ArcelorMittal South Africa Limited
Annual Financial Results
for the 12 months ended 31 December 2007
Introducing New CEO and member of the Board
Me. Nku Nyembezi-Heita
2
Introducing new President and member of the Board
Luc Bonte
3
Market and Operations
Rick Reato
Introduction and Overview
 Earnings increase to R5.7bn
 Earnings per share of 1 288c up 21%
 Net cash flow of R2.9bn
 Domestic market retained momentum
 Demand essentially unchanged on 2006
 Domestic sales constitute 76% of total sales
 Cost pressures continue
 Raw material cost increased by 14%
 Cost of steel sales increased 17%
 Operations
 BFD rebuild completed
 Liquid steel production down 10%
 Sales down 6%
Earnings increase by 21%
5
Key Result Drivers
2007 vs 2006
HRC US$ export price
+22%
LCWR US$ export price
+26%
Total sales volume
-6%
Export sales volume
-22%
Domestic sales volume
+1%
HRC Rand cash cost per tonne
+18%
Billet Rand cash cost per tonne
+16%
Labour productivity
-3%
ZAR movement
-4%
Production volumes impacted on sales volumes
6
Global Environment – General Market Trends
 World economic growth in 2007 decreased marginally from 3.9% to 3.6%
 Chinese economy grew by 11% despite measures to cool it down
 World consumption and production of steel increased by 7.5% in 2007
 Global steel industry consolidation still priority
 Input costs remain high & will continue to support prices
 Lower price volatility expected to continue
Global steel consolidation supports a less volatile market environment
7
Global Environment - Chinese Market Trends
 China remained a net exporter of total steel products in 2007
 China accounted for 37% of world steel production and 35% of
consumption
 Export taxes increased
ktonnes
45,000
20,000
-5,000
-30,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source : TEX Report
Net
China expected to retain its status as a net exporter
Import
Export
8
Global Environment – Input Cost Trends
 Iron ore price expected to increase substantially
 China iron ore spot @ premium of US$40/t
 Coking Coal cost pressure expected in 2008 due to scarcity worldwide
 Coking coal spot prices have increase by 65%
 Sharp increase in scrap prices in early 2008
 Scrap prices increased by 30% during 2007
 Reduction in supply from traditional markets due to local consumption
 Port delays & changing trade patterns lead to rising freight rates
 Freight rates almost doubled during 2007
 Prices of base metals and alloys increased substantially
 Tin (+66%); Nickel (+55%); Ferro Alloys (+60%); Zinc stable after +146% in 2006
Raw material prices exert pressure on steel prices
9
Global Environment – Benchmark Prices
400
Spot coal
prices
Based to 100
300
200
100
0
2003
2004
2005
2006
2007
Coking Coal
Global input costs continue to increase
2008
Iron Ore
Scrap (Tex)
10
Global Environment - Export Prices Achieved
800
Export prices (c&f) US$/t
700
600
500
400
300
200
100
HRC
Steel prices established new trading range
Low carbon wire rod
11
Domestic Environment – Shipments
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
69
73
77
81
85
89
93
97
01
Long (t)
05
Flat (t)
Source : SAISI
Long steel local despatches again achieved a record level
12
Domestic Environment – Inventory Levels
1,500,000
20
16
1,000,000
12
8
500,000
4
0
0
69
73
Stocks (t)
77
81
85
89
93
97
01
05
Week’s despatches
Source : SAISI
Industry inventory levels below recent averages
13
Domestic Environment – Imports
1,200,000
24%
20%
800,000
16%
12%
400,000
8%
4%
0
0%
69
73
77
81
85
89
93
Imports (t)
97
01
05
% of consumption
Source : SAISI
Imports slightly down from 2006
