Luxembourg, May 11, 2018 -
ArcelorMittal (referred to as "ArcelorMittal" or the "Company") (MT
(New York, Amsterdam, Paris, Luxembourg), MTS (Madrid)), the
world's leading integrated steel and mining company, today
announced results[1] for the
three-month period ended March 31, 2018.
Highlights:
-
Health and safety: LTIF rate of 0.62x in 1Q 2018
as compared to 0.87x in 4Q 2017 and 0.80x in 1Q 2017
-
Operating income increased to $1.6 billion in 1Q
2018 as compared to $1.2 billion in 4Q 2017, stable YoY
-
EBITDA of $2.5 billion in 1Q 2018, 17.3% higher
as compared to $2.1 billion in 4Q 2017, primarily reflecting higher
average steel selling prices (+8.2%) and higher seaborne iron ore
reference prices (+13.6%); 1Q 2018 EBITDA up 12.6% YoY
-
Net income of $1.2 billion in 1Q 2018 as
compared to $1.0 billion in both 4Q 2017 and 1Q 2017
-
Steel shipments of 21.3 Mt in 1Q 2018, up 1.7%
vs. 4Q 2017 and up 1.4% vs. 1Q 2017
-
1Q 2018 iron ore shipments of 13.8Mt (+3.6%
YoY), of which 9.1Mt shipped at market prices (+5.5% YoY)
-
Gross debt of $13.4 billion as of March 31,
2018. Net debt increased to $11.1 billion as of March 31, 2018, as
compared to $10.1 billion as of December 31, 2017 due to working
capital investment ($1.9 billion), share buyback ($0.2
billion)[2] and forex
($0.2 billion); net debt is $1.0 billion lower when compared to net
debt as of March 31, 2017
|
Financial highlights (on the
basis of IFRS1):
(USDm)
unless otherwise shown |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Sales |
19,186 |
17,710 |
17,639 |
17,244 |
16,086 |
Operating
income |
1,569 |
1,234 |
1,234 |
1,390 |
1,576 |
Net income
attributable to equity holders of the parent |
1,192 |
1,039 |
1,205 |
1,322 |
1,002 |
Basic
earnings per share (US$)[3] |
1.17 |
1.02 |
1.18 |
1.30 |
0.98 |
|
|
|
|
|
|
Operating
income/ tonne (US$/t) |
73 |
59 |
57 |
65 |
75 |
EBITDA |
2,512 |
2,141 |
1,924 |
2,112 |
2,231 |
EBITDA/
tonne (US$/t) |
118 |
102 |
89 |
98 |
106 |
Steel-only
EBITDA/ tonne (US$/t) |
101 |
89 |
73 |
83 |
83 |
|
|
|
|
|
|
Crude steel
production (Mt) |
23.3 |
22.7 |
23.6 |
23.2 |
23.6 |
Steel
shipments (Mt) |
21.3 |
21.0 |
21.7 |
21.5 |
21.1 |
Own iron
ore production (Mt) |
14.6 |
14.4 |
14.2 |
14.7 |
14.0 |
Iron ore
shipped at market price (Mt) |
9.1 |
8.4 |
9.1 |
9.5 |
8.7 |
Commenting, Mr.
Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"The improvement in global steel market dynamics
has continued into 2018, supporting an encouraging financial
performance in the first quarter. EBITDA increased 13% year-on-year
to $2.5 billion, while net income improved by 19% to $1.2 billion.
The outlook for 2018 has strengthened as the year has progressed,
with the combination of growing demand and supply-side reform
driving higher capacity utilisation rates and healthy steel spreads
globally. Against this improving backdrop, we continue to focus on
structural improvement - through the delivery of our Action 2020
strategic plan - and investing with focus and discipline in
opportunities that will drive higher future returns. Our
acquisition of Ilva has now received competition clearance from the
European Commission and we expect to complete this acquisition by
the end of the second quarter 2018."
Sustainable development
and safety performance
Health and safety
- Own personnel and contractors lost time injury frequency
rate
Health and safety performance based on own
personnel figures and contractors lost time injury frequency (LTIF)
rate of 0.62x in the first quarter of 2018 ("1Q 2018") as compared
to 0.87x in the fourth quarter of 2017 ("4Q 2017"), and 0.80x in
the first quarter of 2017 ("1Q 2017").
