ArcelorMittal issues profit warning, shares slump

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ArcelorMittal, the world's biggest steelmaker, warned on Tuesday that lower prices and weak demand in the fourth quarter would weigh on operating profits, sending its share price sharply lower.

ArcelorMittal said it expected an operating profit in the three months to December of 1.5-1.9 billion dollars (1.07-1.36 billion euros), down from the 2.3 billion dollars reported for the third quarter.

"The demand picture remains muted. There are regional differences but overall demand remains muted on a global basis," finance director Aditya Mittal told a conference call on the results.

In midday trade, ArcelorMittal shares were down nearly 5.0 percent on the Paris market while steelmakers in other European countries came under pressure from the company's gloomy guidance for the fourth quarter.

The profit-warning overshadowed a 48 percent rise in third quarter net profit to 1.35 billion dollars but this was boosted by a one-off tax credit.

The company said capacity usage fell to 71 percent in the period, attributing the downturn to seasonal variations.

Analysts said, however, that the company's claims were not convincing.

"Claims about seasonal changes, advanced once again by ArcelorMittal to explain the fall in demand, still does not convince us," analysts at Aurel ETC Pollak said in a note, highlighting the fact that other steelmakers were more positive on the outlook.

Third-quarter sales jumped 30.1 percent to 21.04 billion dollars, with the comparison flattered by the year-earlier slump, analysts said.

Aditya Mittal said the company expected no increase in demand in the fourth quarter.

ArcelorMittal cut thousands of jobs to help it get through the global slump in 2009, leaving the workforce at 277,000 as of end-September.

Total debt increased to 22.1 billion dollars, Aditya Mittal said, citing currency fluctuations, and adding that the company wanted to cut costs by 5.0 billion dollars on an annual basis by 2012.

Three billion dollars has already been achieved.

Aditya Mittal said the spin-off of the stainless steel unit was progressing well and could be done in the first half of next year.

© 2010 AFP

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