Many steel companies are posting record profits, a surprise to analysts and others who in recent years have just about written-off the industry. But, notes Lakshmi N. Mittal, chairman and CEO of Mittal Steel Co. NV, steel stocks continue to trade significantly below those of other basic materials, with multiples only about five or six times earnings.
"From this it is clear that the financial community is yet to be fully convinced that the industry really has the ability to break away from its past volatility and provide value through the cycles," Mittal said in a speech prepared for delivery in New York on June 21.
The industry's challenge, he said, is to convince investors that it has the potential to create long-term value. And that, he said, as he has before, means that the industry must continue to consolidate and management decisions must be driven by long-term sustainability, not short-term profitability or demand.