ArcelorMittal - Growing AM3S - Investor Presentation, Sept 2007
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ArcelorMittal - Growing AM3S - Investor Presentation, Sept 2007

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ArcelorMittal - Growing AM3S - Investor Presentation, Sept 2007 ArcelorMittal - Growing AM3S - Investor Presentation, Sept 2007 Presentation Transcript

  • Growing AM3S Gonzalo Urquijo – Member of GMB 11-13 September 2007 – Investor day – Paris
  • Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about ArcelorMittal S.A. including Arcelor S.A. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “target” or similar expressions. Although ArcelorMittal’s management believes that the expectations reflected in such forward- looking statements are reasonable, investors and holders of ArcelorMittal’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Netherlands Authority for the Financial Markets, the Commission de Surveillance du Secteur Financier (“CSSF”), the Luxembourg securities regulator and the U.S. Securities and Exchange Commission (“SEC”) made or to be made by ArcelorMittal or previously made by its predecessor, Mittal Steel Company N.V. (“Mittal Steel”). ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise. Additional Information In connection with the proposed merger of ArcelorMittal with Arcelor, Mittal Steel, ArcelorMittal and Arcelor have filed and will file important documents with the relevant securities regulatory authorities, including the filing with the U.S. Securities and Exchange Commission of a registration statement that will include a proxy statement/prospectus. The proxy statement/prospectus will contain important information about the merger and related matters. ArcelorMittal and Arcelor will make public such proxy statement/prospectus and mail the proxy statement/prospectus to the ArcelorMittal U.S. shareholders. Additionally, a proxy statement/prospectus will be filed with the CSSF for European shareholders. Investors and security holders are urged to read the applicable proxy statement/prospectus, and any other relevant documents filed with the relevant securities regulatory authorities, when they become available and before making any investment decision. U.S. shareholders will be able to obtain a free copy of the U.S. proxy statement/prospectus (when available) and other related documents filed with the SEC by ArcelorMittal (and Mittal Steel as its predecessor) and Arcelor at the SEC’s web site at www.sec.gov and from ArcelorMittal and Arcelor at www.arcelormittal.com. European shareholders will be able to obtain the European proxy statement/prospectus (when available) and the related documents at the registered office of Arcelor and ArcelorMittal and at www.arcelormittal.com. 1
  • Agenda • The growth opportunity • Steel Solutions and Services • Strategy and growth plan • Conclusion 2
  • The growth opportunity 3
  • The worlds largest steel distributor and processor in a fragmented industry Leading Metals distributors and processors Market position by region by sales in 2006 (USD billion)* Eastern Europe and CIS No 1 Europe North America Leading position No 1 No 1 No 1 Strategic presence Asia Strategic presence 11.9 Africa 11.0 Strategic presence No 1 South America 7.0 Strategic partnership No 1 5.9 5.7 Significant presence A rc e lo rM itt a l T hys s e nKrupp Klo e c k ne r R ye rs o n R e lia nc e AM3S Steel production AM3S is the worlds largest steel distributor and processor *Sources: company reports 4
  • AM3S is distributing and processing 38%* of Group shipments to distribution ArcelorMittal distribution network Other steel ArcelorMittal steel production network producer 111mt of shipments 85% of AM3S needs 15% Direct Direct AM3S distribution Other distribution Distribution Service Other Construction International to large distributors Centers Distributors (trading) customers 5.4mt 0.7mt Approx 20mt 5.1mt 12mt Distribution Final customer This relatively low level of internal distribution and the small size of AM3S relative to the group represents a unique growth opportunity *Excluding shipments directly distributed by mills to large customers 5
  • Benefits and synergies resulting from downstream integration • Optimising supply chain management & working capital requirement • Optimising upstream utilization: Supports mill sales in low market periods and complements Benefits to Group sourcing in tight markets ArcelorMittal • Providing market intelligence: Gives us insight into market trends, customer needs mills (including new products) and activities of competitors • Improving and stabilising our mills’ market shares in domestic markets • Improving global value chain efficiency with shared inventories and logistics flows • Benefiting from ArcelorMittal brand and leadership Benefits to • Offering new products and custormer assistance with support of ArcelorMittal’s unmatched AM3S R&D capability • Expanding and gaining market share due to improved sourcing and support from ArcelorMittal industrial network • Offering direct access to ArcelorMittal’s unique range of products, services and solutions for all size of customer Benefits to • Reducing delivery times and improving product availability due to close relationship with Customer upstream mills • Benefiting from improved price stability and reduced risk due to ArcelorMittal sustainable price policy AM3S to benefit from superior growth opportunities 6
  • Steel Solutions and Services 7
  • Unique services and value to customer supported by a unique organisation Sales breakdown of AM3S excluding Turnover by tonne processed or distributed in 2006 AM International (trading) (base 100 for HRC in North Europe) 300 Construction 11% 250 200 150 Distribution 100 51% Services 50 Centers 38% 0 HRC* Service Centers Distribution Construction AM3S is the only steel distributor and processor offering a large range of value added products and services going from simple distribution to innovative steel solutions *Source: CRU 8
  • ArcelorMittal Distribution ArcelorMittal Distribution geographical layout Steel Distribution Network - Network of agencies/warehouses; local retail distribution of full range of products (flat, long, tubes, technical & special steels) Total Offer Provider - Heavy processing / semi-finished products for large industrial customers Projects - Innovative and dedicated solutions for building, construction and oil&gas industry. krowten liateR redivorP reffO latoT stcejorP A strong growth potential in emerging markets 5.4 million tonnes distributed annually from 19 countries and 230 locations 9
