ArcelorMittal Swings to Loss, Slashes Dividend

by Christopher Freeburn | October 31, 2012 9:48 am

ArcelorMittal Swings to Loss, Slashes Dividend

ArcelorMittal (NYSE:MT[1]) announced on Wednesday that it may slash its 2013 dividend in order to reduce expenses[2] in the face of falling global steel prices and posted a third-quarter loss.

The worldwide steelmaker said that next year’s dividend would fall to 20 cents a share, compared to the 75 cents a share it will pay in 2012. The lower dividend is expected to save $1 billion, the Wall Street Journal noted.

News of the dividend cut comes as the company announced a third-quarter net loss of $709 million, compared to net earnings of $659 million in the same period last year. Quarterly revenue declined 19% compared to last year, falling to $19.72 billion as U.S. and European demand remained soft and Chinese demand for steel slowed.

In August, Standard & Poor’s cut its rating for ArcelorMittal’s debt to junk status. In order to reduce its debt, the steelmaker will shutter under-performing factories, cut capital spending and continue to dispose of assets. Over the last year, the company has sold about $2.7 billion in assets, including a 48% stake in Paul Wurth Group to SMS for $389 million and Skyline Steel to Nucor for $605 million.

Shares of ArcelorMittal slipped fractionally in early Wednesday trading.

Last week, AK Steel (NYSE:AKS[3]) posted a wider third-quarter loss on lower revenue and predicted another loss for the current quarter[4].

Endnotes:
  1. MT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MT
  2. slash its 2013 dividend in order to reduce expenses: http://online.wsj.com/article/SB10001424052970204712904578090022053622236.html
  3. AKS: http://studio-5.financialcontent.com/investplace/quote?Symbol=AKS
  4. predicted another loss for the current quarter: http://investorplace.com/2012/10/ak-steel-slumps-on-larger-loss-guidance/

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