ArcelorMittal bounces back on demand gain

PARIS: ArcelorMittal, the world's top steel maker, said Wednesday it had made money in the third quarter after a nine-month losing streak, an unexpected turnaround reflecting healthier demand and thousands of job cuts.

The company posted a three months to September net profit of 903 million dollars (631 million euros), compared with forecasts for a loss of 53 million dollars from analysts surveyed by Dow Jones Newswires.

ArcelorMittal suffered a second quarter net loss of 792 million dollars. It last posted a net profit, of 3.82 billion dollars in third quarter 2008, before the financial crisis brought the global economy to its knees.

"We saw the first signs of recovery in the third quarter ... We should see a further improvement going into 2010 although the operating environment remains difficult," company head Lakshmi Mittal said in a statement.

But the results left investors unimpressed, notably a forecast for a fourth quarter operating profit of between 2.0 and 2.4 billion dollars that was deemed to be "clearly disappointing" by analysts at Societe Generale.

ArcelorMittal shares at mid-day were down 3.67 percent at 23.60 euros on a Paris market that was 1.76 percent weaker.

The company said it expected to operate at 70 percent of capacity in the fourth quarter, having fallen to around 50 percent during the worst of the crisis.

It said its rebound reflected the faster-than-expected implementation of urgent measures at the start of the global downturn.

Fixed costs have been slashed by 2.2 billion dollars on an annual basis, savings that flowed in part from the elimination of 39,000 jobs in the past year -- through voluntary departures -- out of a workforce of 287,000.

Net debt, which at one point appeared to call into question the group's financial soundness, has been cut by 11 billion dollars in the last 12 months to 21.6 billion dollars.

Financial director Aditya Mittal said debt reduction was no longer a company priority. The group plans to boost investment to 4.0-5.0 billion dollars in 2010 from an expected 3.0 billion dollars this year, notably in emerging market countries and extraction projects.

But Lakshmi Mittal insisted that despite improvements in demand and sales price levels, the company had not yet emerged fully from the crisis.

Uncertainty continues to surround a rebound in China, far and away the world's leading consumer and producer of steel.

While Chinese demand should limit the decline in world steel consumption this year to 8.6 percent, according to the World Steel Association, doubts persist about the pace, scope and durability of the Chinese recovery.

The company added that that if inventory draw-downs in the United States and Europe were completed, a complete recovery in those markets would likely take several years.