ArcelorMittal said Friday it would ask shareholders for fresh funds, sell assets and slash costs after falling commodity prices pummelled its performance last year, leaving a gaping hole in its accounts.
The world's largest steelmaker reported a net loss of $7.95 billion for 2015, more than four times the previous year's net loss of $1.86 billion in 2014.
To help fill the shortfall, ArcelorMittal said it would tap into shareholders' pockets via a capital increase of $3 billion by mid-2016, and also sell its stake in Spanish automotive company Gestamp, roughly netting another $1 billion.
The company's shares plunged in anticipation of the cash call, dropping by nearly 6 percent on the New York stock market, having earlier posted similar losses on European exchanges.
"Having already seen its market capitalisation decline in recent years, ArcelorMittal now can't avoid a big dilution for shareholders with this capital increase of $3 billion," brokers Aurel BGC said in a note.
Analysts at Societe Generale called the cash call "disappointing, but certainly a reflection of very difficult market conditions".
Over half of the 2015 loss was due to writing down in its books the value of its mining operations to reflect the currently lower value of its iron ore, but even excluding exceptional items ArcelorMittal was $300 million into loss, compared to $400 million in 2014.
Chief executive Lakshmi Mittal acknowledged in a statement that "2015 was a very difficult year for the steel and mining industries... Prices deteriorated significantly during the year as a result of excess capacity in China".
Finance Director Aditya Mittal told an audio conference with reporters that his company is discussing with the EU Commission and other European producers ways to defend themselves against cheap steel imports from China, which has been accused of dumping its excess production on the world market at below cost.
"If you look at the operating results of steel companies, the level of Chinese exports and the impact on prices in our main markets, it is clear that there is an urgent need for action," he said.
However, Lakshmi Mittal said in the statement that the mining business "is fully focused on adapting to this low price environment and has reduced cash costs by 20 percent compared with an initial target of 15 percent".
Mittal said a further 10 percent reduction in mining costs is targeted for 2016.
- New restructuring plan -
Sales dropped 20 percent to $63.6 billion, which mostly reflects falling prices as the company's iron ore production and steel shipments only dipped marginally.
Net debt dipped to $15.7 billion at the end of 2015 from $15.8 at the end of 2014.
Earnings before taxes, depreciation and amortisation (EBITDA) fell by 28 percent to $5.2 billion.
The company announced a new restructuring plan that aims to raise EBITDA per tonne to above $85, irrespective of changes in raw material prices. It fell from $86 per tonne in the fourth quarter of 2014 to $56 in the fourth quarter of 2015.
Overall the latest plan aims to improve structural EBITDA by $3 billion by 2020.
For 2016, the company said that based on current market conditions it expects EBITDA in excess of $4.5 billion this year.
ArcelorMittal also announced it had sold its 35-percent stake in the Spanish company Gestamp, which manufactures steel parts for automakers, for 875 million euros.