The Company's efforts to improve its Health and
Safety record remain focused on both further reducing the rate of
severe injuries and preventing fatalities.
Own personnel and
contractors - Frequency rate
Lost time
injury frequency rate |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Mining |
0.34 |
0.86 |
1.05 |
0.58 |
0.58 |
NAFTA |
0.39 |
0.76 |
0.57 |
0.51 |
0.85 |
Brazil |
0.41 |
0.46 |
0.45 |
0.37 |
0.41 |
Europe |
0.77 |
1.00 |
0.79 |
1.08 |
1.20 |
ACIS |
0.79 |
0.97 |
0.42 |
0.62 |
0.45 |
Total Steel |
0.66 |
0.88 |
0.60 |
0.75 |
0.83 |
Total (Steel and Mining) |
0.62 |
0.87 |
0.67 |
0.72 |
0.80 |
Key sustainable
development highlights for 1Q 2018:
-
Achieved status of 'Steel sustainability
champion' in new worldsteel award scheme, recognising our high
standards in sustainable development data reporting, safety and
life cycle analysis.
-
Response to the recommendations of the Task
Force on Climate-Related Disclosures (TFCD) developed, with
additional disclosures made in 2017 Integrated Annual Review.
-
Gold standard achieved in Ecovadis
sustainability rating - required by many customers.
Analysis of
results for 1Q 2018 versus 4Q 2017 and 1Q 2017
Total steel shipments in 1Q 2018 were 1.7% higher
at 21.3Mt as compared with 21.0Mt for 4Q 2017 primarily due to
higher steel shipments in NAFTA (+7.9%) and Europe (+5.4%), offset
in part by lower steel shipments in ACIS (-6.9%) and by seasonally
lower steel shipments in Brazil (-18.7%). Total steel shipments in
1Q 2018 were 1.4% higher as compared with 21.1Mt for 1Q 2017
primarily due to higher steel shipments in Brazil (+11.5%) and
Europe (+4.8%) offset in part by lower shipments in ACIS (-6.0%)
and NAFTA (-0.9%).
Sales in 1Q 2018 were $19.2 billion as compared to
$17.7 billion for 4Q 2017 and $16.1 billion for 1Q 2017. Sales in
1Q 2018 were 8.3% higher as compared to 4Q 2017 primarily due to
higher average steel selling prices (+8.2%), higher steel shipments
(+1.7%), higher seaborne iron ore reference prices (+13.6%) and
higher market-priced iron ore shipments (+8.1%). Sales in 1Q 2018
were 19.3% higher as compared to 1Q 2017 primarily due to higher
average steel selling prices (+18.2%), higher steel shipments
(+1.4%), and higher market-priced iron ore shipments (+5.5%),
offset in part by lower seaborne iron ore reference prices
(-13.1%).
Depreciation for 1Q 2018 was lower at $711 million
as compared to $747 million for 4Q 2017. Depreciation was higher in
1Q 2018 as compared to $655 million in 1Q 2017 primarily due to
depreciation of the US dollar against the Euro. Full year 2018
depreciation is expected to be approximately $2.9 billion (based on
current exchange rates).
Impairment charges for 1Q 2018 were $86 million
related to the agreed remedy package required for the approval of
the Votorantim acquisition[4]. Impairment
charges for 4Q 2017 were $160 million related to a downward
revision of cash flow projections across all steel facilities
in ArcelorMittal South Africa. Impairment charges for 1Q 2017 were
nil.
Exceptional charges for 1Q 2018 were $146 million
related to a provision taken in respect of an ongoing case in which
a settlement is pending. Exceptional charges for 4Q 2017 and 1Q
2017 were nil.
Operating income for 1Q 2018 was $1.6 billion as
compared to $1.2 billion in 4Q 2017 and $1.6 billion in 1Q 2017.
Operating income for 1Q 2018 and 4Q 2017 were impacted by
impairments and exceptional charges as discussed above.
Income from associates, joint ventures and other
investments for 1Q 2018 was $212 million as compared to $125
million for 4Q 2017, increasing primarily on account of the annual
dividend declared by Erdemir ($87 million) and improved performance
of Calvert investee. Income from associates, joint ventures and
other investments for 1Q 2017 was $86 million and included the
dividend from Erdemir ($45 million), positive contribution from
Calvert and China Oriental investees offset in part by a loss on
dilution of the Company's stake in China Oriental[5].
