Comments
ArcelorMittal will take a $4.3-billion goodwill impairment charge in its fourth quarter accounts, the steel-maker said on Friday, citing a “weaker macro economic and market environment in Europe.”
Shares of the world’s largest steel-maker fell sharply on Friday, down 2.7 per cent in early afternoon trade in Amsterdam, following the announcement.
Downward revision
Steel demand in Europe had fallen by about 8 per cent in 2012 alone, and a total of 29 per cent since 2007, the company said — in contrast to the US, where steel demand was up nearly 8 per cent, and was just 10 per cent below 2007 levels.
“This weaker demand environment, and expectations that it will persist over the near and medium term, led to a downward revision of cash-flow expectations underlying the valuation of the European businesses to which goodwill has been allocated,” it said.
Weak European demand has hit ArcelorMittal hard this year: in October the company reported that net income for the first nine months of the year had fallen to $300 million from $3.3 billion for the same period the year before, as sales fell 9.3 per cent, and it was hit by impairment and restructuring charges relating to its plans to close or idle its European assets.
And in November, ratings agency Moody’s cut the company’s debt rating to “junk,” with a negative outlook
After a brief recovery following the 2007 financial crisis, steel demand in Western Europe has slumped again, and is expected to fall around 8.5 per cent for 2012, according to consultancy CRU, which expects little improvement before the second quarter of 2013.
Across Europe, steel-makers have taken measures to respond to the challenging environment, including weak demand and pricing, by either closing or idling existing infrastructure, though they have struggled to cut capacity in line with the sharp drop in demand.
Florange commitment
Earlier this month, ArcelorMittal resolved a dispute with the French government over its plans to close two blast furnaces at its Florange plant in north-eastern France, agreeing to commit €180 million (Rs 1,270 crore) to the site over the next five years, and make no compulsory redundancies.
Last month Tata Steel said it would be cutting 900 jobs in Britain to position itself better for the persistently weak environment.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.