ArcelorMittal's India operation, a JV with Nippon Steel, recorded an EBITDA (earnings before interest, taxation, depreciation and amortisation) of $140 million despite the Covid-19 pandemic and the lockdown imposed to contain it.

While announcing its first quarter results, ArcelorMittal said that the calendar year 2020 began well with ArcelorMittal Nippon Steel India (AMNS India) achieving strong production and shipment performance in January and February. However, operations were impacted in March by the Covid-19 pandemic and the lockdown imposed in India.

"Despite these impacts, AMNS India reported crude steel production of 1.7 million tonnes (7.0 million tonnes annualised run rate) and EBITDA of $140m ($560m annualized) for 1Q’20," the company said.

This is the first full quarter for AMNS India after the acquisition by ArcelorMittal and Nippon Steel under the insolvency law. Last December, Essar Steel was acquired jointly by ArcelorMittal and Nippon Steel in a Rs 42,000 crore deal and renamed AMNS India. ArcelorMittal holds 60 per cent in the joint venture.

ArcelorMittal's income from associates, joint ventures and other investments for 1Q 2020 was $142 million as compared to $20 million for 4Q 2019 and $208 million in 1Q2019. ArcelorMittal said that 1Q2020 income was positively impacted by income from AMNS India.

The world's largest steel maker said on Thursday that economic activity and steel market conditions had significantly deteriorated since measures were introduced by governments worldwide to contain the Covid-19 pandemic and the improved operating performance in the first quarter had been considerably overshadowed by it.

ArcelorMittal's EBITDA increased to $967 million, 4.5 per cent higher than 4Q 2019; EBITDA for 2Q 2020 was expected to be within the range of $0.4billion to $0.6 billion. Net loss was at $1.1 billion in 1Q 2020 compared to $1.9 billion in the previous quarter.

ArcelorMittal expects the remainder of the year to be challenging. Lakshmi Mittal, ArcelorMittal, chairman and CEO, said, there were 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," he said while commenting on the results.

The company said that it had moved to match production with the evolving orderbook; steel shipments for 2Q 2020 were expected within the range of 13.5 million tonnes to 14.5 million tonnes.

In line, with the cost saving measures taken across the businesses, the ArcelorMittal board has decided to suspend dividend payments till the operating environment normalised.

AM/NS India was also currently running at low utilisation levels. The cash needs (i.e. maintenance capex, interest and tax) are less than $250 million per annum, ArcelorMittal said. Given the cash needs, the joint venture was in a good position to translate EBITDA to cashflow, it added.

ArcelorMittal also said that the joint venture had made good strategic progress during 1Q '20, beginning with a new ten-year term loan agreement with Japanese banks. The proceeds of the loan were used to refinance in full the amounts borrowed by AMNS in connection with the acquisition of AMNS India.