Arcelor Mittal Q1 Loss Widens; Trims Full-year Earnings Goal

(RTTNews) - Steel and mining company ArcelorMittal (MT) reported Thursday a loss for the first quarter that sharply widened from last year, despite higher steel production and shipments, reflecting a drop in iron-ore price, a stronger dollar and surge of imports in the U.S.

Earnings Before Interest, Tax, Depreciation and Amortization or EBITDA, a key metric for the steel company, also declined year-over-year. Looking forward, the company cut the lower-end of its full-year 2015 EBITDA target range. It also trimmed the capital expenditure budget for 2015.

"We faced a number of headwinds in the first quarter, including a declining iron-ore price, a stronger dollar and surge of imports in the United States. As a result of which EBITDA declined to US$1.4 billion, although the underlying performance of our steel business remained similar to the first quarter of 2014," Chairman and CEO Lakshmi Mittal said in a statement.

For the three-month period, net loss attributable to equity holders of the parent widened to $728 million or $0.41 per basic share from $205 million or $0.12 per basic share in the prior-year quarter.

EBITDA was $1.38 billion, down from last year's $1.75 billion. However, in Europe, EBITDA improved 15 percent.

Sales for the quarter declined to $17.12 billion from $19.79 billion in the same quarter last year.

However, steel shipments improved 3 percent to 21.6 million metric tonnes from 21.0 million metric tonnes a year ago.

Own iron ore production rose 5 percent to 15.6 million metric tonnes from 14.8 million metric tonnes last year. Crude steel production also improved to 23.7 million metric tonnes from 23.0 million metric tonnes a year ago.

The NAFTA segment, which includes the Flat, Long and Tubular operations of USA, Canada and Mexico, reported 3.2 percent lower sales at $4.78 billion. NAFTA crude steel production decreased 5.6 percent, amid weaker demand.

In Brazil, sales declined 10.2 percent to $2.12 billion from last year, while in Europe sales decreased 16.7 percent to $8.60 billion a year ago.

ACIS segment sales also dropped 14.4 percent to $1.72 billion, while sales in the mining business were $758 billion, compared with $1.26 billion last year.

Operating income for the quarter decreased to $571 million from $674 million last year. Foreign exchange and other net financing costs were $756 million, as against $380 million a year ago.

Looking ahead to fiscal 2015, ArcelorMittal now expects EBITDA in the range of $6.0 billion to $7.0 billion, compared to the prior forecast of $6.5 billion to $7 billion, citing deterioration of iron ore prices as well as a weaker U.S. market.

The company also reduced capital expenditure budget for 2015 to about $3.0 billion, from about $3.4 billion target earlier.

MT closed Wednesday's regular trading session at $10.81, down $0.14 on a volume of 8.14 million shares. In the past 52-week period, the stock has been trading in a range of $9.21 to $16.60.