Billionaire Lakshmi Mittal-led ArcelorMittal today said it will raise USD 3 billion from investors and sell USD 1 billion stake in Spanish auto-part maker Gestamp, to reduce debt after the losses widened 7-fold in 2015 to USD 7.9 billion.
The world’s largest steelmaker outlined a plan to reduce its USD 15.7 billion net debt by nearly a quarter.
Mittal, who owns about 37 per cent of ArcelorMittal, will maintain his stake and will sign up to its entitlement of the share issue, worth about USD 1.1 billion.
Continuing to suffer from the Chinese industry’s overcapacity that has driven down world prices, the company reported net sales declining to USD 63.58 billion in 2015 against USD 72.28 billion in 2014.
Net loss reported USD 7.9 billion was mostly because of USD 4.8 billion writedowns on the iron ore mining business and a USD 1.3 billion charge on inventory due to the global steel price plunge. A year earlier the group made a loss of USD 1.1 billion.
The firm reported a widening of its net loss to USD 6.69 billion in the December quarter against a net loss of USD 955 million in the year-ago period as it faced a “very difficult” 2015, which witnessed iron ore and steel prices slide further.
The Luxembourg-headquartered company’s revenue fell by 25 per cent to USD 13.98 billion in the October-December quarter of 2015, from USD 18.72 billion in the same quarter of 2014 fiscal. The firm follows January-December as its fiscal year.
On the impairment charges, the firm said: “FY 2015 net loss of USD 7.9 billion including USD 4.8 billion of impairments (primarily due to mining impairments).
“And USD 1.4 billion of exceptional charges (primarily related to the write-down of inventory following the rapid decline of international steel prices).”
Breaking down the impairment charges, ArcelorMittal said the mining segment hit of USD 3.4 billion consists of USD 0.9 billion with respect to goodwill.
Besides, USD 2.5 billion related to fixed assets mainly due to a downward revision of cash flow projections relating to expected persistence of a lower raw material price outlook at ArcelorMittal Liberia (USD 1.4 billion), Las Truchas Mexico (USD 0.2 billion), ArcelorMittal Serra Azul in Brazil (USD 0.2 billion) and ArcelorMittal Princeton coal mining operations in the US (USD 0.7 billion).
While, steel segments’ hit of USD 1.4 billion consists of fixed asset impairment charges of USD 0.2 billion on intended sale of the Long Carbon facilities in the US (ArcelorMittal La Place, Steelton and Vinton within the NAFTA segment).
It also includes USD 0.4 billion primarily in connection with idling for an indefinite time of the ArcelorMittal Sestao plant in Spain (Europe segment) and USD 0.8 billion related to NAFTA: Deployment of asset optimisation programs at Indiana Harbor East and West in the US( USD 0.3 billion).