ArcelorMittal - Transforming Tomorrow, Lakshmi Mittal Investor Presentation, Paris 2007
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  • 1. Transforming tomorrow Lakshmi Mittal – President and Chief Executive Officer 11-13 September 2007 – Investor day – Paris
  • 2. 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
  • 3. Agenda • 3 major achievements • Industry opportunities and challenges • Growth targets and strategy • Conclusion 2
  • 4. 3 major achievements 3
  • 5. A successful proactive adjustment of supply for improved market stability Analysis steel downturns in the US market HRC – North America domestic FOB US Midwest mill since 1997 $/short ton 800 Date Length of the Drop in HRC 700 downturn price during period 600 April 1997 to March 1999 24 months -33% 500 April 2000 to December 2001 21 months -36% IC RO le nab 400 July 2002 to July 2003 13 months -33% tai Sus ost hc cas August 2004 to July 2005 12 months -39% 300 s try Indu July 2006 to January 2007 7 months -23% 200 J a -98 Ja 9 Ja 0 J a -01 J a -02 J a -03 J a -04 J a -05 J a -06 7 April 2007 to August 2007 5 months -12% Ju 9 Ju 0 Ju 1 Ju 2 Ju 0 3 Ju 0 4 Ju 0 5 Ju 0 6 Ju 7 l-9 l-0 l-0 9 0 0 0 0 n- n- n- n- n- n- n- n- n- l l l l l l l Ju ArcelorMittal step-change in the consolidation process has been the main driver of a new market oriented behaviour 4 Source: SBB
  • 6. A successful and faster than anticipated integration ArcelorMittal annualised synergies Integration milestones - Announcement of Group Management SG&A and other 1,280 Q3 Manufacturing & Process Optimisation board Purchasing 2006 Marketing & Trading - Value plan 2008 harmonised and synergies target confirmed top down 973 - Integration office in place - Internal roadshow Q4 2006 - Announcement of the complete organisation 573 - Synergies target confirmed bottom-up and incorporated in budget Q1 - Launch of Web-TV and intra-net 2007 - Human Resources harmonisation 269 - Worldwide H&S day - Closure of the integration office Q2 - Brand launch 2007 - Acceleration of captured synergies Captured at Captured at Captured at Estimated at 31/12/06 31/03/07 30/06/07 30/09/07 More synergies captured in purchasing and SG&A than expected 5
  • 7. A successful 3 dimensional strategy for sustainability and for growth Geography Value Chain Products Geographical breakdown of Upstream and downstream Shipments by products production in 2006 integration in 2006 Stainless Pipes & Tubes 2% 1% Africa 100% Wire products 7% 90% Slabs 3% North America 7% 80% 22% CIS and Central Sections 70% Asia 8% HRC 10% 60% Wire Rod 21% 8% 50% 40% Bars & Rebars Central & East 30% 9% Europe South America 45 18% 20% 38 9% Semi Long CRC 10% 4% 10% 0% Other flat Internal iron ore Distribution through 4% Coated Tin plate Plates production and AM3S West Europe 16% 3% 4% strategic contracts 34% A unique geographical and product diversification coupled with upstream and downstream integration providing reduced risk and cyclicality 6
  • 8. 3 achievements improving resilience to cycle and preparing growth ArcelorMittal EBITDA pro-forma EBITDA growth dynamic from: USD16bn USD14.9bn USD15.3bn - Brownfield and greenfield expansion USD 14.4-14.6bn - Value added investment - Mining and distribution growth - Cost reduction and management gains - Merger synergies - Targeted acquisition 9m 2007G* 2004 2005 2006 HRC FOB US Midw est $/s.ton Stability period Step change period Pre-merger Post-merger 7 *Guidance
  • 9. Industry opportunities and challenges 8
  • 10. A new demand growth dynamic due to China and emerging economies World steel apparent demand from 1950 to 2006 Breakdown of world population – millions of tonnes Developed World* 1400 15% +7%/y 1200 China 22% +1%/y Emerging World 1000 63% 800 Steel consumption per capita in 2006 (kg) 600 +5%/y 500 400 400 300 467 200 200 266 100 0 86 0 19 19 19 19 19 20 50 60 70 80 90 00 Emerging World China Developed World* World steel market expected to grow by 3 to 5% per year for the next 10 years driven by continuing industrialisation from China and emerging economies 9 * Developed world includes US, Canada, EU15, Japan and Korea Source IISI
