ArcelorMittal reports Q1 loss, stands by targets

Top global steelmaker ArcelorMittal reported a first-quarter loss on Friday but stood by its targets for operating profit and for reducing debt, and its shares rose by nearly 6.0 percent in initial trading. The group reported a first-quarter net loss of $345 million (265 million euros), owing mainly to problems in Europe, from a net profit of $92.0 million 12 months ago. Sales fell by 13.0-percent on a 12-month basis to $19.8 billion and earnings before interest, tax, depreciation and amortisation slumped by 26.0 percent to $1.57 billion. However, the comparison with performance in the last quarter of last year is more favourable. In that quarter the group reported a loss of $3.8 billion. Chief executive Lakshmi Mittal said that the quarter had been marked by difficult economic conditions. But he said that the underlying EBITDA operating profit in the second quarter should be higher than in the first quarter. Mittal stood by the target of an EBITDA figure of $7.1 billion for the whole of this year, on the basis that the cost of iron ore, margins on steel prices and raw materials costs remained in 2013 at the same levels as in 2012. Analysts said that it was this reassurance on the outlook for underlying earnings, despite the setback in the first quarter, which had boosted the shares. In the first quarter, the group made progress towards its target of reducing net debt to $17.0 billion in the first half of the year, by reducing it by $3.8 billion to $18.0 billion. ArcelorMittal has been engaged in a high-profile industrial dispute in France over the controversial closure of blast furnaces. Mittal said that in the first quarter the group had reduced its net debt sharply and that action taken to concentrate production on the most competitive assets was beginning to bear fruit. At the end of March, the group had cash available of $18.0 billion. The results in the first quarter suffered from a continuing crisis for the steel sector in Europe. In remarks to a general meeting of shareholders in Luxembourg on Wednesday, Mittal had said that he expected demand for steel in Europe to fall by 0.5-1.5 percent this year, and that the indicators for the first quarter had been worse than for the first quarter of last year. He told AFP later that in the first quarter the trend pointed to a fall of 20.0-30.0-percent in demand for steel by the main French carmakers, the PSA Peugeot group and Renault. Mittal called for a reduction of the cost of energy and of labour in Europe in order to raise the competitive position of European production facilities. But the group said it expected the outlook in Europe to improve by the end of the year and said it was counting on demand in emerging economies to support its results. ArcelorMittal employs about 98,000 people in Europe of whom 20,000 work in France. The company has launched a new round of cost cutting to save about $3.0 billion by 2015. At the beginning of February, the group made a commitment to EU Industry Commissioner Antonio Tajani not to restructure further in Europe before the EU presents an action plan for the steel sector which is expected in the next few months.