The world's leading steel group also reported an operating loss of $3.5 billion in the last quarter of 2008, down from a profit of $5.5 billion in the previous quarter, on writedowns on inventory.

Sales for the three months were $22.1 billion, a 37% plunge from sales of $35.2 billion for the September quarter.

ArcelorMittal said the fall resulted from a collapse in demand for steel products and a sharp fall in prices in the fourth quarter which saw the company slash production during September and increasing through the fourth quarter.

Total steel shipments for the three months were 17.1 million tonnes, compared with steel shipments of 25.6Mt in the previous quarter.

"ArcelorMittal's generally excellent performance in 2008 was overshadowed by the considerable slowdown in the world economy in the last quarter of the year," ArcelorMittal chairman and chief executive Lakshmi Mittal said.

"Whilst the operating climate is likely to remain challenging for the first quarter, we are starting to see some signs of improvement."

For 2008, ArcelorMittal's net income was $9.4 billion, down 9.6% from 2007's net income of $10.4 billion.

Sales and operating income for the year were $124.9 billion and $12.2 billion respectively, compared with sales and operating income for 2007 of $105.2 billion and $14.8 billion.

The company said sales were higher primarily due to higher average steel selling prices, offset by lower steel shipment volumes as a result of a sharp drop in demand in the fourth quarter.

Total steel shipments for 2008 decreased to 102Mt compared with total steel shipments of 110Mt for 2007 as a result of the reduction in steel production and shipments during the fourth quarter.

In November, ArcelorMittal announced it would slash steel output from operations in Europe, North America and emerging markets by 30-35% during the fourth quarter.