Capacity in Europe
Michael Shillaker – Credit Suisse: Two questions then, if I may. Firstly, on Europe, you’ve obviously been focusing very hard on the restructuring there. Can you just confirm how many tonnes of capacity are now actually closed in Europe and when I actually look at the bridge or I look at the clean Q4 versus Q1, and I see 1 million tonnes of volume difference and I apply $250 a tonne to that, that kind of gets into the difference between the two more or less, so, can you help us out a little bit, stating how much cost reduction, you are actually keeping in the numbers is my first question. Second question, what used to be the jewel in the crown in the old LNM days was CIS and that regardless of what’s happening in South Africa in the $67 million EBITDA disruption rarely does seem to be problematic for you now, especially in the long-term with iron ore coming down. It almost feels like an unviable business. So, what actually has gone wrong there and what are you actually going to do to fix that business and can you give us some sort of sense of a target long-term EBITDA that you would have for CIS?
Lakshmi N. Mittal – Chairman and CEO: Aditya continue.
Aditya Mittal – CFO: Michael, I’ll answer on Europe. In terms of the capacity closed, you know that the capacity closed is primarily Liege and Florange. That’s I’m talking about FCE result. I presume the question has to do with FCE. Liege is about 2.7 million tonnes and Florange is about 2.2 million tonnes. So, the total is 4.9 million tonnes of capacity closure. In terms of your direction in terms of EBITDA, you’re right, comparable EBITDA has gone up by $250 million in Q4 to Q1. I think part of the benefit is due to higher volumes, but there is a significant portion driven by lower fixed costs due to AOP. I don’t know if what you meant by how much of the cost reduction in the numbers is, maybe you can elaborate on what you mean by that. In the meantime, we can get on to the second question.
Gonzalo Urquijo – Member of the Group Management Board; Responsible for AACIS (excluding China and India), Distribution Solutions, Tubular Products, Corporate Responsibility, Investment Allocation Committee ( IAC ) Chairman: Yes, in terms of CIS what can we say, versus the previous quarter if you take out the Paul Wurth transaction, we were at negative, minus 20 in this quarter we would be at plus 20. Additionally to that we’ve had 67 cost, as you said of South Africa. So the real comparison would be minus 20 versus let’s say in round figures plus 90, I would say. That would be the real comparison, number one. Two, I do think that in that area there is various issues, one of them we had this fire in South Africa. Second, I do think in Ukraine we’ve had good progress in terms of reliability and in terms of production. We have had I would tell you record production in shipments in the last five years. Now we do have some mix in terms of production. We have had some issues in Kazakhstan, which we are really focusing on and we are trying to bring them up very, very hard. Now, another issue that you mentioned, the issue that if iron ore prices go down this would mean where you have in these countries you have part of raw materials that is your own, this does mean a challenge. I do think that another challenge that for the moment is financial market pricing has not been that high. For example in Ukraine, it has been following the scrap, the scrap market has been going down. So that’s impacted the loan business. In terms of Kazakhstan you have a market that has practically disappeared, which is the Iranian market due to the sanctions which we are fully complying with. Then you do have a market in Russia that has become in terms of prices harder. So I think there is two different issues. One of them the markets that is what it is and it had remained challenging. And on the other hand, you do have in terms of what we can do internally. I think we are very focused internally. I think there have been enormous changes in South Africa and in Ukraine and we are working very hard in terms of Kazakhstan. I have to tell you that in turn we’re very focused in productivity, in reliability of our installations and management gains. We do hope we are going to deliver. So, what will be in our hand? We are convinced we are going to deliver and this should mean a progress going forward to Q2. But as we said on the Investor Day, it does remain challenging. Some markets have disappeared, (indiscernible), the international market is challenging as of today, but what we have to do is deliver all what is there internally, Michael…
Aditya Mittal – CFO: Maybe I’ll just provide a bit more color on Gonzalo’s points and then come back on FCE and see if you have any follow-ups. I think you’re right that in the long run iron ore prices are declining which is a negative headwind on AACIS. Nevertheless, in AACIS the productivity levels are much more inferior to what we have in Western Europe. So, we can achieve productivity gains, which means lower fixed costs which can offset some of that. Number two, if you look at where AACIS is located, it is basically in growth markets. So, at the end of the day, AACIS is still exporting a lot of tonnages and to the extent that these markets grow, we will have more domestic market exposure which again is higher margin. So, I do agree with you, there is a negative headwind, but there are some positive headwinds as well which is productivity and increased domestic market exposure and Gonzalo addressed already the benefits that we have better operational reliability in these facilities. In terms of FCE, if you’re looking for what is the cost impact of AOP, I mean, another way of looking at the same number is just to compare Q1, 2012 with Q1, 2013. There also EBITDA is up by about $200 million when you strip out the impact of lower DDH. This is despite 8% lower shipments. So, you have a sense that there really is a cost reduction, which has occurred in the operating footprint of FCE.
