Arcelor posts strong first quarter results confirming targets of its value plan Press Webcast
Slides Press
Strong 1 st quarter results confirm consistency of business model
Buoyant demand since end of Q1 with strong recovery of pricing just starting
Performance driven by all Arcelor businesses with excellent results for Long Carbon Steel and improved performance for Stainless
Q1 performance supporting successful implementation of Arcelor’s value plan
Integration of Dofasco smooth and beyond expectations with results in line with forecasts
EBITDA : EUR 1,427 million
Net profit group share EUR 761 million
Luxembourg , May 12, 2006 – Arcelor delivered strong first quarter results in an improving demand environment with prices just starting to recover and marked by continuous high costs of raw materials. Since the end of the quarter demand growth has been accelerating and selling prices should improve starting in the second quarter.

Throughout the quarter, Arcelor further strengthened the structural competitiveness of its operations, with management gains at EUR 160 million consistent with the Arcelor 2006-2008 Value Plan targeting a normalized annual EBITDA of EUR 7 billion.

“This result achieved while the company is the target of a take-over attempt is the best proof of the commitment of all of Arcelor’s 110000 employees to create value for our shareholders and to build the long term future of Arcelor.” Joseph Kinsch, Chairman of the Board of directors, said.

Net result, group share, was EUR 761 million compared to EUR 949 million for the first quarter of 2005.

“This solid performance compared to last year’s exceptional quarter demonstrates the ability of Arcelor to perform well in a context of massive materials cost increases and lower spot prices.” said Arcelor CEO Guy Dollé.

In the first quarter the company continued to pursue expansion opportunities in markets with a high growth potential.

“The acquisition of Canadian steelmaker Dofasco and the agreements to take significant stakes in Chinese steel producer Laiwu and in Moroccan construction steel specialist Sonasid, all in this quarter illustrate well our external growth strategy,” Guy Dollé said, adding: “These moves as well as organic growth initiatives such as the 50% increase of our slab production capacity in Brazil that will come on stream this year contribute to strengthen our global industry leadership position.”

Dofasco, which has been consolidated from March 1, 2006, had no impact on results in the first quarter, due to IFRS purchase accounting but operating results in line with the forecast should positively contribute to earnings at the end of the second quarter.

Net debt rose to EUR 5,742 million at March 31, 2006 due to the acquisition of Dofasco, compared to 1,230 million at December 31st, 2005 while total shareholders equity (including minorities) reached 18,602 million.

Active portfolio management was pursued with the agreement, at the beginning of the second quarter, to sell the long stainless business Ugitech to Schmoltz&Bickenbach following the strong recovery of this activity.

Prospects

Excluding China, apparent world steel consumption growth should be 6 % this year after -1.5% in 2005. A stronger pressure on demand generates price increases on semi finished as well as on finished steel products.

Carried by a favourable global economic environment showing a sustainable growth,pattern demand for steel is now strong and rising, driven by consumer demand and inventory adjustments to more normal levels. In this buoyant environment that is also marked by higher raw materials prices, Arcelor has announced price increases for its flat carbon business for the third quarter and already from first quarter on for stainless steel products.

As a consequence, thanks to a very good demand in the second and the third quarters, Arcelor expects excellent performance and very strong results in line with its ambitious targets of value creation for shareholders.