Mittal Steel Company N.V. Reports First Quarter 2005 Results
ROTTERDAM, The Netherlands, April 26 /PRNewswire-FirstCall/ --
Mittal Steel Company N.V., ("Mittal Steel" or "the Company") the
world's largest and most global steel company, today announced
results for the first quarter ended March 31, 2005. Highlights 3
months ended March 31, 2005: % Increases 1Q 2005 v 1Q 2004 -
Shipments: 10.4 million tons +3% - Sales: US$6.4 billion +55% -
Operating income: US$1.7 billion +115% - Net income: US$1.1 billion
+113% The above numbers do not include results of International
Steel Group ("ISG"), which was merged with the Company on April 15,
2005. FIRST QUARTER 2005 EARNINGS CONFERENCE CALL Lakshmi N.
Mittal, Chairman and Chief Executive Officer, and Aditya Mittal,
President and Chief Financial Officer, will host a conference call
for members of the investment community to discuss the Company's
financial results and general business operations at 9:30 AM New
York Time / 2:30 PM London time today. The conference call will
include a brief question and answer session with senior management.
The conference call information is as follows: Date: Tuesday, April
26, 2005 Time: 9:30 AM New York Time / 2:30 PM London Time Dial-In
Number from within the U.S.: 1-877-780-2271 Dial-In Number from
outside the U.S.: 001-973-582-2737 For individuals unable to
participate in the conference call, a telephone replay will be
available from 1:00 PM New York Time / 6:00 PM London Time on April
26, 2005 until midnight / 5:00 AM London Time on May 4, 2005 at:
Replay Number from within the U.S.: 1-877-519-4471 Replay Number
from outside the U.S.: 001-973-341-3080 Passcode: 5993767 A webcast
of the conference call can also be accessed via
http://www.mittalsteel.com/ and will be available for one week.
RealPlayer or Windows Media Player will be required in order to
access the webcast. MITTAL STEEL COMPANY N.V. REPORTS FIRST QUARTER
2005 RESULTS Mittal Steel Company N.V. (NYSE:MT)(AEX:MT), reported
net income for the quarter ended March 31, 2005 of $1.1 billion or
$1.78 per share, as compared to net income of $1.6 billion or $2.42
for the quarter ended December 31, 2004 and $539 million or $0.83
per share for the quarter ended March 31, 2004. Consolidated sales
and operating income for the first quarter 2005 were $6.4 billion
and $1.7 billion, respectively, compared to $6.2 billion and $1.7
billion, for the fourth quarter 2004 and compared to $4.1 billion
and $799 million for the first quarter 2004. Total steel shipments
for the first quarter 2005 were 10.4 million tons as compared to
10.1 million tons for both the fourth and first quarters of 2004.
This is Mittal Steel's first earnings release after the completion
of the merger with International Steel Group on April 15, 2005.
ISG's financial results will be consolidated as from the second
quarter 2005. On a pro forma basis Mittal Steel Company NV
including ISG, achieved shipments of 14.3 million tons, sales of
$9.1 billion, operating income of $2.0 billion and net income of
$1.3 billion or $1.88 per share for the first quarter of 2005. All
pro forma numbers do not include any purchase accounting
adjustments. Analysis of operations Mittal Steel's consolidated
financial statements for the first quarter 2005 include the results
of Mittal Steel Poland (formerly known as Ispat Polska) for the
full quarter. The 2004 first quarter consolidated financial
statements only included Mittal Steel Poland results from March 5,
2004, the date of its acquisition by Mittal Steel. Due to this, the
comparison with 2004 results may not be entirely meaningful.
Average price realization in the first quarter of 2005 remained
flat as compared to the fourth quarter of 2004 and improved by 53%
as compared to the first quarter of 2004. Total steel shipments in
first quarter 2005 were higher by 3% as compared to the fourth
quarter 2004, and first quarter 2004. Due to the increases in the
cost of key inputs, such as iron ore, electricity, natural gas and
transportation, cost of goods sold per ton during the first quarter
2005 was higher by 5% as compared to the fourth quarter of 2004 and
by 39% compared to the first quarter of 2004. Selling, general and
administrative expenses in the first quarter of 2005 decreased by
14% as compared to the fourth quarter of 2004 and increased by 71%
as compared to the first quarter 2004. Operating income in the
first quarter of 2005 remained flat at $1.7 billion as compared to
fourth quarter 2004, and $799 million in first quarter 2004, an
increase of 115% largely due to higher gross margins. Net interest
expenses at Mittal Steel in the first quarter of 2005 decreased to
$33 million as compared to $50 million in the fourth quarter of
2004 and $48 million for the first quarter of 2004, primarily due
to lower outstanding debt. Mittal Steel's consolidated income tax
expense for the first quarter 2005 amounted to $397 million as
compared to $2 million in the fourth quarter in 2004, which
included a deferred tax benefit of $375 million due to release of
certain tax valuation allowance (FAS 109) in certain subsidiaries
owing to improvement in outlook. The effective tax rate for the
first quarter 2005 was 23% as compared to 21% for the first quarter
of 2004. Net income for the first quarter 2005 was $1.1 billion as
compared to $1.6 billion for the fourth quarter 2004, (which had
included a one time other income of $109 million and deferred tax
benefit of $375 million), and as compared to $539 million for the
first quarter of 2004 owing to the reasons discussed above.
