ArcelorMittal Ends Brutal 2009 with Positive Fourth Quarter

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Researched by Industrial Info Resources (Sugar Land, Texas)--ArcelorMittal (NYSE:MT) (Luxembourg), the world's leading steel company, reported a sharp drop in net income for 2009, despite improvement in the fourth quarter. The company's net income for the year was $118 million, which is 98.75% less than the $9.4 billion reported for 2008. However, the fourth quarter saw a net gain of $1.07 billion, compared to a $2.63 billion loss in the same period of last year.

Total sales for the year amounted to $65.1 billion, a 47.89% decline from 2008, and were $18.64 billion for the fourth quarter, a 15.6% decline year-over-year.

AcrelorMittal blamed the global economic crisis for lower income from the company's investments and a pre-tax charge of $2.4 billion related to layoff provisions and a write-down on inventory.

"2009 has been one of the most challenging years in the last 80 years," ArcelorMittal Chairman and Chief Executive Officer Lakshmi Mittal said in a conference call. "In Europe and the U.S., steel demand went down 35%."

Total steel shipments amounted to 19.96 million tons in the fourth quarter, a 17% year-over-year increase, but were 70.07 million for the full year, a 30.11% decline from 2008. Income from continuing operations, not deducting net interest expense, income taxes, asset retirement obligations, depreciation, depletion and amortization, or EBITDA, for total steel shipments was $2.09 billion in the fourth quarter, an 18.7% year-over-year decrease, and $5.95 billion for the full year, a 75.1% decline from 2008.

Mittal said that the 2010 outlook for the steel industry is "significantly better, but still challenging," and that recovery remains slow.

"We have seen some improvement in the demand for steel due to some falloff in pricing from the fourth quarter, but higher anticipated fixed costs. Our guidance for first quarter EBITDA is between $1.8 billion and $2.2 billion.

"After essential production cuts in early 2009, we gradually increased production in the last few quarters. We went from 61% capacity utilization in the third quarter to around 70% in the fourth quarter, and we expect this to increase to between 72% and 75% in the first quarter."

Mittal said he expects the 2010 budget to be $4 billion, a 43% increase from 2009, and that the company continues to hold a strong position in emerging markets. Mittal said much of the new budget will be focused on selective growth in emerging markets.

Industrial Info is tracking 24 active ArcelorMittal projects worth more than $10 billion, including the $9 billion, 12 million-ton-per-year Keonijhargarh grassroot steel mill in Orissa, India. Phase I of this two-phase project will involve the construction of a plant and the installation of process equipment to produce 6 million tons per year. For more information, visit Industrial Info's North American Industrial Database.

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