Michael Shillaker – Credit Suisse: Just one very quick follow-up, have you got a target EBITDA and it’s trying to get there for CIS?
Aditya Mittal – CFO: We’re not giving the CIS target EBITDA.
Lakshmi N. Mittal – Chairman and CEO: We do have an internal one, but we don’t make it public, but of course, we do and it’s very demanding in terms of cost reduction or productivity and reliability of installations. Yes, but its internal, Michael.
Daniel Fairclough – VP, IR: Alex Haissl, Morgan Stanley.
Alexander Haissl – Morgan Stanley: This is Alex Haissl, Morgan Stanley. My first question also on Flat Carbon Europe, if I look at your volumes and would annualize these volumes on your Flat Carbon European business, this would imply a 6% year-over-year gross for this business, how does this fit into your market outlook which you expect to be down minus 1.5%?
Aditya Mittal – CFO: I’m not sure how you run your numbers. Clearly, we do see when we think of FCE in 2013, a normal evolution of shipments compared to what we are seeing in terms of demand outlook. So I’m not forecasting a significant loss of shipments in the second half. I think second half would reflect the seasonal downturn. 2Q should be higher than Q1 which again reflects the seasonal shifts. Clearly, our shipments at FCE are dependent on what our end customers are acquiring and perhaps there are changes in what our customers are requiring. Secondly, when we look at E.U. 27 the number one and a half is including flat and rolled…
Alexander Haissl – Morgan Stanley: My calculation was quite simple. I just take your first quarter, analyze it and compare what you have done last year and I would come to a 6% year-over-year growth, which is even if you take long into account, much more than what you seem to guide for the full year? My second question is also on the bridge for the Group. If I take your $7.1 billion target for the full year that leaves some $5.5 billion for the remaining nine (quarters), which implies a quarterly run rate of $1.85 billion round about versus $1.4 billion. I think it’s easy to strip out the mining expansion as well as steel volumes but still it come to $1.7 billion. Can you explain where you basically bring up the run rate from $1.4 billion in the first quarter excluding delta hedge and the valuation gain to $1.85 billion?
Aditya Mittal – CFO: I think you’re asking me to repeat our guidance which I’m happy to do so. Our guidance is that we should do reported EBITDA at or above $7.1 billion in 2013 and there is a framework around that which you know which as iron ore prices are similar to 2012, steel price or raw material costs are similar to 2012 and then there are three discrete factors. Clearly, iron ore as you said is one of them and steel shipment increase is the second one and the third is the benefit of management gains and asset optimization. The only other color I can provide you is that 2Q EBITDA should be higher than Q1 and that allows us to achieve our net debt target of $17 billion. I don’t really have much more color to provide you other than reiterating our guidance framework.
Alexander Haissl – Morgan Stanley: Just lastly on the management gain savings that you have achieved in the first quarter is $200 million. Can you explain – can you give us an indication how much have been seen at Flat Carbon Europe?
Aditya Mittal – CFO: So the management gains, has been seen at various segments and a significant portion has also been seen at FCE. At this point in time we don’t break out management gains per segment on a quarterly basis.
Daniel Fairclough – VP, IR: Brett Levy, Jefferies.
Brett Levy – Jefferies & Company, Inc.: It’s two actually macro questions. The first one is with price levels as (indiscernible).
Unidentified Company Speaker: (Indiscernible)…
Brett Levy – Jefferies & Company, Inc.: (Indiscernible) in the current context. I have seen it in other points in this type of environment in other cycles and just wondering why there is not more trade cases being filed?
