Mittal writes down European value

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ARCELORMITTAL, the world’s biggest steelmaker, is to write down the value of its European business by $4.3bn, underscoring gloom about prospects for the region’s recession-hit manufacturers.

The group, formed in 2006 when India-born Lakshmi Mittal’s steel business bought European firm Arcelor for $33bn, said demand had fallen about eight per cent in Europe this year and there was no sign of a quick recovery.

As a result, it will write down the goodwill – the value of intangible assets such as brands rather than physical assets such as machinery – of its European operations by 87 per cent.

“It is negative, but it should not really be a big surprise that the book value of its European business was too high,” said a London-based analyst.

Credit agency Fitch cut ArcelorMittal’s long-term issuer default rating to BB+, just below investment grade, due to the challenging outlook for Western European steel markets in 2013.

The $500bn-a-year steel industry has slowed sharply this year.

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