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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