Arcelor Posts Strong First Quarter Results Confirming Targets of Its Value Plan

-- Strong 1st quarter results confirm consistency of business model

-- Buoyant demand since end of Q1 with strong recovery of pricing just starting

-- Performance driven by all Arcelor businesses with excellent results for Long Carbon Steel and improved performance for Stainless

-- Q1 performance supporting successful implementation of Arcelor's value plan

-- Integration of Dofasco smooth and beyond expectations with results in line with forecasts

-- EBITDA : EUR 1,427 million

-- Net profit group share EUR 761 million

Arcelor delivered strong first quarter results in an improvingdemand environment with prices just starting to recover and marked bycontinuous high costs of raw materials. Since the end of the quarterdemand growth has been accelerating and selling prices should improvestarting in the second quarter.

Throughout the quarter, Arcelor further strengthened thestructural competitiveness of its operations, with management gains atEUR 160 million consistent with the Arcelor 2006-2008 Value Plantargeting a normalized annual EBITDA of EUR 7 billion.

"This result achieved while the company is the target of atake-over attempt is the best proof of the commitment of all ofArcelor's 110000 employees to create value for our shareholders and tobuild the long term future of Arcelor." Joseph Kinsch, Chairman of theBoard of directors, said.

Net result, group share, was EUR 761 million compared to EUR 949million for the first quarter of 2005.

"This solid performance compared to last year's exceptionalquarter demonstrates the ability of Arcelor to perform well in acontext of massive materials cost increases and lower spot prices."said Arcelor CEO Guy Dolle.

In the first quarter the company continued to pursue expansionopportunities in markets with a high growth potential.

"The acquisition of Canadian steelmaker Dofasco and the agreementsto take significant stakes in Chinese steel producer Laiwu and inMoroccan construction steel specialist Sonasid, all in this quarterillustrate well our external growth strategy," Guy Dolle said, adding:"These moves as well as organic growth initiatives such as the 50%increase of our slab production capacity in Brazil that will come onstream this year contribute to strengthen our global industryleadership position."

Dofasco, which has been consolidated from March 1, 2006, had noimpact on results in the first quarter, due to IFRS purchaseaccounting but operating results in line with the forecast shouldpositively contribute to earnings at the end of the second quarter.

Net debt rose to EUR 5,742 million at March 31, 2006 due to theacquisition of Dofasco, compared to 1,230 million at December 31st,2005 while total shareholders equity (including minorities) reached18,602 million.

Active portfolio management was pursued with the agreement, at thebeginning of the second quarter, to sell the long stainless businessUgitech to Schmoltz&Bickenbach following the strong recovery of thisactivity.

Prospects

Excluding China, apparent world steel consumption growth should be+6 % this year after -1.5% in 2005. A stronger pressure on demandgenerates price increases on semi finished as well as on finishedsteel products.

Carried by a favourable global economic environment showing asustainable growth,pattern demand for steel is now strong and rising,driven by consumer demand and inventory adjustments to more normallevels. In this buoyant environment that is also marked by higher rawmaterials prices, Arcelor has announced price increases for its flatcarbon business for the third quarter and already from first quarteron for stainless steel products.

As a consequence, thanks to a very good demand in the second andthe third quarters, Arcelor expects excellent performance and verystrong results in line with its ambitious targets of value creationfor shareholders.

Consolidated accounts for the first quarter of 2006

The Arcelor board of directors, chaired by Joseph Kinsch, reviewedthe consolidated accounts for the first quarter of 2006.

At March 31, 2006, consolidated net result, group share, was EUR761 million, versus EUR 949 million for the first quarter of 2005.

At EUR 9,565 million for the first quarter of 2006 compared to EUR8,157 million for the same period last year, consolidated revenuesincreased 17.3% (10.8% on a comparable basis) reflecting essentiallythe full consolidation of Acesita (stainless in Brazil) and theintegration of Dofasco as of March 1st.Consolidated gross operatingresult amounted to EUR 1,427 million, or 14.9% margin for the firstquarter of 2006 versus EUR 1,700 million, or 20.8% margin for the samequarter last year.

