UPDATE 3-ArcelorMittal forecasts slow steel recovery in Q1

* Q4 core profit $2.1 billion, just below expectations

* Sees Q1 EBITDA of $1.8 to $2.2 billion

* Sees higher shipments vs lower prices and higher costs

* Capital expenditure plan of $4 bln, up 43 pct

* Shares down 5.2 pct

(Updates after conference call, share price)

By Philip Blenkinsop

BRUSSELS, Feb 10 (BestGrowthStock) – ArcelorMittal (ISPA.AS: ), the
world’s top steelmaker, said its markets would improve only
slowly with higher shipments but lower prices in early 2010, and
its profit forecast fell short of market expectations.

The company said on Wednesday that the industry, a barometer
of global economic strength, would see increased demand from key
customers such as carmakers and that price rises should have
more of an impact in the second quarter.

“The recovery is underway, but is slow and progressive,”
Chief Financial Officer Aditya Mittal told a conference call,
predicting global demand would rise 10 percent this year.

ArcelorMittal, which has about 8 percent of the global
market, with output three times greater than nearest rival
Nippon Steel (5401.T: ), expects core earnings before interest,
tax, depreciation and amortisation (EBITDA) between $1.8 and
$2.2 billion in the first quarter.

The average forecast in a Reuters poll of analysts was for
$2.6 billion, and compares with a fourth-quarter figure of $2.1
billion, itself just short of expectations.

ArcelorMittal shares were down 5.2 percent at 27.10 euros,
the worst performer in the FTSEurofirst 300 (.FTEU3: ), and
underperforming a 0.1 percent increase in the DJ Stoxx European
basic resources index (.SXPP: ).

“What is disappointing is the guidance. With that start, it
will be tough to meet market estimates for the full year. I
expect them to be revised down,” said Hermann Reith, analyst at
BHF Bank in Frankfurt.

The $500 billion steel industry took a heavy beating in the
2008/2009 downturn, with demand from key construction and auto
consumers sharply down and destocking magnifying the negative
effect. Producers cut output by as much as a half.

ArcelorMittal returned to net profit in the third quarter
after three consecutive losses and was again profitable in the
fourth, thanks to a tax benefit of $1.3 billion.

BIGGER PRICE RISE IMPACT IN Q2

ArcelorMittal said its shipments were expected to be higher
in the first quarter of this year than at the end of 2009, with
capacity utilisation rising to 75 from 70 percent, but it would
face lower average selling prices and increased costs.

Aditya Mittal said prices rises in December and January
would benefit the company more in the second quarter, given an
order to shipment period of 45 to 60 days. ArcelorMittal is
among the most exposed companies to spot steel prices.

“The price environment is improving … There is also going
to be margin expansion, not as pronounced in Q1 but more in Q2,”
he said, adding further price rises could be expected to prevent
a margin squeeze from high iron ore and coking coal costs.

Other steel makers’ results have shown industry conditions
remain tough, with the odd bright spot.

U.S. Steel (X.N: ) recently forecast a fifth consecutive
quarterly loss [ID:nN26229611] and Nippon Steel a first annual
loss in seven years [ID:nTOE60Q096], but Tata Steel (TISC.BO: )
more than doubled quarterly profit at its Indian operations.
[ID:nSGE60P09Q]

European steel body Eurofer said last week the sector in the
region was recovering slowly on the back of an improving outlook
for car and engineering companies, despite a continued slump in
construction. [ID:nLDE6131DJ]

German, French and Italian industrial output all fell in
December, according to data on Wednesday [ID:nLDE6190FK]
[ID:nLDE6190TA] [ID:nLDE6190X7], damping recovery hopes.

French carmaker PSA Peugeot Citroen (PEUP.PA: ) said cost cuts
would help it weather tough conditions this year, but only gave
a forecast to mid-2010. [ID:nLDE6182IZ]

Restocking in North America and Europe, more among the auto
and engineering sectors than construction, should result in 15
percent improved demand in the developed world, albeit 23
percent below 2008 levels, ArcelorMittal said.

China, whose heavy consumption prevented a steel sector
catastrophe last year, would require only 5 percent more in
2010, with its stocks already replenished.

Stock Today

(Reporting by Philip Blenkinsop; Editing by Will Waterman)

UPDATE 3-ArcelorMittal forecasts slow steel recovery in Q1