ArcelorMittal's Q3 core profit beats forecast

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Brussels, Nov 14: ArcelorMittal, the world's largest steelmaker, posted a forecast-beating 12 percent rise in its third-quarter core profit on Wednesday helped by cost savings from its merger, allowing it to raise its dividend.

Earnings before interest, tax, amortisation and depreciation (EBITDA) rose to $4.88 billion, ahead of the average forecast of $4.76 billion in a Reuters poll of eight analysts.

The company had forecast EBITDA of $4.7 billion to $4.9 billion and said it expected fourth-quarter EBITDA of between $4.6 billion and $4.8 billion.

Its shares were up 2.9 percent at 50.46 euros at 0838 GMT, valuing the company at around 71 billion euros. It is three times bigger than its nearest rival, Nippon Steel.

Synergies between Arcelor and Mittal Steel, the former rivals which now form ArcelorMittal, continued to grow towards the group's 2008 target of $1.6 billion.

Cost savings reached $1.3 billion in the third quarter and are expected to amount to about $1.4 billion by the end of the year, an ArcelorMittal spokesman said during a conference call.

Sales were $25.52 billion and net profit was $2.960 billion.

Analysts on average had forecast sales of $25.4 billion and a net profit of $2.53 billion.

ArcelorMittal said its board of directors had decided on the back of the results to raise the company's base dividend by $0.20, increasing quarterly payments to $0.375 a share.

ArcelorMittal repeated its shareholders return policy was based on returning 30 percent of net income to shareholders every year through an annual base dividend, with additional share buybacks.

ArcelorMittal is seeking to raise its iron ore production to 75 percent of consumption in the coming years, a goal which was announced before BHP Billiton announced its plan to acquire rival Rio Tinto.

That combined group would hold about 27 percent of the world market for iron ore which would draw competition concerns from the steel industry.

Asked to comment on the consequences of a possible tie-up of the two mining groups, the ArcelorMittal spokesman said its own investments in iron ore would ease any negative impact.

''We have effectively a better position than many other steel companies,'' he said.

ArcelorMittal also announced it had bought Galvex, an Estonian steel galvanising line with annual sales of 100 million euros.

The acquisition of the Estonian unit comes after ArcelorMittal announced a series of investments and acquisitions during the third quarter.

ArcelorMittal also unveiled plans during the third quarter to increase its annual shipments from 111 million tonnes in 2006 to 126 million tonnes in 2012.


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