EuroBusiness Media (EBM): Arcelor just reported first half earnings for 2006. Gonzalo Urquijo, welcome.
Gonzalo Urquijo (GU): Good morning and thank you very much, it's a pleasure being here.
EBM: You are the chief financial officer, and a member of the management board, of Arcelor. What are your comments on first-half earnings. Are you happy with these numbers?
GU: I believe we have had excellent results for the second quarter. They have been excellent in all the divisions, i.e. for flat, for long, for stainless (where we have seen an enormous recuperation), and for the distribution activities, ATS. So we are very happy, I would like to start by thanking all the Arcelor family, the 110,000 employees, on this tremendous effort everybody has done to deliver very good second quarter results. Especially in an environment that was hard if compared to 2005. Why? We have had an enormous increase of factor costs, i.e. iron ore, coal and zinc. And we had much lower prices than one year ago. So we are very happy with our results.
EBM: What are the levels of price increases that you managed to pass on to clients in the first half, and with what degree of success?
GU: I believe the degree of success has been good, increasing our prices, especially in the second quarter, and we are happy that we are going to have further increases in the third quarter, which have already been passed and accepted, and also in the fourth quarter. So there has been an acceptance and prices have been increased and we hope they will continue increasing.
EBM: What are your comments on the current state of inventories?
GU: Inventories in Arcelor and in distribution: we are happy with the actual level of inventories. Now that's something we want to watch very closely, not only in Arcelor, but in our customers and in all the distribution and steel service centres. You remember last year we had a sudden increase of inventories and that put a lot of pressure on prices a couple of months later. For the moment we are satisfied, but we have to monitor that very closely. I do want to announce at this point that if we see inventories start increasing in our customers, in the distribution or steel service centres, or in our factories, we will not hesitate to cut production, that is clear. We will maintain prices over volumes.
EBM: What new guidance elements could you give the market concerning the merger with Mittal. Do you have any new forecasts that you can give about EBIT?
GU: Nothing new. About a month ago, Aditya Mittal and myself, when we were in the middle of the road show in Paris, we announced a guidance for the year that was an EBITDA of between 12 and 12.5 billion euros. We maintain that for the moment and we expect a dividend pay-out of 30%. Where we see the market as of today, we fully maintain that guidance.
EBM: And finally what is your outlook for prices in the second half and beyond?
GU: Prices will increase in the third quarter and fourth quarter, and as I said before, as we are going to be disciplined in production, we hope to maintain prices and not only maintain, but continue increasing prices, we hope, in 2007. But I insist we will be very disciplined with production.
EBM: Gonzalo Urquijo, CFO and member of the board of Arcelor, thank you very much.
GU: Thank you very much to you and, as I said at the beginning, thank you to the 110,00 members of the Arcelor family for delivering such a good result. Thank you.
