ArcelorMittal, the world’s largest steelmaker, slumped more than expected in the first quarter as demand collapsed, and the prospect of a second quarter uptick was not enough to halt a slide in its shares.
The much-watched EBITDA (earnings before interest, tax, depreciation and amortization) dropped 82 percent to US$883 million in the January to March period, compared with an average forecast of US$1 billion in a Reuters poll of 11 analysts.
ArcelorMittal had forecast a figure of about US$1 billion, with a 15 percent variation, because of final quarter price cuts of up to 40 percent and nearly halved output as key auto and construction markets fell into crisis.
It forecast production would remain at around 50 percent of capacity in the second quarter.
The World Steel Association forecast on Monday that steel demand would tumble 15 percent this year, its steepest fall since World War II.
ArcelorMittal’s slump mirrors that of its rivals.
China’s top steelmaker Baosteel reported a 98 percent drop in first-quarter net profit on Tuesday.
Economists believe the first quarter may have been as bad, or even worse, than the wretched fourth quarter of last year.
ArcelorMittal forecast core profit in the second quarter would recover to some US$1.2 billion to US$1.5 billion. It had previously seen the first quarter as the low point in terms of profitability.
It made a net loss in the first quarter of US$1.1 billion, in part as a result of US$1.2 billion of pretax exceptional charges, mainly for writing down inventories. In the fourth quarter, it booked exceptionals of US$4.4 billion.
It also said it saw potential for price increases during the second and third quarters across major markets and products, although in a presentation it said that it expected a lower average steel price.
“Although market conditions remain challenging, a technical recovery is inevitable and ArcelorMittal will benefit from this,” chairman and chief executive Lakshmi Mittal said.