The world’s largest steel maker, ArcelorMittal SA, said yesterday the steel business was starting to recover, even as it posted a loss of US$792,000 for the second quarter, its third consecutive quarterly loss.
CEO Lakshmi Mittal said the company would restart production at some plants to meet “some initial signs” that the steel slump is ending. He warned that full recovery would be slow and progressive.
ArcelorMittal blamed the net loss on US$1.2 billion in charges from writing down steel stocks and paying off workers who took up the company’s voluntary redundancy program. The company made a profit of US$5.8 billion last year.
Revenues more than halved for the three months ending June 30 to US$15.2 billion, down from US$37.8 billion a year ago.
The third quarter should be better, the company said, as shipments rise and costs for key raw materials — iron ore and coal — fall from record highs.
It said the global recession had triggered an “extreme weakness” in steel demand along with a steep fall in prices.
Its main customers — car makers, construction and engineering companies — have slashed output on falling demand from customers facing the sharpest downturn since World War II.
ArcelorMittal plunged into loss for the first time in the last three months of last year as the steel industry slipped rapidly from boom to bust.
The company shuttered plants this winter and spring as steel stocks remained high, laying off thousands of workers temporarily.
Fearing that these closures could become permanent, Belgian and French workers attacked company headquarters during a shareholder meeting in May.
The company is also trying to aggressively reduce a high debt burden that it built up during a rapid expansion program to meet surging demand in recent years. It paid off US$3.8 billion in net debt in the second quarter and had total debt of US$22.9 billion on June 30, it said.
It said its bankers had agreed to let it change a leverage ratio to give more flexibility if the economy worsens.
The company also reported cost savings of US$1.7 billion in the quarter, close to its target of US$2 billion for the year.