ArcelorMittal Reports 2nd Quarter 2009 Results
07/30/2009 - ArcelorMittal reports a net loss of $792 million on sales of $15.176 billion for the second quarter, and a net loss of $1.855 billion on sales of $30.298 billion for the six months ended June 30, 2009.
ArcelorMittal reported a net loss of $792 million on sales of $15.176 billion for the second quarter, and a net loss of $1.855 billion on sales of $30.298 billion for the six months ended June 30, 2009.
Second Quarter Results—The $792 million net loss ($0.57 loss per share) compares to a net loss of $1.063 billion ($0.78 per share) in the previous quarter (1Q09) and net income of $5.839 billion (4.20 per share) in the year-ago second quarter. EBITDA of $1.2 billion reflects a 38% increase as compared to the previous quarter (1Q09). Results reflect exceptional charges of $1.2 billion pre-tax.
Sales of $15.18 billion compare to sales of $15.12 billion in the previous quarter (1Q09) and sales of $37.84 billion for the year-ago second quarter. Shipments of 17.0 million tonnes compare to shipments of 29.8 million tonnes for the year-ago second quarter. The company said the decline is primarily attributable to the extreme weakness in demand for steel products due to the global economic crisis, along with a steep fall in prices.
ArcelorMittal recorded an operating loss of $1.2 billion, which compares to an operating loss of $1.5 billion for the previous quarter and operating income of $6.6 billion for the year-ago second quarter. The current operating loss reflects $1.2 billion in exceptional charges related to inventory write-downs ($0.9 billion) and provisions for workforce reductions ($0.3 billion). In the previous quarter, the company had recorded $1.2 billion of exceptional charges for inventory write-downs.
Segment Operations Results—The company’s Flat Carbon Americas segment recorded an operating loss of $0.4 billion as compared with an operating loss of $0.7 billion for the previous quarter. The operating loss included exceptional charges of $0.2 billion primarily related to inventory write-downs (vs. exceptional charges of $0.5 billion for the previous quarter). Excluding the impact of these exceptional charges, operating loss was $0.1 billion, compared to an operating loss of $0.2 billion for the previous quarter.
Sales declined to $2.8 billion as compared with sales of $3.2 billion for the previous quarter, due to both lower volumes and prices (an 11.5% decrease in average steel selling price).
Total steel shipments for this segment were 3.5 million tonnes, as compared with steel shipments of 3.6 million tonnes for the previous quarter.
The company’s Flat Carbon Europe segment recorded an operating loss of $0.4 billion as compared with an operating loss of $0.2 billion for the previous quarter. The operating loss included $0.6 billion in exceptional charges primarily related to inventory write-downs and provisions for workforce reduction (vs. exceptional charges of $0.3 billion primarily related to write-downs for the previous quarter). Excluding the impact of these exceptional charges, operating income was $0.2 billion for the current quarter, as compared with $0.1 billion for the previous quarter.
Sales were slightly lower at $4.5 billion as compared with sales of $4.6 billion for the previous quarter, primarily due to lower prices (a 4.9% decrease in average steel selling price), despite an increase in shipments.
Total steel shipments were slightly higher at 5.0 million tonnes, as compared with 4.8 million tonnes for the previous quarter.
The company’s Long Carbon Americas and Europe segment recorded an operating loss of $51 million as compared with an operating loss of $0.2 billion for the previous quarter. The operating loss included $0.1 billion of exceptional charges primarily related to inventory write-downs (vs. similar exceptional charges of $0.2 billion in the previous quarter). Excluding the impact of these exceptional charges, operating income was $55 million for the current quarter, as compared to $19 million for the previous quarter.
Sales were higher at $4.0 billion as compared with $3.8 billion for the previous quarter, due to an increase in shipments that more than offset lower prices (a 9.9% decrease in average steel selling price).
Total steel shipments were higher at 5.3 million tonnes as compared with 4.4 million tonnes for the previous quarter.
The company’s Asia Africa and CIS (AACIS) segment recorded an operating income of $20 million as compared with an operating loss of $18 million for the previous quarter. The operating income included $0.1 billion of exceptional charges primarily related to inventory write-downs (vs. similar exceptional charges of $72 million in the previous quarter). Excluding the impact of these exceptional charges, operating income was unchanged at $0.1 billion for both quarters.
Sales remained flat at $1.7 billion as compared with the previous quarter due to slightly lower prices (a 1.7% decrease in average steel selling price) that offset a small increase in shipments. Total steel shipments were slightly higher at 2.9 million tonnes as compared with 2.8 million tonnes for the previous quarter.
The company’s Stainless Steel segment recorded an operating loss of $64 million as compared with an operating loss of $0.2 billion for the previous quarter. The previous quarter’s operating loss included $98 million of exceptional charges related to inventory write-downs; excluding the impact of these exceptional charges, the previous quarter’s operating loss was $71 million.
Sales were higher at $1.0 billion as compared with $0.9 billion for the previous quarter, primarily as an increase in shipments more than offset lower prices (a 10.2% decrease in average steel selling price).
Total steel shipments were higher at 363,000 tonnes as compared with steel shipments of 315,000 tonnes for the previous quarter.
The company’s Steel Solutions and Services segment recorded an operating loss of $0.3 billion as compared with an operating loss of $0.2 billion for previous quarter. The current operating loss included $0.1 billion of exceptional charges primarily related to inventory write-downs (vs. similar exceptional charges of $0.1 billion in the previous quarter). Excluding the impact of these exceptional charges, operating loss was $0.2 billion, as compared with $65 million for the previous quarter.
Sales remained flat at $3.4 billion as compared to the previous quarter, primarily due to lower prices (a 13.7% decrease in average steel selling price) that offset an increase in shipments.
Total steel shipments for this segment were higher at 4.5 million tonnes as compared with steel shipments of 3.9 million tonnes for the previous quarter.
Management Comments—“The first six months of the year have been some of the most challenging the steel industry has ever experienced,” said Lakshmi N. Mittal, Chairman and CEO, ArcelorMittal, commenting on results. “Operating in such a difficult environment, I am pleased with the way in which ArcelorMittal has responded to adapt production, cut costs and strengthen our balance sheet.
“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,” added Mittal. “Provided there are no further unexpected economic deteriorations, we should see continued gradual improvement throughout the second half of the year, with full recovery remaining slow and progressive.”
ArcelorMittal is the world's largest steel company, with operations in more than 60 countries. It is a leader in a range of major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. With an industrial presence in over 20 countries spanning four continents, the company covers the key steel markets, from emerging to mature.
Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources. ArcelorMittal also takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combat climate change.
In 2008, ArcelorMittal had revenues of $124.9 billion and crude steel production of 103.3 million tonnes, representing approximately 10% of world steel output.