Net interest expense in 1Q 2018 was $164 million
as compared to $188 million in 4Q 2017 and $223 million in 1Q 2017.
Net interest expense was lower in 1Q 2018 as compared to 4Q 2017
and 1Q 2017, primarily due to debt repayments and lower cost of
debt.
Foreign exchange and other net financing losses in
1Q 2018 were $174 million as compared to losses of $261 million for
4Q 2017 and $133 million in 1Q 2017. For 1Q 2018, a foreign
exchange gain of $72 million was recorded (as compared to a gain of
$83 million for 4Q 2017) mainly on account of a 2.7% depreciation
of the USD against the Euro (versus 1.6% depreciation in 4Q 2017).
1Q 2018 includes non-cash mark to market losses of $35 million
related to mandatory convertible bond call options following the
market price decrease of the underlying shares as compared to gains
of $174 million and $158 million in 4Q 2017 and 1Q 2017,
respectively. 4Q 2017 includes mark-to-market losses on a
derivative relating to a pellet purchase agreement in the US of
$0.3 billion. 1Q 2017 was additionally impacted by $159 million in
premium accrued on early repayment of bonds (settled in April
2017).
ArcelorMittal recorded an income tax expense of
$203 million for 1Q 2018 as compared to an income tax benefit of
$119 million for 4Q 2017 and an income tax expense of $283 million
in 1Q 2017. The tax benefit of 4Q 2017 is the result of recording a
deferred tax asset of $275 million in Luxembourg following
expectation of higher future taxable profits.
ArcelorMittal recorded a net income for 1Q 2018 of
$1,192 million, or $1.17 earnings per share, as compared to a net
income for 4Q 2017 of $1,039 million, or $1.02 earnings per share,
and a net income for 1Q 2017 of $1,002 million, or $0.98 earnings
per share.
Analysis of segment
operations
NAFTA
(USDm)
unless otherwise shown |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Sales |
4,752 |
4,296 |
4,636 |
4,607 |
4,458 |
Operating
income |
308 |
155 |
256 |
378 |
396 |
Depreciation |
(132) |
(137) |
(125) |
(128) |
(128) |
EBITDA |
440 |
292 |
381 |
506 |
524 |
Crude steel
production (kt) |
5,864 |
5,598 |
5,904 |
5,762 |
6,216 |
Steel
shipments (kt) |
5,559 |
5,150 |
5,655 |
5,419 |
5,610 |
Average
steel selling price (US$/t) |
779 |
748 |
741 |
760 |
719 |
NAFTA segment crude steel production increased by
4.8% to 5.9Mt in 1Q 2018 as compared to 5.6Mt for 4Q 2017,
primarily reflecting market improvement in the US and recovery
following an operational issue in Mexico in the prior quarter.
Steel shipments in 1Q 2018 increased by 7.9% to
5.6Mt as compared to 5.2Mt in 4Q 2017, driven primarily by an
increase in volumes in flat products on account of improved market
fundamentals, following the destock that negatively impacted 4Q
2017.
Sales in 1Q 2018 increased by 10.6% to $4.8
billion as compared to $4.3 billion in 4Q 2017, primarily due to
higher steel shipment volumes as discussed above, and higher
average steel selling prices +4.3% (for both flat products +3.5%
and long products +9.1%).
Operating income in 1Q 2018 of $308 million was
higher as compared to $155 million in 4Q 2017 and lower as compared
to $396 million in 1Q 2017.
EBITDA in 1Q 2018 increased by 50.7% to $440
million as compared to $292 million in 4Q 2017 primarily due to
higher steel shipment volumes (+7.9%). EBITDA in 1Q 2018 declined
by 15.9% as compared to $524 million in 1Q 2017 primarily due to a
negative price-cost effect.
