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The Canadian Press - ONLINE EDITION
ArcelorMittal posts $1 billion loss after big charges, sees decline in steel demand
In this Jan. 8, 2008 file photo, steel is descaled at the ArcelorMittal steel plant in Differdange, Luxemburg. THE CANADIAN PRESS/AP, Oliver Multhaup
BRUSSELS - Several large charges for taxes and restructuring pushed ArcelorMittal into a deep loss in the fourth quarter and the steelmaker warned Tuesday that concerns over Europe's economy had hit demand.
ArcelorMittal posted a US$1 billion net loss in the fourth quarter, compared to a $780 million loss in the same quarter of 2010. In the third quarter of 2011, it reported a profit of $659 million.
The company is the world's biggest steel company and also has major operations in Canada, where it bought the former Dofasco Inc. a few years ago in a wave of consoidation that saw the Canadian steel industry taken over by foreign buyers.
The loss reported Tuesday as mostly due to $1.3 billion in charges for deferred taxes, restructuring and impairments, the Luxembourg-based company said.
Sales were up 8.5 per cent at US$22.45 billion from the $20.7 billion in the fourth quarter of 2010, but fell 7.3 per cent compared with the third quarter last year.
"The progressive recovery that we have been experiencing was impacted in the second half of the year by the growing uncertainty over the economic situation in Europe, which particularly affected sentiment and performance in the fourth quarter," Chief Executive Lakshmi N. Mittal said in the earnings statement.
ArcelorMittal is particularly vulnerable to changes in economic sentiment, since much of the steel it makes is used in expensive items like cars, home appliances or buildings.
Concerns over how the debt crisis in the eurozone would affect the overall economy contributed to steel prices dropping 6.2 per cent compared to the third quarter, while shipments fell 2.5 per cent as buyers in Europe used up existing stock, the company said.
"Looking ahead to 2012, the situation in Europe remains a live concern," Mittal said, but added that the company had seen some improvement in sentiment in the early weeks of this year compared with the end of 2011.
The CEO added that the steel maker's performance was helped by its presence all over the world and its growing mining business, which increased production of both iron ore and coal — two key ingredients for steel.
ArcelorMittal has been building up its own iron ore and coal production to become more independent from price changes in those two products.
With files from The Canadian Press
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