Americas Total steel shipments of the Americas region were 3.0
million tons in the first quarter 2005, as compared to 2.8 million
tons for the fourth quarter 2004 and 3.1 million tons in the first
quarter 2004. Sales were higher at $1.9 billion in the first
quarter 2005 as compared to $1.8 billion for the fourth quarter of
2004 and as compared to $1.3 billion for the first quarter of 2004.
The operating income was higher at $568 million for the first
quarter 2005 as compared to $483 million for the fourth quarter of
2004 and as compared to $149 million for the first quarter of 2004,
due to higher gross margins. Europe Total steel shipments of the
European region were 4.6 million tons in the first quarter 2005, as
compared to 4.5 million tons for the fourth quarter 2004 and 3.9
million for the first quarter 2004. Sales were higher at $3.0
billion in the first quarter 2005, as compared to $2.8 billion for
the fourth quarter of 2004, and $1.6 billon for the first quarter
2004. The operating income was higher at $492 million for the first
quarter 2005 as compared to $480 million for the fourth quarter of
2004, and compared to $174 million for the first quarter 2004. Rest
of World Total steel shipments of the Rest of World region remained
flat at 2.8 million tons in the first quarter 2005 and fourth
quarter 2004. Total steel shipments in the first quarter 2004 were
3.1 million tons. Sales were lower at $2.0 billion in the first
quarter 2005, as compared to $2.2 billion in the fourth quarter of
2004 and higher as compared to $1.6 billion for the first quarter
2004. The operating income was lower at $632 million for the first
quarter 2005, as compared to $688 million for the fourth quarter of
2004, and higher as compared to $443 million for the first quarter
2004. On February 17, 2005 there was a fire at Mittal Steel
Temirtau plant (formerly known as Ispat Karmet) within the cable
gallery at the Hot Rolling Mill damaging cables and electrical
panels/equipments. As a result there was a stoppage of Hot Rolled
production and subsequent stoppage of rolling mills for want of
feed materials. Hot Roll production restarted from April 11, 2005.
(The above regional analysis does not include inter company
eliminations). Liquidity The Company's liquidity remains strong. At
March 31, 2005, the Company's cash and cash equivalents including
restricted cash were $2.7 billion as compared to $2.6 billion at
December 31, 2004. In addition, the Company's operating
subsidiaries had un-availed borrowing limits of $1.3 billion as at
March 31, 2005*. Total debt at March 31, 2005 which includes
long-term debt, short term debt, loan from shareholder and
including dividend payable, as well as borrowings under working
capital credit facilities, was $3.3 billion, as compared to $3.6
billion at December 31, 2004. Net debt (which is total debt as
described above, less cash and cash equivalents, restricted cash
and short-term investments) was $520 million at March 31, 2005,
reduced from $996 million at December 31, 2004. During the first
quarter of 2005, working capital increased by $628 million, mainly
due to increased trade receivables, inventories and other current
assets. Capital expenditures during the first quarter 2005 were
$205 million as compared to $376 million for the fourth quarter
2004 and $100 million for the first quarter 2004. Depreciation
during the first quarter 2005 was $163 million as compared to $141
million for the fourth quarter 2004 and $128 million for the first
quarter 2004. On a pro forma basis net debt of Mittal Steel Company
NV including ISG as at March 31, 2005 was $2.9 billion. Recent
Developments On January 14, 2005, Mittal Steel signed a share
purchase agreement with Hunan Valin Iron & Steel Group Co.,
Ltd., or the Valin Group, to acquire 37.17% of the outstanding
shares of Hunan Valin Steel Tube & Wire Co., Ltd., or Valin, a
listed subsidiary of the Valin Group. Under the terms of the share
purchase agreement, Mittal Steel will acquire 656,250,000 legal
person shares from the Valin Group at a price of Renminbi, or RMB,
3.96 per share, for a total consideration of RMB 2,599 million,
approximately $314 million. The consideration is subject to
adjustment based on the net asset value of Valin as at December 31,
2004. Subject to the receipt of all necessary approvals and waivers
from the regulatory authorities in the Peoples Republic of China,
the transaction is expected to close by the end of the year. In
January 2005, Mittal Steel announced that its Polish subsidiary,
Mittal Steel Poland has successfully signed agreements for the
modernization of its wire rod mill in Sosnowiec, and the
