LN Mittal's Q3 profits fall by 64 pc
The fall in the profits is attributed to rising costs and a drop in demand.Updated: Nov 11, 2005 15:03 IST
News that global steel baron Lakshmi Mittal has emerged as the richest billionaire in Europe has been tempered by a 64 per cent fall in his company's profits for the third-quarter.
The fall in the profits of Mittal Steel Company is attributed to rising costs and a drop in demand.
In a company release, Mittal said that profit for the three months ending September 30 was $478 million down from $1.33 billion a year ago.
The company, however, remains in an expansionist mode with an announcement that it could buy a controlling stake in South Africa's second largest steel producer, Highveld.
Mittal had emerged as the world's largest steel company after it acquired the International Steel Group (ISG) in the US in April this year.
Revenue rose 12 per cent to $7 billion as the company continued to impose production cuts to reduce its inventory levels in response to price drops caused by cuts in demand from big markets such as China.
"We have experienced highly challenging global market conditions in the past quarter with significant steel price decline in all regions," said Mittal in the release.
Total steel shipments for the quarter were 13 million tonnes, up from 12.2 million tonnes for the previous quarter and from 11 million tonnes a year ago. The cost of goods sold by tonnes over the quarter rose 24 per cent from a year ago because of a steep increase in the costs of raw materials.
The company, which operates plants in 14 countries and employs 160,000 people after its $4.5 billion acquisition of ISG, said that shipments and selling prices were expected to be slightly higher in the fourth quarter.
"Overall, we expect operating income per tonne to be up to $10 higher than the third quarter 2005," the release said.
Davinder Chugh, chief executive of its South African arm, said that it was considering buying the 79 per cent stake in Highveld being sold by the company Anglo American.
First Published: Nov 11, 2005 10:09 IST