Wednesday, April 29, 2009

ArcelorMittal Reports Net Loss Of $1.1 Billion

. Wednesday, April 29, 2009

By stockOzone team

ArcelorMittal the world's largest steelmaker, reported slightly worse-than-expected first-quarter results on Wednesday and forecast a modest pick-up in the second quarter.

The much-watched EBITDA (earnings before interest, tax, depreciation and amortisation) dropped 82 percent to $883 million in the January-March period, compared with the average $1.0 billion in a Reuters poll of 11 analysts.

ArcelorMittal forecast in February a figure of about $1 billion due to final quarter price cuts of up to 40 percent and output running at 55-60 percent of capacity.

The global economic downturn has slashed demand for everything from cars to household appliances, hitting global steelmakers, miners and metals processors. Destocking has exacerbated the problems.

Economists believe the first quarter may have been as bad, or even worse, than the wretched fourth quarter of 2008. ArcelorMittal forecast core profit in the second-quarter would recover to some $1.2-$1.5 billion.

It had previously seen the first-quarter as the low point in terms of profitability. It made a net loss in the first-quarter of $1.1 billion due in part to $1.2 billion of exceptional charges mainly for writing down inventories.

It also said it saw potential for price increases during the second and third quarters across major markets and products. "Although market conditions remain challenging, a technical recovery is inevitable and ArcelorMittal will benefit from this," Chairman and Chief Executive Lakshmi Mittal said.

Debt crept up to $26.7 billion from $26.5 billion at the end of 2008. ArcelorMittal repeated its target to cut net debt by $10 billion by the end of 2009.

The company, formed from Mittal Steel's takeover of then world number two Arcelor, went on a spending spree during the commodities boom, ratcheting up debt.

Disclosure: Author does not own any of the stocks discussed here.

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