installation of a color coating line in Swietochlowice. These
investments form part of the Euro 497 million capital expenditure
program as agreed under the terms of the privatization agreement
for Mittal Steel Poland, signed between Mittal Steel and the Polish
Ministry of State Treasury. These are two of four key investments,
which are to be implemented before the end of 2006. On January 21,
2005, Mittal Steel mandated ABN AMRO, Citigroup Global Markets
Limited, Deutsche Bank AG London and HSBC Bank plc (as Mandated
Lead Arrangers and Bookrunners) and CSFB and UBS Limited (as
Mandated Lead Arrangers) to arrange a $3.2 billion unsecured
revolving credit facility ("the Facility"). The Facility has a
maturity of 5 years and the interest margin is based on a rating
grid. On April 8, 2005 Mittal Steel Company announced its intention
to merge its Central and Eastern European Operations with its
Western European Operations to form one unified European business
structure. This new structure will help Mittal Steel to build on
its existing position as Europe's second largest steel producer. On
the same day, Mittal Steel Company announced global managerial
changes across Mittal Steel's various Business Units. These include
appointment of new Chief Operating Officers at the Mittal Steel
Temirtau, Mittal Steel Lazaro Cardenas (formerly known as Ispat
Mexicana), and Mittal Steel Point Lisas (formerly known as
Caribbean Ispat) and for the combined European operations, new
Chief Executive Officers at Mittal Steel Galati (formerly known as
Ispat Sidex) and Mittal Steel Ostrava (formerly known as Ispat Nova
Hut) as well as appointment of a new Corporate Director for
Operations and Maintenance. Further, Mr. Roeland Baan, the Chief
Executive Officer for the erstwhile Central Eastern European
operations, was appointed as the Chief Executive Officer of the
combined European operations. On April 15, 2005, Mittal Steel
Company announced the completion of the ISG merger and also
announced management organization for Mittal Steel USA, including
Mr. Louis Schorsch as its new Chief Executive Officer. On April 18,
2005, Standard & Poor's Ratings Services raised its long-term
corporate credit rating on Mittal Steel Company to 'BBB+' from
'BBB'. At the same time, the long-term corporate credit and senior
secured debt ratings on Ispat Inland Inc. (Ispat Inland) were
raised to 'BBB' from 'BBB-' and remain on credit watch with
positive implications. On April 20, 2005 Moody's affirmed the
Company's debt rating (senior implied rating at 'Baa3') and
upgraded ISG's unsecured debt ratings to 'Ba2' following completion
of the merger between Mittal Steel Company and ISG. Dividend
payable of $1.375 billion as at March 31, 2005 has since been paid
in full. Outlook for second quarter 2005. Due to higher costs, on
similar prices but lower volumes, the operating income per ton in
the second quarter 2005 as compared to the first quarter 2005 is
estimated to be lower by $25-$30 per ton. Statements in this press
release that are not historical facts, including statements
regarding expectations concerning market growth and development,
expectations and targets for Mittal Steel's results of operations,
and statements preceded by "believe," "expect," "anticipate,"
"target" or similar expressions, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Actual results may differ materially from those implied by
such forward-looking statements on account of known and unknown
risks and uncertainties, including, without limitation: (1) changes
in general economic, political and social conditions; (2) adverse
regulatory changes; (3) fluctuations in currency exchange rates;
(4) cyclicality of the steel industry; (5) increased competition;
(6) availability and cost of raw materials, energy and
transportation; (7) Mittal Steel's ability to realize expected cost
savings from recently acquired companies within the expected time
frame; (8) Mittal Steel's ability to integrate recently acquired
companies; (9) labor disputes; and (10) the risks contained in
Mittal Steel's Form 20-F and other filings with the Securities and
Exchange Commission. Mittal Steel undertakes no obligation to
publicly update its forward-looking statements, whether as a result
of new information, future events, or otherwise. For further
information, visit our web site: http://www.mittalsteel.com/ *
Corresponding exercisable/available limits are lower, which are
based on the level of inventory/receivable. MITTAL STEEL COMPANY
N.V. CONSOLIDATED BALANCE SHEETS As at March 31, December 31, In
millions of U.S. Dollars 2005 2004 (Unaudited) ASSETS Current
Assets Cash and cash equivalents $ 2,171 $ 2,495 Restricted cash
