Mittal experiences "annus horribilis" - FT.com For Lakshmi Mittal, the past year has already turned into something close to an annus horribilis and it has just got a lot worse following the savage spat in which the Indian steel tycoon has become embroiled in France. Mr Mittal has been accused of "blackmail and threats" by Arnaud Montebourg, France's industry minister, over ArcelorMittal's plans to shut two blast furnaces in northeast France and was called to the Elysée palace to explain his company's intentions to President François Hollande. IN European Companies The affair will have sparked uncomfortable memories by the 62-year-old billionaire of the verbal battering that he suffered in France during Mittal Steel's €26.9bn contested takeover in 2006 of the European steel giant Arcelor. Although based in Luxembourg, Arcelor had its top plants in France and French managers in many of its most senior positions. During the battle, Mr Mittal was regarded by the French establishment as an upstart with little knowledge of Europe's industrial heritage. Guy Dollé, Arcelor's French chief executive, described Mr Mittal's offer for the company as consisting of "monkey money," while the then French finance minister accused the Indian entrepreneur of not adhering to the good "grammar" of business. After Mr Mittal won the battle by increasing the price he paid for his prize, the deal consolidated his company's position as the world's biggest steelmaker, adding a series of top-performing factories in western Europe to his interests mainly in other regions. But after a two-year honeymoon period in which the newly formed ArcelorMittal turned in stellar results, the serious financial crisis in late 2008 dealt Mr Mittal's company a huge blow from which neither it, nor the rest of the world steel industry, has recovered. During 2012, the position for ArcelorMittal, in which Mr Mittal has a 41 per cent stake, as well as being chairman and chief executive, has gone from bad to worse. With steel demand in many developed countries down a quarter compared with previous peaks around 2007, ArcelorMittal's underlying profits, expressed as earnings before interest, tax, depreciation and amortisation, are likely to come in this year at about $7bn, down from $10.1bn last year and $23.6bn in 2008. So far this year, the company's share price has slid 20 per cent, adding to the losses suffered since the 2008/09 downturn. Its debt has risen to a degree that has alarmed the Moody's and Standard & Poor's rating agencies, which have marked down the company's borrowings to the status of "junk." The difficulties for ArcelorMittal are at their direst in Europe, which accounts for about half the company's worldwide workforce of 260,000 and which last year made 46 per cent of its steel. In the first nine months of this year, with steel consumption in the continent particularly hit by the euro crisis as well as the world slowdown, ArcelorMittal's main European plants accounted for a cumulative operating loss of $823m. In this situation, Mr Mittal has been forced to act to bring supply more in line with demand. Out of the 34 blast or arc furnaces run by ArcelorMittal around western Europe for making raw material for steel plants, the company has closed nine of them on a temporary basis. Four more - two in Liege, Belgium, as well as two in Florange that are the subject of the row with Mr Montebourg - are earmarked for permanent closure in a bigger effort to cut capacity. The incendiary remarks by the French minister have been greeted with bewilderment by most steel industry observers. One former top manager at a big French steel business branded as "crazy" Mr Montebourg's threat to take into government ownership some if not all the Florange site if ArcelorMittal does not keep it open. Jonathan Aylen, a steel expert at Manchester Business School in the UK, said Mr Mittal had been "remarkably patient" at keeping open the blast furnaces in Florange which have long been regarded as relatively inefficient since they lack scale and are some way from the company's three biggest European steel plants, of which two, at Fos-sur-Mer near Marseille and Dunkirk, are in France and the other in Ghent, Belgium. Michael Shillakar, an analyst at Credit Suisse, said: "I don't think that [assuming the Florange part-closure is effected] the company is finished with efforts [in Europe] to shut plants on a permanent basis." Last year Mr Mittal put his son Aditya, ArcelorMittal's chief financial officer, in charge of the company's troubled European operations and told him to find a way out of the mess that this part of the business is in. So far neither Aditya nor his father have given any clues they have discovered a way forward and it seems highly improbable that anything that comes up in the discussion between Mr Hollande and elder Mr Mittal will advance matters in any way that the company would view as positive.