ArcelorMittal, the world’s biggest steelmaker, posted a third consecutive quarterly loss and said it plans to restart some shuttered output as demand recovers.
The second-quarter net loss was $792 million, or 57 cents a share, compared with net income of $5.84 billion, or $4.19, a year earlier, Luxembourg-based ArcelorMittal said today in a statement. The loss, which included $1.2 billion of inventory writedowns and provisions for job cuts, missed the $336 million median of eight analyst estimates compiled by Bloomberg. The shares slid as much as 7.9 percent, the most in two months.
“The second quarter was another challenging period,” Chief Executive Officer Lakshmi Mittal said in a conference call. “We are beginning to see more positive signals.”
ArcelorMittal, whose share price advanced 47 percent in the quarter, said this month it was restarting blast furnaces in Ghent in Belgium, Florange in France, and Gijon in Spain as customers buy steel to replace depleted inventories. The company shipped 17 million metric tons of steel in the second quarter, 43 percent less than a year earlier.
The shares were 1.025 euros lower at 24.30 euros as of 12:25 p.m. in Amsterdam trading. Earlier, they had their biggest intraday drop since May 21.
Higher Shipments
ArcelorMittal said today the first half will be “the bottom of the cycle.” The demand outlook is still “uncertain,” U.S. Steel Corp., the largest U.S. producer, said yesterday. Sweden’s SSAB Svenskt Staal AB posted its first loss in eight years on July 27 and said third-quarter earnings will be weaker. European demand is unlikely to recover until “well into 2010,” Moody’s Investors Service said last week.
ArcelorMittal forecast earnings before interest, tax, depreciation and amortization of $1.4 billion to $1.8 billion in the third quarter. Average steel selling prices will be stable or slightly lower, it said. Shipments will be least 1 million tons higher than in the second quarter, Chief Financial Officer Aditya Mittal said.
“If all the steelmakers increase production we’ll be back where we started,” Charlie Dove-Edwin, an analyst at MF Global UK Ltd. in London who has a “sell” recommendation on the stock, said by phone today. “There’s not enough real demand out here and making more steel will just send the price down.”
Return to Profit
Analysts predict a return to profit in the quarter as demand recovers and prices increase. The cost of hot-rolled coil, a benchmark steel product used in cars and construction, gained 4.2 percent in the second quarter, the first such increase in a year, according to data compiled by Metal Bulletin.
ArcelorMittal said it achieved annualized fixed-cost cuts of $8.4 billion at the end of the second quarter. Sales declined 60 percent to $15.2 billion.
The steelmaker said July 17 there was a “positive outcome” to its request to lenders to amend terms on $31 billion of loan facilities. The ratio of debt to Ebitda on the company’s principal facilities will rise to 4.5 in December and will fall to 4 in June and 3.5 in December 2010.
ArcelorMittal spent $3.8 billion on acquisitions since the start of 2008, according to data compiled by Bloomberg, to gain greater control over supplies of iron ore and coking coal.
The company, formed by the takeover of Arcelor SA by Mittal Steel Co. in 2006, produced 101.6 million tons of steel in 2008, 7.7 percent of the world total of 1.32 billion tons, the World Steel Association said on its Web site.
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