ArcelorMittal, the biggest steelmaker in the world, reported on October 31 a plunge into a loss of $709 million (546 million euros) in the third quarter because of a slowdown in demand from China. The group recommended slashing its dividend next year and said that cutting debt was a priority.
Weak demand and difficult trading conditions caused the group to revise downwards its outlook for profits in the second half of the year.
The company reported an operating loss of $643 million euros on the production of flat carbon steels in Europe in the first nine months of the year. The group, caught in controversy over the closure of two furnaces in northern France for which the French government is looking for a buyer, said that sales in the quarter had fallen by 19.0 percent to $19.7 billion.
The group has decided to close the furnaces, damped down for 14 months, saying that they are uncompetitive in a tough trading climate, partly because they are too far from ports for transportation.
For the third quarter of last year, the group had reported a net profit of $659 million. The figures on October 31 were far below those expected by analysts polled by Dow Jones Newswires who had broadly expected a loss of $230 million and sales of $20.56 billion.
The head of the group, Lakshmi Mittal said in a statement that the main cause was a slowdown in demand from China which had caused very difficult trading conditions which were likely to continue into the fourth quarter.
A fall of the price of iron ore in the third quarter and a weakening of the world economy had also led the group to revise down the outlook for profits in the second half, the group said.
It now expected an operating profit of about $7.0 billion for the whole of the year, without referring to a previous estimate. The group has greatly increased its iron ore interests in recent years as part of vertical development to protect its raw materials inputs.
The volume of steel deliveries by the group fell by 5.7 percent in the quarter to 19.9 million tonnes. Output of iron ore rose by 1.3 percent.