  • 11. Chinese growth expected to continue at strong pace in two of the “three Chinas” Steel consumption per capita in 2006e (kg)* Steel consumption per capita in 2006 (kg) 1200 1000 800 600 1002 845 400 606 200 266 0 China Japan Taiw an Korea West Middle Apparent consumption of finished steel (mt)* Coastal China China China 700 (80 kg) High case and low (100 kg) 600 (575kg) case scenario 500 400 300 200 Development and Population growth potential Migration 100 0 20 P 20 P P 84 86 88 90 92 94 96 98 00 02 04 20 6 08 10 12 0 19 19 19 19 19 19 19 19 20 20 20 20 ArcelorMittal is well positioned to capture growth opportunities in China through its different partnerships and participations *IISI and ArcelorMittal estimates 10
  • 12. Low steel consumption in South America represents a growth opportunity American population breakdown Steel consumption per capita in 2006 (kg) 600 400 Central 200 397 America 117 110 98 77 0 19% Other Brasil Argentina Venezuela United South States America US & Canada Apparent consumption of finished steel (mt)* 38% 50 40 30 South 20 America 43% 10 0 P P P 94 96 98 00 02 04 06 08 10 12 19 19 19 20 20 20 20 20 20 20 Leader in the region and present in all products (Long, Flat & Stainless steel), ArcelorMittal is ideally positioned to capture market growth *IISI and ArcelorMittal estimates 11
  • 13. Africa, Middle East and CIS new growth supported by the oil and commodity boom Population in Africa, Middle East and CIS (million) Apparent consumption of finished steel (mt)* 800 600 200 400 200 150 0 Middle East CIS Africa Steel consumption per capita in 2006 (kg) 100 600 400 50 467 200 248 163 149 62 104 21 57 0 0 IS * st e a t a a ld yp P P P in Ea si 94 96 98 00 02 04 06 C ric ric or 08 10 12 a us Eg er Af W kr Af 19 19 19 20 20 20 20 e R 20 20 20 th U dl th d er id O e th u M op So O el ev Africa Middle East CIS D Number 1 in Africa, CIS and principal supplier of steel to Middle East, ArcelorMittal has a unique opportunity to leverage its position in those markets *IISI and ArcelorMittal estimates 12
  • 14. The very promising Indian steel market Indian steel industry and main greenfield projects Steel consumption per capita in 2006 (kg) 800 600 400 714 200 266 72 38 0 India South East China Japan & Asia Korea SAIL Essar AM Jharkhand Apparent consumption of finished steel (mt)* Tata 70 SAIL POSCO 60 SAIL Ispat AM Orissa 50 JSW 40 30 20 10 ArcelorMittal Greenfield projects 0 P P P 94 96 98 00 02 04 06 08 10 12 19 19 19 20 20 20 20 20 20 20 With 2 major greenfield projects in the country, ArcelorMittal is ideally positioned to benefit from the strong and sustainable growth of the Indian market *IISI and ArcelorMittal estimates 13
  • 15. Mature markets to benefit from new dynamic members in EU27 and NAFTA Steel consumption per capita in 2006 (kg) Steel consumption per capita in 2006 (kg) 600 600 400 400 531 200 402 344 200 397 293 278 177 161 0 0 Romania Poland Turkey Other new EU 15 Mexico US Canada EU (10) Apparent consumption of finished steel (mt)* Apparent consumption of finished steel (mt)* Central & East Europe European Union (15) Mexico US & Canada 300 200 250 150 200 150 100 100 50 50 0 0 P P P P P P 94 96 98 00 02 04 06 94 96 98 00 02 04 06 08 10 12 08 10 12 19 19 19 20 20 20 20 19 19 19 20 20 20 20 20 20 20 20 20 20 Approx. 50% of the EU27 and NAFTA growth is expected to come from Central & East Europe and Mexico where ArcelorMittal is the leading steel producer *IISI and ArcelorMittal estimates 14
  • 16. Facing the new challenges of the steel industry – Expanding capacity to answer demand growth without creating over-capacity Growth Systematically challenging investments projects – Responding to customer demands for improved services, quality and innovations Product Investing in value added products and downstream – Facing constant cost pressure in particular from raw materials and energy Cost Realising operational excellence and global sourcing – Assuming Corporate Social Responsibility and facing global Sustainable warming Development Implementing ambitious CSR strategies ArcelorMittal strategy to answer the industry’s new challenges 15
  • 17. Growth targets and strategy 16
