Paris (AFP) – Steelmaker ArcelorMittal warned Wednesday that tariff uncertainty could cause further economic disruption even as its global footprint helped it weather turbulence in the first quarter. The US administration has imposed 25 percent tariffs on imports of aluminum and steel, but its wider tariff measures on its major trade partners — many of them on hold as negotiations are underway — threaten to stall global growth as both businesses and consumers hold back on purchases.
“Heightened uncertainty around the terms of global trade is hurting business confidence and risks causing further economic disruption if not quickly resolved,” ArcelorMittal’s chief executive Aditya Mittal warned. However, the company beat analyst expectations by posting a net profit of $805 million for the first quarter, though that was a decline of 14 percent from the same period last year. Mittal called it a “quarter of consistent delivery and robust margins, particularly given the geopolitical challenges”. The company posted a net loss of $390 million in the final quarter of last year.
Mittal called it “encouraging…that around the world, governments are committed to supporting their domestic manufacturing industries.” He said US tariffs “are supporting higher prices and spreads” and called on the European Union to rapidly implement agreed measures to protect steel manufacturers in the bloc.
Chief financial officer Genuino Christino told analysts during a conference call that “It’s clear there’s now a good understanding in Europe of the challenges the steel industry faces.” He welcomed in particular Germany’s investment plan worth billions of dollars to “support demand”. But when asked about an eventual exit from Europe because of high production costs relative to India or Latin America, Christino said it was too “early” to discuss the issue.
ArcelorMittal also confirmed it would invest $4.5 to $5 billion in efforts to decarbonize its steel production. However, the company suspended a 1.8-billion-euro ($2 billion) decarbonization investment in France at the end of last year and is carrying out a plan to shift some support jobs from Europe to India to save money. Earlier this month, it said around 600 jobs would be cut in France across seven sites that employ around 7,100 people.
ArcelorMittal confirmed its base dividend and policy of returning a minimum of 50 percent of post-dividend annual free cash flow to shareholders. It recently announced further share buybacks, another means of returning funds to investors. ArcelorMittal’s shares closed down 1.7 percent while the Amsterdam stock exchange all-share index finished up 0.4 percent.
© 2024 AFP
