Hello, everyone. My name is John Andrews, and it's my pleasure to welcome you to the Annual Retail Shareholders event for ArcelorMittal. It's my pleasure to welcome Michel Wirt, Main Board Director, who is absolutely willing as always to answer your questions and questions can come in by phone, by Internet, whatever. We have Valerie Mela, who is from Investor Relations, who can also pose your questions. But Michel, let me start off by asking you a general question.
We live in what the Chinese tend to call interesting times because they mean that as a curse. They're difficult times. How do you view the macroeconomic situation in which the world in general finds itself, but ArcelorMittal in particular?
Okay. Hello, John. Hello, all listeners. So I think it's a pleasure all the time to be with you and to have a real dialogue especially with you as you are long term shareholders. And it's good to have sometimes once a year a specific event organized for you where we can go to your questions.
So answering to what you told me, I think that when we are speaking about the global economy, obviously, it's very dependent from what angle you are looking at it. Obviously, 1st of all, if I look at the macro picture, we see that the developed countries are doing quite well, positive growth, in particular in NAFTA and in Europe. And then you have the developing countries which are suffering. And if you apply this analysis or these facts now to the consequences on the steel industry, then we come to a paradox that a country like China, which is really suffering is doing a huge harm to our industry simply because you have to know that 50% of installed capacity in steel is located in China. And when China is in crisis, having known tendency and a growth rate of 6%, 7%, 8% per year in steel consumption and being now negative, that gives a huge disruption and I would qualify the crisis, the steel crisis in China as it is today as what Europeans have lived in the '70s and in the '80s.
So this is a fundamentally difficult time with huge consequences on our industry.
But I mean it took the Europeans a long time to get out of that crisis before in 70s 80s. Is it going to take that long for China? And if you look at the IMF, it's already downgraded its growth projections for the world economy basically because of the slowdown in China. How long is it going to take for China to resume that sort of growth path that actually would save the steel industry?
I think we need to see differently from demand and from supply. First of all, if we look at demand, we see that the Chinese economy is in fact moving from an investment based economy to a more consumer demand based economy, which is less steel intensive. And that's one of the reasons why steel demand went is going down. But that means also that qualities of steel, which are required, changing. For example, I give you an example, consumer based economies buy much more automotives.
So steel for the automotive sector or so will definitely grow. On the other hand, steel demand in China has suffered very much because there was a bubble in the construction industry, in the housing boom totally collapsed. And today, more than 50% of steel produced in China was going into the construction industry. Now I think it's reasonable to say that in a couple of years or so, this will become normalized again and the construction industry will start which will help definitely steel demand. Now on the supply side, we see that there are numerous mills of very different size and of different qualities and there we need restructurings, we need mergers and this is a second phenomenon which will take place.
And to give you answer how long will it last, I think it's a little bit the combination on how rapidly demand will recover on one hand side and how rapidly supply will restructure and perhaps that could be that demand would recover more rapidly than supply but already if demand improves that will go into the right direction.
I mean restructuring is normally a code word for cutting capacity for closing mills. Is this what the Chinese are not doing and should be doing?
This is what the Chinese have not done enough and that's the reason why they are in crisis and the Chinese today are selling at prices if these products are landed in Europe or in other parts in the world which are simply at variable cost which is absolutely nonsense from an economic point of view and which you can also translate in saying that this is really a dumping which is done and which translates into an unfair trait which is also part of the question which needs to be resolved.
Well, is anti are anti dumping cases taking place in the States and in European Union?
It is a little bit more advanced since United States because there you have coated flat steels. You have cold rolled and the U. S. Introduced also now an anti dumping trial for hot rolled. So you could say the whole spectrum of lead steels are concerned.
In Europe, this is not yet the case. And that's the reason also why European price if you look at the European price level is still much below the U. S. Prices and which is then also letting to suffer for European producers.
So I mean, are you saying that the EU has been rather slow in taking anti dumping measures? Because I presume that if America takes anti dumping measures against China, then a lot of Chinese exports which would have gone to the U. S. Will come to Europe and therefore worsen the plight of the steel industry in Europe.
Historically, the U. S. Were all the time more rapid in introducing trade cases when there was an assumption of unfair trades in Europe. But what is characterizing today is that you have in many countries now antidumping measures against Chinese or other low priced imports. For example, this happens in South Africa, this happens in Canada, this happens in Mexico, this happens in many cases including in Europe.
