ArcelorMittal (AM) has followed its first ever quarterly loss, in the fourth quarter of 2008, with another though somewhat less severe one.

Today the company reported a net loss of $1.063 billion or 78 cents per basic share in the first quarter of 2009, compared to a net loss of $2.632 billion or $1.93 per basic share in the fourth quarter and a net income of $3.614 billion or $1.69 per basic share in the year-ago period.

The company attributed part of that net loss to exceptional pre-tax charges of $1.2 billion related chiefly to write-downs of inventory. It also attributed a good part of its net loss in the fourth quarter to exceptional pre-tax charges of $4.4 billion, also related to write-downs of inventory and raw-material supply contracts as well as provisions for workforce reduction and litigation.

“Strong measures have been taken to reduce our cost considerably and liquidity remains healthy with an extended debt maturity profile,” AM Chair and CEO Lakshmi Mittal said. “Although market conditions remain challenging, a technical recovery is inevitable and ArcelorMittal will benefit from this.”

The company did note the “potential” for a price increase in the second and third quarters “across major markets and products,” and earlier today, the Associated Press reported, Mittal said at a press conference that it would raise prices and continue to freeze production, for a reduction in the second quarter to 50 percent of capacity.

The company also expects the construction sector to begin buying more product in the historically stronger second quarter, AP reported.

Sales plummeted by 37 percent in the first quarter, to $15.122 million, compared to $22.089 billion in the fourth quarter and $29.809 billion in the year-ago period.

Shipments were down by 6 percent in the first quarter, to 16 million metric tons, compared to 17.1 million metric tons in the fourth quarter and 29.2 million metric tons in the year-ago period.

For the first quarter the company reported an operating loss of $1.483 billion, compared to $3.466 billion in the fourth quarter and an operating income of $3.614 billion in the year-ago period.

Flat Carbon Americas reported an operating loss of $700 million in the first quarter, compared to an operating loss of $400 million in the fourth quarter. The company attributed part of that operating loss to exceptional charges of $500 million related to write-downs of inventory and related contracts. Excluding exceptional charges, the operating loss in the first quarter was $200 million.

Sales were $3.2 billion in the first quarter, compared to $4.5 billion in the fourth quarter, due to both lower volumes and prices, the company said, with a 25.4 percent decrease in the average steel selling price.

Shipments were 3.6 million metric tons in the first quarter, compared to 3.9 million metric tons in the fourth quarter, due “to the deterioration of global steel markets and the continuation of production cuts into the first quarter.”

On March 31 the company had net cash from operating activities of $300 million, compared to $5.9 million on Dec. 31; cash and cash equivalents of $4 billion, compared to $7.6 billion on Dec. 31; liquidity of $11.6 billion, compared to $13.4 billion on Dec. 31; and net debt of $26.7 billion, compared to $26.5 billion on Dec. 31.

In April the company secured a further $1.5 billion of re-financing commitments, bringing the total amount to be re-financed to around $6.3 billion, and effectively extending existing financing form 2010 to 2012.

The company also announced a new common stock and convertible senior note offer to raise $3 billion, “as part of its strategy to accelerate debt reduction and to further strengthen its balance sheet,” with the Mittal family committing to subscribe for at least 10 percent of the shares of common stock.

On April 7, the company said, Moody’s Investors Service placed its Baa2 long term and P2 short-term ratings on review for possible downgrade in light of the continued weakness in the steel markets.

On March 20 Fitch Ratings placed the company’s BBB+ on Rating Watch Negative, citing evidence of the further weakening of the global economy and steel market conditions beyond the agency’s previous expectations.

But on Feb. 12 Standard & Poor’s Rating Service revised its outlook on the company from negative to stable, while affirming the company’s BBB+ long-term corporate credit rating.

Besides continued cuts in production, the company is implementing industrial optimization measures expected to result in more than $7.5 billion in annualized cost reductions in the second quarter.

The company is also projecting to reduce its net debt by $10 million by the end of the year.

Posted 4/30/2009