560 138 Short-term investments 1 1 Trade accounts receivable - net
2,085 2,006 Inventories 4,209 4,013 Prepaid expenses and other 738
666 Deferred tax assets 246 306 Total Current Assets 10,010 9,625
Property, plant and equipment - net 7,277 7,562 Investments in
affiliates and joint ventures 682 667 Deferred tax assets 789 855
Intangible pension assets 104 106 Other assets 311 338 Total Assets
$19,173 $19,153 LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities Payable to banks and current portion of long-term debt
$ 369 $ 341 Trade accounts payable 1,743 1,899 Dividend payable
1,375 1,650 Accrued expenses and other current liabilities 2,250
2,307 Deferred tax liabilities 32 33 Total Current Liabilities
5,769 6,230 Long-term debt 1,508 1,639 Deferred tax liabilities 928
955 Deferred employee benefits 1,936 1,931 Other long-term
obligations 728 809 Total Liabilities 10,869 11,564 Minority
Interest 1,719 1,743 Shareholders' Equity Common shares 59 59
Treasury stock (117) (123) Additional paid-up capital 548 552
Retained earnings 5,886 4,739 Cumulative other comprehensive income
209 619 Total Shareholders' Equity $6,585 $5,846 Total Liabilities,
Minority Interest and Shareholders' Equity $19,173 $19,153 MITTAL
STEEL COMPANY N.V. CONSOLIDATED FINANCIAL & OTHER INFORMATION
AS PER U.S. GAAP For the First Quarter Ended March 31, In millions
of U.S. Dollars, except shares, 2005 2004 per share and other data
(Unaudited) (Unaudited) STATEMENT OF INCOME DATA Sales $6,424
$4,140 Costs and expenses: Cost of sales (exclusive of depreciation
shown separately) 4,289 3,065 Depreciation 163 128 Selling, general
and administrative expenses 253 148 4,705 3,341 Operating income
1,719 799 Operating margin 26.8% 19.3% Other income (expense) - net
5 27 Income from equity method investments 15 11 Financing costs:
Interest (expense) (58) (55) Interest income 25 7 Net gain (loss)
from foreign exchange 13 (11) (20) (59) Income before taxes 1,719
778 Income tax expense: Current 290 48 Deferred 107 113 397 161 Net
income before minority interest 1,322 617 Minority interest (175)
(78) Net income $1,147 $539 Basic and diluted earnings per common
share $1.78 $0.83 Weighted average common shares outstanding (in
millions) 643 646 OTHER DATA Total shipments of steel products
including inter-company shipments (thousands of tons) 10,379 10,106
MITTAL STEEL COMPANY N.V. CONSOLIDATED STATEMENTS OF CASH FLOWS For
the First Quarter Ended March 31, In millions of U.S. Dollars 2005
2004 (Unaudited) (Unaudited) Operating activities: Net income
$1,147 $ 539 Adjustments required to reconcile net income to net
cash provided from operations: Depreciation 163 128 Deferred
employee benefit costs 4 (6) Net foreign exchange loss (gain) (5) 3
Deferred income tax 107 113 Undistributed earning from JV's (10)
(36) Minority interest 175 78 Other 12 (6) Changes in operating
assets and liabilities, net of effects from purchases of
subsidiaries: Trade accounts receivable (174) (313) Inventories
(315) (51) Prepaid expenses and other assets (87) (80) Trade
accounts payable (79) 20 Accrued expenses and other liabilities 27
48 Net cash provided by operating activities 965 437 Investing
activities: Purchase of property, plant and equipment (205) (100)
Proceeds from sale of property, plant and equipment - 19 Proceeds
from sale of assets and investments and investments in affiliates
and joint ventures (8) 8 Acquisition of net assets of subsidiaries,
net of cash acquired - 58 Restricted cash (445) (177) Net cash
(used) by investing activities (658) (192) Financing activities:
Proceeds from payable to banks 520 929 Proceeds from long-term debt
- net of debt issuance costs 19 910 Proceeds from long-term debt
from an affiliate - 46 Payments of payable to banks (508) (1,050)
Payments of long-term debt (116) (771) Purchase of treasury stock -
(30) Sale of treasury stock for stock option exercise 2 - Dividends
(426) (111) Net cash (used) by financing activities (509) (77) Net
increase / (decrease) in cash and cash equivalents (202) 168 Effect
of exchange rate changes on cash (122) 10 Cash and cash equivalent:
At the beginning of the period 2,495 760 At the end of the period
$2,171 $ 938 DATASOURCE: Mittal Steel Company N.V. CONTACT: For
further information, visit our web site:
http://www.mittalsteel.com/, or call: Mittal Steel Company N.V.,
Thomas A. McCue, Director, North American Investor Relations (and
Treasurer Mittal Steel USA), +1-219-399-5166; Mittal Steel USA,
Blaise E. Derrico, Manager, Investor Relations, +1-330-659-7430;
Mittal Steel Company N.V., Nicola Davidson, General Manager,
Communications, +44-20-7543-1162
Copyright