ArcelorMittal Posts First Loss (MT)

Results from the world’s largest steelmaker, ArcelorMittal (NYSE:MT), could have been worse, but it’s hard to see how. For the fourth quarter, the company posted a loss of $2.63 billion (EPS of -$1.93) on sales of $22.1 billion. Analysts had expected EPS of $0.44 on revenue of $19.73 billion. EBITDAwas $2.81 billion.

The worse news comes in Arcelor’s outlook for the current quarter. The company provided guidance only on first quarter EBITDA, and it’s not pretty: $1.0 billion. That’s down 64%. The company also plans to reduce production and cut its dividend by $0.75/share.

The company sees the current quarter as the low point for iron ore shipments because demand is picking up from China and the US, where inventories are being drawn down. According to Reuters, the company’s CFO noted that “underlying demand [for iron ore] is not off by 45 percent.”

Arcelor did one positive thing in the fourth quarter. It reduced its net debt by $6 billion, to $26.5 billion.

We wrote yesterday of the possible effect that Arcelor’s earnings would have on the Baltic Dry Index. The BDI closed yesterday above 1,900, a gain of 100 from the previous day.

Investors appear to like the combination of Arcelor’s debt reduction and hopeful comments that the iron ore market is bottoming out, coupled with the rise in the BDI. Arcelor shares are up nearly 7% in pre-open trading this morning.

Paul Ausick
February 11, 2009