So it is definitely the sign that something is wrong and that something really needs to be happened and that was the reason by the way why the UK government was asking an Industry Minister Council in Europe precisely to debate the question and to see how it should be addressed and which is clearly also a sign that signs of things are not normal and that something needs to be done.
I mean what impact is this? I mean you downgraded your expectations for 2015. Is that precisely because of the Chinese problem or were there other factors that played into this?
No, there are 2. First of all, the macro picture I made before is that 1 year ago expectations was that steel consumption, global steel, apparent steel consumption in the world would grow by 1.5%. Today, we see that this is a minus 1.5%, which is a 3% difference of the expectations. And hence, if we translate this more difficult macro environment on the Oslo situation. We see first that volumes are not as global volumes are not there as we had really or as the market anticipated And as volumes are not there, I would say competition is even more fiercer and that means that prices went even down.
So and I would say that it is these two combined factors which explains that what was considered as a fair hypothesis 1 year again, 1 year ago has changed. And this is really what motivated our change in our expectations. But on the other hand, if we look at our group, I would say that in most of the areas we have really done quite a good job. We are today our plants are very competitive. We have reached most of our cost cutting targets.
We are there with our cash flow generation targets. So I would say at home in the group, we have done our job, but globally as markets were much harsher in steel not speaking about iron ore but I think that we will cover this later.
If you put China aside I mean how are your competitors reacting? Because you are the biggest steel company in the world, but presumably you can't do everything alone to bring the market closer into balance.
It is not only China, it is for example Brazil. Brazil is the big macroeconomic crisis and still consumption will go down this year in an unprecedented way 10% or 12%. 2nd, everything which happens in Russia with trade sanctions and all this political struggle, which we are living has obviously negative consequences of on steel consumption. So there are many, many difficulties and many factors, but in particular in developing countries. And that has an impact on the market equilibrium and also on the results of our competitors.
And if you see, for example, we are now making this talk here from London, if we see the situation of the British Steel Industries, quite dramatic with 1 or 2 major steel plants which has been closed, but that means that competition is suffering at least as much as we are suffering and that sometimes even they are struggling even more than we are doing.
Let me see if there are questions from our shareholders. Valerie, do you have a
Yes, indeed. So to kick off on the theme of antidumping, as we have partially given elements of answers on the questions, concretely, does ArcelorMittal continue to knock at the EU Commission's door on the matter? And what progress do you think can be achieved into 2016?
Is that a question from Europe or from the States?
From Europe.
Okay. So first of all, I think it's not ASLA Metal alone, which is acting. We are members and we have an active member of Eurofair and it is in fact the European Association of Steel Producers who is saying that there are some unfair trade practices which are going on and hence it is the association who is really pushing hard to say that something needs to be done. Now I guess also there's a different national steel associations where we also members sometimes even the biggest members are also then knocking to the doors of our national governments saying look what is going on. You were really putting a threat on our steel mills and something needs to be done and all this is done.
And I have really the impression also is that also following the Industry Minister's Council, which took place last week, that people that politicians start becoming aware of the situation, which gives us good hopes that something will happen and that we will come into a situation where fair trade is better respected than it is today because all of this is about fair trade and we are in favor of fair trade because we are the most global steel company is very obvious. But if trade is not fair and if indeed in one jurisdiction, the steel shops still which is coming from for example from China is done with losses, then we have a problem and this needs to be addressed.
But I mean, has the Council of Ministers reacted too slowly or has the steel industry reacted too slowly in tapping on the door
of the EU? I would say first of all I think it's known that Europe bureaucracy sometimes a little bit slow is one of the problems. And then we have to see that anti dumping processes are complex processes. And we need to show evidence that there is unfair trade, that there is injury and then only people can move and all this there is a lot of data which need to be assembled complex files which need to be done complex discussions with Europe. So that takes time but unfortunately it takes more time in Europe than it takes in the U.
S. That is true but we are now well advanced.
You mentioned Brazil just a few minutes ago. Is that a spillover from the Petrobras scandal?
