Arcelor Grapples With Glut
06 Fevereiro 2016 - 06:02AM
Dow Jones News
(FROM THE WALL STREET JOURNAL 2/6/16)
By Alex MacDonald and John W. Miller
ArcelorMittal, the world's largest steelmaker, said Friday it
would issue $3 billion in shares to shore up its finances as it
grapples with a global steel glut that pushed it to a $6.7 billion
loss in the fourth quarter.
Chief Executive Lakshmi Mittal said in an interview that it is
time "to focus on improving our balance sheet" amid the
deteriorating global outlook for the industry.
ArcelorMittal lost almost $8 billion for all of last year as a
flood of Chinese exports and a collapse in demand battered steel
prices. The average global steel price fell 23% in 2015, according
to consultancy firm MEPS International Ltd. The company also mines
iron ore, steel's main ingredient, and its benchmark price dropped
43% last year.
Amid the tough market conditions, ArcelorMittal aims to reduce
net debt by about $4 billion from $15.7 billion at the end of 2015.
The company's dismal fourth-quarter results -- which were released
a week earlier than scheduled -- underscored the urgency of that
plan.
ArcelorMittal's net loss ballooned to $6.7 billion from just
under $1 billion in the year-earlier quarter, and revenue sank 25%
to $14 billion amid the slump in prices of iron ore and steel.
Impairment charges of $4.8 billion largely related to its iron-ore
operations led to a full-year loss of $7.9 billion, worse than its
$1.1 billion loss in 2014.
The Mittal family, which at the end of last year owned about a
39% stake, said it would subscribe to its entitlement in the share
issue, or about $1.1 billion.
The company, which is based in Luxembourg and run out of London,
will also sell its 35% stake in Gestamp Automocion, a Spanish
manufacturer of bumpers, chassis, pedal boxes and other steel car
parts, for about $1 billion by the end of June to pay down
debt.
Aditya Mittal, the steelmaker's chief financial officer, said
shareholders would be better served by a rights issue than more
asset sales given expectations that supply and demand in the global
steel market will achieve a better balance with time. "We have to
make sure we don't destroy value" through asset sales, he told
reporters on Friday.
ArcelorMittal shares have fallen 60% over the past year and
closed the day down 9.7% at $3.73 on the New York Stock Exchange.
Falling steel prices and excess steel supply from China, the
world's largest steel producer, have exerted intense pressure on
its business. In 2015, Chinese steel exports grew 22% to 100.3
million tons, by far the most steel a country has ever exported,
according to Chinese customs data.
Lakshmi Mittal said ArcelorMittal faces continued tough trading
conditions. "[This year] will be another difficult year for our
industries," he said. "It is clear that China has a challenge to
restructure its steel industry . . . Until this situation is fully
addressed the effective and swift implementation of trade defense
instruments will be critical."
(END) Dow Jones Newswires
February 06, 2016 02:47 ET (07:47 GMT)
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