ArcelorMittal Posts First-Quarter Loss on Output Cuts (Update1)
By Mark Herlihy
April 29 (Bloomberg) -- ArcelorMittal, the world’s biggest steelmaker, posted a second straight quarterly loss after a slump in prices forced it to cut output as much as 45 percent.
The net loss in the first quarter was $1.06 billion, or 78 cents a share, from net income of $2.37 billion, or $1.68, a year earlier, the Luxembourg-based company said today in an e- mailed statement. The loss exceeded the median estimate of $594 million among the five analyst forecasts compiled by Bloomberg. Sales slumped 49 percent to $15.1 billion.
ArcelorMittal, formed through the takeover of Arcelor SA by Mittal Steel Co. in 2006, cut output as the world economy shrank and demand fell. Weak orders from automakers and builders pushed global steel prices to a six-year low, and consumption will drop 15 percent in 2009, according to the World Steel Association.
“Market conditions remain challenging,” ArcelorMittal Chief Executive Officer Lakshmi Mittal said in the statement.
The steelmaker spent $3.8 billion on acquisitions from the start of 2008, according to data compiled by Bloomberg, as it sought greater control over supplies of iron ore and coking coal, raw materials that soared to record prices last year. The company paid $809.9 million for London Mining Plc’s Brazilian iron ore operations in August and $475 million for Bayou Steel Corp., a producer of steel in Louisiana and Tennessee, in June.
Prices Tumble
Steel prices have since tumbled. European hot-rolled coil, a benchmark steel product used in cars and construction, slumped 56 percent since reaching a record high of 815 euros ($1,076) a metric ton in June, Metal Bulletin data showed.
Demand for steel in the European Union, which accounted for 54 percent of ArcelorMittal’s sales in 2008, will fall as much as 45 percent in the first half, industry lobby group Eurofer said last week.
Global steelmakers may have to permanently close between 5 percent and 10 percent of installed capacity, Johan Rode, an analyst at Citigroup Global Markets, said in a research note yesterday. He rates ArcelorMittal stock a “hold.”
Regards,
Inca.