Louis Schorsch – Member of the Group Management Board; Responsible for Flat Carbon Americas, Group Strategy, CTO, Research and Development, Global Automotive and member of the Investment Allocation Committee: This is Louis Schorsch from Flat Carbon Americas. I think that as I am sure you know in the U.S. context you need to show injury and that’s typically a backward looking perspective and I think we certainly have very experienced and expert attorneys as well as managements that know how to calculate the prospects for successful actions and frequently there is a lag involved. That’s one of the complaints of the industry where you can see damage occurring but again the period at which the authorities would look is lagged a bit. So I think that explains the tentative effect that there hasn’t been actions to the same degrees you might expect given the situation in the market. Then if you look outside that region, certainly in other parts of the world I think you have too many different regimes and different practices and different ways of dealing with these issues. I think particularly a lot of countries, for example our company and Brazil is a very important market for us. Brazil has been traditionally a major exporting region. I think it takes time for countries to look to adapt to an environment where they face potentially unfavorably treaded imports. If you look at Brazil though, I think over the past two or three years has been a significant movement particularly last year with in position what I call Leadtek, Terrace, and many steel products these are relatively temporary, but they’re substantial 25% on many hot-rolled products, as well as political measures to eliminate some of this taxes incentives that were provided by individual state governments to encourage import. So, I think these things take time and again regimes politically and legally a very different and particularly there is a lag required to show the injury that’s required under international tax each year trade regimes.
Daniel Fairclough – VP, IR: Carsten Riek, UBS.
Carsten Riek – UBS: First question. If I look at your cash position looks like comfortable, and I also look at your bonds I believe there are two bonds, which stick out both come from 2009 with coupon rates 8% and above. The one is actually expiring in June. Could we also expect something on the one, which expires in 2016, because it would actually lower your interest build quite substantially? Second question also on the steel shipments, you still expect 2% increase in steel shipment year-over-year, but you ended up 6% down year-over-year in the first quarter. How much of that was weather related in Flat Carbon Europe and Long Carbon, and can you make up for the loss of volumes in South Africa, due to the fire?
Aditya Mittal – CFO: In terms of your first question, we believe our position on the Company remains very strong, and we’re in a good position to meet upcoming maturities. Beyond that, I cannot comment on what we would do with the remaining debt profile. In terms of 2% increase in shipments, if you look at Q1, apparent steel consumption in Europe and the U.S. you see that’s quite negative. For example, in Europe and the U.S., it’s about minus 5% and Q1 year-on-year. Nevertheless, in the U.S. we’re forecasting positive growth for the year, and slightly negative growth in Europe for the year. This implies that in the next nine months, we will have stronger year-on-year growth and that is why we believe, we will achieve 2% increase in shipments. In terms of South Africa, I’ll get Gonzalo to provide you more color specifically.
Gonzalo Urquijo – Member of the Group Management Board; Responsible for AACIS (excluding China and India), Distribution Solutions, Tubular Products, Corporate Responsibility, Investment Allocation Committee ( IAC ) Chairman: Thank you, Aditya. In terms of crude steel, we lost 347 Kt. That is one. In terms of EBITDA, we’ve estimated 67 million, but in terms of shipments, we’ve lost 150, because what we’ve been doing is recuperating those, loss in production through various methods. One, we’ve used a lot of our stock, number one. Two, we’ve got tonnes coming from Brazil 22 Kt in forms of slab and Mexico. Number three, we also used Saldanha instead of exporting. We took it to the domestic market. So, at the end, the impact in shipments has only been 350 Kts. We do hope by June with customers, we are going to be updated. Now we are going to try and best to recuperate a part way but we have seen how the installations worked. So we lost 350 in crude steel; a 150 in shipments because we really worked hard to give service to our customers. We work hard and we’ll see. We are having ambitious internal target that we see if that is feasible.
Daniel Fairclough – VP, IR: Alessandro Abate, JPMorgan.
Alessandro Abate – JPMorgan: Congratulation on the results of the quarter. Just one question, which is related to we have discussed off this cycle, at the Capital Market Day, restructuring program seems to be taking off quite nicely Flat Carbon in Europe. But I haven’t heard any more talking about the portfolio optimization, what does that mean assuming that you have $120 million capacity installed. In other words you have a lot of little assets, niche assets that are generating nice profitability. But at the moment the value that comes out of it is absolutely extremely low. Is there any possibility in the future you might not be ruling out the potential spin-off of these assets?
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