ArcelorMittal cuts dividend after slipping to quarterly loss

Company took a hit in the July-Oct period as slowdown in China compounded an already fragile global economy

ArcelorMittal, the world's largest steelmaker, said it would slash its annual dividend as it focused on cutting debt after slipping into a net loss in the third quarter and abandoning its full-year outlook.

The company, which makes 6-7% of the world's steel, said on Wednesday it took a hit in the July-October period as the slowdown in China compounded the difficulties of an already fragile global economy.

"This resulted in very challenging operating conditions for ArcelorMittal, which are expected to continue in the fourth quarter," Chief Executive Lakshmi Mittal said in a statement.

ArcelorMittal reported a third quarter core profit of $1.34 billion, in line with market expectations, but its lowest level in three years. That resulted in a net loss of $709 million.

The $500 billion steel industry, a gauge for the global economy, has slowed sharply this year from last.

The World Steel Association said earlier this month it expected steel demand to rise by 2.1% in 2012, down from 6.2% in 2011. It had said in April that it expected 3.6% expansion this year.

After a dip at the end of last year, a sharp slowdown in China and a deepening euro zone contraction have stalled an expected second-half recovery.

ArcelorMittal, whose output is more than double that of its nearest rival, said it would propose reducing the annual dividend payment to $0.20 per share in 2013, only to be progressively increased once deleveraging was complete. It paid out $0.75 this year.

Economic weakness, particularly in Europe, prompted ratings agency Standard & Poor's to cut the steelmaker's debt to junk status in August; Moody's to cut its outlook to negative.

The latter has said that ArcelorMittal must cut net debt by $5 billion by early 2013 to avoid a downgrade.