ArcelorMittal to write down European business value by $4.3 bn
World's largest steel maker ArcelorMittal today said it will write down the value of its European business by about USD 4.3 billion on account of decreasing demand in Europe due to weaker macro economic and market environment.
"The write down will take the form of a non-cash impairment charge that will be recorded in the fourth quarter of 2012. The impairment is due to a weaker macro economic and market environment in Europe where apparent steel demand has fallen by approximately 8 per cent this year, bringing the cumulative demand decline to 29 per cent since 2007," the company said in a statement.
The development comes on heels of the company closing its blast furnaces in France and Belgium. "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," the company said.
This is in contrast to the US, where apparent steel consumption is up almost 8 per cent this year and is now approximately 10 per cent lower than it was in 2007, it added. The company said its key metrics such as net debt and operating profits, as well as compliance with debt covenants, are unaffected by this impairment.
Europe's steel industry is struggling with excess production capacity amid economic downturn.