ArcelorMittal Profit Rises 2.7% as Shipments Increase

ArcelorMittal Profit Rises 2.7% as Shipments Increase

Feb. 13 (Bloomberg) -- ArcelorMittal, the world's largest steelmaker, said fourth-quarter profit rose 2.7 percent on higher prices and expanded Latin American production.

Net income climbed to $2.44 billion, or $1.71 a share, from $2.37 billion, or $1.71, a year earlier, Luxembourg-based ArcelorMittal said today in a statement. That beat the $2.39 billion median estimate of seven analysts surveyed by Bloomberg News. Sales increased 21 percent to $28 billion with shipments up almost 5 percent to 28 million metric tons.

Chief Executive Officer Lakshmi Mittal got approval in December to take full control of Acindar Industria Argentina de Aceros SA, part of the company's plan to expand in emerging economies. ArcelorMittal is focusing on developing nations as economic growth slows in the U.S., where it raised prices during the quarter because of raw-material and transport costs.

``They've got massive increases in costs coming up and significant increases in their prices,'' said Alan Coats, an analyst at HSBC Bank Plc in London who has an ``overweight'' rating on the company. ``From that storm, the question is what sort of profits will be made.''

First-quarter profit before interest, taxes, depreciation and amortization will be $4.7 billion to $5 billion, up from $4.3 billion a year earlier, ArcelorMittal said. The annual rate of $18.8 billion to $20 billion would fall short of HSBC's estimate of $24.8 billion.

ArcelorMittal rose 2.98 euros, or 6.5 percent, to 49.17 euros in Amsterdam yesterday. The stock has increased 36 percent in the past 12 months, valuing the company at 71.2 billion euros ($104 billion).

Steel Prices Gain

European prices for hot-rolled steel gained 13 percent in the fourth quarter from a year earlier, according to Metal Bulletin data. ArcelorMittal raised U.S. prices by $40 a metric ton from Jan. 1, double its average fourth-quarter increase of $20. Global steel output may fall short of demand this year by 55 million tons as China reduces exports, Credit Suisse Group estimated in a Feb. 11 report.

``Any further structural positives in China's supply and demand balance could leave steel supply well below demand levels even with ongoing weakness in Europe and the U.S.,'' Credit Suisse London-based analysts including Michael Schillaker said in the report.

ArcelorMittal produces 10 percent of the world's steel. The company was formed last year through the $38.3 billion merger of Mittal Steel Co. and Arcelor SA.

``In 2007, we announced 35 acquisitions, all of which serve to strengthen ArcelorMittal's global steel offering,'' Mittal said in the statement.

Iron-Ore Record

Iron ore and coal have risen to records as steel demand surged in China and other emerging economies. The benchmark price for iron ore, which has tripled in five years, may rise 50 percent in 2008, according to Macquarie Group Ltd. Steel demand is expected to grow about 6 percent in 2008, ArcelorMittal said in November.

In addition to regulatory approval for the full acquisition of Acindar, Argentina's second-largest steelmaker, ArcelorMittal last year purchased the Sicartsa steel mill in Mexico in April and Arcelor Brasil SA in Brazil in May.

Year-earlier net income was calculated by ArcelorMittal as if the company existed at the time.

(ArcelorMittal executives will discuss earnings at 10:30 a.m. London time. To listen, go to the company's Web site at http://www.arcelormittal.com .)

BLOOMBERG