14
Key Performance Indicators
2006
2007
Employees per million tonnes produced
1 385
1 429
Revenue per head (R000)
2 594
3 220
HRC cash cost
- R/t
- US$/t
2 150
318
2 538
360
Billet cash cost
- R/t
- US$/t
1 993
295
2 310
327
Percentage value-add exports
- flat
- long
96%
94%
97%
100%
Productivity influenced by lower volume
15
Liquid Steel Production
8,000
7033
7,000
7261
7055
6375
ktonnes
6,000
5,000
4855
5067
4863
4231
4,000
3,000
2178
2194
2192
2144
2,000
1,000
0
Flat Products
Long Products
2004
Total
2005
Blast furnace rebuild and Corex reduced output volumes
2006
2007
16
Liquid Steel Production
ktonne
2006 liquid steel output
7 055
Recoupment of 2006 losses
+323
Vanderbijlpark - BFD Rebuild
-813
Vanderbijlpark - BFD Cold hearth conditions
-177
Saldanha - Corex condition
-49
Newcastle - Furnace condition
-57
Efficiency improvements
+93
2007 liquid steel output
6 375
BFD biggest impact on output volumes
17
Operational developments
 Blast Furnace D
 Market Coke production at battery N2 at Newcastle Works
 Galvanizing line 5 achieved full capacity
 Colour coating line achieved record output
 EAF at Vereeniging produced record volume
 Various records at all rolling mills at Newcastle
Blast Furnace D overshadowed production
18
Shipment Volumes
6 223
6 230
6,000
ktonnes
5,000
4 329
2344
4 283
4,000
1601
3,000
1881
4 268
1299
1,000
2728
2402
1794
2745
5 829
1408
3 928
1042
2,000
2969
6 194
2886
1 894
1 947
743
864
1151
1083
2004
2005
1 926
1 901
495
366
1431
1535
2006
2007
3879
4400
4421
2006
2007
3485
0
2004
2005
2006
Flat Products
2007
2004
2005
Total
Long Products
Domestic
Substantial shift to meet local demand on long products
Export
19
Geographic Shipments
South Africa
76%
Rest of Africa
12%
Total Africa
88%
Americas
0%
Asia
11%
Europe
1%
0%
10%
20%
30%
40%
50%
60%
2004
Maintain Africa focus
70%
2005
80%
2006
90%
100%
2007
20
Investment Programme
Rm
2007
Major projects completed (and ongoing) in 2007
Vanderbijlpark Works
- Blast furnace “D” rebuild completed
- New direct reduction kilns 5 & 6 on track (2008)
Saldanha Works
- Corex/Midrex reline preparation
- Ore screen & stockhouse upgrade
Newcastle Works
- Evaporator crystalliser & RO plant upgrade
- Blast Furnace “N5” Mini-reline (2008)
Vereeniging Works
- EAF Dust extraction (2008)
- Crane replacement and gantry upgrade at Steelmaking (2008)
Coke & Chemicals
- Battery rebuild (Newcastle)
Other (mainly Mozambique)
Total Expenditure in 2007
Furnace refurbishment absorbed 30% of total cash flow expenditure
1 183
260
199
50
59
97
1 848
21
 ArcelorMittal South Africa
achieved 26 LTI free days
(3.7m LTI free man hours)
 1m LTI free hours achieved
 7x at Vanderbijlpark Works
 6x at Newcastle Works
 1x at Vereeniging Works
 1x at Saldanha Works
 Best ever safety performance
by Newcastle Works
Lost Time Injury Frequency Rate (LTIFR)*
Safety Remains our Priority
7.0
6.0
5.0
4.0
3.0
2.0
2002
2003
2004
2005
ArcelorMittal South Africa
2006
2007
IISI
*Includes contractors
Best ever safety performance
22
Finance
Kobus Verster
Headline Earnings
Rm
2006
Revenue
2007
25 350
29 333
6 082
7 703
Gains & losses on foreign exchange rates and financial instruments 301
-131
Financing cost
294
-101
369
-44
7
4
-2 022
-2 455
135
270
34
25
4 730
693
5 741
816
Operating profit
- net interest income
- imputed interest on non-current provisions
Income from investments
Tax
Equity earnings*
Net deficit on disposal or scrapping of assets*
Headline earnings
- in US$m
*After tax
Record earnings
24
Headline Earnings Trend
1,800
1586
1,600
1398
1,400
1582
1653
1532
1488
