving orderbook, with steel shipments for 2Q 2020 expected within the range of 13.5Mt to 14.5Mt; the actions taken to reduce all costs in line with reduced operating rates is expected to yield a reduction in fixed costs by 25%-30% in 2Q 2020, essentially maintaining fixed costs per-tonne at the 1Q 2020 level; EBITDA for 2Q 2020 is expected to be within the range of $0.4bn to $0.6bn,” the steelmaker said.
ArcelorMittal’s crude steel production for the quarter reached 21.1 million tons, up from 19.8 million tons the previous quarter but down from 24.1 million tons in Q1 2019.
Iron ore production reached 14.4 million tons, down slightly from the 14.8 million tons produced in Q4 2019 and up slightly from the 14.1 million tons produced in Q1 2019.