London - ArcelorMittal said it plans to raise $3 billion as full-year profit dropped 28 percent and the world’s biggest steelmaker seeks to cut debt amid record exports by China. The company will raise a further $1 billion selling its stake in Gestamp.
Billionaire Lakshmi Mittal, the chief executive officer who owns about 37 percent of the company, has committed to maintain his stake in the business and his family will take up about $1.1 billion, the Luxembourg-based company said in a statement Friday.
The share sale, which should complete in the first half, will cut debt to less than $12 billion. Full-year earnings before interest, taxes, depreciation and amortisation declined to $5.2 billion, with the producer saying earnings will drop to “in excess of” $4.5 billion in 2016.
“This capital raise, combined with the sale of our minority shareholding in Gestamp, will accelerate the company’s debt- reduction plan,” Mittal said in the statement. ”This will help ensure that the business is resilient in any market environment and puts ArcelorMittal in a position of strength from which to further improve performance.”
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Shares in ArcelorMittal, which supplied New York’s One World Trade Center and London’s Wembley stadium, have dropped 58 percent in the last 12 months.
They’ve been hit by declining prices for steel as China pushes the material onto the world market at record levels to counter its slowing economy. Prices for the iron ore ArcelorMittal mines have also dropped as demand for the steelmaking ingredient fell and supplies from exporters expanded.
“2015 was a very difficult year for the steel and mining industries,” Mittal said in a separate statement. ”Although demand in our core markets remained strong, prices deteriorated significantly during the year as a result of excess capacity in China.”
The company has scrapped its dividend, cut expansion plans and shuttered plants as it seeks to pay down debt. It reported net debt of $15.7 billion. Full-year sales declined 19 percent to $31.9 billion.
ArcelorMittal twice cut its profit forecast last year as China’s export undercut steel prices in Europe and the U.S., its biggest markets. Exports from China rose by a fifth to a record 112 million metric tons in 2015. European hot-rolled coil, a benchmark for steel prices, sank in November to its lowest since at least 2007, down 75 percent from its peak. US prices slid 40 percent in 2015 to a decade low.
BLOOMBERG