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Growth Plan 2012, Aditya Mittal Investor Presentation Paris Sept 2007

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Information about Growth Plan 2012, Aditya Mittal Investor Presentation Paris Sept 2007

Published on October 4, 2007

Author: jasmo

Source: slideshare.net

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Growth plan 2012 Aditya Mittal – Chief Financial Officer and 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 • Growth plan highlight and methodology • Growth plan targets by division • CAPEX and financing • Greenfield and M&A update • Conclusion 2

Growth plan highlight and methodology 3

Growth plan 2012 within ArcelorMittal three dimensional growth strategy 3D and key pillars growth Targeted strategy Brownfield Greenfield acquisition Geography Growth plan 2012 Greenfield and M&A growth Products Product Value added mix improvement growth and value chain Value Chain growth Value Chain Internal growth plan 2012 is only one part of group growth strategy 4

Growth plan 2012 highlight Shipments target in million tonnes* Comments about Growth plan 140 • Investment projects approved (15mt) 130 5 – Projects approved by investment allocation committee, by group management board and 120 15 by board of directors 110 • Investment project options (5mt) 131 – Projects still under internal study 100 111 103 • Shipments to be proactively adjusted to 90 economic condition when required 80 2005 2006 Projects Projects Grow th plan approved under study 2012 Approximately 75% of volume of the growth plan 2012 already done or approved for a potential investment of USD 7bn over 6 years *Growth plan 2012 adjusted with European long products remedies, Sparrows Points disposal and Sicartsa acquisition - 5 Growth plan 2012 confirmed the Value Plan 2008

Methodology and criteria used to assess initiatives Project is strongly supported by market demand, including likely 1. Market demand behaviour of competitors Market 2. Value addition in Project is focused on increased production of value-added products product mix Project minimises logistical costs in the delivery chain to customer; 3. Flow to market logistical infrastructure is adequate in the delivery chain 4. Asset utilisation and Project requires minimal capex; or project is focused on assets that performance are at or close to benchmark levels of utilisation, productivity, yield etc Industrial 5. Cost leadership Project is being implemented in a plant that is a cost leader Project eliminates bottlenecks and optimises production flows; 6. Balanced local flows logistical infrastructure is adequate in the production chain Internal capability Adequate human resources with right skill set (e.g. project 7. Deliverability management) have/will be provided for this project Costs required to ensure project fully complies with environmental Environmental 8. Environmental requirements now and in the future are minimal; no significant hurdles issues for environmental approvals Investment decision focus on high return projects 6

Growth plan targets by division 7

Growth plan 2012 by division Shipments breakdown by segment in 2006 and in 2012 as projected in growth plan (mt) Flat Carbon Europe Long Carbon**** 37 37 33 2006 2012P* 2012P** 30 27 25 Flat Carbon Am ericas*** Asia, Africa & CIS 2006 2012P* 2012P** 32 31 27 30 29 Stainless 20 2006 2012P* 2012P** 2006 2012P* 2012P** 2.4 2.2 2.2 2006 2012P* 2012P** Growth projects focus on high growth market and low cost area *Include only projects done or approved **Include projects done, approved and under study 8 ***Include Sparrow Points disposal (30mt of shipments in 2006 including Sparrow Points) ****Include European long products remedies and Sicartsa acquisition

Flat Carbon Americas growth plan 2012 Shipments target in million tonnes* Main projects already done or approved Sparrows Point • Tubarao (Brazil) – Heat Recovery Coke Batteries with a capacity of 1.5mt of coke and power generation of 170 mw 32 31 – Slab capacity increase from 5mt to 7.5mt 27 – Hot strip mill expansion from 2.5mt to 4mt • Lazaro (Mexico) – CO2 absorption system to increase DRI production by 2006 2012 Projects done 2012 Projects 270,000t (module 1) or approved under study CAPEX for projects done, • US approved or understudy – Includes 1mt volume recovery relative to production adjustment to market in 2006 USD 0.5bn Approximately 80% of projects of the growth plan 2012 already done or approved *2012 includes Sparrows Point disposal 9

Flat Carbon Europe growth plan 2012 Main projects already done or approved Shipments target in million tonnes • Krakow (Poland) – New Hot Strip mill leading to quality and yield improvements and additional capacity of 300,000t – 2nd phase Hot Strip mill linked to Dabrowa 37 37 33 Gornica new continuous caster no.3 adding 1.7mt • Liege (Belgium) – Restart of blast furnace no.6 of 1.2mt leading to 2006 2012 Projects done 2012 Projects a 2.7mt capacity or approved under study • Bremen (Germany) – Slab expansion of 500,000t for line pipe CAPEX for projects done, • Aviles (Spain) approved or understudy – Plate expansion of 200,000t USD 0.3bn Approximately 100% of projects of the growth plan 2012 already done or approved 10

Long Carbon growth plan 2012 Shipments target in million tonnes* Main projects already done or approved • Long carbon Americas – Acindar (Argentina) steel capacity increase by 300,000t – Turnaround program at Point Lisas (Trinidad), Sicartsa (Mexico), Indiana Harbor (US) and Georgetown (US) 30 resulting in 0.4mt additional volume 27 25 – Continuous improvement in Steelton (USA), Juiz de Fora (Brazil) and other South American to contribute for approximately 0.4mt additional volume 2006 2012 Projects done 2012 Projects • Long carbon Europe or approved under study – Zagora (Spain) plant relocation adding 400,000t capacity CAPEX for projects – Duisburg (Germany) contract for 200,000t additional hot done or approved metal – Differdange (Luxembourg) Revamping EAF adding 160,000t – Hunedoara (Romania) Improved EAF adding 130,000t USD 1.4bn – Rodange (Luxembourg) mill revamping adding 300,000t of sheet piles Approximately 40% of projects of the growth plan 2012 already done or approved *2012 include European long products remedies and acquisition of Sicartsa 11

Africa, Asia & CIS growth plan 2012 Main projects already done or approved Shipments target in million tonnes* • Africa – Vanderbijlpark (South Africa) DRI increase of 350,000t – Turnaround program at Annaba (Algeria) resulting in 400,000t additional volume 30 29 – Continuous improvement in various South African plants to contribute approximately 0.5mt additional volume 20 • Asia & CIS – Kryviy Rih (Ukraine) liquid steel capacity to increase to 12mt including flats products 2006 2012 Projects done 2012 Projects – Temirtau (Kazakhstan) productivity and bar mills projects or approved under study resulting in 1.2mt increase CAPEX for projects – Zenica (Bosnia) restarting 1mt integrated route done or approved • Pipes & Tubes – Saudi Arabia (Asia) Greenfield project of 500,000t – Various organic growth projects resulting in 300,000t USD 4.2bn volume increase Approximately 85% of projects of the growth plan 2012 already approved *Includes Pipes & Tubes projects 12

CAPEX and financing 13

A net debt well under control supported by a high free cash-flow generation Net debt on EBITDA annualized Free cash-flow* / EBITDA 2006 (%) 2.5 60% 50% 2 40% 1.8 1.5 30% 1.6 1.2 1.2 1.3 1.1 1 20% 10% 0.5 0% 0 s ls g es s e l se s el a iv in od ga al ia itt e i ti en ot in ic St er Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 go rM til d M m om f at an De U lo l he m ita ut e il & C g rc O ap A in e A C c ld pa ui os B er A USD 23.2 billion of net debt at end of Q2 2007 Source: Exane BNP Paribas – Arcelor Mittal *To facilitate comparisons on this slide, free cash-flow is defined as proforma cash-flow from operations minus total CAPEX 14

Growth plan fully financed by cash-flow allowing debt reduction and M&A EBITDA, cash-flow from operating activity and free cash-flow CAPEX program estimates related to in H1 2007 (USD billion) growth plan 2012 Financial charge, tax, change in 3.3 w orking capital 4.7-5.0 Maintenance 1.2 4.6 CAPEX 4.1 9.7 Grow th CAPEX 1.1 Dividend 6.4 1.9 G ro w t h Debt reduction 2.2 and acquistions M ai nt enance EBITDA Cash flow from Free cash-flow operating allocation activities 2005 2006 2007 2008 2009 2010 EBITDA 14.9 15.3 Increase Maintenance CAPEX to represent USD 2.5bn in 2007 CAPEX to grow with underlying EBITDA growth of the group 15

