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Lakshmi Mittal named CEO at Arcelor Mittal
AMSTERDAM - The world’s leading steel producer, Arcelor Mittal, created through the merger last June of the European groups Arcelor and Mittal Steel, said on Monday that Indian businessman Lakshmi Mittal had been named chief executive officer.
The company at the same time announced an increase in third quarter net earnings to 2.18 billion dollars (1.7 billion euros) from 1.8 billion in the second quarter.
Arcelor Mittal shares turned weaker in mid-morning trading, as some analyats reacted negatively to news of Mittal’s appointment and the company’s prediction that operating earnings would decline in the fourth quarter.
Shares were down 1.27 percent to 32.67 euros on the Paris exchange, which was 0.37 percent stronger overall.
Arcelor Mittal said sales in the July-September period came to 22.05 billion dollars from 22.4 billion in the second quarter, adding that fourth quarter operating earnings -- before interest, taxes, depreciation and amortization -- would likely be less than the 4.35 billion dollars recorded in the third quarter.
It cited seasonal factors for the expected decline as well as lower production in the United States and the European Union.
The board of directors at Arcelor Mittal said Lakshmi Mittal would replace Roland Junck as chief executive officer, with Junck remaining a member of the group management board.
‘We are making these changes to clarify the leadership of the company,’ said Joseph Kinsch, chairman of the board of directors.
‘It had become clear over the past months that the interests of the company were not best served by the previous structure.’
Lakshmi Mittal added that ‘the overarching priority for Arcelor Mittal is to successfully integrate the two companies and deliver the merger syngeries and benefits.’
‘The past three months have served to increase our confidence in the strategic rationale of combining the two companies.’
Mittal had initially said he did not want to play an executive role in the merged entity. Junck, formerly of Arcelor, was named chief executive officer three months ago in order to reassure parties that were uncomfortable with the 26-billion-euro takeover of Arcelor by Mittal Steel, which is of Indian origin but is now based in the Netherlands and run from London.
Analysts were divided on the management change.
‘The appointment of Mr Lakshmi Mittal is in our view positive as he has been regarded by investors as the consolidator in the global steel market,’ said analysts at Rabo Securities.
But at CA Cheuvreux experts commented: ‘Roland Junck having suddenly resigned, Mr Mittal takes over as CEO. This clarifies where the power remains inside the group, but unseats the merger-of-equals principle.’
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