Consolidated operating result amounted to EUR 1,091 million forthe first quarter of 2006 versus EUR 1,390 million for the samequarter last year, or an 11.4% margin versus 17.0% respectively.

After a financial result of EUR -322 million, a positivecontribution from associates of EUR 72 million and income tax of EUR57 million, consolidated net result, group share, was EUR 761 millioncompared to 949 million for the first quarter of 2005. The strongincrease in financial result is essentially the consequence of IAS 32compliance leading to the recognition of the share price increase onthe O.C.E.A.N.E. value (295 million). Very low taxes reflect thecapitalization of tax losses carried forward of the Belgian perimeter(285 million) further to corporate legal restructuring.

Key Figures
Pro-Forma
1st
Quarter
2006
Including
1st Quarter 1st 3 months
In millions of euros 2005 Quarter Dofasco
(restated)(2) 2006 ---------
(Unaudited)
------------------------------------- ------------ -------- ---------
Revenues 8,157 9,565 10,212
------------------------------------- ------------ -------- ---------
Gross Operating Result 1,700 1,427 1,564
------------------------------------- ------------ -------- ---------
Operating Result 1,390 1,091 1,214
===================================== ============ ======== =========
Net Result, group share 949 761 826
------------------------------------- ============ ======== =========
Earnings per Share (in euro) 1.55 1.23 1.33
------------------------------------- ------------ -------- ---------

Net Financial Debt

Net financial debt was EUR 5,742 million at March 31, 2006compared to 1,230 million at December 31, 2005 reflecting theacquisition of Dofasco (Canada) which includes 765 million netfinancial debt of Dofasco.

Change in working capital requirements is essentially due to theconsolidation of Dofasco (EUR 1.4 billion) as inventories havedeclined in volume.

At EUR 532 million for the quarter, capex (of which 261 million ofgrowth capex mainly in Brazil) is in line with forecast.

Net financial debt/shareholders' equity ratio, including minorityinterests, was 0.31 at March 31, 2006 compared to 0.07 at December 31,2005.
In millions of euros December 31, March 31,
2005 2006
(restated)(2) (Unaudited)
------------------------------------------- ------------ ------------
Shareholders' equity(1) 17,431 18,602
------------------------------------------- ------------ ------------
Net financial debt 1,230 5,742
=========================================== ============ ============
Net financial debt/Shareholders' equity(1) 0.07 0.31
------------------------------------------- ------------ ------------

(1) Including minority interests

Flat Carbon Steel

Consolidated Revenues amounted to EUR 5,381 million compared to4,756 million for the first quarter 2005, (Europe EUR 4,450 million,Brazil 558 million, Canada 373 million compared to 4,280 million and475 million for Europe and Brazil in 2005) or an increase of 13.2%(5.1% on a comparable basis). This increase is essentially explainedby the consolidation of Dofasco as of March 1st 2006 and growingshipped volumes, particularly in Brazil.

Total shipments were 8,504 (including 433 thousand tons fromDofasco) thousand tons compared to 7,396 thousand tons for the sameperiod last year or a 6.5% increase in Europe (6,720 thousand tonscompared to 6,311 thousand tons in 2005) and 24.5% in Brazil (1,351thousand tons compared to 1,085 thousand tons in 2005).

Consolidated Gross operating result amounted to EUR 780 million,of which 643 from Europe (921 million for 2005) and 137 from Brazil,(252 million in 2005) the contribution of Dofasco being zero due topurchase accounting method. Despite very high raw materials costs andlower average selling prices, margins for the first quarter 2006 were14.4% for European activities and 24.6% for Brazil to be compared with21.5% and 53.1% respectively for the same period in 2005.

Total Operating Result was EUR 589 million, for Europecontribution was 524 million or 11.8% margin and for Brazil 91 millionor 16.3% margin. Contribution of Dofasco for the period was -26million. This has to be compared with a total operating profit for thesame period 2005 of 982 million, or 766 million, 17.9% margin forEurope and 216 million, 45.5% margin for Brazil.