I think that Brazil is not politically in a good shape and due to the Petrobras case, also the Petrobras case has had implicit also consequences on the investment of this company and of the whole oil sector in Brazil. And that by the way has worsened the business climate. And as a consequence, we came Brazilian the Brazilian economy became really depressed, depressed was that revenues was negative, less investment, less housing, less construction and then you come into a vicious circle which is as big as I told you before with for this year really in steel consumption which is down by 12%. This has never been seen like that in Brazil before.
I mean looking through your figures it seems to me that one of the areas you've highlighted has been Africa and the CIS, the Commonwealth of Independent States. What's been happening there?
But in let's start maybe first with Africa and in particular with South Africa which is the only African country which is really producing steel. So there we were faced also by a very strong push of imports, bringing prices to unprecedented levels. And on the other hand, we saw that partnership relationship we had with upstream with the iron ore industry in South Africa also was in fact giving negative effects because we came into a situation where our iron ore supply was at a higher cost that we would have imported iron ore from overseas. So we had these two situations once again. Our costs were higher because of internal South African problems and our revenues were lower because of dumped steel materials.
And this needed to be addressed and we have worked very hard now over the last 2 or 3 months with different stakeholders in Brazil with quite good results. First of all, we have made new agreements with Kumba, which is now a much fairer contract for the supply of iron ore. 2nd
Let me interrupt you for a second. Don't you have so much for your own iron ore? I mean, if I were just an ordinary retail investor, I'd say, why are you paying above the odds for this iron ore in South Africa when you have a vertically integrated company in the 1st place with your own raw materials?
Yes, but the idea was in South Africa to have a contractual integrated fill year and this did not work due to outside factors. And for that reason, it needed to be changed because it would have been absurd in a country like South Africa, which was Anglo American to import iron ore from our own mines elsewhere and this needed to be addressed. And so we addressed the problems from iron ore, we addressed the problems that there were some anti dumping and tariffs which were established and we addressed also the problems with our stakeholders in the sense that we have now and a plan to bring in local shareholders in the BBBE program and all this makes that I think that we have done quite a good progress in South Africa, including from a financial point of view where we made the capital increase. So that's the balance sheet of AMSA today is also now solid again.
So basically you've got a better price? Absolutely. At a fairer price?
Absolutely.
What about the CIS, the Central Asian Economies which were part of the Soviet Union?
There's the so we are this is an overall economic area, but with different currencies. And when sanctions were addressed against Russia, the consequence was that the ruble was devaluating much more, for example, than compared to the Kazakh Tenge and the consequence was that this currency devaluation was so different from one to the other that Kazakhstan became uncompetitive and hence had suffered. Now the fact is that you know that the Kazakh economy is very much dependent also on oil. This has been regressed recently and there had been a relative devaluation also so that Kazakhstan is now doing much better. Ukraine, on the other hand, is a little bit different.
Ukraine is an integrated steel producer making a lot of long products, but also semis. And what happened there was that Ukraine needs to be competitive in the export markets and we're very much hit by these dumped exports of billet and of semis from China.
The power supply for your industry in Ukraine. I mean you always hear these problems of Russia putting pressure on Ukraine and so on. Have you had power supply problems?
We have tried to improve our independence of this outside energy in the sense that if you are producing on the blast furnace basis as we are doing it in Ukraine, we are producing energy from blast furnace gas and coke oven gas, which helps to be largely self sustaining and in order to become a little bit more independent, what we have changed also some blowing in of natural gas by PCI investment we have done as well.
Valerie, do you have another question from Yes.
Are U. S. And EU able to have a common approach to fight dumping trade?
This is not the way how these things were handled differently because typically dumping is treated as a national policy or in Europe it is handled at the it's one of the specific competencies of the European Commission. So it's a different way, it's a different logic, it's a different legislation. But I would say under the umbrella of the World Trade Organization, which basically says that trade should be free and fair and the question of dumping is a question of is fairness there or not. And if there is no fairness, then different countries or the EU in the case have the right to introduce some anti dumping penalties.
Let me switch the focus
a little
bit. We are happy to be talking now just as the COP21, the Conference of Partners is meeting in Paris. So you've got all the great and the good of the world, all the leaders meeting in Paris to do something about climate change. Now steel is a big producer of anthropogenic greenhouse gases, I believe. I'm not an expert on this.
What are you doing? What's your attitude towards COP21 and actually climate change in general?
