Luxembourg-based ArcelorMittal says a challenging operating environment and lower steel pricing has resulted in a decline in profits in the first quarter of 2019. The steelmaker reported operating income decreased to $0.8 billion in the first quarter of 2019 compared with $1 billion in the fourth quarter of 2018 and $1.6 billion in the first quarter of 2018.
The company also reported steel shipments of 21.8 million metric tons of finished steel in the first quarter of 2019, up by 7.9 percent compared with the fourth quarter of 2018, while producing 24.1 million tons of crude steel during the first quarter of 2019, which is up compared with 2018.
Commenting on the first quarter results, ArcelorMittal Chairman and CEO Lakshmi Mittal says, "Our first quarter results reflect the challenging operating environment the industry has faced in recent months. Profitability has been impacted by lower steel pricing due to weaker economic activity and continued global overcapacity, as well as rising raw material costs as a result of supply-side developments in Brazil.”
On May 6, ArcelorMittal announced plans to temporarily idle steel production at its steelmaking facilities in Poland and reduce steelmaking in Spain. Following the announcement, the company said May 29 it will make more steel production cuts across Europe, reducing steel production at facilities in France and Germany in response to “weak market demand” and high import levels in Europe. ArcelorMittal Europe CEO Geert van Poelvoorde says the decision is a “temporary measure” that will be reversed when market conditions improve in Europe.
Mittal adds the company continues to “face a challenge from high levels of imports, particularly in Europe, where safeguard measures introduced by the European Commission have not been fully effective. Although we are somewhat encouraged by the firmer price environment in China, this is not being reflected in Europe, where in order to adapt to the current market environment we have recently announced annualized production cuts of three million tons in our flat steel operations. It is important there is a level playing field to address unfair competition, and this includes a green border adjustment to ensure that imports into Europe face the same carbon costs as producers in Europe.”
Looking ahead, Mittal says, “We remain focused on our own initiatives to improve performance through delivery of our Action2020 plan. Generating positive free cash flow, demonstrating progress in our efforts to further strengthen our balance sheet and improve shareholder returns are the priority.”