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Crisis forces ArcelorMittal to review growth target
2008-10-23
PARIS (AFP) - ArcelorMittal, the world's biggest steel producer said on Thursday that the financial crisis has forced it to review its global growth targets. The giant group insisted in a statement that its growth strategy remained "unchanged", but it added: "The current market situation is prompting us to check the order of priority to be assigned to our different growth projects. We are currently reassessing these priorities." ArcelorMittal's share price fell on the four European markets where it is quoted after the announcement. In Paris the share fell 8.90 percent by mid afternoon to 17.54 euros and has now lost 67 percent of its value since the beginning of the year. The CAC 40 index of leading shares was down 2.51 percent. The group has already announced a cost-cutting operation to save 2.8 billion euros (four billion dollar) around the world, including job cuts. On Thursday, the Financial Times newspaper quoted analysts as saying that the group was reviewing a plan to invest 35 billion dollars up until 2015. It said ArcelorMittal could delay spending some of the money that was scheduled for the start of 2009. Investment in two new steel complexes in India, costing 20 billion dollars, might not start until 2012-2015. An ArcelorMittal spokesman declined to comment to an AFP question on whether the company was still expecting world steel demand to grow from three to five percent in coming years. The group is to publish new quarterly results on November 5 and these could include new predictions. ArcelorMittal said recently that it expected prices to remain above 1,000 dollars a tonne in coming years. Despite the crisis, the group said this month that it expected third-quarter EBITDA earnings before taxes and other charges to be 8.5 billion dollars, about twice the 4.8 billion dollars for the third quarter of 2007. For the first nine months of the year, earnings should be up 47.3 percent at more than 21.5 billion dollars. ArcelorMittal has said it expects record cash flow this year. Group chairman, Lakshmi Mittal, said that despite the slowdown in Chinese demand and a big reduction in world stocks, he expected profitability to rise in the second half of the year. Rival firms have also become more prudent about the future. Anglo-Australian groups Rio Tinto and BHP Billiton have said they are reviewing expansion programmes because of the crisis and the economic slowdown in China.
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