I think we as a company and as a land trust to the steel and mining company in the world, we are taking this extremely serious and as there is a threat of global warning, we need to take our responsibilities and to behave in the best possible way. And where can we act? 1st of all, reacting in terms of energy efficiency and energy savings and what you have to see is that if I long so I have a steel carrier of 35 years. But if I look at the last 50 years, I would say that specific energy consumption and that means basically also CO2 emissions per ton of steel produced in Europe has been divided by 2, which is already a big stake. 2nd, we are also arguing as one of the major industries to have clear and logical
rules.
And that means basically that there should be a level playing field and the same fair rules for everyone wherever he produces steel. And our criticism in particular in Europe is that with the European trading system, emission trading system we have is that in Europe the CO2 issue is costing more money to steel producers than in other jurisdictions and what we say also to the European Commission, to our national governments is that it is not a good policy to say we will reduce geographically our emissions by transferring production into other jurisdictions. So we are in favor. We see that this is a key issue. We have our own plans to reduce further our energy basis basically by 8% up to 2020, which is almost physically the limits we can reach.
And on the other hand, we are strongly arguing for a level playing field and for reform of the ETS.
You mean the cap and trade system isn't really working properly?
No, cap and trade is not a good solution because it artificially reduces the number of free allowances which are available and hence it reduces the cost of making steel in Europe even if emissions in Europe on a per ton basis is the best in the world. And in fact from a climate point of view, it would be better to produce more steel in Europe than somewhere elsewhere. And by having the same price for carbon everywhere, which would be the logical solution, the optimization of the carbon emissions would be much better globally.
I want to ask you a slightly provocative question. Looking at your analyst reports and so on, they do note that the enterprise value has gone down. Does that mean that the EV to EBITDA ratio, does that mean that theoretically, ArcelorMittal could be a takeover target or are you basically too big to be taken over?
No, I think that we are not too big, but the fact is that we have quite a stable shareholder basis. And in particular, we have one shareholder, the Mittel family, which has a shareholding of approximately 40% and hence giving a very long a good stability to the company. The advantage of this the advantage of this is obviously that we can have a long term view, whereas some companies who have a broader based shareholding need to look much more at their quarterly earnings than we have to do it and we can have really a strategic view on how to run our business.
Well, we're talking about the shareholders. Valerie, is there a shareholder with a question for Michelle now?
Yes, concern about the share price of course. So I have a few questions that I will regroup which are do you think your stock will recover soon? Do we need to worry about the share price? You got downgraded by Moody's recently and some have even mentioned low €4. Can you shed a bit more light on the topic?
So first of all, I think it's clear that shareholders are disappointed about the evolution of our share price because basically it went down this year and mainly due to the macro reasons we were discussing. So negative global growth, sharp decline in prices of steel and of iron ore and hence, definitely a worsening of our results because we are all below our guidance we had before. So this being said, I think that it's difficult for me to predict the share price of an Astra Metal share. Otherwise, by the way, I would not be sitting here, but I would be I would play the role of a broker as well. But let's take this I take this away.
Think what is important for our shareholders to know is that from a strategic point of view, we have done what needs to be done. And in particular, today, it is absolutely clear that, for example, the restructuring steps we have taken in Europe in 2011, 2012 was absolutely the right moment. And if I see our results and also how things go in Europe, this is very well done. On the other hand, even in the mining side, if I see the expansion program of our Canadian mine, which has succeeded to bring down our per tonne cost dramatically in iron ore has made really this mine sustainable. So in the long term view, I would say that our group is quite solid from an operational point of view.
And then looking at our balance sheet since 2008, our net debt have been divided by 2 and today we can say that we have a very strong balance sheet. We have a low debt. We have a maturity scheme which is very even over time for the next 4, 5 years, we have never to repay more than EUR 2,000,000,000 or EUR 3,000,000,000 maximum EUR 2,500,000,000 per year and we have a liquidity almost of 10,000,000,000. So we are extremely liquid solid balance sheet and from a structural point of view things that we have done our homework.
Yes. And the debt profile is actually pretty good, isn't it?
This is extremely good. And before we were very heavily indebted through the banks and today we don't have any debt with the banks and basically banks provide us with the liquidity reserve we have with confirmed credit lines which would help us if there is an opportunity to manage our short term liquidity.
You mentioned earlier NAFTA. What's the situation with NAFTA With the whole North America?
