ArcelorMittal posts losses exceeding $1 bln for the second time in six months

The posted loss is almost double that expected by foreign analysts, as Q1 2009 is the second quarter in which the global market leader registers losses after years of positive financial results.

“Market conditions remain worrisome,” said the group’s Chief Executive Officer, Lakshmi Mittal.

The steel producer’s loss is due to exceptional costs, worth $1.2 bln, from the downward reevaluation of stocks, considering that the steep price halved on foreign commodity exchanges. The company posted positive earnings before interest, taxes, depreciation, and amortization (EBITDA), of $883 million, even though sales fell 50 percent at the global level, down to $15.1 bln. Steel deliveries totaled 16 million metric tons, compared to 29.2 million in the first three months of 2008.

“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, leading to drastic curtailment of production, said the quoted report.

Company officials are convinced that the market will bounce back, so they forecast an EBITDA of $1.2-1.5 bln for the second quarter. According to the press release, measures taken to reduce expenses resulted in maintaining a solid level of liquidities, of $11.6 bln. One of the group’s goals for 2009 is lowering its debt by $10 bln.

According to local steel market specialists, the group’s most important asset in Romania, ArcelorMittal Galati, which makes up eight percent of the group’s production in Europe, follows the group’s trend in terms of results.