Brazil
(USDm)
unless otherwise shown |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Sales |
1,988 |
2,252 |
2,059 |
1,834 |
1,610 |
Operating
income |
215 |
266 |
128 |
128 |
175 |
Depreciation |
(69) |
(75) |
(74) |
(73) |
(71) |
Impairment |
(86) |
- |
- |
- |
- |
EBITDA |
370 |
341 |
202 |
201 |
246 |
Crude steel
production (kt) |
2,801 |
2,989 |
2,797 |
2,714 |
2,710 |
Steel
shipments (kt) |
2,483 |
3,052 |
2,940 |
2,622 |
2,226 |
Average
steel selling price (US$/t) |
752 |
685 |
651 |
655 |
678 |
Brazil segment crude steel production decreased by
6.3% to 2.8Mt in 1Q 2018 as compared to 3.0Mt in 4Q 2017.
Steel shipments in 1Q 2018 decreased by 18.7% to
2.5Mt as compared to 3.1Mt in 4Q 2017, primarily due to a seasonal
decrease in flat product steel shipments (primarily export).
Sales in 1Q 2018 decreased by 11.7% to $2.0
billion as compared to $2.3 billion in 4Q 2017, due to lower steel
shipments (-18.7%), offset in part by higher average steel selling
prices (9.8%) with both domestic and export prices increasing.
Operating income in 1Q 2018 was lower at $215
million as compared to $266 million in 4Q 2017 and higher than $175
million in 1Q 2017. Operating income in 1Q 2018 was impacted by
impairment of $86 million (Cariacica and Itaúna industrial plants
in Brazil) related to the agreed remedy package required for the
approval of the Votorantim acquisition.
EBITDA in 1Q 2018 increased by 8.5% to $370
million as compared to $341 million in 4Q 2017 due to positive
price-cost effect offset in part by lower steel shipment volumes.
EBITDA in 1Q 2018 was 50.5% higher as compared to $246 million in
1Q 2017 due to higher steel shipment volumes (+11.5%) driven by
improved demand and a positive price-cost effect.
Europe
(USDm)
unless otherwise shown |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Sales |
10,641 |
9,610 |
9,196 |
9,180 |
8,222 |
Operating
income |
580 |
525 |
546 |
652 |
636 |
Depreciation |
(318) |
(336) |
(302) |
(290) |
(273) |
Exceptional
charges |
(146) |
- |
- |
- |
- |
EBITDA |
1,044 |
861 |
848 |
942 |
909 |
Crude steel
production (kt) |
11,246 |
10,311 |
11,248 |
10,997 |
11,212 |
Steel
shipments (kt) |
10,697 |
10,151 |
10,116 |
10,466 |
10,208 |
Average
steel selling price (US$/t) |
801 |
736 |
723 |
698 |
649 |
Europe segment crude steel production increased by
9.1% to 11.2Mt in 1Q 2018, as compared to 10.3Mt in 4Q 2017
following a reline in ArcelorMittal Bremen and a blast furnace
maintenance in ArcelorMittal Galati in 4Q 2017.
Steel shipments in 1Q 2018 increased by 5.4% to
10.7Mt as compared to 10.2Mt in 4Q 2017, primarily due to a 5.6%
increase in flat product shipments and 5.0% increase in long
product shipments.
Sales in 1Q 2018 were $10.6 billion, 10.7% higher
as compared to $9.6 billion in 4Q 2017, with higher average steel
selling prices (+8.7%) (related to increases in both the flat
(+8.3%) and long product businesses (+9.4%)) and higher steel
shipments, as discussed above.
Operating income in 1Q 2018 was $580 million as
compared to $525 million in 4Q 2017 and $636 million in 1Q 2017.
Operating income in 1Q 2018 was impacted by exceptional charges of
$146 million related to a provision taken in respect of an ongoing
case in which a settlement is pending.
EBITDA in 1Q 2018 increased by 21.2% to $1,044
million as compared to $861 million in 4Q 2017 primarily due to
higher steel shipment volumes and foreign exchange translation
impact. EBITDA in 1Q 2018 improved by 14.9% as compared to 1Q 2017
primarily due to higher steel shipments (+4.8%) and foreign
exchange effects offset in part by a negative price-cost
effect.
