ArcelorMittal announces $3 billion savings target by 2015

ArcelorMittal announces $3 billion savings target by 2015 Luxembourg/New Delhi: World's largest steel maker ArcelorMittal Friday announced a plan to save USD 3 billion by 2015 through optimising its assets and other cost cutting measures.

Moreover, the company would be reducing its net debt levels sharply by about USD 4.8 billion by June this year, it said in a statement, adding that it has kept a medium term net debt target of USD 15 billion.

The company, which was celebrating its annual investor day Friday, did not specified the time line for medium term target.

"(It) confirms a mid-2013 net debt target of approximately USD 17 billion and a medium-term net debt target of USD 15 billion and specify that growth capex and dividends will not be increased until this medium-term target has been achieved," the company said.

The new target is aimed at increasing its core profits (EBITDA- earnings before income, tax, depreciation and amortisation) USD 150 per tonne. The EBITDA per tonne had declined to USD 85 per tonne last year.

Company's CFO Aditya Mittal said in a presentation that "If our markets expand by 15 percent i.E (company's) global shipments (get) back to above 95 million tonnes, then we believe USD 150 per tonne EBITDA is achievable."

Taking about the cost cutting programme, he said that "through new management gains programs, we are targeting to more than offset the effect of inflation on fixed costs, minimise the effect of higher activity (production) on fixed costs and achieve further variable cost efficiencies."

Noting that "cost cutting is in our DNA", Mittal said that a similar programme of achieving USD 4.8 billion of "management gains" since 2008 has already been achieved.

Talking about the outlook, the company said that it expects global apparent steel consumption to increase by 3?3.5 percent this year.

It further said that ArcelorMittal's progress in increasing iron-ore production capacity to 84 million tonnes, including the Phase 2 expansion in Liberia and the commencement of the Early Revenue Phase (ERP) for Baffinland in Canada is on track.