arcelormittal - growing am3s - investor presentation, sept 2007
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Growing AM3S
11-13 September 2007 – Investor day – Paris
Gonzalo Urquijo – Member of GMB
1
DisclaimerForward-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.
2
Agenda
• The growth opportunity
• Steel Solutions and Services
• Strategy and growth plan
• Conclusion
3
The growth opportunity
4
The worlds largest steel distributor and processor in a fragmented industry
Leading Metals distributors and processors by sales in 2006 (USD billion)*
AM3S is the worlds largest steel distributor and processor
*Sources: company reports
11.911.0
7.05.9 5.7
A rcelo rM itta l T hyssenKrupp Klo eckner R yerso n R eliance
Market position by region
Steel production AM3S
Strategic presence
No 1
No 1
No 1No 1
No 1
Strategic presence
Strategic partnership
Significant presence
Strategic presenceNo 1
Leading position
EuropeNorth America
South America
Africa
Asia
Eastern Europe and CIS
5
AM3S is distributing and processing 38%* of Group shipments to distribution
This relatively low level of internal distribution and the small size of AM3S
relative to the group represents a unique growth opportunity
ArcelorMittal steel production network111mt of shipments
Distribution
Service Centers
5.1mt
Construction
0.7mt
International
(trading)
12mt
Distribution
5.4mt
Final customer
ArcelorMittal distribution network
Other steel producer
Direct distribution
Other
Distributors
AM3SOther
distributors
Approx 20mt
85% of AM3S needs 15%
Direct distribution
to large customers
*Excluding shipments directly distributed by mills to large customers
6
Benefits and synergies resulting from downstream integration
AM3S to benefit from superior growth opportunities
Benefits to ArcelorMittal
mills
Benefits to
AM3S
Benefits to Customer
• Optimising supply chain management & working capital requirement
• Optimising upstream utilization: Supports mill sales in low market periods and complements Group sourcing in tight markets
• Providing market intelligence: Gives us insight into market trends, customer needs
(including new products) and activities of competitors
• Improving and stabilising our mills’ market shares in domestic markets
• Offering direct access to ArcelorMittal’s unique range of products, services and solutions for all
size of customer
• Reducing delivery times and improving product availability due to close relationship with
upstream mills
• Benefiting from improved price stability and reduced risk due to ArcelorMittal sustainable price
policy
• Improving global value chain efficiency with shared inventories and logistics flows
• Benefiting from ArcelorMittal brand and leadership
• Offering new products and custormer assistance with support of ArcelorMittal’s unmatched
R&D capability
• Expanding and gaining market share due to improved sourcing and support from
ArcelorMittal industrial network
7
Steel Solutions and Services
8
Sales breakdown of AM3S excluding AM International (trading)
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
Turnover by tonne processed or distributed in 2006
(base 100 for HRC in North Europe)
Unique services and value to customer supported by a unique organisation
Distribution
51%Services
Centers
38%
Construction
11%
0
50
100
150
200
250
300
HRC* Service Centers Distribution Construction
9
5.4 million tonnes distributed annually from 19 countries and 230 locations
ArcelorMittal Distribution geographical layout
ArcelorMittal Distribution
Retail networkTotal Offer ProviderProjects
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.
