ArcelorMittal Update on Europe Business
Europe segment crude steel production decreased by 28.6% to 7.1 million tonne in 2Q 2020 as compared to 9.9 million tonne in 1Q 2020 driven by weak demand caused by the COVID-19 pandemic. Europe segment crude steel production decreased by 41.4% in 2Q 2020 as compared to 12.1 million tonne in 2Q 2019 (35.7% lower excluding the impact of the remedy asset sales related to the ArcelorMittal Italia acquisition).
The COVID-19 pandemic containment measures began impacting European industrial activity in mid-March. The Company announced measures on March 19, 2020 to reduce production and the temporary idling of steel making and finishing assets, including operations in Italy, France, Spain, Germany, Belgium and Poland, which continued during 2Q 2020.
Steel shipments in 2Q 2020 declined by 26.7% to 6.8 million tonne as compared to 9.3 million tonne in 1Q 2020 primarily driven by lower flat steel shipments (-33.8%). Steel shipments were 42.3% lower in 2Q 2020 as compared to 11.8 million tonne in 2Q 2019 (37% lower excluding the impact of remedy assets associated with the ArcelorMittal Italia acquisition). Steel shipments in Europe started to decline in the latter part of March and early 2Q 2020 due to the COVID-19 containment measures implemented in the various countries. However, activity levels are gradually improving, as lockdowns have eased through 2Q 2020, particularly with automotive and manufacturing restarts.
Sales in 2Q 2020 were $5.8 billion, 24.2% lower as compared to $7.7 billion in 1Q 2020, primarily due to 26.7% lower shipment volumes as discussed above and a weaker sales mix (lower flat products shipments, in particular automotive sales).
Operating loss in 2Q 2020 was $229 million as compared to a loss of $426 million for 1Q 2020 and an operating loss of $301 million in 2Q 2019. Operating results for 1Q 2020 and 2Q 2019 were impacted by impairment charges and exceptional items as discussed above.
EBITDA in 2Q 2020 of $126 million was 38.4% lower as compared to $204 million in 1Q 2020. primarily due to the loss of profit margin on reduced steel shipments (fixed costs were reduced in line with lower shipments) on account of lower demand due to the COVID-19 pandemic, and a negative sales mix impact (lower flat products shipments, in particular to automotive).
EBITDA in 2Q 2020 decreased by 64.9% as compared to $359 million in 2Q 2019 primarily due to 42.3% lower steel shipments (37.0% lower excluding the impact of the remedy asset sales related to the ArcelorMittal Italia acquisition) and lower average steel selling prices offset in part by lower costs.
Source : STRATEGIC RESEARCH INSTITUTE