ArcelorMittal Loss Widens, Warns On EBITDA, Sells Gestamp JV Stake; Stock Down

(RTTNews) - Shares of ArcelorMittal (MT) were losing around 7 percent in the morning trading in Amsterdam after the steel and mining company reported Friday a hefty loss of $6.7 billion in its fourth quarter, wider than the prior year, reflecting impairment charges and weak sales due to lower prices. Looking ahead, the company projects lower EBITDA, a key earnings metric, for fiscal 2016.

Aiming to reduce net debt, ArcelorMittal said it has sold its 35 percent stake in Gestamp Automoción Joint venture to the majority shareholder, the Riberas family, for a total cash consideration of 875 million euros. The payment is expected to be made within six months. ArcelorMittal will also receive a payment of 10 million euros as a 2015 dividend.

ArcelorMittal further announced a proposed capital raise of $3 billion which, alongside the Gestamp stake sale, would reduce pro forma net debt as of December 31, 2015 by $4 billion to below $12 billion.

The company also announced a five-year strategic roadmap, the ArcelorMittal Action 2020 plan, which sets out specific targets for each business segments which combined aim to achieve a further structural EBITDA improvement of approximately $3.0 billion.

In its fourth quarter, ArcelorMittal's net loss attributable to equity holders of the parent was $6.69 billion, compared to last year's loss of $955 million.

The latest results included impairment charges of $4.7 billion, compared to last year's charges of $264 million. Exceptional charges for the recent quarter were $0.9 billion.

ArcelorMittal's adjusted net loss was $0.4 billion, compared to an adjusted net income of $0.1 billion in 2014.

Sales in the quarter declined 25.3 percent year-over-year to $13.98 billion. The company said demand in core markets remained strong, but prices deteriorated significantly as a result of excess capacity in China.

The company recorded 22.6 percent drop in average steel selling prices and 37 percent lower iron ore references prices, along with 6.8 percent decline in steel shipments

Own iron ore production was 15.5 million tonnes, down from 16.7 million tonnes last year. Iron ore shipped at market price was flat at 9.9 million tonnes.

Total steel shipments were 6.8 percent lower at 19.7 million metric tonnes primarily due to lower volumes in NAFTA segment.

For the fourth quarter, ArcelorMittal Europe recorded an operating loss of 465 million euros, compared with a profit last year. EBITDA, however, improved 12.5 percent.

The company said there will be no dividend payment in respect of the 2015 financial year.

Looking ahead, that company said that 2016 will be another difficult year for its industries, although it has started to see a recovery in Chinese steel spreads from 2015 lows.

Due to order book and the time lag required for lower raw material costs to positively impact cost of sales, EBITDA is expected to sequentially decline in first quarter 2016.

Based on the assumption of prevailing raw material costs and spot steel spreads, the company expects fiscal 2016 EBITDA to be in excess of $4.5 billion. This is compared to last year's EBITDA of $5.23 billion.

ArcelorMittal shares were trading at 3.44 euros, down 6.59 percent.