Steel Maker Takes Huge Writedown
The world's largest steelmaker, ArcelorMittal (NYSE: MT), said this morning that it would take a noncash $4.3 billion impairment charge against the goodwill of its businesses in Europe. The charge will be posted to the company's fourth quarter of fiscal 2012, which ends this month.
In its announcement the company said:
The impairment is due to a weaker macro economic and market environment in Europe where apparent steel demand has fallen by approximately 8% this year, bringing the cumulative demand decline to approximately 29% since 2007. This weaker demand environment, and expectations that it will persist over the near and medium term, led to a downward revision of cash flow expectations underlying the valuation of the European businesses to which goodwill has been allocated.
ArcelorMittal did not refer to the difficulties it has had with trying to close several furnaces in France and other plants in Belgium. The company is shifting its focus from Europe to the United States, where energy costs are lower and demand is rising.
Shares are down 2.8% in premarket trading this morning, at $17.03 in a 52-week range of $13.28 to $23.62.
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