  • 18. An internal growth plan of more than 20%* increase in shipments by 2012 World crude steel production (million tonnes) ArcelorMittal shipments (million tonnes) 1,800 1,500 - 1,600 1,600 131 140 126 1,400 1,244 120 111 1,200 100 1,000 80 800 60 600 40 400 20 200 - 0 2006 2012P 2006 2012 including 2012 including projects done or projects under approved study World steel production expected to grow between 20% and 30% by year 2012 (or a Internal growth plan target to increase yearly growth rate of 3% to 5%, depending ArceloMittal shipments by 22mt* to on high or low case scenario 130mt by year 2012 ArcelorMittal target for internal growth matching world market low case scenario growth to ensure healthy supply/demand equilibrium *Internal growth related to internal investment projects done, approved and under study. Volumes in 2012 are excluding Sparrows point 17 disposal and European remedies and includes Sicartsa acquisition
  • 19. A very achievable target considering leadership in high growth markets ArclorMittal production breakdown and market position in 2006 Uncontested global leadership and capability in: Latin Am erica Rank No 1 13% • Marketing • Purchasing • Human Resources Central & East Rank No 1 • Industrial assets Europe 18% • Mining assets West Europe, • Technology US & Canada • R&D 52% CIS and Rank No 2 • Financials Central Asia 10% … to provide leverage for high Africa Rank No 1 return growth in emerging 7% economies Approximately half of ArcelorMittal industrial network is located in high potential growth markets 18
  • 20. Value chain and product growth adding to volume growth plan Mining Distribution Product growth growth growth Iron ore production internal Value added products and AM3S volume increase growth plan (mt)* enhancement target (mt) target (mt)** 20 70 66 18 20 58 60 +6m t 16 53 14m t 51 +60% 14 50 45 15 12 40 10 10 30 8 6 20 5 4 10 2 0 0 0 Co ated CRC Sectio ns P lates Tin plate Upgraded 2006 2007 2008 2009 2010 2006 2012 pro ducts by 2012 3 dimension growth strategy not only focused on internal capacity growth but also mining, distribution and value added mix growth *excluding strategic contracts Cleveland Cliffs (11.2mt), South Africa (8.5mt) and Brazil (1.4mt) 19 **excluding trading
  • 21. Achieving cost leadership and operational excellence Steel industry HRC production cash cost in H2 2006e* ArcelorMittal HRC production cash cost in H2 2006 500 500 Average 420 USD/t Average 390 USD/t 400 400 300 300 200 200 100 100 0 0 IS IS Am a a a n a a a pe a e ric ic ic pa ic ic si n op C C ro hi er er er er fA Af Ja r & C Eu Eu Am Am Am to a ri c es th th h h Af ut ut R or or So So N N Example of initiatives Group strategy • Knowledge management and best practice • Transfer of best practice from Europe and Brazil to US • Practical good capital management • Specific energy cost reduction in FCA • Development of a competitive supply base • Increasing sourcing from China and alternative suppliers ArcelorMittal strategy is not only about growth but also continuous cost reduction beyond merger synergies * WSD, JPM, BCG and ArcelorMittal estimates 20
  • 22. Implementing a Corporate Social Responsibility strategy Human Environment Communities Shareholders Resources Communities Social Environmental Corporate Commitments Commitments Commitments Governance Commitments • Local economic • Board independence • Greenhouse gas • Health & Safety development emissions • Foundation for social • Waste, water resources • Equal rights among • Social dialogue investment practice and pollution shareholders • Community • Research & • Best in class • Human rights and best engagement around Development of product shareholder dialogue in class labour new acquisition and sustainability standards resettlements 12 commitments to transform tomorrow 21
  • 23. Conclusion 22
  • 24. ArcelorMittal new dynamic A strong resilience to economic cycle An ambitious internal growth plan Long term Greenfield projects and M&A to accelerate growth Question 1 ArcelorMittal deserves a premium to Steel industry multiples due to: 1 - Uncontested leadership 2 - More stable profile 3 - Superior growth profile 4 - Combination of above points 5 - Does not deserve a premium Transforming tomorrow 23
  • 25. Q&A 24