Yes. So the whole North America, I would say nothing to say except very good news from Canada because there with Dofasco we have definitely the cost and the industry leader in North America. Canada has become even more competitive as well because you noticed that while 2 years ago the Canadian and the U. S. Dollar were at parity, Today, we are close to 130.
So Canada has become very strong on one hand side. Secondly, if we turn to the United States, I would say we have 2 different questions. First one is I go to the south, which is Calvert, which is the most
That's a joint venture with With Nepenthes,
which we run, which is a fantastic opportunity in the medium term. We need now to continue our ramp.
That's a very smart deal to buy it from Thyssen, is that right?
I think that it was a good deal at least, I don't know, probably it was I'm
deliberately words into your mouth.
No, no, if you find the seller, then the seller Bill believes that it is also a good deal for him definitely. But for ArcelorMittal, it was an attractive deal because it is the most powerful and the most modern flat steel producer in North America and hence, of course, very new opportunities, particularly for the automotive market. And then in the midst we have our Oslo U. S. A.
Basically in Yanahan, well, Burnts Harbor, Cleveland and what is surrounded. These older mills which are unionized and as you know that we are presently discussing and negotiating the renewal of the CLA in this area. So for that point, it's difficult now for me to speak because you cannot publicly speak on ongoing negotiations, which are this is not very useful. But what I think also our auditors and our shareholders have to know is that there is a general recognition that we need also to adapt our footprint in these plants and to streamline them in order to improve their competitiveness in the next future.
But I think one could venture to say that labor relations and difficulties in the United States tend to be less than they are in for example France. All your labor problems in France, I assume, are now over.
I think that in France, we see now that we can be competitive and we run full in our different operations and not later than for the Health and Safety Day, for example, I was in Lorraine in Florenges and I was amazed to see a very highly motivated workforce, which was quite happy to have received these new CapEx as promised and which has made out of Flourish one of our best performing downstream activities in particular for supplying the European Automotive Industry.
But your CapEx must be I presume lower now than say 5 years ago?
You're absolutely right for two reasons. First of all, because the restructuring period is now over and second, because our asset base has been shrinked. For example, we have today 5 integrated mills in Europe, whereas we had 7, 5 years ago. So in 5 plants, you have less maintenance costs than you would have had in 7, especially if the 2 ones we have closed had been the oldest months, I. E.
The ones where maintenance is the most expensive.
Bunnell, I don't know if you if I were a retail shareholder, I think I'd be worried about the dividend. Have you had any or lack of dividend?
I have 2 more 2, 3 more questions, yes. Indeed, regarding the dividend, is the dividend cut temporary for fiscal year 2015 or do you think it's a more durable step given the steel market conditions and outlook?
So the decision by the board to cut the dividend which needs to be approved by the next AGM in May is basically due to the fact that the group has or the board has decided that the strength of the balance sheet and to reach the goal towards €15,000,000,000 of net debt should have had would have priority. And that is what it is. And so from that point of view, it is a decision of 1 year's time. And I would say that in 1 year's time, probably next September, October in the Board, we will discuss what is going on. And if situation improves, then we can restore dividends.
If situation remains tough, we need to see. But this is still an open question.
But I mean, if you look ahead, at what point do you see things turning up? I mean, in a sense, we go back to the macro picture.
Yes, I would say that would we have fair international trade practices and let's say fair pricing, we would say that situation would not be so bad because even in this difficult international environment with a negative global steel consumption, we see as La Metal up to the end of September, this year ship 1.5% more than last year. So that means that our plants are in a good shape. We are competitive. We can take market opportunities and we can go for. It's only simply a pity that we are living in these difficult times and the sooner we come back to fair trade practices, I think the better it will be.
And we can from that point of view, that's the reason why we can look in a confident way in the future.
But in the meantime, I mean, presumably, a lot will be riding on the state of the automobile market, both in the States and in Europe. How are automobiles looking from your point of view?
That automotive is indeed a key market for SLA Metal with what I can say is that where we are clearly the leaders. We are the leaders in terms of volumes, which is fine. But much more importantly, we are the leaders in technology. And in fact, what we are doing today is we have designed and we are starting to produce the steels for the future. And that means that we are today in a position to give the appropriate response to automotive, automobile producers in the post COP21 area where we need to reduce the weight, where we need to improve fuel efficiency, where we have specific solutions for electric outdoors and that is today on the table and there we have been fabulously effective in doing so.