A strong growth potential in emerging markets
10
5.2 million tonnes processed annually in 10 countries at 44 plants and 200 production lines
ArcelorMittal Steel Service Centers geographical layout
ArcelorMittal Steel Service Centers
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
A strong growth potential
Steel Service Center networks
11
Approx. 700,000 tonnes shipped annually from 52 manufacturing sites in 25 countries
ArcelorMittal Construction geographical layout
ArcelorMittal Construction
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)
Opportunities to grow in developing
economies
Production and commercial company
12
12 million tonnes shipped annually with >50 offices on 5 continents
ArcelorMittal International geographical layout
ArcelorMittal International
A global organisation allowing us to capture
best commercial opportunities
Business areasPlatforms for sales / trading
- Sales & Marketing for Group mills exports
- Trading
- End-user contacts
in all markets
- Market intelligence resource
- Credit risk management
& know-how in export markets
13
Strategy and growth plan
14
• Reinforcing market share in West Europe and in particular in
Germany, Italy and UK
• Leveraging upstream leadership
in Central & Eastern Europe to
implement AM3S business model in those high growth
markets
A strategic focus on growth and value
High level strategic priorities
Strengthening
of European
core leadership
Adding value
with new
products and
services
Expanding
operation in fast
growing and
strategic markets
• Improving service provided to large industrial customers
(Faurecia, Carrier, Otis,…)
• Developing new sophisticated
processing (blanks) for
automotive industry
• Thorough segmentation
• Accompany or precede upstream strategies in fast
growing areas
Growth and value- added plan to be realised
through internal investment, greenfield and M&A
15
• Target to grow shipments by 60% over next 6 years and distribute & process 50% of Group deliveries*
– Reach around 25% market share in all
major European countries
– Take positions in fast growing
economies
– Develop presence in BRICET
– Review other development opportunities
• Growth will be fueled through M&A and/or greenfield capex depending on market conditions and/or acquisition opportunities
“Make or Buy” alternative cautiously monitored to focus on accretive acquisitions
Growth plan and targets for AM3S
AM3S growth target for 2009 and 2012*
*Excluding shipments directly distributed by mills to large customers and excluding ArcelorMittal International (trading)
11
14
17
0
2
4
6
8
10
12
14
16
18
20
2006 2009 2012P
>60%
Dow nstream
integration*38% > 45% > 50%
16
Progress in growth plan since 2006
250,000tSteel Service CenterCzech Republic
(Ostrava)
Greenfield
VolumeType of facility or name of acquisitionLocationInitiative
460,000tAcquisition of RozakTurkeyM&A
17,000tPanel & Profiling lines for ConstructionRomania
(Bucarest)
Greenfield
35,000tProfiling line for Construction Slovakia (Senica)Greenfield
200,000tSteel Service CenterSlovakia (Senica)Greenfield
50,000tPanel & Profiling lines for ConstructionPoland (Rawa)Greenfield
450,000tSteel Service CenterPoland (Krakow)Greenfield
AM3S growth initiatives realized or announced since 1st August 2006
An expansion of 1.5 million tonnes with 69% greenfields and 31% acquisitions
17
• 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
AM3S current locations in CEE
50% of volume target can be achieved by organic growth due to synergies with ArcelorMittal mills (logistics & product range)
Central & Eastern Europe growth plan
Distribution
Construction
Service Centers
Leveraging ArcelorMittal leadership in region
1.0
3.5
0.0
1.0
2.0
3.0
4.0
2006 2012P
x3.5
Shipments target in region (mt)
18
Turkey, Middle East & Caspian area growth plan
Distribution facilityService CentersProjectsConstructionArcelorMittal major steel plant in region
ArcelorMittal network in Turkey, Middle East and Caspian area
Local player with regional growth potential
well positioned to build ArcelorMittal presence in 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.
• Rozak volume expected to grow from 460,000t to 1mt by 2010
Reinforcing position in region with Rozak
19
• AM3S roadmap: complete network to sustain growth
• CST, which will expand its production (galv & HR
material)
• Sicartsa, after recent integration into ArcelorMittal
• Trinidad & Tobago
Central & South America growth plan
Development scenario under assessment
ArcelorMittal steel plant
ArcelorMittal industrial network in Latin America
Belgo & Acindar network
JV with VillarealShipments target in region (mt)
Leveraging steel making expansion
0.8
2.0
0
0.5
1
1.5
2
2.5
2006 2012P
x2.5
20
Conclusion
21
Growing AM3S
Transforming tomorrow
�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
22
Q&A
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