ArcelorMittal posts $3.73 bn net loss in 2012

ArcelorMittal, world's largest steelmaker, has gone into the red with a net loss of $3.73 billion in 2012 largely due to $4.3 billion write down related to company's European businesses.

It had posted net profit of $2.26 billion in 2011.

Operating profit or EBITDA (earnings before interest, taxes, depreciation and amortisation) also fell by 30 per cent to $7.08 billion in 2012 vis-a-vis $10.11 billion in 2011, ArcelorMittal said in a statement.

The company's sales too were down 10.39 per cent to $84.21 billion in 2012.

However, ArcelorMittal gave a positive outlook for 2013, saying it expects higher EBITDA and 2-3 per cent increase in steel shipments in 2013.

It is also expecting "marginal" improvement in per-tonne steel margins in 2013 as it hopes to reap full benefits of asset optimisation plan that has already been completed during the second half of 2013.

"2012 was a very difficult year for the steel industry, particularly in Europe where demand for steel fell a further 8.8 per cent... Although we expect the challenges to continue in 2013, largely due to the fragility of the European economy, we have recently seen some more positive indicators," the company's chairman Lakshmi Mittal said.

He added that various measures taken last year to strengthen company's businesses, including reducing capacities and net debt are "expected to support an improvement in the profitability of our steel business this year."

During the year, ArcelorMittal took a non-cash write down of $4.3 billion with respect to its European businesses. Besides, it also incurred $1.3 billion charges related to optimisation of its assets.

"The $4.3 billion goodwill impairment is due to the weaker macroeconomic and market environment in Europe where apparent steel demand fell by approximately 9 per cent in 2012, bringing the cumulative demand decline to approximately 29 per cent since 2007,"

the company said.

It added that "weaker demand environment and expectations that it will persist over the near and medium term, led to a downward revision of cash flow expectations underlying the valuation of the European businesses to which goodwill had been allocated".

Quarter-on-quarter basis, ArcelorMittal's net loss widened to $3.98 billion in October-December, 2012 vis-a-vis $1 billion of the same quarter of 2011.

The sales were down 14 per cent to $19.31 billion, while EBITDA fell nearly 23 per cent to $1.32 billion in the fourth quarter.

The company also forecast that European steel consumption would be 1 per cent lower this year than in 2012. However, it expects a growth of 3 per cent in the Chinese market and 5 per cent in Brazilian market in 2013.

Besides, ArcelorMittal is planning to increase iron ore shipments by 20 per cent. The expansion of its mines in Canada to 24 million tonnes per annum is on track and expected to be completed during the first half of 2013, it said.

The company is also hopeful of reducing its net debt to $17 billion by June 30 due to a slew of measures.

It is expecting to garner $5 billion from fund raising exercise completed in January, and 15 per cent stake sale in Canadian iron ore mine to Posco and China Steel Corporation.

As on December 31, 2012, the company had a net debt of $21.8 billion.

For 2013, the company has set a capex of $3.5 billion on various operations and expansion plans.

However, it has proposed to reduce the dividend for 2013 by about 74 per cent to $0.20 per share against $0.75 per share of 2012.