ArcelorMittal's earnings fall in 2008 with economy

BY ANDREA HOLECEK, Times of Northwest Indiana
holecek@nwitimes.com

Steel giant ArcelorMittal reported a $2.63 billion loss for the fourth quarter 2008 while its full year profit of $9.4 billion dropped 9 percent from a year earlier.

The Luxembourg-based company's fourth quarter loss compares to its profit of $3.8 billion for the third quarter. It posted fourth quarter 2007 profits of $2.4 billion.

The recent quarter loss resulted from $4.4 billion in exceptional charges for write-downs of inventory and raw material supply contracts and provisions for work force reductions and litigation, the company reported Wednesday.

ArcelorMittal, the world's largest steel producer, has been severely affected by the economic crisis, Chief Executive Officer Lakshmi Mittal said.

"ArcelorMittal's generally excellent performance in 2008 was overshadowed by the considerable slowdown in the world economy in the last quarter of the year," he said.

Speaking to analysts Wednesday, Mittal called the current global economic situation "exceptional."

"We are probably facing the worst financial crisis since the 1930s," he said. But he added there is some reason for optimism, including the beginning of a recovery in China, the rapid cut in steel production and the impact of multiple government programs.

Mittal said he anticipates some recovery at the end of the current quarter and for the remainder of 2009.

The company said it expects to continue producing at 55 percent to 60 percent of its capacity during the current quarter and said it will continue at that level until destocking ends. Capacity reductions have resulted in the layoff of hundreds of workers at U.S. plants and the shut down of company facilities in Illinois and Pennsylvania.

The company's Flat Carbon Americas segment, including its U.S. and Northwest Indiana mills, had steel shipments of 3.9 million tonnes in the fourth quarter, which are nearly half of third-quarter shipments. Sales dropped to $4.9 billion for the recent quarter from $8.5 billion for third quarter 2008.

Mittal announced the company is cutting its dividend to 75 cents per share from $1.50. It is slicing its capital expenditures to $3 billion from a previously projected $4.5 billion, with $2.5 billion to be spent on maintenance projects and $500 million on smaller growth projects that will produce returns in an estimated nine months to a year.