Mixed Projections by Steel Giant ArcelorMittal
Wednesday saw the world’s largest steelmaker, ArcelorMittal, presenting a gloomy picture of the company’s profitability, amid declining global demand and a strengthening dollar.
The Luxembourg-based steelmaker, accounts for around 6 percent of the global steel output. According to the company’s projections, the global steel demand is expected to grow between 0.5 and 1.5, from 1.5 and 2.5 percent forecasted earlier. Particularly, China, the US, Brazil, Russia and former Soviet Union states were included in these reduced forecasts. The company reported a net loss of $728 million for Q1 ended March 31, coming at the back of declining iron ore prices, a stronger dollar and surge in US imports.
The EBITDA, which is an accounting measure calculated using a company's net earnings, before interest expenses, taxes, depreciation and amortization, and serves as a proxy for a company's current operating profitability, declined to $1.4 billion. This came even when the underlying performance of the company’s steel business remained the same as Q1 of 2014. Net sales of the steel giant fell from $19.79 billion in the last quarter of 2014 to $17.12 billion during Q1 of 2015, a plunge of 13.5 percent.
The company also reported an ensuing decrease in the capital expenditure estimates to $3 billion, owing to stalled investment projects and foreign exchange fluctuations.
However, in the midst of all these negative projections, there was some good news in store for the investors. The cash flows expectations for 2015 were positive and when it came to operating costs, the company endeavored to decrease its mining costs by as much as 15 percent. Europe, specifically, reported a jump of 15 percent in EBITDA.
The steel major’s debts stood at $16.6 billion, a 10 percent decline from 2014. Steel shipments, too, witnessed a rise of three percent, as also iron ore production which climbed by five percent in Q1 of 2015.