>ARCELOR MITTAL: Listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Brussels (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).

In its Q4CY11 commentary, ArcelorMittal alluded to a rebound in global lead indicators/sentiment, end of destocking, modestly rising steel prices and a better outlook for steel than in the previous quarter. Blended EBITDA/t for European business in Q4CY11 was negative USD9/t which is inline with our assumption for Tata Steel Europe (TSE). The company is expecting a recession in Europe in H1CY12, but a recovery in the next half. CY12 global steel demand growth guidance has been maintained at ~5% given the soft landing in China (5% growth in CY12). Developing world, ex‐China, would see acceleration in steel demand from 3.8% in CY11 to 5.7% in CY12.


■ European business: EBITDA/t turns negative as expected
European flats segment’s adjusted EBITDA/t was negative USD22 while longs did better
with a positive EBITDA/t of USD19, leading to blended EBITDA/t of negative USD9. For
Tata Steel Europe (TSE), we had assumed EBITDA/t at negative USD10 for Q4CY11 hence the above was in line. Combined volume for ArcelorMittal’s European business declined 2.6% QoQ while for TSE, we have taken a volume decline of 6% QoQ.


■ Expect global steel consumption to grow 4.5%‐5% in CY12
Most regions are expected to slow down in CY12 as compared to the growth seen in CY11. Steel demand growth across regions for CY12 would be: NAFTA at 5.5% YoY (CY11 : 9.7% YoY), EU27 at ~0% YoY (CY11 : 6.1% YoY) and China at 5% YoY (CY11 : 7.7% YoY). ArcelorMittal expects a soft landing in China and that the country’s exports might remain
at low levels.


■ EBITDA in‐line with consensus expectations
ArcelorMittal’s revenues and EBITDA at USD24.2bn and USD1.7bn respectively were in
line with expectations. Net profit at (a loss of) USD1bn was marred by non‐cash charges of USD1.3bn, related to a reduction in deferred tax assets and restructuring charges. Steel
shipments in 4QCY11 were 20.6Mt, down 2.5% QoQ, driven by destocking in Europe.


■ Outlook: Improvement seen ahead
ArcelorMittal has provided a more optimistic outlook than the guidance in November
2011. Global lead indicators have rebounded in Q1CY12 as encouraging signs emanate
from the US market. Europe, likely to witness a recession in H1CY12, may recover in
H2CY12. The company expects volume for H1CY12 to be flat YoY while EBITDA for H2CY12 is likely to be up over H2CY11 level of ~USD4 bn, but below H1CY11 levels of ~USD6bn.




■ Operational summary of European business
ArcelorMittal’s Flat Carbon Europe (FCE) division reported ~6% QoQ decline in blended
realisations at ~USD1,132/t for Q4CY11 while the adjusted EBITDA/t dropped sharply to
negative USD22/t from a positive USD37/t in Q3CY11. FCE volume also dropped ~3% QoQ, led by weak seasonality and destocking.


The Long Carbon Europe (LCE) business fared better with a positive EBITDA/t of USD19 in Q4CY11, which, however, was down from USD28 in Q3CY11. Volume dropped by just 1.4% QoQ.


On a combined basis, volume for the European business was down 2.6% QoQ while
EBITDA/t was negative USD9. In comparison, for Tata Steel Europe (TSE), we have assumed a negative USD10/t EBITDA/t in Q4CY11, down from USD32/t in Q3CY11. However, we have assumed a sharper volume drop of 6% QoQ for TSE.




■ Company Description
ArcelorMittal is the world's leading integrated steel and mining company, with a presence in more than 60 countries.


ArcelorMittal is the leader in all major global carbon steel markets, including automotive,
construction, household appliances and packaging, with leading R&D and technology. The Group also has a world class mining business with a global portfolio of over 20 mines in operation and development, and is the world's 4th largest iron ore producer. With operations in over 22 countries spanning four continents, the Company covers all of the key industrial markets, from emerging to mature, and has outstanding distribution networks.


In 2011, ArcelorMittal had revenues of USD 94.0 billion and crude steel production of 91.9
mt, representing ~6% of world steel output. The Group's mining operations produced 54 mt of iron ore and 8.3 mt of metallurgical coal.


ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris
(MT), Brussels (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
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