ArcelorMittal Q1 Loss Narrows

(RTTNews) - Steel giant ArcelorMittal (MT) reported that its net loss for the first-quarter of 2016 narrowed to $416 million or $0.23 per share from $728 million or $0.41 per share in the first-quarter of 2015.

But adjusted net loss widened to $176 million from $36 million in the prior year.

Lakshmi N. Mittal, ArcelorMittal chairman and CEO, said, "Our results for the first quarter reflect the very tough operating conditions in the second half of 2015. Since that time we have seen a recovery in spreads in our core markets to more sustainable levels, which is expected to result in improved results in the coming quarters. This is a welcome development, although given the levels of excess capacity in China the market remains fragile and we must continue to be vigilant and active against the threat of unfair trade."

The Company expects fiscal year 2016 EBITDA to be in excess of $4.5 billion. The impact of the improving steel spread environment is expected to be fully reflected in the results of the second half of the year.

The Company's cash requirements in 2016 are expected to total $4.5 billion, a greater than $1 billion reduction as compared to 2015.

The Improving market conditions are likely to consume working capital in 2016 (current estimate of ~$0.5 billion); the Company nevertheless, expects to be free cash flow positive in 2016.

Operating income for the first-quarter was $275 million as compared to operating income of $571 million last year. Operating results the quarter were negatively impacted by a $69 million provision primarily related to onerous hot rolled and cold rolled contracts in the US.

Sales for quarter declined about 21.7% to $13.4 billion from last year's $17.1 billion primarily due to lower average steel selling prices (-22.1%), lower market-priced iron ore shipments (-16.8%) and lower iron ore reference prices (-22.7%).

NAFTA segment crude steel production increased 9.9% to 5.6 million tonnes in the first-quarter of 2016 as compared to 5.1 million tonnes for the fourth-quarter of 2015.

Steel shipments in the first-quarter of 2016 increased 19.2% to 5.5 million tonnes as compared to 4.6 million tonnes in prior quarter, primarily driven by a 20.8% increase in flat product steel shipments (mainly US) and 11.7% increase in long product shipment volumes (in both Canada and Mexico).

Separately, ArcelorMittal Europe has announced its results for the first quarter of 2016, reporting a 34% drop in Ebitda to 328 million euros compared with the fourh-quarter 2015, mainly due to a 7.2% decline in average steel selling prices for the first three months of 2016. Lower prices were however offset in part by higher steel shipment volumes and improved cost performance.

ArcelorMittal Europe reported an operating profit of 77 million euros for the first three months of the year, compared with a€465 million euros operating loss in the previous quarter. The fourth quarter 2015 performance was significantly impacted by impairments and inventory write-downs. Comparing year-on-year, ArcelorMittal Europe reported an operating profit of 281 million euros for the first quarter of 2015.