So this is strategic and this is good and there we are a unique producer and that's also the reason as we give a lot of value to our customers, this is also the consequences that pricing also there is much better. And I would say we are making our automotive customers happy and we are happy with them as well.
I mean, I know that you personally have a background in R and D, research and development within the company. Is R and D spending being maintained? Is it going up or is it going down? Because I mean a lot of companies when they need to cut back will cut back on R and D.
In fact, our R and D has remained stable. So we are spending roughly $300,000,000 of R and D, even a little bit increasing, in particular, for specific new programs for the automotive market. So because this is our future and this is where we have to put off it. I must say, the biggest single portfolio in our R and D is automotive and there is also where we have made huge success.
I mean, automotive, so everybody now is talking about the VW scandal over their emissions measurements. Has there been any knock on effect for the automobile market in Europe or actually elsewhere as in the States as well? Because after all that was where the scandal was uncovered.
We have not observed this and we continue to see globally that automotive demand for vehicles is increasing. So this might vary from one producer to the other, but there is clearly a need for mobility for a lot of people and that's the reason why the automotive market has been very positive this year with reaching high level record levels in the U. S. With reaching I think that new cash admissions in Europe has increased by 8% this year and we continue to be optimistic, especially as new cars continue very rapidly to be much better and much more fuel efficient and much lighter and much safer than old models have been. So there's plenty of new and beautiful cars to buy also for all of us.
Including in China.
So maybe the
Chinese overcapacity will be sold.
Including in China and which is the reason why we are present in China because we have an automotive sheet plant together with our partner in Berlin precisely to be a global producer and we believe that the automotive market is a global market and we want to be there where the market is growing. Hence this joint venture in China which is now doing quite starting to do well and really to move up. And in the same logic also, we have signed a letter of intent with same in India in order to replicate this model and to build to work on the feasibility of such an automotive plant also in India.
Valerie, more?
Yes, I have two questions on the outlook for 2016. What are you doing to improve performance first and what further fixed costs can be removed from your business do you think?
Okay. So obviously 20 15, 2016 will depend very much on the market environment. And what we see today in this heavily declining prices especially in the second half of this year is that inventories need to come down because typically when prices go down, a steel buyer says, I wait because tomorrow maybe that prices will be the steel price will be cheaper than today and hence it's consuming its inventories. And that has this move has some physical limits. And hence, it is likely that due to the reversal of the inventory cycle and due to the fact that global at least that Europe and the United States will continue to have positive growth that we will next year see an apparent steel consumption which would increase as we had negative numbers this year.
So that is the first question. Now internally, what are we doing? First of all, we suffer a lot in the second half of this year and in particular also in Q4 because prices went dramatically down and hence we needed already to react in order to improve the situation. And basically, we have taken 2 actions. First one is to improve.
We have a value plan. We have developed a value plan to improve our EBITDA by $1,000,000,000 compared basis Q4 this year and to realize this in 2016. So it's not the run rate, but it is globally an improvement. And this covers the different geographies, value plan in Europe, specific cost and market plan in Brazil and also a specific plan in North America.
What does the value plan involve in Europe?
The value plan in Europe is improving our cost basis, rationalizing our production processes, improving our variable costs, for example, partly through R and D, improving, for example, energy yield or improving other yields, trying to take advantage also to try to make some additional savings in purchasing all these together and then continuing also to improve productivities in the different plants.
A question, you've talked about the ruble, the 10 gs and of course the dollar, the euro. I mean, currency fluctuations must be a huge difficulty for you at times.
Yes, but I would say more from an accounting point of view than from an operation point of view because when you are in Kazakhstan, our CEO in Kazakhstan and his team, they need to run their company. And for them, the currency is a given. And if the currency is an evolution in the wrong direction, they need to react and the same for Europe for example. Today, the euro dollar rate is at 1.5, 1.6. It used to be 1.30 or even 1.36 15 or 18 months ago.
So a huge change this has had as a consequence in Europe is becoming much more competitive in terms of cost, but translated the euros, the EBITDA which are in euros if they are translated in U. S. Dollars means that you need to have 20% higher euro EBITDAS in order to have the same number of dollars. So this is complicated, but this is more complicated, I would say, for the CFO and for the accountants and for our European leadership team. Valerie?
