ArcelorMittal plans $1 billion cost cuts under new CEO

BRUSSELS (Reuters) - ArcelorMittal, the world’s largest steelmaker, plans to cut 20% of its office staff in a $1 billion cost-reduction plan, it said on Thursday after posting higher than expected fourth-quarter earnings and boosting returns to shareholders.

The group also announced that finance chief Aditya Mittal will take over as chief executive from his father Lakshmi, who founded the company in 1976 and will become executive chairman.

“We have worked closely together since he joined the company in 1997, indeed in recent years we have effectively been managing the company together,” Lakshmi Mittal said in a statement. The Mittal family owns more than 35% of the company.

ArcelorMittal, which employs about 190,000, said it would run a $1 billion cost-cutting programme over the next two years which will include boosting productivity, cutting contractor numbers and reducing office staff by a fifth.

Chairman Lakshmi Mittal said market conditions had improved in the fourth quarter, and the company now forecasts 4.5-5.5% growth in steel demand this year.

For the year ahead, new CEO Aditya Mittal told a conference call that customers were rebuilding steel inventories and end-user demand was recovering following summer lockdowns.

Germany’s Thyssenkrupp on Wednesday raised its full-year outlook for the first time in nearly four years, boosted by a recovery at its steel unit.

ArcelorMittal said it would resume dividend payments, of $0.30 per share, and would return a further $570 million to shareholders through a new share buyback programme in addition to a $650 million buyback announced on Tuesday.

The Luxembourg-based group’s shares were down 0.5% at 19.12 euros by 0855 GMT, but have recovered strongly from mid-2020 when they were below 10 euros.

ArcelorMittal also said the impact of the second wave of COVID-19 had so far been limited on its customers in the manufacturing, construction and automotive industries.

Analysts at Jefferies said solid earnings and the new shareholder returns policy should be welcomed by the market.

Fourth-quarter core profit almost doubled to $1.73 billion, beating an average forecast of $1.47 billion in a company poll of analysts.

Reporting by Marine Strauss @StraussMarine; Editing by David Goodman and Jan Harvey