ArcelorMittal, the world’s biggest steelmaker, reported a wider-than-anticipated loss in the first quarter as falling metals prices forced the company to cut the value of its inventories.
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 in a statement.
Sales slumped 49 per cent to $15.1 billion. “This is a bit of a shocker all-round,” Nick Hatch, an analyst at ING Bank NV in London, said today by phone.
“There’s been none of the bravado that we’ve seen from previous quarters and pretty much all the main numbers are at the bottom end of the range or below. It looks as though the rest of the year will be extremely difficult.”
ArcelorMittal, formed through the takeover of Arcelor SA by Mittal Steel 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 per cent in 2009, according to the World Steel Association.
“Market conditions remain challenging,” ArcelorMittal chief executive Lakshmi Mittal said in the statement.
The company paid $809.9 million for London Mining Plc’s Brazilian iron ore operations in August and $475 million for Bayou Steel, a producer of steel in Louisiana and Tennessee, in June.
Steel prices have since tumbled. European hot-rolled coil, a benchmark steel product used in cars and construction, slumped 56 per cent since reaching a record high of €815 ($1,076) a metric tonne in June, Metal Bulletin data showed.
ArcelorMittal has renegotiated terms on its debt as the slumping prices and cuts in production have eroded revenue, leading to the company’s second straight quarterly net loss.
Bloomberg