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Last Updated: Wednesday, 15 February 2006, 08:22 GMT
Rising costs hit Mittal profits
Mittal chief executive Lakshmi Mittal
Mittal's boss says Europe needs a stronger steel sector
Mittal Steel, which is bidding to takeover rival steelmaker Arcelor, has reported a drop in annual profits following a rise in raw material costs.

The world's largest steelmaker said its net income fell to $3.36bn (1.9bn) in 2005, down from $4.7bn in 2004.

Mittal boss Lakshmi Mittal said he was pleased with the "positive" response he had received from Arcelor's shareholders to the takeover bid.

However, Arcelor's board has already rejected Mittal's $22.3bn offer.

Luxembourg-based Arcelor, which was created in a merger four years ago between three European steel companies, is due to unveil its results later in the week.

Political opposition

On a quarterly basis, Mittal Steel's results made better reading.

The Anglo-Dutch group reported a stronger-than-expected net income of $650m during the final three months of 2005, on revenues of $7.05bn.

Mr Mittal, who is Britain's richest man, has argued that Europe needs a stronger steel sector to compete with China.

However, he has struggled to convince leading European politicians about the merits of his firm's bid for Arcelor.

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