The world's biggest steel maker ArcelorMittal on April 29 reported a net loss of $1.063 billion in the first quarter as demand from industry collapsed. The figure includes $1.2 billion in exceptional charges due mainly to write-downs of the value of stockpiled products as the Luxembourg-based giant struggles to find buyers amid the financial crisis.
"The main reason for the decline continues to be the extreme weakness in demand for steel products in the first quarter of 2009 as a result of the global economic crisis, along with a steep fall in prices," the firm said.
The firm has been badly hit by collapsing demand from, among others, the construction and motor industries, but the loss was nevertheless almost twice as bad as expected by analysts and shocked the market.
Earnings were down sharply from the same quarter in 2008 when it reported a profit of $3.614 billion, but the latest reported loss was less heavy than the $2.632 billion fall booked in the fourth quarter of 2008.
Many of ArcelorMittal's plants are operating at drastically reduced capacity and the firm shipped only 16 million tons of steel in the first quarter of 2009, compared to 29.2 million tons in the same period of last year.
ArcelorMittal reduced its global workforce by 4,000 to 312,000 at the end of last year and trade unions, fearing more redundancies and production cuts, urged the company to reinvest rather than pay shareholder dividends.
Separately, an ArcelorMittal spokesman in Liberia -- where the firm has since 2007 run a billion-dollar iron ore concession in one of Africa's poorest countries -- said jobs would be lost there. "We had 570 direct employees. We have put down 20 persons from Buchanan, 20 persons from Yekepa and 40 from Monrovia," said Arthur Massaquoi, adding that more than a thousand jobs would be lost from a subcontractor. "1,300 indirect employees hired by a private company to build our railroad are out of a job because we have terminated our contract with the company due to the financial crisis," he said.
The company's chairman, Lakshmi Mittal, said that ArcelorMittal plans to continue cutting production in line with reduced demand and forecasts that profits would rebound in the second quarter. "Strong measures have been taken to reduce our cost considerably and liquidity remains healthy. Although market conditions remain challenging, a technical recovery is inevitable," he said.
ArcelorMittal accounts for 10% of world steel output and produced 103.3 million tons of steel in 20 countries in 2008, earning revenues of $124.9 billion over the year.
Global steel output in March tumbled 23.5% from the same month last year, the World Steel Association said last week, as the global economic slump ravaged the sector. Steel production in the 66 member nations of the association fell 24% in January on a 12-month comparison and by 22% in February.
China bucked the trend in the first quarter however, registering a slight increase in steel production of 1.4% in the three-month period.
Copyright Agence France-Presse, 2009