ACIS
(USDm)
unless otherwise shown |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Sales |
2,080 |
2,039 |
1,941 |
1,834 |
1,807 |
Operating
income |
290 |
182 |
159 |
51 |
116 |
Depreciation |
(73) |
(81) |
(80) |
(77) |
(75) |
Impairment |
- |
(160) |
- |
(46) |
- |
EBITDA |
363 |
423 |
239 |
174 |
191 |
Crude steel
production (kt) |
3,400 |
3,832 |
3,669 |
3,685 |
3,492 |
Steel
shipments (kt) |
3,029 |
3,254 |
3,362 |
3,257 |
3,221 |
Average
steel selling price (US$/t) |
610 |
546 |
515 |
499 |
502 |
ACIS segment crude steel production in 1Q 2018
decreased by 11.3% to 3.4Mt as compared to 3.8Mt in 4Q 2017
primarily due to planned (blast furnace #9) and unplanned
maintenance in Ukraine.
Steel shipments in 1Q 2018 decreased by 6.9% to
3.0Mt as compared to 3.3Mt in 4Q 2017, primarily due to lower steel
shipments in Ukraine offset in part by seasonally higher steel
shipments in South Africa.
Sales in 1Q 2018 increased by 2.0% to $2.1 billion
as compared to $2.0 billion in 4Q 2017 primarily due to higher
average steel selling prices (+11.8%) across all businesses, offset
in part by lower steel shipments (-6.9%).
Operating income in 1Q 2018 was $290 million as
compared to $182 million in 4Q 2017 and $116 million in 1Q 2017.
Operating income in 4Q 2017 was impacted by impairments of $160
million across all steel facilities in ArcelorMittal South
Africa.
EBITDA in 1Q 2018 decreased by 14.1% to $363
million as compared to $423 million in 4Q 2017, primarily due to
lower volumes in Ukraine (negatively impacted by planned and
unplanned maintenance). EBITDA in 1Q 2018 was significantly higher
as compared to $191 million in 1Q 2017, primarily due to a positive
price-cost effect offset in part by lower steel shipments
(-6.0%).
Mining
(USDm)
unless otherwise shown |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Sales |
1,024 |
959 |
1,029 |
1,015 |
1,030 |
Operating
income |
242 |
159 |
238 |
216 |
378 |
Depreciation |
(107) |
(108) |
(103) |
(103) |
(102) |
EBITDA |
349 |
267 |
341 |
319 |
480 |
|
|
|
|
|
|
Own iron ore production (a) (Mt) |
14.6 |
14.4 |
14.2 |
14.7 |
14.0 |
Iron ore shipped externally and internally at market price
(b) (Mt) |
9.1 |
8.4 |
9.1 |
9.5 |
8.7 |
Iron ore
shipment - cost plus basis (Mt) |
4.7 |
5.8 |
5.9 |
5.8 |
4.7 |
Own coal production(a) (Mt) |
1.5 |
1.5 |
1.5 |
1.6 |
1.7 |
Coal shipped externally and internally at market
price(b) (Mt) |
0.4 |
0.6 |
0.6 |
0.8 |
0.8 |
Coal
shipment - cost plus basis (Mt) |
0.9 |
0.9 |
0.9 |
0.9 |
0.9 |
(a) Own iron ore and coal production not including
strategic long-term contracts.
(b) Iron ore and coal shipments of market-priced based materials
include the Company's own mines and share of production at other
mines, and exclude supplies under strategic long-term
contracts.
Own iron ore production in 1Q 2018 increased by
1.3% to 14.6Mt as compared to 14.4Mt in 4Q 2017, due to improved
iron ore production in Liberia (which remains on track to produce
5Mt in 2018) and Ukraine, offset in part by seasonally lower
production in ArcelorMittal Mines Canada[6] (AMMC). Own
iron ore production in 1Q 2018 increased by 4.3% as compared to 1Q
2017 primarily due to increased production in Liberia offset in
part by lower AMMC production.
Market-priced iron ore shipments in 1Q 2018
increased by 8.1% to 9.1Mt as compared to 8.4Mt in 4Q 2017,
primarily driven by higher shipments in Liberia and Ukraine.
Market-priced iron ore shipments in 1Q 2018 increased by 5.5% as
compared to 1Q 2017 driven by higher shipments in Liberia offset in
part by lower AMMC shipments. Market-priced iron ore shipments are
expected to grow 10% in 2018 compared to 2017.
