By Lisa Shidler / Post-Tribune
Mittal Steel N.V. nearly quadrupled its net income in 2004, at $4.7 billion compared to $1.2 billion the previous year.
The company, which operates Ispat Inland in East Chicago, announced its earnings on Thursday, just six weeks prior to becoming the world’s largest steel company with International Steel Group as its latest acquisition.
Mittal Steel officials said they are hoping for approval from the Securities and Exchange Commission on the ISG deal and expect the merger to be wrapped up by the end of March.
Mittal profited from the steel surge in China and hefty steel prices across the world in 2004.
“2004 was an excellent year for Mittal Steel,” Lakshmi Mittal, chairman and CEO of the company, said in an analysts call on Thursday. “2004 has seen very strong global demand. We completed a number of strategic acquisitions, which further enhanced our global position.”
On Dec. 17, 2004, Ispat International completed its acquisition of LNM Holdings N.V. and changed the name to Mittal Steel Company N.V. The company also announced the deal to buy ISG last year.
By the end of March, Mittal will own three Northwest Indiana integrated steel mills Ð Ispat Inland, ISG-Burns Harbor and ISG-Indiana Harbor.
“The big thing is getting compliance from the SEC,’’ said New York-based steel analyst Charles Bradford about the merger. He said the SEC had asked for more information from Mittal and ISG officials.
“They did have questions. You don’t know whether responses were adequate or not.”
Mittal said negotiations with the United Steelworkers of America at Ispat Inland are going well, and expects a deal to be inked in the next few days.
However, Tom Hargrove, president of Local 1010 at Ispat Inland, disagreed with the time frame.
“There’s no truth to it. It will be over when it’s over,” Hargrove said.
When the merger was announced, the two sides had already signed an agreement to craft a labor pact similar to the one that already encompasses ISG union workers.
Mittal officials said there will be some low restructuring costs when the merger is completed but would not elaborate.
“The idea is that both of these operations are complementary to each other and create the platform for the strongest steel company in the United States,” said Aditya Mittal, vice president and group chief financial officer about Ispat Inland and ISG’s operations.
Mittal has about 150,000 employees, and ISG brings about 15,000 employees to the mix. Mittal officials said they would cut the work force by about 12 percent but said much of that will come from Central Asian plants.
Mittal’s operating income was $6.1 billion in 2004 compared to $1.3 billion in 2003.
Lakshmi Mittal expects to see strong global demand across all markets in the first quarter. He says shipments will remain flat or increase modestly in the first quarter and prices will stay up in the first quarter compared with the fourth quarter.
Aditya Mittal said the company’s strong numbers are reflective of the fact that it can improve its operations because of the control it has on raw materials, which often fluctuates in the marketplace.
“Clearly, consolidation is changing the market of the global steel industry,” Aditya Mittal said.
When asked by an analyst if he would consider building a new steel mill, Lakshmi Mittal said he would not.
“Why not try to acquire some underperforming companies and try to increase their product and improve the product mix,” Lakshmi Mittal said. “I don’t support building new capacity.”
Aditya Mittal said the company is considering future acquisitions in Turkey, Poland and other European countries.
Mittal’s shipments were down in the fourth quarter 2004 compared to the third quarter, which Aditya Mittal attributed to shipping delays and planned outages.
Aditya Mittal said the company will spend about $1.5 billion on capital expenditures in 2005 and outlined a number of projects in Poland, South Africa and Romania but did not detail any projects in the United States.
