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ArcelorMittal on Wednesday reported a net loss of $709 million for the third quarter against $659-million net profit during the third quarter in 2011.
In Q2 this year, the company had registered $959-million profit in the second quarter of 2012. The world’s largest steel maker on Wednesday reported a considerable drop in earnings in the third quarter ended September 30.
Its earnings before interest, tax, depreciation and amortisation (EBITDA) at $1.3 billion in 3Q 2012 represented a sharp drop from $2.4 billion in 2Q 2012. The India-born L.N. Mittal controlled company said it now expects to achieve FY 2012 EBITDA of approximately $7 billion.
The global steel behemoth on July 25 (after the Q2 results) had said that the second half EBIDTA would be similar to that in the first ($4.4 billion).
In Q2, Arcellormittal had reported a 28 per cent slump in the second-quarter profit. The Luxembourg-based company on Wednesday said: “Considering the challenging global economic conditions, and the company’s priority to deleverage, ArcelorMittal’s board of directors proposes reducing the annual dividend payment to $0.20/share from 2013 (from $0.75/share in 2012).
Capital market players have been keenly awaiting the Q3 (July-September) results of Arcelormittal for an indicative reading on the European steel sector outlook. According to JP Morgan Cezanove, the focus is not only on Arcelormittal’s asset disposal plan, but also the market outlook.
“Considering the opposite trend of EU steel prices (soft on FX effect) vs. raw material (iron ore and scrap up) and the US (bouncing on recovery of Chinese steel export price)”, JP Morgan’s Europe equity research analyst Alessandro Abate wrote last week.
Steelmakers were forced to tweak their plans this year in view of slowing demand. ArcelorMittal has been resorting to output cuts in Europe for more than a year now.
According to market analysts here, ArcelorMittal’s results and guidance could throw up clues for Tata Steel’s European operations. Tata Steel is scheduled to announce its July-September quarter standalone results on November 9. Europe contributes nearly 66 per cent of India-listed Tata Steel’s total production capacity.
“As Tata Steel’s consolidated results is announced with a considerable time gap after its standalone numbers are available, research houses need careful study of the other indicators to form a reasonable view," said a team head of global institutional stock broking firm.
Global steel demand growth is forecast to slow to 3.6 per cent this year from 5.6 per cent in 2011, while in Europe there may be a 1.2 per cent contraction, according to the World Steel Association.
jayanta.mallick@thehindu.co.in
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