1439
1247
1623
1292
Rm
1,200
800
600
400
1056
988
1,000
1528
869
661
703
656 672
599
353
200
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2003
2004
2005
Earnings remains within ‘new’ range
2006
2007
25
Operating Profit
Rm
2006
2007
Flat products
3 644
4 338
Long products
2 111
2 661
Coke & Chemicals
184
727
Corporate & other
143
-23
6 082
7 703
Operating profit
Long products and Coke & Chemicals continue to increase their contribution
26
Cash Flow
Rm
2006
Cash profits from operations
Working capital
Capex
Net interest/Investment income
Investments
Tax
Dividends
Net cash flow
Capital reduction
Net cash flow after capital reduction
Net cash
Cash flow remains robust
7 132
-1 033
-1 446
468
-1 660
-1 261
2 200
2 200
7 679
2007
9 021
-606
-1 848
476
-16
-2 209
-1 948
2 870
-6 352
-3 482
3 973
27
Financial Ratios
2006
2007
Operating margin
24%
26%
EBITDA margin
28%
30%
1.4
1.5
Return on equity
22%
26%
Net cash/equity
33%
19%
Revenue / invested capital (times)
Improvement in financial ratios
28
Share Performance
650
Period 2003 to 2007
Average Dividend Yield at 5.7% (excl cap red) - double the market
550
Average Price Earnings ratio of 7.2X - half the market
450
350
250
150
50
Arcelor Mittal South Africa
Excellent medium to long term share performance
ALSI
Top 40
29
Dividend
 Dividend policy
 Distributing one third of headline earnings
 Dividend and cash declared
 Interim dividend of 233 cents per share - 3 September 2007
 Final dividend of 196 cents per share - 17 March 2008
 Total dividend of 429 cents covered 3 times by EPS of 1 288 cents
 Capital reduction of 1 425 cents - September & October 2007
 Total cash distribution of 1 854 cents over past twelve months
Cash yield at 13.6%
30
Other Developments
Rick Reato
Meeting local demand
 Channels for capturing strong local demand and strong international
prices
 Production stability
 Divert exports
 N5 and Corex/Midrex relines
 Investing in additional capacity
 Electricity supply
Focus on production stability
32
Investment Programme
Rm
2008 - 2011
Relines
450
Maintain capability
2 000
Steel capacity increase
2 900
Downstream value adding projects
2 700
Environmental investments
1 000
Expenditure in 2005
1 608
Expenditure in 2006
1 446
Expenditure in 2007
1 848
Investment programme support expansion strategy
33
Major Investments up to 2011
 Flat products
 DRI kilns (2008)
 Corex and Midrex reline (2008)
 New Colour Line (2009)
 New Galvanising line (2011)
 Power plant
 Ore screen and stockhouse upgrade (2009)
 Long products
 N5 reline (2008)
 Maputo mill (2008)
 New Bar/Section Mill (2011)
 New Blast Furnace “N6” (2011)
 New Billet Caster (2011)
 Crane and gantry upgrade (2008)
34
Major Investments up to 2011
 Environmental
 Sinter clean gas
 EAF dust extraction at Vanderbijlpark Works
 EAF dust extraction at Vereeniging Works
 Calcium Carbide Desulphurisation at Newcastle Works
 Evaporator crystallizer
35
Ongoing developments
 Competition Tribunal
 SARS BAA dispute
 Iron ore supply
 Electricity supply
 BEE
36
Cost containment
 Production stability
 Increased throughput
 Purchasing power
 Efficiency improvements
 Cost Control
37
Outlook
Rick Reato
Outlook for Q1’08
 Business environment
 Domestic demand expected to remain healthy
 Higher international prices expected
 Higher input prices will influence production costs
 Earnings
 Earnings to remain strong compared to Q4’07
 Power supply and the exchange rate may have an influence
Earnings expected to remain strong in Q1’08
39
ArcelorMittal South Africa Limited
Annual Financial Results
Thank you