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ArcelorMittal sees even weaker Q4 after Q3 drop

ArcelorMittal sees even weaker Q4 after Q3 drop
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First Published: Tue, Oct 26 2010. 11 38 AM IST
Updated: Tue, Oct 26 2010. 11 38 AM IST
Brussels: ArcelorMittal, the world’s largest steelmaker, forecast a far weaker fourth quarter than expected due to muted demand, lower prices and higher raw material costs.
The company, whose output is more than double that of its nearest rival, said its shipments would pick up slightly, average steel prices would be lower than in the third quarter and iron ore and coal costs would be higher.
Analysts had been expecting a marginal improvement.
“In Q3 the business performed towards the lower end of our expectations against a background of seasonally lower volumes, weakening spot prices and higher costs,” chief executive Lakshmi Mittal said in a statement.
“Our outlook for Q4 remains cautious as the expected higher input prices continue to work through the business and demand remains muted, though with some regional differences,” he added.
ArcelorMittal said its much-watched core profit (Ebitda) would be between $1.5 billion and $1.9 billion in the fourth quarter, implying a 25% decrease from the third quarter.
The market had on average forecast a figure of $2.4 billion, based on a Reuters poll of 10 analysts.
The third-quarter figure of $2.27 billion was itself a 25% slide from the April-June period.
The $500 billion steel industry, a bellwether for the broader economy, profited in the second quarter from a strong auto sector and booming demand in China, but since then both have cooled.
Iron ore and coal costs rose, but steel prices did not.
ArcelorMittal shares are 22% down this year and around 29% off a peak hit in April. The STOXX European basic resources index has risen 11% so far this year and is just 5% off its April high.
Rivals such as world number three Posco and Nucor Corp have already reported lower-than-expected third-quarter results, the former cutting its 2010 forecast, the latter warning of uncertainty.
US Steel and AK Steel report third-quarter results later on Tuesday.
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First Published: Tue, Oct 26 2010. 11 38 AM IST