By Thomas Biesheuvel
Oct. 28 (Bloomberg) -- ArcelorMittal, the world's biggest steelmaker, dropped the most in four months in Amsterdam trading after third-quarter profit missed analyst estimates as demand remained depressed in Europe.
Operating income plus depreciation, impairment expenses and exceptional items was $1.59 billion, Luxembourg-based ArcelorMittal said today in a statement. That missed the $1.78 billion median of 15 analyst estimates compiled by Bloomberg. The company forecast fourth-quarter operating income at $2 billion to $2.4 billion. The stock fell as much as 6.4 percent.
"We see some more downside to our 2009 forecasts," said Rochus Brauneiser, an analyst at Kepler Equities in Frankfurt who has a "buy" recommendation on the shares.
Steelmakers around the world have cut production and jobs in the past year after usage tumbled. Demand in Europe, which is ArcelorMittal's biggest market, dropped 32 percent in the third quarter compared with a year earlier and the market is "stuck in slow motion," industry group Eurofer said last week.
The shares fell 50.5 cents, or 2.1 percent, to 23.995 euros in Amsterdam trading at 9:53 a.m. in Amsterdam. Earlier they traded at 22.94 euros, the biggest intraday decline since June 22. The stock has increased 41 percent this year, valuing the company at 37.4 billion euros ($55.4 billion).
Other steelmakers have suffered from the collapse in demand. U.S. Steel Corp., the largest U.S. producer, yesterday posted its third consecutive loss. Tata Steel Ltd., India's largest steelmaker, missed analyst estimates after saying yesterday second-quarter profit slumped 50 percent.
Output Curtailments
ArcelorMittal cut output as much as 50 percent earlier in 2009, fired workers, and sold shares and bonds to refinance borrowings. Fourth-quarter steel capacity utilization will be about 70 percent, which compares with 61 percent in the third quarter and 50 percent in the second, Chief Financial Officer Aditya Mittal told reporters on a conference call.
"We have seen the first signs of recovery in the third quarter," Chief Executive Officer Lakshmi Mittal said in the statement. "We should continue to see further gradual improvement through 2010, although the operating environment remains challenging."
The plunge in global steel demand has ended and usage will grow by 9.2 percent next year as automakers and builders recover, the World Steel Association said earlier this month. ArcelorMittal said in July it would restart blast furnaces in Belgium, France, and Spain as customers rebuilt inventories.
Price Gains
The company posted third-quarter net income of $903, or 60 cents a share, after a $899 million tax gain. That compares with $3.82 billion, or $2.78, a year earlier.
The cost of hot-rolled coil, a benchmark steel product used in cars and construction, gained 16 percent in the third quarter, the steepest increase in 15 months, according to data compiled by Metal Bulletin. Steel coil, which currently fetches 415 euros a metric ton, has dropped 38 percent from a year earlier after the global economy contracted.
The company amended terms on $31 billion of facilities in July allowing net debt to rise to 4 1/2 times its Ebitda, from a limit of 3 1/2 previously.
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