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ArcelorMittal Reports Net Loss of $780 Million in Second Quarter ArcelorMittal Reports 2nd Quarter Net Loss of $780 Million
(about 7 hours later)
LONDON — ArcelorMittal, the world’s largest steel company, reported on Thursday a net loss of $780 million for the second quarter compared with net income of about $1 billion in the same period a year earlier. The company also reported $1.7 billion in earnings before interest, taxes, depreciation and amortization, the commonly used metric in the steel industry, a figure that was in line with analysts’ consensus forecasts. The company cut its Ebitda forecast for 2013 to $6.5 billion from “above $7.1 billion,” given its previous results in May. LONDON — ArcelorMittal, the world’s largest steel company, reported on Thursday a net loss of $780 million for the second quarter, compared with net income of about $1 billion in the same period a year earlier. The company also reported $1.7 billion in earnings before interest, taxes, depreciation and amortization, the commonly used metric in the steel industry, a figure that was in line with analysts’ consensus forecasts.
The results were hurt by continued losses in Europe, where the company took $212 million in write-offs after closing plants at Florange in France. Production suffered in the United States as a result of labor problems and operational issues at plants at Burns Harbor and Indiana Harbor on Lake Michigan in Indiana. The company cut its Ebitda forecast for 2013 to $6.5 billion, from the “above $7.1 billion” figure given at the time it released its previous results in May.
The earnings were hurt by continued losses in Europe, where the company took $212 million in write-offs after closing plants at Florange in France. Production suffered in the United States as a result of labor problems and operational issues at plants at Burns Harbor and Indiana Harbor on Lake Michigan in Indiana.
The company’s shares were down about 3 percent in Amsterdam.
The operating environment, especially in Europe, where ArcelorMittal has a large proportion of its production and employees, remains difficult. While steel shipments for the company, which is based in Luxembourg, rose 1.7 percent to 21.3 million tons, compared with the first quarter of 2013, the overall operating margin for the first half of 2013 was 1.9 percent, compared with 4.5 percent for the first half of 2012.The operating environment, especially in Europe, where ArcelorMittal has a large proportion of its production and employees, remains difficult. While steel shipments for the company, which is based in Luxembourg, rose 1.7 percent to 21.3 million tons, compared with the first quarter of 2013, the overall operating margin for the first half of 2013 was 1.9 percent, compared with 4.5 percent for the first half of 2012.
The main European unit, Flat Carbon Europe, which supplies flat steel for making cars and other products, posted an operating loss of $198 million for the quarter. The company says it averaged a loss of $28 on each metric ton of production at the unit, which has been highly unprofitable in recent years.The main European unit, Flat Carbon Europe, which supplies flat steel for making cars and other products, posted an operating loss of $198 million for the quarter. The company says it averaged a loss of $28 on each metric ton of production at the unit, which has been highly unprofitable in recent years.
The company did say that the second half of 2012 had marked the lowest point in what has been a very trying few years since the financial crisis. “Although we have revised our full year guidance, the second half should deliver a clear underlying improvement relative to the second half of 2012, which we believe marked the lowest point in the cycle,” Lakshmi Mittal, the company’s chief executive, said in a statement. The company did say that the second half of 2012 had marked the lowest point in what has been a very trying few years since the financial crisis. The company forecasts that a 1 percent to 2 percent rise in steel shipments this year, coupled with cost-cutting, will lift profit. “We still expect the underlying performance of the company to improve compared to 2012,” Lakshmi N. Mittal, the chief executive, told reporters Thursday.
It appears that the company, which Mr. Mittal built through acquisitions before the financial crisis, continues to face a long, hard journey. The company has closed plants in France and Spain and has idled others in Belgium and elsewhere, but the question is whether that will be sufficient. Other European steel executives say they believe that there is still substantial overcapacity in Europe, where only about 10 percent of the blast furnaces that were operating before the financial crisis have been shuttered, while demand for steel has fallen about 30 percent. It appears that the company, which Mr. Mittal built through acquisitions before the financial crisis, continues to face a long, hard journey. The company has closed plants in France and Spain and has idled others in Belgium and elsewhere, but the question is whether that will be sufficient. Other European steel executives say they believe that there is still substantial overcapacity in Europe, where only about 10 percent of the blast furnaces that were operating before the financial crisis have been clsoed, while demand for steel has fallen about 30 percent.
Robrecht Himpe, chief of European flat steel for ArcelorMittal, said in a statement that the unit’s production was up 2.8 percent compared with the first quarter, despite “the continued drop in European steel demand.”Robrecht Himpe, chief of European flat steel for ArcelorMittal, said in a statement that the unit’s production was up 2.8 percent compared with the first quarter, despite “the continued drop in European steel demand.”
Jeff Largey, an analyst at Macquarie in London, wrote in a research note that ArcelorMittal’s results showed “some encouraging signs of improvement in performance" in its Europe flat steel business. But he added that weak results in North America demonstrated that the company was “still subject to the volatility of the structurally challenged steel industry.”Jeff Largey, an analyst at Macquarie in London, wrote in a research note that ArcelorMittal’s results showed “some encouraging signs of improvement in performance" in its Europe flat steel business. But he added that weak results in North America demonstrated that the company was “still subject to the volatility of the structurally challenged steel industry.”