Total crude steel production for the first quarter 2006 was 7,209thousand tons for Europe compared to 7,805 thousand tons for the sameperiod in 2005 and 1,259 thousand tons for Brazil in 2006 to becompared with 1,252 thousand tons for the equivalent period in 2005.Difference of production in Europe is due to the closure of one blastfurnace in Liege (April 2005) and to a blast furnace relining in Gijon(Spain). Production at Dofasco amounted to 386 thousand tons in March.

Long Carbon Steel

Consolidated revenues amounted to EUR 1,875 million for the firstquarter 2006, an increase of 19.6% (30.7% on a comparable basis).Thisincludes 1,074 million for Europe, 717 million for Americas and 93million for wire drawing activities and compares with EUR 1,562million total revenues for the first quarter 2005, of which 938million for Europe, 554 for Americas and 86 million for wire drawing.Variations take into account the full integration of Huta Warszawa,(September 1st, 2005) the divestment of rods and bars activities inSpain (July 31st, 2005) and divestment of small tubes by Acindar(Argentina) at the end of January 2006.

Total shipments were 3,458 thousand tons, including 2,187 thousandtons in Europe, 1,201 thousand tons in Americas and 70 thousand tonsof drawn wire (Europe, US and South Korea), to be compared withrespectively, 2,989 thousand tons, 1,877 thousand tons, 1,049 thousandtons and 63 thousand tons for the first quarter of 2005.

Total Gross operating result amounted to EUR 439 million, with 151million, or 14.1% margin, contributed from Europe, 281 million or39.2% margin from Americas and 7 million or 7.5% margin from drawnwire. For the same period last year, total gross operating profit was330 million, including 126 million, 13.4% margin, from Europe, 195million,35.2% margin, from Americas and 9 million,10.5% margin fromwire drawing. Improved results are essentially due to increasedvolumes, a good control over costs and increased management gains.Results include 51 million from the tube divestiture at Acindar(Argentina).

Total Operating result was EUR 359 million. Europe contributed for125 million or an 11.6% margin, Americas for 230 million or a 32.1%margin while wire drawing represents 4 million or 4.3% margin.

Crude steel production was 3,077 thousand tons (1,838 in Europeand 1,239 in Latin America) compared to 2,844 thousand tons for thesame period of 2005 (1,679 thousand tons in Europe and 1,165 thousandtons in Latin America).

Stainless Steel and Alloys

Total Revenues for the first quarter 2006 were EUR 1,406 millioncompared to 981 million in 2005 which do not include Acesita. Thefirst quarter of 2006 was characterised by a positive impact of volumeand mix while base prices even if one notes an improvement in Europegoing forward, remain low compared to the same period last year.

Shipments were of 603 thousand tons including Acesita for 169thousand tons, compared to 578 thousand tons for the same period lastyear (on a comparable basis), or 403 thousand tons for Europe and 175thousand tons for Acesita.

Gross operating result for the first quarter 2006 was EUR 114million or 8.1% margin compared to 94 million, for the first quarter2005. This positive evolution reflects the change in scope with thefull consolidation of Acesita (74 million contribution for the firstquarter 2006) as of last quarter of 2005 and higher selling prices inBrazil.

Operating result for the first quarter 2006 at EUR 76 million, ora 5.4% margin, compares to EUR 70 million, or 7.1% margin, for thesame period of 2005.

Crude steel production for the first quarter 2006 was 713 thousandtons compared to 633 thousand tons in 2005 (on a comparable basis).

Turnaround of European activities will be completed during thesecond half with the ramp up of the Carinox (Charleroi, Belgium) newsteel shop and the closure of the steel production at Isbergues(France).

Specialty Plates

Revenues for this activity (Industeel) was EUR 274 million for thefirst quarter 2006, compared to 243 million for the equivalent periodlast year. Gross operating result for the first quarter 2006 amountedto EUR 50 million or 18.2% margin, compared to 21 million or 8.6%margin, for the first quarter 2005. Operating result was EUR 45million or 16.4% margin to be compared with 19 million or a 7.8%margin for the same period last year.

