ArcelorMittal is the descendant to Mittal Steel, a business originally founded in 1976 by Lakshmi N Mittal. ArcelorMittal was created through the merger of Arcelor and Mittal in 2006, making it the world’s largest steel producer, with annual crude steel production of 98.1 million tons. In 2007 the newly merged company launched an expansive growth strategy, with 35 transactions worldwide. Arcelor Mittal has put substantial emphasis on growing its mining business in the past few years.
The current economic environment is forcing ArcelorMittal to cut around 450 jobs in Liberia and lower iron ore exports from the West African nations as it struggles to reduce costs. Interest expenses eat up a large portion of profits and the company has posted a net loss every year since 2011. While its net debt has declined several years in a row, the Financial Review explains that Arcelor Mittal needs to do more to cut debt. The company believes it did enough three years ago, issuing more equity while shutting down furnaces, but falling steel demand continued to hurt them. Moreover, the slowdown in China is also affected steel demand in that country as well as weak construction activity in Europe is another concern.
Moody’s ratings agency recently downgraded the company a notch from Ba1 to Ba. Moody’s vice president, Hubert Allemani, said the downgrade of the company “primarily reflects its weaker operating performance since the beginning of 2015 as a result of falling steel prices.”