ArcelorMittal upbeat about steel recovery despite $1.1 billion coronavirus loss
Family-owned steel giant ArcelorMittal has suspended its dividend after a net $1.1 billion loss in the first coronavirus-stricken quarter of 2020, but its family principal says steel demand is beginning to rally as lockdowns ease.
The world's largest steelmaker outside of China said this week its improved operating performance in the first quarter had been “considerably overshadowed” by the impact of the Covid-19 crisis. The drop of $1.1 billion compared with a profit of $414 million in the year-earlier period. ArcelorMittal withdrew its usual forecast for steel consumption over pandemic uncertainty, but expected shipments in 2020 to be below 2019.
The Luxembourg-headquartered family business decided to temporarily suspend dividend payments against the backdrop of “significant cost savings measures” being taken across the company. Fixed costs in the second quarter 2020 were expected to be 30% below first quarter 2020 levels due to pay cuts by senior managers and directors, workforce furlough schemes and state aid.
Lakshmi Mittal (pictured), 69, chairman and chief executive, said ArcelorMittal moved swiftly to temporarily idle furnaces, cut production across markets and reduce operating and capital costs to match this environment.
“We have continued to meet remaining customer demand from a reduced level of production and are very thankful to our employees and stakeholders for their support in enabling plants to keep running,” Mittal said.
“There are still too many uncertainties to accurately predict what the rest of the year holds. However, it seems likely that over the course of this month countries will start to announce details of their ‘exit’ strategies. Whilst these are likely to be an easing, not an immediate ending of lockdown, construction and manufacturing are expected to be among the first sectors to be permitted to re-start operations and indeed we are seeing signs of customers re-starting production. Rigorous planning to ensure we can meet customer demand whilst protecting the health and safety of our people has been undertaken, leaning on the experience of our plants which have already been on this journey.”
Escarrer family has Melia Hotels certified for Covid-19 health and safety
The Escarrer family-owned group Melia Hotels International is having its hotels audited for health and safety and standardising hygiene protocols as it looks to re-open its hotels after the coronavirus outbreak.
The €470.9 million ($520 million) Spanish group led by Gabriel Escarrer Julia, 85, founder and non-executive chairman, and son Gabriel Escarrer (pictured), 49, executive vice chairman and chief executive, announced this week Bureau Veritas was devising preventative measures to combat Covid-19 in its hotels. The family’s 350 hotels in 40 countries were expected to be certified in May to reassure guests and staff that direct interaction had been reduced and hygiene standards and social distancing were being maintained until the crisis was over.
The group developed its Stay Safe with Melia programme which covers cleaning, occupational health, facility maintenance and technological applications to cut physical contact while promoting a positive customer experience. The plan also trains employees on the “emotional aspects of customer relationships in the situation created by Covid”. It foresees the appointment in each hotel of a person responsible for the “emotional well-being” of guests and the compliance of virus prevention measures. Melia was co-operating with Spanish organisations and health to prepare a guide for hotel operations for Spain and abroad.
Gabriel Escarrer said his family business will be prepared to open their hotels as soon as people had greater mobility and there was enough demand to guarantee a minimum level of occupancy.
“To do this, we are pouring all of our know-how and the experience we have had over the last few months in our hotels in China, into the Stay Safe with Melia programme,” Escarrer said.
“The Bureau Veritas certification confirms that the new processes and the adaptation of spaces comply with the maximum health and safety guarantees and the most rigorous international standards, a factor that will be essential to operate in the post-Covid-19 period.”
H&M clothing sales plummet 57% in two months as lockdowns bite
Swedish fashion retailer H&M, owned by the founding Persson family, suffered a 57% fall in sales while its shops are shuttered and is shoring up its liquidity.
Hennes & Mauritz announced this week its total sales between 1 March and 6 May decreased by 57% in local currencies compared with the same period in 2019. Online sales, which were open in 46 of the company’s 51 online markets, were up by 32% in the same period.
Chaired by second-generation Stefan Persson (pictured), 72, the H&M group operated 5,061 stores in 74 markets including franchise markets and net sales were SEK 233 billion ($23.6 billion) in 2019. However, 80% of stores had been closed since mid-March. From the end of April onwards, H&M started to reopen some stores in line with local restrictions and rules on social distancing but said trade had been “muted”. As of this week, 3,050 stores, representing 60% of the group’s stores, were still temporarily closed.
To offset poor sales, H&M said it was implementing a range of “rapid and forceful measures” in purchasing, investments, rents, staffing and financing.
The family business described its liquidity as “good” with cash and cash equivalents plus unutilised credit facilities totalling BSEK 23.8 ($2.4 billion) as of 30 April. Nevertheless, “the group’s work is focused on ensuring financial flexibility and freedom of action on the best possible terms in a challenging market where business opportunities are also arising. The group is therefore working to secure additional credit facilities in parallel.”