ArcelorMittal lost nearly $1.88 billion in the fourth quarter and $2.45 billion in all of 2019 in market conditions it described as challenging, but the company said things may finally be turning around.
The Luxembourg-based steelmaker, one of Northwest Indiana's largest employers, lost $1.86 per share in the fourth quarter and $2.42 per share for the full year. The previous year, it turned a profit of $5.1 billion, or $5.07 a share, but then demand for steel fell internationally.
"2019 was a very tough year, clearly reflected in our significantly reduced profitability," ArcelorMittal Chairman and CEO Lakshmi Mittal said.
"However, our cash generation remained strong, helping to reduce net debt to the lowest ever level. This demonstrates the contribution of our Action 2020 program which was designed to ensure ArcelorMittal can be cash flow positive through all aspects of the steel cycle. We expect to make further deleveraging progress this year."
The steelmaker did generate $2.4 billion in free cash last year, exceeding analysts' expectations. The company ended the year with $14.3 billion in debt, including $9.3 billion in net debt, which is the lowest since the company was created by a merger of Arcelor and Mittal Steel in 2006. The multinational steel company has since been the world's leading steelmaker by volume with a presence in 60 counties across the globe.
“Maintaining a strong balance sheet and reaching our net debt target is a clear priority for ArcelorMittal," Mittal said. "Having now completed the acquisition of Essar Steel India in partnership with Nippon Steel, we have also secured a new opportunity for the group in the fast-growing Indian market. The asset is performing well and offers considerable brownfield potential aligned with the country’s ambition to triple crude steel production over the next ten years."
ArcelorMittal said it looks to cut costs by $1 billion in 2020 and reduce its net debt to $7 billion. It also hopes to reduce its impact on the environment in anticipation of more stringent emissions regulations worldwide because of mounting concerns about climate change.
“We also continue to invest strategically in research and development, including lower carbon steel-making processes and low-carbon products," Mittal said. "Steel has the potential to significantly reduce its carbon emissions, but new policy will be vital. In this regard we are encouraged by the position adopted by the new European Commission, including their support for a carbon border equalization."
Company executives believe that the demand slowdown has already started to stabilize and that demand should start to grow this year in core markets like the United States. Steel service centers have run through much of the inventories they stockpiled in anticipation of tariffs raising prices.
“Although market conditions remain challenging, there are encouraging early signs of improvement particularly in our core markets of US, Europe and Brazil," Mittal said. "With inventory levels having reached a very low level following a period of de-stocking, we are seeing customers return to the market, supporting an improved pricing environment.”