Yes, sure. A recurring issue from European retail shareholders is how do you explain that some sell side analysts have a sell recommendation on the stock, while some others have outperform or buy recommendation? And shouldn't ArcelorMittal work more on being more transparent on the future outlook and its strategy?
So first of all, the last part of your question, I think, ArcelorMittal is very transparent company because we are doing guidance. We are discussing a lot with our shareholders. We are visiting a lot of conferences and our investor relation team and our senior management also is having a lot of contacts with analysts. Now why are there divergent views? I think that is because there is a lot of uncertainty in the market.
Some people are more bullish for economic recovery, others are more pessimistic. If the view would only be one direction, then either down or up, then the share price and everything would go anticipations and also customer behavior would go into one direction and things would be much simpler, but that's not the case. And so I see that I think that visibility is not really good and that's the reason why they have used. And then some analysts also we are taking are looking at the next quarter and we are in difficult times and others are looking in with the horizon of 6 months, They see probably this inventory cycle may change and others are saying but look at 2 or 3 years view Oslo has done a good job and structurally the share price should be stronger than it is today. So I think that is a point.
But if you were an ordinary retail shareholder, not an institution, what would persuade you to stick with your Arsenal shares rather than to sell them?
I would say that when the share price is so low as it is today, probably and I am also a small shareholder, I would not sell now because the opportunity is the upside is definitely higher than the downside. But I think that's quite an evidence. This is not the best answer because people also have had share seen their share price declining for all the reasons we have discussed. But I think that if they see as we see it that this company is solid, has done the right job, then one can be reasonably optimistic also for the future.
Valerie, any more questions from here? Let me then pose just a final question. Actually, it's sort of a 2 edged question. What would be the worst scenario going ahead for you and what would be the best?
Okay. I think that's so you want me to dream?
Dream or nightmare, yes.
Yes, but dream can also be a nightmare. I think it's what could I tell you, we have had the financial crisis in 2,008, which was really an outside tsunami, which was coming up. And then you need to realize this as soon as possible in order to react what we have done. But this was obviously a very bad and a very difficult scenario. Then we hit 2,006, 2,007 when you had the whole world economy growing, when you had global steel demand going up by 3.5% or 4%, which would mean that you were more in an that buying was bigger than supplying for iron ore and for steel and then everything went up.
But what we need to know is the steel industry is a cyclical industry and that will not change in 2016 2017 either. So it will be a challenging world and that's the reason is why from an industrial point of view, you have to do what is necessary to be sound, to be try to be competitive, to look at your competitors and to be more innovative to have a better service. And I would say that many of our people in the different units are doing that and they think that we have a good management team to deliver this.
So you can ride out the cycles and we must pray there is not another repetition of 2,008 which was the repercussions are still felt of course.
I think that was a global crisis whereas what we see today is crisis in some jurisdictions and then a much better market perspective in others which is more of a normal situation here, right.
Is there anything else from our shareholders, Ramon?
Just the last one I just received, which is how does the group see its future in the automotive use of aluminum?
Okay. So I think that we believe that we are the leaders and we believe very firmly that steel is the solution for automotive producers because basically the steels we are developing in our R and D centers are able to respond to the new norms and to the weight reduction targets of our customers. And moreover, we can do this at the price or at the cost for our clients, which is much better than aluminum. And hence, this is where we need to work. And we definitely believe that in terms of value for price, steel is by far the best solution.
But does the same also apply to plastics and composites?
In terms of sustainability, definitely. And as we are here on the COP and we were speaking about the CO2 issue, still once it has been produced in the blast furnace is recycled on a permanent basis in electric furnace where you need as energy electricity and electricity can be produced basically without CO2. So once steel is recycled, steel is also from an environmental point of view by far the best and from a life cycle approach definitely it is also the best solution.
It's sustainable in a way that
It is sustainable. It is definitely the best and its carbon footprint sometimes is also better for example than for carbon fibers which is sometimes considered as a material of the future.
Well, I think I'd like to thank our shareholders for their questions. But in particular, Michel, I'd like to thank you for answering them. Thank you so much. And until the next year. Thank you.
Okay. Thank you. It was a pleasure for me. And I hope that we have been able to answer all the questions of our shareholders. I understand that they are a little bit suffering this year, but I think that they should be confident as we are confident also for our future.
Thank you very much. Thank you.