Key figures for 1Q 2020

COVID-19 impacts

  • Faced with a significant humanitarian challenge from the COVID-19 pandemic, the Company’s first priority has been to take all the necessary actions to safeguard the wellbeing of our people and to provide support to the extent required in the communities in which we operate
  • Economic activity and steel market conditions have significantly deteriorated since measures were introduced by governments worldwide to contain the COVID-19 pandemic
  • The Company has responded swiftly: aligning production to a lower order book, and taking measures to reduce all costs in line with exceptionally low capacity utilization levels

Highlights of 1Q 2020

  • Health and safety performance: LTIF rate2 of 1.01x in 1Q 2020
  • Improved operating performance in 1Q 2020 reflects the positive market developments prior to the escalation of the COVID-19 pandemic in March; operating loss of $0.4bn (vs. loss of $1.5bn in 4Q 2019); EBITDA increased to $1.0bn (4.5% higher than 4Q 2019)
  • Net loss of $1.1bn in 1Q 2020 (adjusted net loss of $0.6bn, excluding impairment and exceptional items)3
  • Strong cash management during the quarter, including a working capital investment limited to $0.1bn; gross debt of $13.8bn and a marginal increase in net debt to $9.5bn (down $1.7bn vs 1Q 2019)
  • Liquidity at the end of 1Q 2020 stood at $9.8bn (consisting of cash and cash equivalents of $4.3bn and $5.5bn of available credit lines5); further supplemented by a recently signed new $3bn credit facility5

Outlook and guidance

  • The Company has moved swiftly to secure its assets and match production to the evolving orderbook, with steel shipments for 2Q 2020 expected within the range of 13.5Mt to 14.5Mt; the actions taken to reduce all costs in line with reduced operating rates is expected to yield a reduction in fixed costs10 by 25%-30% in 2Q 2020, essentially maintaining fixed costs per-tonne at the 1Q 2020 level; EBITDA for 2Q 2020 is expected to be within the range of $0.4bn to $0.6bn
  • Certain cash needs of the business are now expected to be approximately $3.5bn in 2020 (vs. $4.5bn previous guidance), due to lower planned capex (reduced to $2.4bn from $3.2bn previous guidance) and lower taxes
  • Annual working capital needs will be determined by the extent market conditions recover in 2H 2020, but the Company still expects to release the $1bn in working capital previously targeted
  • The Company’s $2 billion asset portfolio optimization program continues to progress. Given suitable and viable buyers have expressed serious interest in certain assets, the Company remains confident in completing the program by mid-2021
  • While the impacts of COVID-19 have introduced unanticipated challenges, the Company continues to target achievement of its $7bn net debt objective in the near term
  • Against the backdrop of significant cost savings measures being taken across the business, the Board determined it both appropriate and prudent to suspend dividend payments until such a time as the operating environment normalizes

Financial highlights (on the basis of IFRS[1]):

"The improved operating performance in the first quarter has been considerably overshadowed by the COVID-19 crisis. Faced with a significant humanitarian challenge, the Company’s first priority has been to take all the necessary actions to safeguard the wellbeing of our people and to provide support to the extent required in the communities in which we operate. But we have also moved decisively to protect the business in the face of the completely unprecedented scenario we are facing where social and economic lockdown has contributed to a significant decline in demand. We moved swiftly to temporary idle furnaces, cutting production across markets and reducing operating and capital costs to match this environment. We have continued to meet remaining customer demand from a reduced level of production and are very thankful to our employees and stakeholders for their support in enabling plants to keep running." Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO