Arcelor shows strong quarterly performance
· Strong generation of cash flow
· Reinforced Balance Sheet
· Expansion in Brazil
· Positive outlook for Q4
Third quarter results confirmed the positive trend in revenues and profits despite the traditional summer slowdown in Europe. World steel consumption continues to grow at a healthy pace, driven by continuous strong demand from China despite government efforts to avoid an overheating of the economy. Arcelor results were mainly driven by contributions from the Long Carbon Steel and Distribution Sectors. For the first nine months of the year, price increases for Flat Carbon Steel general industry shipments and constant prices for contract business hardly offset increased raw material and energy costs, so that margin improvement was mainly due to better performance of operations and continuous implementation of synergies.
Finally, a strong cash flow generation and the successful rights issue (for financing the acquisition of Brazilian assets) allowed a reduction of financial net debt.
Since last summer, Arcelor has successfully closed several agreements allowing the Group to fully consolidate CST as from October 1st, 2004.

The board of directors of Arcelor met on November
12, 2004 under the chairmanship of Joseph Kinsch and reviewed the Group consolidated accounts for the third quarter of 2004.
Consolidated net result, Group share for the third quarter of 2004, was EUR 629 million, compared to EUR 101 million for the same period of last year.
Consolidated revenues for the Group for the first nine months of 2004 amounted to EUR 21,745 million compared to EUR 19,451 million for the same period last year (+ 15.2% on a comparable basis). Net consolidated result, Group share, was EUR 1,494 million for the first nine months of 2004, compared with EUR 459 million at September 30, 2003.
At EUR 7,152 million for the third quarter of 2004 compared to EUR 5,869 million for the same period last year, consolidated revenues increased by 21.9% (25.6% on a comparable basis, mainly following the disposal of the tube business and Thainox). This evolution translates the increase of average selling prices for steel, specifically for flat carbon steels (excluding annual and multi-year contracts) since July and for long carbon steels since the beginning of the year (mainly due to the scrap surcharge introduced for
most products), but also an increase in shipped volumes for flat carbon steels compared to the low volumes of third quarter of 2003.
Consolidated gross operating result for the third quarter amounted to EUR 1, 098 million compared to EUR 416 million for the third quarter 2003, or a 15.35% margin against a 7.09% margin for the same period of 2003. Gross operating results incorporate several non-recurring items (capital gains and losses on minor disposals as well as EUR 100 million of exceptional charges for restructuring of the Spanish facilities, the net amounting to EUR -163 million).
Consolidated gross operating result for the nine months up to September 30th
amounted to EUR 2,877 million compared to EUR 1,692 million for the same period of last year.
Quarterly consolidated operating result was EUR 835 million for the third quarter of 2004 versus EUR 169 million for the equivalent period last year, which corresponds to an 11.7% margin versus 2.9% respectively.
After a financial result of EUR -37 million, a contribution from associates of EUR 158 million (including EUR 65 million for CST) and income tax of EUR 201 million, consolidated net result, Group share was EUR 629 million compared to EUR 101 million for the same period last year.

Prospects
Economic growth remains sustained since the beginning of the year and while some
adjustments have been observed in Asia last summer, demand in China stays strong. Real consumption is expected to continue to grow during the next months as inventory levels can be considered normal.
European spot selling prices for flat carbon steels continue to be lower than those achieved in North America despite price increases for the third quarter that aimed at aligning prices to world levels.
If this gap tends to narrow through additional price adjustments for the fourth quarter it is without negative consequences for volumes. Inventories remain at normal levels despite slight restocking.
In a context of strong global demand and reduced imports into Europe and despite more attractive prices in US dollars, especially in North America, Arcelor remains committed to serve its historic European customers.
Raw material and freight costs are expected to increase further starting from very high levels despite a possible volatility of apparent consumption next year. These increases should nevertheless be transferred, within the frame of long term contract renegotiations with the automotive, packaging and appliances industries.
Thanks to the implementation of strong cost reduction programs, Arcelor takes the best advantage of the current economic environment and pursues its transformation.
CST (Flat Carbon Steel, Brazil) will be fully consolidated as of October, 1st 2004, therefore confirming a first step of a larger exposure of the Group to higher growth areas.