  • ArcelorMittal Steel Service Centers ArcelorMittal Steel Service Centers geographical layout Flat Carbon Steel Processing - Slits, sheets & blanks, including shaped and punched blanks Just-in-time delivery of ready-to-use steel products - Automotive and general industry customers Optimised logistics offer: a unique network in Europe skrowten retneC ecivreS leetS A strong growth potential 5.2 million tonnes processed annually in 10 countries at 44 plants and 200 production lines 10
  • ArcelorMittal Construction ArcelorMittal Construction geographical layout Steel solutions for contemporary architecture - Façades, roofs, floors and interior design - Tailor-made offerings and large range of products - Sales in square meters more than tonnes Promote steel in Construction - Solutions for contractors (ready-to-use products for faster construction) - Solutions for architects (aesthetic and modular steel solutions for creativity) ynapmoc laicremmoc dna noitcudorP Opportunities to grow in developing economies Approx. 700,000 tonnes shipped annually from 52 manufacturing sites in 25 countries 11
  • ArcelorMittal International ArcelorMittal International geographical layout - Sales & Marketing for Group mills exports - Trading - End-user contacts in all markets - Market intelligence resource - Credit risk management & know-how in export markets saera ssenisuB A global organisation allowing us to capture gnidart / selas rof smroftalP best commercial opportunities 12 million tonnes shipped annually with >50 offices on 5 continents 12
  • Strategy and growth plan 13
  • High level strategic priorities Expanding Adding value Strengthening operation in fast with new of European growing and products and core leadership strategic markets services • Improving service provided to • Reinforcing market share in • Accompany or precede large industrial customers West Europe and in particular in upstream strategies in fast (Faurecia, Carrier, Otis,…) Germany, Italy and UK growing areas • Developing new sophisticated • Leveraging upstream leadership processing (blanks) for in Central & Eastern Europe to automotive industry implement AM3S business model in those high growth • Thorough segmentation markets Growth and value- added plan to be realised through internal investment, greenfield and M&A A strategic focus on growth and value 14
  • Growth plan and targets for AM3S AM3S growth target for 2009 and 2012* • Target to grow shipments by 60% over next 6 years and distribute & process 50% of Group deliveries* 20 >60% 18 – Reach around 25% market share in all 16 major European countries 14 – Take positions in fast growing 12 economies – Develop presence in BRICET 10 17 – Review other development opportunities 8 14 6 11 • Growth will be fueled through M&A and/or 4 greenfield capex depending on market 2 conditions and/or acquisition opportunities 0 2006 2009 2012P Dow nstream 38% > 45% > 50% integration* “Make or Buy” alternative cautiously monitored to focus on accretive acquisitions *Excluding shipments directly distributed by mills to large customers and excluding ArcelorMittal International (trading) 15
  • Progress in growth plan since 2006 AM3S growth initiatives realized or announced since 1st August 2006 Initiative Location Type of facility or name of acquisition Volume Greenfield Poland (Krakow) Steel Service Center 450,000t Greenfield Poland (Rawa) Panel & Profiling lines for Construction 50,000t Greenfield Slovakia (Senica) Steel Service Center 200,000t Greenfield Slovakia (Senica) Profiling line for Construction 35,000t Greenfield Czech Republic Steel Service Center 250,000t (Ostrava) Greenfield Romania Panel & Profiling lines for Construction 17,000t (Bucarest) M&A Turkey Acquisition of Rozak 460,000t An expansion of 1.5 million tonnes with 69% greenfields and 31% acquisitions 16
  • Central & Eastern Europe growth plan AM3S current locations in CEE Leveraging ArcelorMittal leadership in region • ArcelorMittal mills strong presence in CEE boosts AM3S commercial presence • Since January 2007, expansion of 900kt greenfield • The largest investments have been concentrated in Poland, as the main country in the area: – new SSC in Kracow (450kt) – new panel plant in Rawa (50kt) • AM3S has also entered into JV with Gonvarri in Slovakia. • Several M&A projects under negotiation Shipments target in region (mt) 4.0 x3.5 3.0 Distribution 2.0 Construction 3.5 Service Centers 1.0 1.0 0.0 2006 2012P 50% of volume target can be achieved by organic growth due to synergies with ArcelorMittal mills (logistics & product range) 17
  • Turkey, Middle East & Caspian area growth plan Reinforcing position in region with Rozak ArcelorMittal network in Turkey, Middle East and Caspian area • Estimated local market share: 15% • Balanced product mix: – Plates: 46% – Beams:43% – Pipes: 3% – Other:8% • Good channel for ArcelorMittal mills, especially for sections from Spain and Luxembourg, + Poland and Galati material. ytilicaf noitubirtsiD sretneC ecivreS • Rozak volume expected to grow from stcejorP 460,000t to 1mt by 2010 noitcurtsnoC noiger ni tnalp leets rojam lattiMrolecrA Local player with regional growth potential well positioned to build ArcelorMittal presence in Caspian area 18
  • Central & South America growth plan ArcelorMittal industrial network in Latin America Leveraging steel making expansion laeralliV htiw VJ • AM3S roadmap: complete network to sustain growth • CST, which will expand its production (galv & HR material) • Sicartsa, after recent integration into ArcelorMittal • Trinidad & Tobago Shipments target in region (mt) 2.5 x2.5 2 1.5 lattiMrolecrA 2.0 tnalp leets 1 radnicA & ogleB krowten 0.5 0.8 0 2006 2012P Development scenario under assessment 19
  • Conclusion 20
  • Growing AM3S ArcelorMittal global industrial leadership offers a unique opportunity to expand AM3S Growth expected to be both internal and external (M&A) A minimum 60% growth target by 2012 Question 5 Do you think AM3S growth relative to the metal distribution & processing metals industry will be: 1 – Faster 2 - Similar 3 – Slower Transforming tomorrow 21
  • Q&A 22