Steel Czar Lakshmi Mittal Names His Son As CEO; Will Fire 40,000 Employees To Cut Costs
Aditya Mittal, son of now executive chairman Lakshmi Mittal, has been named successor at the helm of ArcelorMittal.
Meet The New CEO
Born in 1976, same year as the steelmaking giant itself, Aditya Mittal previously held the positions of Chief Financial Officer and president, along with CEO of its European arm.
He is expected to run day to day operations of the $53.3 billion giant.
Genuino Christino is expected to become the new CFO.
According to Lakshmi Mittal the decision comes after unanimous agreement within the board.
The younger Mittal Was Behind Arcelor Acquisition
He had joined the company in 1997 and completed a two decade apprenticeship under his father. During this period one of his major accomplishments was completion of the $36 billion takeover of Arcelor in 2006.
This catapulted the company to the status of the world’s biggest and most advanced steelmaker with a capacity of 100-million tonne.
His previous organisations include Credit Suisse group AG’s investment bank.
His predecessor who owns 36% of the company will continue leading the board of directors and working with the CEO and management.
What Challenges Lie Ahead
The challenges of managing carbon emissions from steel plants and handling competition of low-cost output from Turkey to China lie ahead for the new CEO.
Aditya Mittal said, “The world is transforming at a rapid pace and this change brings challenges but also many opportunities for ArcelorMittal. The biggest challenge, but also the biggest opportunity, will be to demonstrate that steel can de-carbonise and indeed is the perfect material for a circular economy.”
20% Employees To Be Laid Off
In another development for the company, 20% of its 190,000 strong workforce over 60 countries are set to be cut.
This comes after $1 billion of structural cost improvements were taken into account.
In the measure aimed at reducing expenses and improving profitability, the billion- dollar downsizing program will be spaced out over 2 years. Majority of savings are expected at the end of this financial year and expected to fully realise by FY22.
The company has further goals of improving productivity which is expected to be a key source of savings, slashing contractor numbers and reducing staff by a fifth.
The 20% staff cut is factored into selling, general and administrative expenses (SG&A) which will contribute 25% of savings.
“This effort is complemented by an improvement in market conditions which supported a significantly improved performance in the fourth quarter,” Lakshmi Mittal said in a statement.
The impact of the second wave of COVID-19 on customers across manufacturing, construction and automotive industries has been limited, as shared by the firm.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $1.73 billion was reported in the fourth quarter.