ArcelorMittal

With the meltdown of steel demand in second-quarter 2020, S&P Global Ratings revised downward our expectation for ArcelorMittal's EBITDA for the rest of the year, assuming underlying EBITDA below $4 billion in 2020 (down from $5.8 billion-$6.3 billion assumed in early February). We expect the company's adjusted funds from operations (FFO) to debt to be below 15% in 2020, after 13.5% in 2019, which is well below the 25% rating threshold. A reduction in the 2020 cash flow needs (capital expenditure [capex], tax, and interest) target to $3.5 billion from about $4.5 billion previously. The reduction is primarily due to postponement of capex. The underway $2 billion divestment program. The company has a substantial asset base and we understand it

...After reaching the trough in the industry cycle, the focus is moving to the shape of the recovery, which remains unclear at the moment. The weak steel industry conditions of 2019 have worsened in first-half 2020. Given our forecast of a global economic slowdown, with European GDP contracting 7.3% or more in 2020 and North American GDP by 5.2%, the steel demand slump will be a multiple of this. However, based on different market indications, it seems that the trough of the crisis was recorded in April-May, and a gradual recovery is under way. That said, the shape of the recovery remains unclear. With the meltdown of steel demand in second-quarter 2020, S&P Global Ratings revised downward our expectation for ArcelorMittal's EBITDA for the rest of the year, assuming underlying EBITDA below $4 billion in 2020 (down from $5.8 billion-$6.3 billion assumed in early February). We expect the company's adjusted funds from operations (FFO) to debt to be below 15% in 2020, after 13.5% in 2019, which...

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