interim results
for the six months ended june 2005
Davinder Chugh
chief executive officer
market & operations
Overview
 Record half year earnings of R3 221m
- Earnings per share of 723c up 108%
- Operating margin of 35% up 66%
- Return on equity of 37% up 61%
- High international steel prices
- Cost increases contained
 Delivering on R9bn capital investment programme
Note: All comparisons against corresponding period in 2004
Maintaining strong performance
4
Key Result Drivers
Increase in HRC US$ export price
Increase in HRC Rand domestic price
Export sales volume up
1H’05 vs 1H’04
35%
13%
6%
Slowdown in domestic sales volume
(7%)
Increase in HRC Rand cash cost per tonne
11%
Strengthening of Rand
Good performance supported by cost containment
8%
5
Export Prices
Mittal Steel Invoiced Prices (c&f) US$/t
700
HRC
Low Carbon Wire Rod
600
500
400
300
200
100
0
1994
1995
1996
1997
1998
1999
2000
2001
Historical high prices prevailed
2002
2003
2004
2005
6
Global Market Trends
 Global steel demand outstripped supply in 2004/2005
 Inventory adjustments prompted recent price slide
 World economic growth is expected to remain positive
 Consolidation amongst steel companies globally continues
 Steelmakers’ input costs will remain high
 Chinese economy still growing at high rate
 In 2004, China accounted for
- 30% of world steel production
- 32% of world steel consumption
Global steel demand driven by China
7
Chinese Market Trends
 China a 320kt net importer of finished steel products in June 2005
 China a 140kt net exporter, incl billet & slab, in June 2005
 Government Policy
- Foreign companies not allowed to control domestic mills
- Steel and raw material export rebates will be gradually reduced
8
Chinese Market Trends
 Domestic Industry Consolidation
- 10 largest mills will account for 50% of steel output by 2010
- Aims to create two industry giants with capacity > 30m tonnes
- Government will not ‘in principle’ grant approval for new steel plants
- Existing steel makers will be gradually reduced
 Technology
- Promote production of high end, low cost steel products
- By 2010 steel mills to consume < 0.73 tpts of coal & < 8 tpts of water
Note: tpts = tonnes per tonne of steel
China imposing internal regulations
9
Mittal Steel SA Geographic Sales
South Africa
Rest of Africa
Total Africa
Americas
Asia
Europe
1H’04
2H’04
1H’05
Oceania
0%
10%
20%
30%
40%
Africa focus continues
50%
60%
70%
80%
10
Global Input Cost Cycle
350
Coking coal - Contract
Iron ore fines - Contract
300
250
200
150
100
50
Jul 2001 Jan 2002 Jul 2002 Jan 2003 Jul 2003 Jan 2004
Jul 2004 Jan 2005
Steel prices supported by high input cost
Jul 2005
11
Global Input Cost Cycle
700
Freight Rates - Spot
Coke - Spot
600
Scrap - Spot
500
400
300
200
100
0
Jul 2001 Jan 2002 Jul 2002 Jan 2003 Jul 2003 Jan 2004
New capacity taking effect
Jul 2004 Jan 2005
Jul 2005
12
Global Input Cost Trends
 Iron ore price increased by 71%
 Metallurgical coking coal contracts settled at +120%
 Freight rates slightly reduced but still at high levels
 Coke prices reduced by 50% after peaking above US$400/t
 Scrap prices coming down, still above long-term trend
 Input material spot prices softening as new capacity starts to show
 Various expansion projects to eliminate logistics chain bottlenecks
Source: World Steel Dynamics
Further input costs increase expected
13
Key Performance Indicators
1H’04
2H’04
1H’05
CI savings (Rm) - incl procurement
657
396
(141)
- excl procurement
519
320
86
12 072
11 416
10 755
Man hours per ton steel
3.9
3.7
3.4
Revenue per head (R’000)
874
1 096
1 141
1 686
1 753
1 876
254
284
303
- flat
49
48
48
- long
71
77
65
Number of full-time employees
HRC cash cost
- R/t
- US$/t
Percentage value-add exports
Efficiency improvements partially countered high input costs
14
Liquid Steel Production
4 000
1H’04
2H’04
1H’05
3 500
3477
3556
3707
3 000
2 500
2 000
1829 1799
1986
1 500
1 000
1085 1093 1105
500
563
664 616
0
Vanderbijlpark
Saldanha
Long Products
Half year production record
Total
15
Sales Volumes
3 500
Domestic
Export
3101 3100 3033
1210 1112 1283
3 000
2 500
2 000
1 500
1569 1597 1520
470 472 524
1 000
1099 1125
1988
1750
996
500
50
1891
548
593
547
350
287
333
198
306
984
910
966
390
353
426
594
557
540
214
1H’04 2H’04 1H’05
1H’04 2H’04 1H’05
1H’04 2H’04 1H’05
1H’04 2H’04 1H’05
Vanderbijlpark
Saldanha
Long Products
Total
Sales impacted by inventory adjustment
16
Environmental
 Environmental projects > R1bn at different stages
Cost
Rm
Planned
Completion
 Vanderbijlpark
-
Zero effluent discharge (MTP)
Cleaning of coke ovens gas
New sinter plant off-gas system
Blast Furnace D Tap floor de-dusting
222
306
210
40
2H’05
1H’06
2H’07
Commissioned
50
1H’06
231
2H’04
 Newcastle
- Reverse osmosis plant
 Projects completed
- Newcastle
• Coke oven repair project
Environmental projects on track
17
Other Major Projects
