Luxembourg-headquartered steel manufacturer ArcelorMittal today announced results for the three-month period ended 31 March 2020.

Faced with the COVID-19 pandemic, ArcelorMittal reported that its first priority has been to take all the necessary actions to safeguard the wellbeing of its staff and provide support to the communities in which it operates. Meanwhile, economic activity and steel market conditions significantly deteriorated since measures were introduced by governments worldwide to contain the pandemic.

In the first quarter of 2020, ArcelorMittal reported an improved operating performance reflecting the positive market developments prior to the escalation of the COVID-19 pandemic in March. Operating loss droppted to $0.4 billion (compared to a loss of $1.5 billion in Q4 2019), while earnings before interest and taxes increased to $1.0 billion (4.5% higher than Q4 2019). The company reported a net loss of $1.1 billion in Q1 2020 (adjusted net loss of $0.6 billion, excluding impairment and exceptional items).

Liquidity at the end of Q1 2020 stood at $9.8 billion (consisting of cash and cash equivalents of $4.3 billion and $5.5 billion of available credit lines), further supplemented by a recently signed new $3 billion credit facility.

Concerning the outlook for the future, ArcelorMittal has moved swiftly to secure its assets and match production to the evolving orderbook, with steel shipments for Q2 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% to 30% in Q2 2020, essentially maintaining fixed costs per-tonne at the Q1 2020 level. Earnings before interest and taxes for the second quarter is expected to be within the range of $0.4 billion to $0.6 billion.

Certain cash needs of the business are now expected to be approximately $3.5 billion in 2020 (compared to $4.5 billion previous guidance), due to lower planned capex and lower taxes. Annual working capital needs will be determined by the extent market conditions recover in the second half of 2020, but the company still expects to release the $1 billion in working capital previously targeted.

While the impacts of COVID-19 have introduced unanticipated challenges, ArcelorMittal continues to target achievement of its $7 billion net debt objective in the near term
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 normalises. 

Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, commented: “There are still too many uncertainties to accurately predict what the rest of the year holds. 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".