Own coal production in 1Q 2018 increased by 3.0%
to 1.5Mt as compared to 4Q 2017 primarily due to higher production
at Princeton (US) mines. Own coal production in 1Q 2018 decreased
by 11.3% as compared to 1Q 2017 primarily due to lower production
in Kazakhstan following operational and geological issues offset in
part by higher production at Princeton (US) mines.
Market-priced coal shipments in 1Q 2018 declined
by 27.5% to 0.4Mt as compared to 0.6Mt in 4Q 2017. Market-priced
coal shipments in 1Q 2018 decreased by 46.0% as compared to 1Q 2017
primarily due to decreased shipments at Kazakhstan.
Operating income in 1Q 2018 increased to $242
million as compared to $159 million in 4Q 2017, and was lower than
$378 million in 1Q 2017.
EBITDA in 1Q 2018 increased by 30.7% to $349
million as compared to $267 million in 4Q 2017, primarily due to
increased seaborne iron ore reference prices (+13.6%) and higher
market-priced iron ore shipments (+8.1%). EBITDA in 1Q 2018 was
lower as compared to $480 million in 1Q 2017, primarily due to
lower seaborne iron ore reference prices (-13.1%), lower coal
shipments offset in part by higher market-priced iron ore shipment
volumes (+5.5%).
Liquidity and Capital
Resources
For 1Q 2018, net cash provided by operating
activities was $160 million as compared to $2,885 million in 4Q
2017 and net cash used in operating activities of $299 million in
1Q 2017. The lower net cash provided by operating activities during
1Q 2018 reflects working capital investment of $1,869 million
(which follows the normal seasonal pattern and reflects the effect
of higher steel shipments as well as the impact of higher selling
prices and higher raw material prices), as compared to working
capital release of $1,657 million in 4Q 2017.
Net cash used in investing activities during 1Q
2018 was $676 million as compared to $931 million during 4Q 2017
and $598 million in 1Q 2017. Capital expenditures decreased to $752
million in 1Q 2018 as compared to $1,036 million in 4Q 2017 and
higher as compared to $580 million in 1Q 2017. FY 2018 capital
expenditure is expected to be $3.8 billion.
Cash provided by other investing activities in 1Q
2018 of $76 million primarily includes proceeds from the sale of
Frydek Mistek in Czech Republic[7]. Cash
provided by other investing activities in 4Q 2017 of $105 million
primarily included tangible asset disposals and disposal proceeds
of US long products (Georgetown).
Net cash used by financing activities in 1Q 2018
of $33 million includes proceeds from commercial paper issuances
($0.2 billion) offset by $0.2 billion used under the share buyback
program. Net cash used by financing activities in 4Q 2017 of $2.2
billion includes $1.2 billion of bonds repurchased in October 2017
pursuant to cash tender offers, $0.6 billion (€540 million)
repayment at maturity of the euro 4.625% Notes due November 17,
2017, $644 million used to early redeem in December 2017 the 6.125%
Notes due June 1, 2018 and partial repayment of borrowings offset
in part by a new $0.4 billion (€300 million) Schuldschein loan in
October 2017 and $0.6 billion (€500 million) euro 0.95% bond due
January 17, 2023 issued in December 2017. Net cash provided by
financing activities for 1Q 2017 of $666 million primarily includes
proceeds from the European Investment Bank loan[8] of
€350 million ($373 million) and $0.3 billion of commercial paper
issuances.
During 1Q 2018, the Company paid dividends of $50
million to minority shareholders in AMMC (Canada) as compared to
$21 million in 4Q 2017 (primarily to minority shareholders in
Bekaert (Brazil)) and $40 million in 1Q 2017 (primarily to minority
shareholders in AMMC (Canada)).
As of March 31, 2018, the Company's cash and cash
equivalents amounted to $2.3 billion as compared to $2.8 billion at
December 31, 2017 and $2.4 billion at March 31, 2017.
Gross debt increased to $13.4 billion as of March
31, 2018, as compared to $12.9 billion at December 31, 2017 and
decreased as compared to $14.5 billion at March 31, 2017.
As of March 31, 2018, net debt increased to $11.1
billion as compared with $10.1 billion at December 31, 2017
primarily due to lower net cash provided by operating activities
less capex ($0.6 billion), negative foreign exchange impacts on
Euro-denominated debt ($0.2 billion) and share buyback ($0.2
billion). Net debt as of March 31, 2018, was lower as compared to
$12.1 billion as of March 31, 2017.
