ArcelorMittal Posts $2.63 Billion Loss on Steel Slump

ArcelorMittal, the world’s biggest steelmaker, posted an unexpected fourth-quarter loss after taking one-off charges of $4.4 billion that included writedowns on inventories and raw-material contracts.
The net loss was $2.63 billion, compared with net income of $2.44 billion a year earlier, the Luxembourg-based company said today in a statement. The median forecast of four analysts surveyed by Bloomberg News was for profit of $560 million. The annual dividend was cut to 75 cents a share, from $1.50.
Plunging demand is spurring steelmakers around the world to reduce production and payrolls. ArcelorMittal said in November it aimed to cut output by more than 30 percent and eliminate as many as 9,000 jobs. Nippon Steel Co., Asia’s biggest producer of the metal, said last month it probably would lower output twice as much as predicted in November.
“The first positive signs are coming out of China,” Chief Financial Officer Aditya Mittal said today in a conference call. “Demand and prices are improving in China.”
Arcelor rose 60 cents, or 3 percent, to 20.55 euros as of 9:02 a.m. in Amsterdam trading. The stock has declined 56 percent in the past 12 months, giving the company a market value of 29.8 billion euros ($38.5 billion).
The operating climate is likely to remain “challenging” and first-quarter earnings before interest, taxes, depreciation and amortization will be about $1 billion, the company forecast. Ebitda in the first quarter of 2008 was 4.85 billion euros.
‘Difficult’ Outlook
“The outlook for 2009 still looks difficult,” Nick Hatch, an analyst at ING Bank NV in London who has a “sell” recommendation the shares, wrote in a note. “We see little here to change our view on the stock.”
The steelmaker counts automakers and construction companies, both of which have been hit by the global economic slowdown, among its customers. Chief Executive Officer Lakshmi Mittal, 58, formed the company in 2006 when his Mittal Steel Co. bought Arcelor SA for $38.3 billion.
Job cuts may exceed the 9,000 announced last year, Aditya Mittal said. Of the charges for the fourth quarter, $900 million related to job losses, he said.
World crude steel production fell 24 percent from a year earlier in December as a slump in output accelerated, the World Steel Association said Jan. 22. The price of European hot-rolled coil steel, a benchmark product used in cars and construction, declined 43 percent in the fourth quarter to 425 euros a metric ton, according to data supplied by Metal Bulletin.
Auto sales were the weakest since 1981 in the U.S. last month and also slowed across Europe, Russia and China.
ArcelorMittal’s fourth-quarter shipments of steel in the fourth quarter declined 39 percent to 17.1 million tons. Sales slid 21 percent to $22.1 billion. The loss per share was $1.93, from a profit of $1.71 a year earlier.