 Investment plan of R8bn at different stages
Cost
Rm
 Vanderbijlpark
-
Blast furnace C interim repair
Blast furnace D reline
Blast furnace D – stoves
3rd sinter strand
2 New DRI kilns
40
537
318
288
432
2H’05
2H’06
2H’06
2H’06
2H’07
310
2H’07
211
590
Commissioned
2H’08
455
2H’06
 Saldanha
- Corex reline
Planned
Completion
 Newcastle
- Pulverised coal injection
- Blast furnace N5 reline
 Mittal Coke & Chemicals
- Market coke expansion
 Asset replacement & ongoing capex
 Other downstream projects under investigation
 Other reline & value adding projects
1 280
1 300
655
18
Other Major Projects
Cost
Rm
Planned
Completion
 Projects completed
- Vanderbijlpark
• BOF control systems
• Blast furnace C – throat armour repair
• Blast furnace D – interim repair
• Sinter plant repair and upgrade (Phase 1-3)
- Saldanha
• Third roll grinder
- Asset replacement & ongoing capex
- Other reline & value adding projects
Strong investment programme
112
23
139
42
2H’04
1H’04
2H’04
2H’04
30
502
626
2H’04
19
finance
Headline Earnings
1H’04
2H’04
1H’05
10 544
12 509
12 264
2 948
4 451
4 347
(14)
50
83
(133)#
(37)
(30)
(914)
(1 551)
(1 329)
Equity earnings*
179
79
153
Minority interest
(4)
(2)
(3)
2 062
2 990
3 221
311
482
521
2 990
3 221
Rm
Revenue
Comparable operating profit
Financing cost
- net interest (expense)/income
- long-term provision top-up
Tax
Comparable earnings
- in US$m
BAA remuneration*
(511)
Headline earnings
1 551
* After tax
# Lower discount rate accounts for R100m
Record earnings
21
Comparable Headline Earnings Trend
1 750
1578
1575
1 500
1643
1415
1393
1 250
Rm
1 000
750
657
500
596
669
4Q’03
1Q’04
352
250
0
655
1Q’03
2Q’03
3Q’03
2Q’04
Earnings level maintained
3Q’04
4Q’04
1Q’05
2Q’05
22
Operating Profit
Rm
1H’04
2H’04
1H’05
Vanderbijlpark
1 840
2 289
2 332
Saldanha Steel
348
799
685
Long products
640
1 129
1 195
Coke and chemicals
161
301
159
18
24
12
(59)
(91)
(36)
2 948
4 451
4 347
4 451
4 347
Other
Corporate
Comparable operating profit
BAA remuneration
Operating profit
(731)
2 217
Strong performance from all units
23
Cash Flow
Rm
1H’04
2H’04
1H’05
Cash profits from operations
3 465
5 112
4 971
(1 069)
(341)
(930)
Working capital
BAA remuneration
Capex
(731)
(405)
(849)
(493)
(22)
58
75
Tax
(273)
(613)
(1 508)
Dividends
(334)
(5)
(1 783)
Net cash flow
1 362
2 631
332
Net cash position
1 369
3 973
4 280
Finance cost
Substantial tax & dividend payments
24
Working Capital
Rm
1H’04
2H’04
1H’05
14
(302)
(791)
(1 214)
86
(175)
131
(125)
36
(1 069)
(341)
(930)
Inventories
Debtors
Creditors
Total
WIP inventory building for reline
25
Financial Ratios
1H’04
2H’04
1H’05
21
36
35
28
36
35
26
39
40
33
39
40
Revenue/invested capital (times)
1.4
1.7
1.5
Return on equity (%)
23
40
37
30
40
37
9.7
24.8
22.6
Operating margin (%)
- on comparative basis (%)*
EBITDA margin (%)
- on comparative basis (%)*
- on comparative basis (%)*
Net cash/equity (%)
* Adjusted for once-off items
Sound business performance
26
Share Performance
350
Mittal Steel SA
All Share
300
Top 40
250
200
150
100
50
0
2002
2003
2004
2005
Source: I-Net Bridge
Good investment case
27
Dividend
 Dividend policy
- Distributing one third of headline earnings
 Dividend declared
- Interim dividend of 240 cents per share -12 September 2005
28
investment
case
Strategy Update
 2 Mtpa throughput strategy
- Several projects at EIA stage
 US$50/t Cost reduction strategy
- Newcastle PCI project exceeding expectations
 Africa strategy
- 90% Africa focus inline with development plans of SA Govt & NEPAD
Strategy gaining momentum
30
Contribution to the Economy
 R9bn capital investment programme
 US$704m gross export revenue
 Contribution to the state treasury of R1.6bn
 Procurement from affirmative business enterprises of R805m
 Refocused social investment on science & technology education
- Scitech exhibition (attendance 38 000 learners)
- Mittal National Science Olympiad (participation 10 000 learners)
Supporting economic growth
31
Outlook for 3Q’05
 Business environment
- Local demand expected to improve by up to 5%
- Lower local and international steel prices
- Inventory cycle completed, off-take to improve
- Higher input prices will influence production costs
- Exchange rate will have an important influence
 Earnings
- Earnings to remain robust, but materially lower compared to 2Q’05
Softer trading conditions expected
32
Mittal Steel Company NV
 The world’s largest & most global steel producer
- Revenues of over US$32bn*
- Shipments of 69Mt*
- 14 operations on four continents
- 164 000 employees over 45 nationalities
- Major supplier to all steel consuming sectors
- Technology leadership with major R&D centres
- Significant vertical integration
- Unrivalled acquisition & turnaround experience
- Ranked 253rd ito revenues & 55th ito profits (Fortune 500)
*Pro-forma 2005
Shaping the future of steel
33
interim results
for the six months ended june 2005