ArcelorMittal, one of world's biggest steel producers, announced on Thursday that Aditya Mittal would take over as chief executive officer (CEO) from his father, Lakshmi Mittal, who would take on the mantle of executive chairman.
Aditya Mittal, 45, was previously the president and chief financial officer (CFO) of the company, and CEO of its European arm.
Lakshmi Mittal, who founded the company in 1976, will continue to lead the board of directors and work together with the CEO and management team, while Aditya will run the company’s day-to-day affairs, the steel giant said.
The company on Thursday also reported better-than-expected numbers for the December 2020 quarter, with earnings before interest, taxes, depreciation and amortisation (Ebitda) at $1.7billion -- almost double the Q4FY19 level. The firm follows the January-December financial year cycle.
A challenging market environment, however, saw its steel shipments decline by 18.2 per cent last year. The company ended 2020 with a gross debt of $12.3 billion and net debt of $6.4 billion, which is the lowest level since the 2006 merger with Arcelor. It posted a net loss of $0.7 billion in 2020.
The company said $1 billion of structural cost improvements had been identified, with the majority of savings expected in FY2021 and fully realised in FY2022 versus the FY2019 base. The most significant source of savings would be from productivity. Selling, general and administrative expenses (SG&A) is expected to account for approximately 25 per cent savings, including a 20 per cent reduction in corporate office headcount.
The ArcelorMittal board also proposed to restart dividend payout to shareholders at $0.30 a share.
Commenting on the leadership reshuffle in the company, Lakshmi Mittal, 70, said, “Having achieved some key strategic targets, this seems like the right moment to transition to executive chairman. And the board unanimously agreed that Aditya Mittal is the natural and right choice to be the company’s chief executive.”
“We have worked closely together since he joined the company in 1997. In recent years, we have effectively been managing the company together,” he added.
Those who know Aditya Mittal said he had been spearheading the company’s acquisitions for a while now. In 2006, he had initiated and led Mittal Steel’s offer for Arcelor, creating the world’s first 100-million tonne plus steel company.
In India, ArcelorMittal’s major entry into steelmaking with the acquisition of Essar Steel – jointly with Nippon Steel – under the insolvency law, in 2019, was largely led by him. It was Mittal, who led the due diligence and is now the chairman of ArcelorMittal Nippon Steel India (AM/NS India).
The company also gave an insight into AM/NS India’s numbers. AM/NS India achieved a record production at an annualised rate of 7.5 million tonnes. It achieved $0.7 billion Ebitda in FY20, which exceeded the cash needs of the business.
During a media call, Aditya Mittal said, “In terms of our growth plans, immediately, we are commissioning a pelletising activity, bringing our capability to 20 million tonnes – in Paradip. Also, we are focused on increasing production from 7.5 million tonnes to 8.5 million. We have projects underway which will increase design capacity.”
On rising steel prices, which have been in focus in India, Mittal said that in India, demand levels had come back much stronger than 2020. He also pointed out that another reason behind the increase in steel prices was the price of raw materials, which was also up.