Amid ongoing challenging conditions in manufacturing and construction, the world’s largest manufacturer of steel has announced a significant third quarter loss, though the company remains ‘cautiously optimistic’ regarding prospects for the year ahead.
In the September quarter, Luxembourg-azubased ArcelorMittal says it lost $US192 million after tax – much less than the $US780 million the company lost in the second quarter or the $US652 million it lost in the previous corresponding period last year but still a disappointing result which took the company’s overall net loss for calendar 2013 thus far to a whopping $US1.318 billon.
Underlying earnings (EBITDA) rose from $US352 million to $477 million, taking the overall yearly figure thus far to $US4.978 billion, down from $6.122 billion year-on-year during the same period.
Company chairman and CEO Lakshmi N. Mittal acknowledged the result was disappointing but insisted the worst was over.
“After a weak first half, we have seen third quarter performance improve year-on-year, positively impacted by our cost optimisation efforts and the increased shipments from our mining expansion,” Mittal said. “We believe that the bottom of the cycle is behind us and expect second half EBITDA, usually comparably weaker, to be at least equal to the first. Although operating conditions remain challenging, as economic indicators are improving we are cautiously optimistic about the prospects for 2014.”
Around the world, steel makers have been hit by weak conditions in manufacturing and construction, which has led to price falls of more than a quarter since the most recent peak in April 2011, albeit with average prices now having stabilised and bounced back off lows experienced in the middle of the year.
As the world’s largest steel maker, ArcelorMittal is not immune – especially with the company’s exposure to Europe.
Steel makers in Australia have also had a rough go. A whopping $961 million in asset impairment charges and restructuring costs forced local manufacturer Arrium to record a $695 million loss for the year to June 30 this year, while fellow steel maker BlueScope lost $84 million after booking losses of $1.044 billion the previous year.
Though it does not give forecasts for net profit after tax, ArcelorMittal says it expects underlying profitability to improve during calendar 2013 amid higher levels of shipments in iron ore and steel and benefits from restructuring.
It says net debt will fall to $US17 billion during the fourth quarter, a figure the company hopes to reduce to $15 billion over the medium term.