ArcelorMittal SA (NYSE: MT) stock fell over 1.6% in the pre-market session on 10th May, 2019 (as of 8:30 am GMT-4; Source: Google finance) after the company in the first quarter of FY 19 has reported 34 percent fall in the adjusted earnings before interest, tax, depreciation and amortization of $1.65 billion (1.27 billion pounds) from a year earlier and below the company-compiled consensus of $1.68 billion. First-quarter net profit slumped to $414 million from $1.19 billion a year earlier as global steel prices continue to fall, while sales were almost flat at $19.19 billion.
ArcelorMittal recently said it plans to temporarily cut production in Europe by 3 million tonnes on an annualised basis in an effort to mitigate the effects of rising imports, and high energy, carbon costs and weak demand. Industrial production in the European Union fell in November, December and January year on year and was up a modest 0.3 percent in February. March figures are due out next Tuesday. In January the EU had agreed to a series of measures aimed at reducing the imports after the introduction of tariffs in the U.S. diverted large volumes of the metal into Europe. The commission imposed quotas on 26 product categories and a 25% duty on imports exceeding those quotas. Further, the average selling prices in Europe fell 9% on year to $541 a ton, compared with a 6.4% drop in Brazil and a 12% gain in the NAFTA region over the same period.
Meanwhile, ArcelorMittal has raised its growth forecast for 2019 global apparent steel consumption, which also reflects changes in inventory levels, to 1.0-1.5 percent from its February guidance of 0.5-1.0 percent. The major change was its more bullish view of China, which is the world’s largest steel consumer and producer. However, ArcelorMittal has almost no business there. Nearly half of ArcelorMittal’s steel is produced in Europe, with just under 40 percent in the Americas. Excluding China, the growth this year would be in the range 1.0-2.0 percent, down a percentage point from ArcelorMittal’s earlier view. The company now sees contraction of demand in Europe and has a more moderate view of expansion in Brazil. The company left its growth forecasts for the United States and the former countries of the Soviet Union unchanged.
The company reaffirmed its commitment to maintaining an investment-grade credit rating and adjusted its target to reduce net debt to below $7 billion from a previous target of below $6 billion to reflect the impact of the IFRS accounting standards.