ArcelorMittal targets $3 billion savings to help margins
By Philip Blenkinsop
BRUSSELS (Reuters) - ArcelorMittal ISPA.AS, the world's largest steelmaker, set out a new $3 billion savings plan to restore steel margins to levels unmatched since the crisis struck in 2008.
The new plan is the latest step in its aggressive response to steel sector problems that include a nine percent slide in demand in the European Union last year.
The Luxembourg-based company has already sold assets, launched a rights issue, cut its dividend and closed some production since Standard & Poor's cut its credit rating to junk status last August.
ArcelorMittal, more than double the size of its nearest rival, said on Friday it wanted to make savings of $3 billion by the end of 2015 by improving the reliability, productivity and energy efficiency of its blast furnaces and mills and shifting to low-cost U.S. gas.
The new plan supplements $4.8 billion of savings in sales and administrative expenses and other costs achieved by the end of September 2012 and the idling and closing of facilities in Europe set to yield $1 billion per year.
The aim is to increase core profit per metric ton (1.1023 tons) of steel produced to $150. It dropped to $85 per metric ton last year from $118 in 2011, the peak level of the past four years. In 2008, the figure was $241, driven by the commodity boom.
Chief Financial Officer Aditya Mittal said the improvement was realistic with a 15 percent market expansion and global shipments rising to around 95 million metric tons.
ArcelorMittal's steel shipments were above 100 million metric tons in 2007 and 2008, but have been below 90 million since. Continued...