As of March 31, 2018, the Company had liquidity of
$7.8 billion, consisting of cash and cash equivalents of $2.3
billion and $5.5 billion of available credit lines[9]. The $5.5
billion credit facility contains a financial covenant of 4.25x Net
debt / EBITDA (as defined in the facility). As of March 31, 2018,
the average debt maturity was 5.2 years.
Key recent developments
-
On May 9, 2018, the Annual General Meeting of
shareholders of ArcelorMittal held in Luxembourg approved all
resolutions. The results of the votes are posted
on www.arcelormittal.com under "Investors > Equity
Investors > Shareholders' meetings > Annual General Meeting
of shareholders, 9 May 2018" where the full documentation regarding
the general meeting is available. The shareholders re-elected Mrs.
Karyn Ovelmen and Mr. Tye Burt as directors of ArcelorMittal for a
term of three years each.
-
On April 13, 2018, ArcelorMittal announced that,
as part of the ongoing European Commission ('EC') review into its
acquisition of Ilva, it submitted a proposed divestment package to
the EC to address concerns the EC has raised during its review. The
divestment package includes the following assets:
-
ArcelorMittal Piombino, the Company's only
galvanized steel plant in Italy
-
ArcelorMittal Galati, Romania
-
ArcelorMittal Skopje, Macedonia
-
ArcelorMittal Ostrava, Czech Republic
-
ArcelorMittal Dudelange, Luxembourg
-
Hot dipped galvanizing lines 4 and 5 in
Flemalle; hot-rolled pickling, cold rolling and tin packaging lines
in Tilleur, all of which are in Liège, Belgium.
On May 7, 2018, ArcelorMittal announced that it
has been granted merger clearance by the EC for AM Investco Italy
S.r.l. (AM Investco)'s proposed acquisition of Ilva S.p.A (Ilva).
EC merger clearance follows the conclusion of the Commission's
Phase II investigation into the proposed acquisition of Ilva, and
has been granted on the basis that the Company has committed to
dispose of assets in the divestment package. Approval by the EC is
a significant milestone in the transaction to acquire Ilva and
represents a major step towards closing the deal, which is now
expected end of June 2018.
-
In February 2018, the Brazilian antitrust
authority - CADE - approved the acquisition, by
ArcelorMittal, of the entire representative shares of
Votorantim Siderurgia's equity capital. The closing of the
transaction occurred on April 1, 2018, Votorantim Siderurgia, under
the new corporate name of ArcelorMittal Sul Fluminense, became a
subsidiary of ArcelorMittal Brasil. The combination of the
businesses will result in a long product steel producer with annual
crude steel capacity of 5.1 million metric tonnes. CADE's approval
was subject to the fulfilment of certain divestment commitments:
ArcelorMittal Brasil agreed to dispose of its two production
sites of Cariacica and Itaúna, as well as some drawing equipment,
which disposal was completed early May 2018. This acquisition aims
to create value through cost, logistical and operational synergies
totaling ~$110 million per annum.
-
On April 12, 2018, ArcelorMittal published a
convening notice for its Extraordinary General Meeting of
shareholders, which will be held on May 16, 2018 at 11.00 a.m. CET
at the company's registered office, 24-26, Boulevard d'Avranches,
L-1160 in Luxembourg. The convening notice, the amended draft of
the articles of association, the voting forms and all other meeting
documentation are available on ArcelorMittal's website under
"Investors - Equity investors - Shareholders' meetings -
Extraordinary General Meeting May 16, 2018".
-
On March 28, 2018, ArcelorMittal announced the
completion of its share buyback program. ArcelorMittal repurchased
7 million shares for a total value of approximately €184 million
(equivalent USD 226 million) at an approximate average price per
share of €26.34. All details are available on its website
on: http://corporate.arcelormittal.com/investors/equity-investors/share-buyback.
