Nov. 15 (Bloomberg) -- Arcelor SA, the world's biggest steelmaker, posted a record third-quarter profit after three price increases since January. Earnings will probably be at least as high in the fourth quarter, Chief Executive Guy Dolle said.

Net income rose to 629 million euros ($816 million), or 1.09 euros a share, from 101 million euros, or 21 cents, a year earlier. Luxembourg-based Arcelor, which makes the steel for one in three European cars, won increases of at least 20 percent on annual contracts for next year, Dolle said. Annual contracts account for about a fifth of Arcelor's shipments.

``The fourth quarter will be at least as excellent as the third one,'' Dolle, 62, said in a telephone interview. ``The automotive industry is asking for more volume next year.''

Arcelor, created in a three-way merger in 2002, plans a fifth consecutive quarterly price increase in January, along with Corus Group Plc and other European steelmakers. Higher prices aren't damping European demand, forecast by Dolle to increase by as much as 3 percent next year, the same as this year.

The shares rose as much as 38 cents, or 2.4 percent, to 16.48 euros in Paris, the highest since they started trading in February 2002. The stock traded up 25 cents at 16.35 euros at 8:20 a.m. Paris time. Arcelor has gained 22 percent this year, valuing the company at 10.4 billion euros.

European Sales

Arcelor gets about three-quarters of its sales in Europe. Shipping costs almost tripled last year and reached records this year, according to the Baltic Exchange in London, deterring steel imports into Europe.

Arcelor's automotive customers include Renault SA and PSA Peugeot Citroen of France. Rexam Plc and Mivisa Envases SA are among Arcelor's packaging customers and the steelmaker supplies appliance manufacturers such as Whirlpool Corp. and Electrolux AB. Arcelor doesn't disclose contract terms for customers.

The company was expected to report net income of 482 million euros, based on the median estimate of seven analysts surveyed by Bloomberg. Export prices for European hot-rolled coil steel almost doubled this year to a record $592.50 a metric ton, according to Metal Bulletin, an industry publication.

Arcelor posted an all-time record profit of 631 million euros for the second quarter of this year.

Third-quarter sales of flat carbon steel used in cars and washing machines rose 20 percent to 3.77 billion euros, Arcelor said. Shipments rose 6.7 percent to 6.03 million metric tons.

Long Carbon

Sales of long carbon steel used in construction rose 41 percent to 1.64 billion euros. Shipments increased 12 percent to 3.28 million tons. Stainless steel sales rose 27 percent to 1.02 billion euros.

Arcelor has raised prices in part to make up for higher iron ore and coking coal costs. It paid at least 19 percent more for its iron ore this year and 20 percent more for its coking coal.

The steelmaker expects to pay ``at least'' 50 percent more for its coking coal next year, Dolle said. That's still better than spot prices, which are double the year-ago contract price.

Arcelor will be overtaken by Mittal Steel Co. in terms of production once Indian-born billionaire Lakshmi Mittal completes the planned combination of his assets and the purchase of International Steel Group Inc. next year.

Larger steel companies have greater clout when demanding price concessions from mining companies that supply raw materials and with carmakers and other customers that buy their products.

Arcelor's debt fell to 2.37 billion euros, from 3.53 billion euros at the end of the second quarter.

To contact the reporter on this story: Stuart Wallace in London swallace6@bloomberg.net.

Last Updated: November 15, 2004 03:52 EST