A3S (Arcelor Steel Solutions & Services)

Revenues for the first quarter of 2006 amounted to EUR 2,225million compared to 2,056 million for the same period last yearreflecting activity improvement starting at the end of the quarterexcept for the construction area which suffered from a long winter.

Shipments of the first quarter 2006 amounted to 3,691 thousandtons (of which 2,621 thousand tons sourced internally and 1,070externally) compared to 3,208 thousand tons (2,438 thousand tonssourced internally and 770 externally) for the equivalent period lastyear.

Gross operating result for the first quarter 2006 at EUR 77million, or a 3.5% margin compares to 98 million or a 4.8% margin, forthe same period last year and translates higher costs of inputs, aswell as a decrease of prices and a higher value of inventories.

Operating result was EUR 61 million, a 2.7% margin for the firstquarter, to be compared with 79 million, 3.8% margin for the sameperiod last year.

Revenues, Gross Operating Result and Operating Result by business
In millions of euros 1st Quarter 2005
(Unaudited) (restated)(2)
Revenues Gross Op.
Op. Result
Result % %
----------------------------------------------------------------------
Flat Carbon Steel 4,756 1,173 24.7% 982 20.6%
----------------------------------------------------------------------
Long Carbon Steel 1,562 330 21.1% 266 17.0%
----------------------------------------------------------------------
Stainless, & Alloys Steel 981 94 9.6% 70 7.1%
----------------------------------------------------------------------
A3S 2,056 98 4.8% 79 3.8%
======================================================================
Others 527 10 n.a. -2 n.a.
----------------------------------------------------------------------
Intra-Group -1,725 -5 n.a. -5 n.a.
======================================================================
Total 8,157 1,700 20.8% 1,390 17.0%
----------------------------------------------------------------------


In millions of euros 1st Quarter 2006
(Unaudited)
Revenues Gross Op.
Op. Result
Result % %
----------------------------------------------------------------------
Flat Carbon Steel 5,381 780 14.5% 589 10.9%
----------------------------------------------------------------------
Long Carbon Steel 1,875 439 23.4% 359 19.1%
----------------------------------------------------------------------
Stainless, & Alloys Steel 1,406 114 8.1% 76 5.4%
----------------------------------------------------------------------
A3S 2,225 77 3.5% 61 2.7%
======================================================================
Others 475 13 n.a. 2 n.a.
----------------------------------------------------------------------
Intra-Group -1,797 4 n.a. 4 n.a.
======================================================================
Total 9,565 1,427 14.9% 1,091 11.4%
----------------------------------------------------------------------

(2) 2005 comparative information restated following the change inaccounting policies in 2006.

This press release contains certain forward looking statementsregarding anticipated market evolution and the future prospects ofArcelor. While these statements are based on the Company's bestestimations as of the date hereof, actual results will vary as afunction of market conditions, the action of competitors, consumerdemand, steel prices, economic conditions and other factors.

Arcelor's consolidated financial information is prepared under the"International Financial Reporting Standards" (" IFRS ") as adoptedby the European Union and applicable as of March 31, 2006. In thisrespect, the exclusion of certain provisions relating to hedgeaccounting, pursuant to the adoption of IAS 39 by the European Union,has no impact on the Group's consolidated financial information.

Arcelor is the number one steel company in the world with aturnover of 32.6 billion euros in 2005. The company holds leadershippositions in its main markets: automotive, construction, householdappliances and packaging as well as general industry. The company -number one steel producer in Europe and Latin America - ambitions tofurther expand internationally in order to capture the growthpotential of developing economies and offer technologically advancedsteel solutions to its global customers. In 2006, Arcelor employs110,000 associates in over 60 countries. The company places itscommitment to sustainable development at the heart of its strategy andambitions to be a benchmark for economic performance, labour relationsand social responsibility.

For more information visit www.arcelor.com