ArcelorMittal MT today announced it expects to
write down the goodwill in its European businesses by approximately US$4.3bn.
This follows the completion of its yearly goodwill impairment test, as
required by IFRS accounting standards.
ArcelorMittal shares are down more than three percent at last check.
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% 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. This is in contrast
to the US, where apparent steel consumption is up almost 8% this year and is
now approximately 10% lower than it was in 2007.
Key metrics such as net debt and ebitda, as well as compliance with debt
covenants, are unaffected by this impairment.
Additionally, Fitch downgraded ArcelorMittal to BB+ with a Stable outlook.
Elsewhere in the sector, AK Steel AKS shares are down nearly four percent, shares of US Steel X are down nearly three percent, and shares of Nucor NUE are down almost two percent.
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