ArcelorMittal (MT) on Wednesday reported a steep loss for the fourth quarter, as a weak Europe forced the steel giant to take a heavy impairment charge. The weaker demand environment in the region is expected to continue over the near and medium term, the steelmaker said in a statement.
The company, nevertheless, expects higher Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA, and increased steel shipments for 2013. Steel shipments are also expected to increase 2 percent to 3 percent.
Net loss for the recently concluded quarter widened to $3.99 billion from the prior year's $1 billion and the previous quarter's $709 million. Loss per share were $2.58 compared to $0.65 last year. The results are on the basis of International Financial Reporting Standards.
The operating loss for the three-month period was $4.94 billion, compared with a profit of $47 million last year.
As the company had previously announced, the latest results included impairment charges of $4.8 billion, including the $4.3 billion non-cash write down of goodwill with respect to ArcelorMittal's European businesses. Impairment charges totaled $228 million last year.
The company had said in December 2012 that apparent steel demand in Europe dropped nearly 8 percent in 2012, which resulted in cumulative demand decline to about 29 percent since 2007.
EBITDA dropped to $1.32 billion from $1.71 billion for the quarter.
Sales in the quarter fell 14 percent to $19.31 billion from last year's $22.45 billion and the previous quarter's $19.72 billion.
The steelmaker attributed the sequential sales drop to a 2.8 percent lower average steel selling prices, offset in part by marginally higher steel shipment volumes.
Own iron ore production were lower at 14.0 million metric tons, compared to 15.1 million metric tons last year and 14.3 million metric tons in the preceding quarter.
Total steel shipments were 20.0 million metric tons, compared with 19.9 million metric tonnes for the third quarter, and 20.6 million metric tonnes for the prior year quarter.
Segment-wise, sales at the Flat Carbon Americas were $4.7 billion, down both sequentially and from the prior year, amid lower steel selling prices in North America as well as weak slab pricing in Brazil and Mexico.
Flat Carbon Europe generated $6.1 billion, nearly flat with the previous quarter, but a decline from the prior year.
Sales in the Long Carbon Americas and Europe segment were essentially flat with the previous quarter at $5.2 billion, but fell from the prior year's $5.94 billion.
Asia Africa and CIS or AACIS, generated $2.13 billion, and Distribution Solutions brought in $3.86 billion in the quarter, reporting declines from the prior year. Mining sales fell to $1.26 billion from last year's $1.81 billion.
ArcelorMittal's net loss for the year was $3.73 billion or $2.41 per share, compared to net income of $2.3 billion or $1.46 per share. Sales decreased 10.4 percent to $84.21 billion primarily due to lower average steel selling prices and marginally lower steel shipments.
Lakshmi Mittal, CEO, said, "2012 was a very difficult year for the steel industry, particularly in Europe where demand for steel fell a further 8.8%. During the year we took a number of important steps to address the challenges we face... 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..."
Mittal sees an improvement in the profitability of the steel business this year. Marketable iron ore shipments are also expected to increase about 20 percent due to the expansion at ArcelorMittal Mines Canada.
As previously announced, ArcelorMittal's Board of Directors proposes to reduce the annual dividend payment to $0.20 per share for 2013 from $0.75 per share in 2012.
MT closed up 1.3 percent at $16.89 on Tuesday.
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