LONDON--Steel company ArcelorMittal (MT) Wednesday proposed
slashing its annual dividend due to challenging economic conditions
as ailing steel demand spurred the company to swing to a net loss
in the third quarter.
The company's board of directors proposed slashing the
steelmaker's annual dividend by nearly three-quarters to $0.20 a
share in 2013 from $0.75 this year.
"The already fragile global economy was further impacted in the
third quarter of 2012 by the slowdown in China. This resulted in
very challenging operating conditions for ArcelorMittal, which are
expected to continue in the fourth quarter," said Lakshmi Mittal,
the company's chairman and chief executive in a statement. "Against
this backdrop, the company is focused on delivering its plan of
asset optimization, net debt reduction and productivity and
efficiency improvements."
The world's largest steelmaker by volume, accounting for some 6%
of global output, posted a net loss of $709 million in the three
months to Sept. 30, compared with a net profit of $659 million in
the year-earlier period as it suffered lower profitability across
all of its divisions. The company last posted a net loss in the
fourth quarter of last year.
The net loss missed analysts' expectations for a loss of $230
million, based on a Dow Jones Newswires poll of five analysts.
Third-quarter revenue fell 18.5% on the year to $19.72 billion
while earnings before interest, taxes, depreciation and
amortization--a profit metric keenly watched by analysts as a key
measure of operating performance--fell 45% on year to $1.34
billion, beating analysts' expectations of $1.29 billion.
The steelmaker said it now expects to deliver Ebitda of about $7
billion this year, which translates into a fourth quarter Ebitda of
$1.24 billion, slightly below analysts' expectations for a fourth
quarter Ebitda guidance of $1.42 billion.
Steelmakers have seen their margins squeezed in recent months as
steel prices have fallen due to weak demand in Europe and the U.S.,
and slower-than-expected economic growth in China. ArcelorMittal
has responded by temporarily idling steel-production plants and
proposing the permanent closure of four European blast furnaces. It
is also selling non-core assets in order to pay down debt and shore
up its balance sheet.
ArcelorMittal's shares closed Tuesday up 2.8% at EUR12.15 a
share, valuing the company at EUR18.47 billion, down 14% since the
beginning of the year.
-Write to Alex MacDonald at alex.macdonald@dowjones.com
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