Tags: ArcelorMittal | holds | spending | MT

ArcelorMittal Rolling Back Spending

By    |   Tuesday, 08 Nov 2011 03:40 PM

Despite dwindling demand and prices around 12-month lows, global steel giant ArcelorMittal (MT) is making the best of a bad economy by rolling back its spending.

The company plans to cut costs by up to $1 billion per year through a series of recent plant closures. It will temporarily shut down a blast furnace in Poland responsible for a third of the country’s crude steel output and permanently close a mill in Belgium that had produced 2.5 million metric tons of liquid steel annually. The company also has idled production in Germany and Spain.

While it mothballs unneeded capacity, MT will boost production at its remaining facilities across Europe, bringing them as close to 100 percent capacity as possible.

"Steel demand and prices do show regional variations, and while there has been downward pressure on prices from a combination of weakening real demand and import competition from Russia and the Ukraine, prices in Europe are still at levels at which rated entities can continue to be profitable," said Peter Archbold, senior director and Fitch's metals and mining coverage lead analyst in Europe, in a statement.

Fitch retains a BBB- long-term issuer rating on ArcelorMittal, the lowest rating the company provides.

Smarter investments

Through a joint venture with the world’s largest private sector coal company, Peabody (BTU), ArcelorMittal expected to increase its existing shareholding of Australian coal miner Macarthur Coal. But a sudden change of heart recently forced it to rethink its position.

Now Peabody instead will go forward toward a full buyout of the coal company, which makes pulverized coking coal, a key ingredient for steel production, for $4.9 billion.

The original deal was thought to cost MT $200 million but that quickly shot up to $1.2 billion after a major Chinese shareholder decided to take up the share purchase offer. ArcelorMittal felt its capital was better invested elsewhere than in a minority shareholding.

Credit Suisse analysts called ArcelorMittal's decision was a "sensible move."
ArcelorMittal’s second quarter EBITDA increased by 21.5 percent on the year to $3.4 billion while its first half EBITDA of $6 billion was 32.9 percent higher than the first half of 2010.

ArcelorMittal reported third quarter 2011 earnings of 19 cents per share compared to 89 cents per share in 2010.

The steel company next reports on Feb. 2.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
Companies
Despite dwindling demand and prices around 12-month lows, global steel giant ArcelorMittal (MT) is making the best of a bad economy by rolling back its spending. The company plans to cut costs by up to $1 billion per year through a series of recent plant closures. It will...
ArcelorMittal,holds,spending,MT
384
2011-40-08
Tuesday, 08 Nov 2011 03:40 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved