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WIKI ANALYSIS
ArcelorMittal (NYSE:MT) is a steel producer.
Company Overview
History
ArcelorMittal was formed in 2006 by the merger of Arcelor and Mittal Steels. Previously, Mittal Steels produced the largest amount of steel by volume and Arcelor produced the second largest. After the merger, ArcelorMittal represents around 10% of the world's steel output.
Before the acquisition, Arcelor and Mittal Steels independently acquired various smaller companies, especially distressed steel making assets in Central and Eastern Europe[1]. After the acquisition, ArcelorMittal continues this strategy of horizontal integration. ArcelorMittal is now listed in the stock exchanges in New York, Paris, Amsterdam, Brussels, Luxembourg, and the Spanish stock exchanges. Its headquarters is located in Luxembourg.
CEO and the Board of Directors
ArcelorMittal's CEO is Lakshmi Mittal, currently the fourth richest man according to Forbes. He's a citizen of India who headed Mittal Steels before the acquisition. He's also a non-executive board member of Goldman Sachs.
ArcelorMittal has chosen an international board of directors, with members from France, India, Luxembourg, and other countries. ArcelorMittal maintains that these choices were made to reflect the wide array of international operations conducted by the company.
Financial Analysis[2]
ArcelorMittal's six business segments are Flat Carbon Americas, Flat Carbon Europe, Long Carbon Americas and Europe, AACIS, Stainless Steel, and Steel Solutions and Services.
Flat Carbon Americas (21.6% of total sales)
Flat Carbon Americas makes a range of flat carbon steel products, including slab, hot-rolled, cold-rolled and coated plates and sheets.
In North America, ArcelorMittal USA and ArcelorMittal Hamilton are the largest flat-rolled supplier in the United States and Canada respectively. ArcelorMittal USA is the largest plate producer in North America.
In South America, ArcelorMittal Tuburao and ArcelorMittal Lazaro Cardenas are the largest slab producers in Brazil and Mexico respectively.
Flat Carbon Europe (30.7% of total sales)
Like Flat Carbon Americas, Flat Carbon Europe makes a range of flat carbon steel products, including slab, hot-rolled, cold-rolled and coated plates and sheets. With major production facilities in Belgium, France, Germany and Spain, this segment is the largest supplier of steel sheets to the European automotive industry.
Long Carbon Americas and Europe (25.8% of total sales)
Long Carbon Americas and Europe makes a range of long carbon steel products, including rebars, rails, sections, sheet piles and wire rod. This segment is the world's largest producer of sections, sheet piles and wire rod.
AACIS (10.5% of total sales)
AACIS makes flat and long carbon steel products for Asia, Africa and the Commonwealth of Independent States. With major production facilities in Kazakhstan, South Africa and Ukraine, AACIS is the largest producer of steel products in Africa and one of the largest producers in Asian and the Commonwealth of Independent States.
Stainless Steel (6.7% of total sales)
As the name indicates, this segment of ArcelorMittal makes stainless steels, electrical steels and nickel alloys. With major production facilities in Belgium, Brazil and France, Stainless Steel is one of the world's largest producer of nickel alloys and the only producer of stainless and electrical steels in South America.
Steel Solutions and Services (18.5% of total sales)
Steel Solutions and Services offers a range of services from steel processing and engineering to technical consultancy and project management. With major facilities in Poland, the Czech Republic, Romania and Austria, Steel Solutions and Services in the world's largest steel distributor and processor.
Key Trends & Forces
Raw Materials Prices Affect Costs
ArcelorMittal consumes several resources with volatile prices, such as iron ore, coal, and scrap metal. ArcelorMittal produces 46% of its own iron ore and 13% of its own coal, but must buy the remainder from outside suppliers. ArcelorMittal has sold its less profitable plants to other companies in an attempt to downsize and cut costs.
Emerging Markets
ArcelorMittal's agenda includes capitalizing the productive power of the emerging markets of China and India. Although not yet specified how, ArcelorMittal is actively pursuing emerging markets and recognizing them as sources of profit.
ArcelorMittal has commented on a medium-term ambition to get to 200 million tonnes of annual steel production. With ArcelorMittal in 2009 at under 80 million tonnes of steel output and the next-largest acquisition targets each producing just 25-30 million tonnes of steel per annum, the most likely means of achieving this aim would seem to be:
- Takeover of several large steel making competitors - including Baosteel, POSCO, Nippon Steel, JFE. The current ownership structures of these firms (which involve Government ownership e.g. for Baosteel) suggest this to be an unlikely scenario
- Organic growth - where given the importance of the construction sector in steel consumption; and the increasing prominence of Asia in total steel demand - more probable strategic options may involve ArcelorMittal's pursuit of building design, building fabrication, steel distribution and erection joint ventures in countries such as China, Japan, India and Korea.
Competition
ArcelorMittal competes with:
References
- ↑ History of ArcelorMittal
- ↑ {{cite 10k|ticker=MT|year=2009|form=20-Yeah buddyyyyyyyyyyyyyy ===Business Segments<ref>{{cite 10k|ticker=MT|year=2009|form=20-F|link=http://www.wikinvest.com/stock/ArcelorMittal_(MT)/Filing/20-F/2010/F83672219|pg=79}}</li></ol></ref>
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