Luxembourg-headquartered steel manufacturer ArcelorMittal has announced plans to reduce production further in light of the COVID-19 (coronavirus) pandemic.
In a statement released this morning, ArcelorMittal began by recognising the resilience and flexibility of its global workforce, whose health and well-being remain the company's number one priority. Where possible, employees are working remotely from home.
Moreover, ArcelorMittal has assured that, where assets continue to operate, it is following the national recommendations as well as those provided by the World Health Organisation (WHO).
The company noted that the global escalation of coronavirus and the introduction of governmental measures worldwide to contain the virus have been negatively impacting economic activity and industrial supply chains in many parts of the world. Consequently, ArcelorMittal has seen or expects to see a significant decline in industrial activity in many if not all of the geographic markets in which it operates.
In response, the steel manufacturer has decided to reduce production and temporary idle steelmaking and finishing assets, adapted on a country by country basis in alignment with regional demand as well as government requirements. This will not necessarily happen uniformly at assets across the globe given the escalation of the virus is at different points in different regions. While Europe is currently the epicentre, according to official WHO data, cases in the North American Free Trade Agreement (NAFTA) region have now exceeded those in China, with cases also increasing in Africa, India, South America and the Commonwealth of Independent States (CIS). Where demand for our products continues, for example for food packaging, the company will endeavour to maintain reduced operations to ensure it can meet customer’s requirements.
In order to mitigate the impact of the lower level of production, ArcelorMittal is implementing various measures to preserve cash and reduce costs in-line with reduced production levels. This includes accessing measures introduced by governments to support companies throughout these unprecedented times.
Although the current market volatility and uncertainty has proven tough for every country, individual and company, ArcelorMittal remains confident that it is buoyed by the fact it has prioritised the strengthening of its balance sheet in recent years to provide a strong financial foundation in all market conditions. Indeed, net debt is at a record low, the company has a very manageable debt maturity profile having used available cash to prepay debt in recent years and it also benefits from a significant liquidity position. Nevertheless, ArcelorMittal will provide updated guidance on its 2020 cash requirements, including capital expenditure, when it announces its first quarter 2020 results on 7 May 2020. In order to ensure the safety and well-being of employees, shareholders and stakeholders, the company has however decided to postpone the AGM planned for 5 May 2020. A new date will be communicated in due course.
Like many in the private sector, ArcelorMittal is attempting to harness its skills and resources in a useful and collaborative way to help address the challenges presented by COVID-19. Specifically, the company has focussed its actions on collaborating to address the severe lack of the required safety and medical equipment, including face masks and ventilators. Its businesses across the world have now collectively donated to various initiatives. The company has also been utilising its global network to help facilitate the transfer of equipment to and from regions most impacted. For example, in February, it actively helped source masks for China. Now that China appears to have passed its peak, the company is working with its associates there to help bring medical equipment to the countries now facing an escalation and particularly those that will struggle to source adequate supplies, such as India and Liberia.
Furthermore, ArcelorMittal has contributed the 3D printing expertise of its R&D team to a global effort focussed on developing a 3D printed ventilator prototype. This prototype will be tested imminently in hospitals and, if successful, will massively increase the ability to rapidly produce ventilators. The company is now focussed on the prototype for a more advanced ventilator which also has the ability, in addition to providing lungs with oxygen, to feeding medicine incorporating artificial intelligence (AI) algorithms.
Finally, where excess capacity exists, ArcelorMittal is offering space to medical facilities to host additional wards.