By Philip Blenkinsop
BRUSSELS (Reuters) – ArcelorMittal <MT.AS>, the world’s largest steelmaker, reported a second consecutive quarterly loss on Thursday and cut its forecasts for demand in its main U.S. and European markets.
The Luxembourg-based company said global steel consumption, including the impact of inventory changes, would grow in 2019 by 0.5-1.0% this year, towards the lower end of its previous guidance of 0.5-1.5%.
Reporting a net loss of $539 million for the third quarter – a second straight quarter in the red – it said it now expected a reduction of U.S. steel demand due to a weak auto sector and a slowdown in demand for machinery, although non-residential construction was healthy.
It also said the contraction in steel demand in Europe would be worse than expected due to a sluggish auto sector and slowing construction.
The company did upgrade its forecasts for the former Soviet Union and for China, the world’s largest producer and consumer of steel. But ArcelorMittal ships almost half its steel to European customers, around a quarter to the United States and has negligible business in China, although that market does affect prices.
The company, which produces around 5% of global steel, said it now expected its own shipments to be stable this year, having previously forecast a year-on-year increase.
Chief Executive Officer Lakshmi Mittal said in a statement that ArcelorMittal had anticipated a tough market in the July-September period as low prices and high raw materials costs squeezed margins.
The company’s net debt, a key metric for markets, increased by $0.5 billion to $10.7 billion. It has a target to pull it below $7 billion.
Mittal said a substantial release of working capital in the fourth quarter should enable the company to reduce net debt further year-on-year.
The company’s third-quarter core profit (EBITDA) in the third quarter was $1.06 billion, compared with the average forecast in a company poll of $930 million.
(Reporting by Philip Blenkinsop; Editing by Kim Coghill and Kenneth Maxwell)