Brussels: ArcelorMittal, the world’s largest steelmaker, said it would slash its dividend and focus on cutting debt after slowing demand from China and sluggish European markets drove it to a third-quarter loss.
The group, which makes 6-7 per cent of the world’s steel, said on Wednesday there was little prospect of a quick recovery in the $500 billion steel industry — a gauge of the global economy — and scrapped its forecast for core profit per tonne in the second half of the year to be similar to that in the first.
“Very challenging operating conditions for ArcelorMittal ... are expected to continue in the fourth quarter,” Chief Executive Lakshmi Mittal said in a statement.
ArcelorMittal shares fell 2.8 per cent in early trade, making them among the weakest performers in the FTSEurofirst 300 index of leading European stocks.
The steel industry has slowed sharply this year from last, as a moderation in China’s economic growth rate has compounded weak demand from austerity-hit Europe.
The World Steel Association earlier this month forecast steel demand would rise by 2.1 per cent in 2012, down from 6.2 per cent in 2011. It had forecast 3.6 per cent growth in April.
Other steelmakers are hurting too. South Korea’s Posco , the world number four, last week cuts its annual investment target after a 25 percent drop in quarterly profit.
ArcelorMittal reported a third-quarter core profit of $1.34 billion, in line with analyst expectations, but its lowest level in three years.
The group said it believed European Union demand would fall by 8 per cent this year, making it 29 per cent below pre-crisis levels. It has responded by announcing the closure of blast furnaces in Belgium and France.
Including an impairment and restructuring charges related to those closures, as well as a one-off hit from a new US labour contract, ArcelorMittal tumbled to a net loss of $709 million, greater than the $193 million loss expected.
ArcelorMittal, whose output is more than double that of its nearest rival, said it would propose reducing the annual dividend payment to $0.20 per share in 2013, only to be progressively increased once deleveraging was complete. It paid out $0.75 this year.
