Did Mittal Know This

Shocker of shockers Dofasco has announced that it has lost money. Let me repeat that Dofasco has lost money. And not just a little. Instead of posting a profit it has posted a 71% loss!

Dofasco's results dubbed `horrible'

Quarterly net profit plummets surprise 71%
Steel maker declines to give further comment

Steel maker Dofasco Inc. has reported dismal financial results 10 days after its board of directors signed a deal locking in a $5.6 billion takeover bid from Arcelor SA of Luxembourg. The Hamilton-based company earned $28.4 million, or 37 cents a share, in the fourth quarter, down 71 per cent from $96.8 million, or $1.26, a year earlier. "It's horrible," one analyst said. A consensus estimate of analysts surveyed by Thomson Financial suggested earnings of 93 cents a share, before one-time items. Dofasco's results were propped up by its iron-ore business, while steel-making operations eked out gross profits of just $9.9 million, down from $173.1 million a year earlier.

The Steelmaker which was being romanced by French and German steel interests has pulled and Enron. Arcelor the French steel company whcih bid on Dofasco sealed the deal and now Dofasco announces its lost money. Meanwhile Mittal offered to buy Arcelor, and sell off Dofasco to ThyssenKrupp for less money than Arcelor paid for it. But Mittal was going to keep the Iron Ore portion of the company which made money, and sell off the now money losing Steel factories. Interesting what did Mittal know that neither Arcelor of ThyssenKrupp knew, or for that matter Bay Street or the Dofasco investors.

And don't you just love it when Bay Street analysts underplay the shock they are experiencing with terms like 'troubling'.
Paul D'Amico, an analyst with TD Securities, said the revelation of fourth-quarter production problems was a "negative surprise." In addition, "non-operating items" reduced earnings by 11 cents per share, but no details were given on what those were or whether they have been resolved, D'Amico said, calling that "troubling."
I would say it looks like big trouble for Dofasco and again I have to ask What Did Mittal Know? It appeared last week that they had made a deal with ThyssenKrupp which is why they dropped their bid. But no-one in the market was willing to say so. But appearance is everything. And Mittal has been involved in shady deals before. See: Mittal Plays Monopoly

Tags
Canada
Steel
Dofasco
Mittal
ThyssenKrupp
Arcelor