Mumbai: ArcelorMittal Nippon Steel India (AMNS India) has reported a 64.4% rise in Ebitda (earnings before interest, taxes, depreciation and amortisation) to Rs 1,304 crore ($176 million) during the quarter ended September, as against a profit of Rs 800 crore ($107 million) mainly on the back of better demand and increased capacity utilisation levels.
While announcing the September quarter earnings, ArcelorMittal which holds 60% of the equity in Nippon Steel, said that AMNS India’s operations were impacted by the Covid-19 pandemic during 2Q 2020, since then lock down measures have been lifted, demand has improved and the assets are currently running at higher utilization levels.
The company’s overall global performance which includes operations in the EU, USA and other Asian countries reported a consolidated net loss of Rs 1,934 crore ($ 261 million) which has come down from last quarter’s net loss of Rs 4,143 crore ($559 million), the company’s net loss during the same period last year was around Rs 3,995 crore ($539 million). The company’s core profit (EBITDA) fell 15% from a year earlier to $901 million.
Commenting on the group’s overall performance, chairman, Lakshmi N. Mittal said, “The third quarter marked an improved operating performance for the Group with steel markets recovering gradually from the very challenging second quarter after the ending of lockdowns”.
The company follows January to December as their fiscal year.
“Crude steel production was up 50% to 1.8 million tonnes as against a production of 1.2 mt in the previous quarter of FY21 as demand for steel improved in India,” the company said in a statement.
The company attributed the positive income levels from subsidiaries to better performance in India operations.
“Income from associates, joint ventures and other investments for 3Q 2020 was $100 million compared to a loss of $15 million for 2Q 2020 Income increased in 3Q 2020 on account of improved performance at AMNS India,” the company statement said.
The India operation’s maintenance capital expenditures, interest expenses and cash tax expense for 2020 are expected to total less than $250 million per annum, the company said.
During August 2020, AMNS said that it has set aside a capital outlay of over Rs 20,000 crore for enabling infrastructure in Gujarat, the company told the Gujarat government in a virtual meeting with chief minister Vijay Rupani.
The company during the June quarter announced completion of the Essar Steel India Ltd’s acquisition of Odisha Slurry Pipeline Infrastructure to its Hazira steel plant for a net $245 million (Rs 1,860-crore).
Japan’s largest long steelmaker Nippon Steel and ArcelorMittal had come together to bid for Essar Steel for a total amount of Rs 50,000 crore which was admitted to the National Company Law Tribunal (NCLT). The joint venture was declared the new owner in December 2019, following an SC ruling.
Following Essar acquisition, earlier this year, it also completed the acquisition of the Bhander Power Plant in Hazira, Gujarat, from Edelweiss Asset Reconstruction Company. Bhander, is a natural gas-based thermal plant with an installed capacity of 500 megawatt.
The other asset that AMNS India is looking to take control of is the captive port at Hazira for which it has moved Gujarat High Court against Gujarat government, Gujarat Maritime Board (GMB) and Essar Bulk Terminal.
“In this very tough environment, we take considerable satisfaction from the fact that our deleveraging program and asset disposal program are now complete. Following the agreed sale of ArcelorMittal USA, we can now prioritize returning cash to shareholders,” said Mittal.
The companywill be selling its U.S. assets in a cash and shares deal with Cleveland-Cliffs Inc for $1.4 billion in a deal.
The group’s overall debt levels were recorded at $7 billion at the end of the quarter primarily driven by positive free cash flow offset in part by forex impacts. The net debt is lower by $3.7bn as compared to $10.7bn as of September 30, 2019, the company said.