ArcelorMittal slumps on full year loss, capital raising

Shares in ArcelorMittal slumped on Friday after the steel giant reported a loss of $7.9bn (£5.4bn) for 2015.

This included $4.8bn of impairments and $1.4bn of exceptional charges, primarily related to the writedown of inventory following the rapid drop in international steel prices.

Even excluding these exceptional and non-cash items, the full year adjusted net loss came in at $300m compared to adjusted net income of $400m the previous year.

Chairman and chief executive officer Lakshmi N Mittal said: “2015 was a very difficult year for the steel and mining industries. Although demand in our core markets remained strong, prices deteriorated significantly during the year as a result of excess capacity in China.

“Throughout the year we have rigorously focused on implementing a series of measures aimed at reducing costs and ensuring the business is adapted for these tough market conditions. As a result of these measures we succeeded in ending the year with net debt slightly below the end of 2014 despite significantly lower EBITDA.”

ArcelorMittal said it was targeting a further 10% cut in costs for 2016.

Also on Friday, the company announced a proposed capital raising of €3bn, which alongside the sale of its 35% stake in Gestamp for around $1bn, would reduce pro forma net debt as at 31 December 2015 by $4bn to under $12bn.

RBC Capital Markets, which rates the stock at ‘sector perform’, said: “We see the larger net debt reduction target as a positive from a balance sheet perspective, but it also highlights MT’s cautious outlook.”

Societe Generale, which rates the stock at ‘buy’, said news of the rights issue is “disappointing” but “reflects the currently very tough market conditions”.

At 1242 GMT, shares in Arcelor were down 6.7% to €3.44.