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ArcelorMittal South Africa Falls on Worse-Than-Expected Loss

ArcelorMittal South Africa Ltd., the continent’s biggest steelmaker, declined for a third day in Johannesburg trading after posting a worse-than-expected loss.

The shares slid 1.9 percent to 66.30 rand, closing at its lowest level since Dec. 20. The FTSE/JSE Africa All Share Index was 0.6 percent lower. The full-year loss excluding one-time items was 13 cents (1.7 U.S. cents) a share, from a profit of 3.43 rand a year earlier, the Vanderbijlpark-based company said today in a statement. The result missed the average estimate of 10 analysts surveyed by Bloomberg for a profit of 64 cents.

“It was a terrible fourth quarter, worse than expected,” Mohamed Kharva, an analyst at Nedgroup Securities Ltd., said by phone from Cape Town. “There are no shining stars on the horizon for this company in the next six to nine months.” Kharva recommends investors sell the stock.

While there are signs local sales are improving, the South African construction outlook is “bleak,” Chief Executive Officer Nonkululeko Nyembezi-Heita said in a presentation to investors. Construction and building accounts for about 61 percent of domestic steel consumption, the company said.

Capital spending may drop to about 1 billion rand from 1.2 billion rand last year, Nyembezi-Heita said. The company had a loss excluding one-time items of 260 million rand in the final quarter of 2011, after a 497 million-rand loss a year earlier.

“Operating costs were severely affected by significant price escalations for raw materials and electricity,” the company said. “A major structural failure of the blast furnace dust catcher at Newcastle negatively impacted production.”

ArcelorMittal, the world’s biggest steelmaker, is the largest shareholder of the South African company.

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