Greenfield and M&A update 16

M&A and 3 dimensional growth strategy Requirement for low risk and value creative M&A growth strategy: Geography - Leadership and global reach for maximising opportunities Product - Price sensitive approach - Experience and integration know-how to deliver synergies Value Chain Market position by region No 1 in Eastern No 1 in A unique global and No 1 in Europe and CIS Western Europe North America industrial intelligence network multiplying number of opportunities Extremely large number of No 1 in Strategic presence opportunities allow high level No 1 in Africa South America in Asia of selectivity and reduce risks M&A to remain a key pillar of growth strategy 17

Earning accretive acquisition of Arcelor Brasil minority interests ArcelorMittal industrial position in South America • Leading producer in South America with 10.1mt of production in 2006; Arcelor Brasil is one of the most competitive producers in the world with an EBITDA margin of 32.2% in 2006 • Acquisition for USD 4.2bn and 27 million shares elevating ArcelorMittal stake to 97.85% • Transaction allowing to simplify structure, to optimize debt/cash-flow, to potential gain on tax and to increase exposure to growing South American market Brazil finished steel consumption (mt)* Geography Long Carbon Product 22 Flat carbon 18.5 15.8 Stainless steel 12.1 Value Chain 1994 2000 2006 2012P Transaction expected to be EPS accretive 18 *IISI and ArcelorMittal estimates

Recent growth initiatives in Pipes & Tubes Pipes & Tubes industrial positioning • Construction of a 500,000t seamless tubes mill in Saudi Arabia to serve fast growing middle east high quality grade tubes market Acquisitions in France • Preliminary agreement to acquire a 100,000t welded tubes mill and tubular components plant for the automotive industry Saudi Arabia • Project providing significant marketing and project industrial synergies Geography Product Value Chain sebut sselmaeS sebut dedlew aid llamS sepip dedlew aid egraL Leveraging steel leadership to create a world class Pipes & Tubes leader 19

Acquisition of Wabush mines operations Canada iron ore organisation • Acquisition for USD 67m of 100% of Wabush mine cebeuQ rodarbaL operations by exercising option on 71.4% of the shares not already owns • Wabush mine operations to generate synergy with QCM CCOI mining operation related in particular to optimisation of the Wabush pellet plant (6mt capacity located in Pointe-Noire) thgirW-tnoM hsubaW MCQ • Operations to increase Group pellet production by about 3.5 million tonnes per year y a wli Geography noitarepo gninim lattiMrolecrA ar tisoped ero norI M Product C enil cirtcele-ordyH Q selI tpeS yawliaR Value Chain erioN etnioP lanimret gnippihS reitraC troP revir tneruaL tS Getting closer to objective of 75% iron ore self-sufficiency 20

Planned acquisition of the steel distributor Rozak in Turkey Rozak distribution network • Agreement to acquire 51% of Rozak, a Turkish Steel Distributor • Leading distributor in Turkey with a 450,000t of products shipped in 2006, Rozak is expecting to expand rapidly in line with dynamic market growth • Platform to expand AM3S in Central & East Europe but also toward Middle East and Caspian area Turkey finished steel consumption (mt)* Geography Tata Product 31 21.9 12.7 Value Chain 6.9 esuoheraW retnec ecivres erutuf rof dnaL 1994 2000 2006 2012P Leveraging industrial leadership in Central & East Europe to grow in distribution *IISI and ArcelorMittal estimates 21

Major Greenfied projects in India progressing Indian steel industry and main Greenfield projects Jharkhand • MoU signed on 12th October 2005 • Site to be announced immediately after the notification of Rehabilitation & Resettlement policy by Jharkhand government Orissa • MoU signed on 21st December 2006 SAIL • Site announced and application for lands and mines Essar AM Jharkhand Tata underway SAIL Each Project POSCO SAIL Ispat Geography AM Orissa • Project to built a 12mt steel plant in 2 phases of 6mt with access to 600 million JSW tonnes of iron ore deposit Product • Investment of USD 10 billion including mining development, coke plant and Value Chain power plant Main local producers Greenfield projects Orissa and Jharkhand Greenfield projects representing a 24mt steel potential *IISI and ArcelorMittal estimates 22

Conclusion 23

Demonstrating growth Internal growth plan expected to increase volume by 20% by 2012 Greenfield projects in India to add another 20% volume growth Underlying profitability to progress significantly faster than volume growth as internal growth projects initiated in low cost area Question 2 How do you consider Group growth plan? 1 – Disruptive to market 2 – Above expectation 3 – In line with expectation 4 – Below expectation Transforming tomorrow 24

Q&A 25

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