-
On February 12, 2018, the Company's subsidiary
ArcelorMittal India Private Limited (AMIPL) submitted a Resolution
Plan for Essar Steel India Limited (Essar Steel) which set out a
detailed plan to restore Essar Steel's fortunes and enable it to
realise its full potential and participate in the anticipated steel
demand growth in India. On March 2, 2018, ArcelorMittal signed
a joint venture formation agreement with Nippon Steel &
Sumitomo Metal Corporation (NSSMC) in relation to its offer to
acquire Essar Steel.
This will involve a multi staged approach: initial
steps will be to stabilize the operation and increase production
from the current 5.6Mtpa level to 8.5Mtpa in the medium term and
ultimately have long term aspirations to produce between
15-20Mtpa.
-
On February 1, 2018, Standard and Poors Global
Ratings (S&P) raised its long-term corporate credit rating on
ArcelorMittal to 'BBB-' from 'BB+' and assigned a stable outlook.
At the same time, S&P raised the short-term corporate rating to
'A-3' from 'B' and raised its issue-level ratings on
ArcelorMittal's unsecured debt to 'BBB-' from 'BB+'. Because these
ratings are now investment grade, S&P has withdrawn the
associated recovery ratings.
Recent filings
-
During May 2018, ArcelorMittal published the
2017 investor relations fact book. The report is available
on http://corporate.arcelormittal.com under "Investors
> Financial reports > Factbook."
-
On March 12, 2018, ArcelorMittal published the
statutory financial statements of ArcelorMittal parent company for
the year ended December 31, 2017. These financial statements have
been filed with the electronic database of the Luxembourg Stock
Exchange (www.bourse.lu) and are available
on http://corporate.arcelormittal.com under "Investors
> Financial reports > Annual reports".
-
On February 16, 2018, ArcelorMittal published
its annual report for the year ended December 31, 2017. The report
has been filed with the electronic database of the Luxembourg Stock
Exchange (www.bourse.lu) and are available on
http://corporate.arcelormittal.com under "Investors >
Financial reports > Annual reports".
-
On February 15, 2018, ArcelorMittal filed its
Annual Report 2017 on Form 20-F with the U.S. Securities and
Exchange Commission (SEC). The report is available on
ArcelorMittal's
website http://corporate.arcelormittal.com under "Investors
> Financial reports > SEC filings".
Outlook and guidance
The following global apparent steel consumption
("ASC") figures reflect the Company's 2018 estimates, which remain
unchanged from those presented in connection with the full year
2017 results announcement in January 2018.
Market conditions are favorable. The demand
environment remains positive (as evidenced by the continued high
readings from the ArcelorMittal weighted PMI), and steel spreads
remain healthy.
Global apparent steel consumption ("ASC") is
estimated to have expanded by +3.2% in 2017. Based on the current
economic outlook, ArcelorMittal expects global ASC to grow further
in 2018 by between +1.5% to +2.5%. By region: ASC in US is expected
to grow +1.5% to +2.5% in 2018 (including pipes and tubes) (versus
+1.3% in 2017 (excluding pipes and tubes)) driven by demand in
machinery and construction. In Europe, we expect underlying demand
to continue to grow, supported by the strength of machinery and
construction end markets, and overall demand is expected to be
+1.0% to +2.0% in 2018 (versus growth of +1.5% in 2017). In
Brazil, ASC is expected to grow by +6.5% to +7.5% in 2018 (an
acceleration of growth versus +4.6% in 2017), as the economy starts
to turnaround with improved consumer confidence and pick up in
longs as construction recovers. In the CIS, ASC is expected to
grow +2.0% to +3.0% in 2018 (a moderation of growth versus +5.4% in
2017). In China, ASC grew by +3.5% in 2017, higher than our initial
expectations. Overall demand is expected to remain close to this
level in 2018 (between -0.5% to +0.5%), as the anticipated weakness
in the real estate sector is expected to be offset in part by
robust infrastructure and automotive end markets. Nevertheless,
ex-China ASC is expected to grow by approximately +3.0% to +4.0% in
2018 (versus +2.8% in 2017), which supports global ASC growth of
+1.5% to +2.5% in 2018 (as compared to growth of ~3.2% in
2017).
The Company expects cash needs of the business
(excluding working capital investment) to increase in 2018 to
approximately $5.6 billion from $4.4 billion in 2017. The expected
increase in capex to $3.8 billion in 2018 from $2.8 billion in 2017
largely reflects the Mexico hot strip mill project and anticipated
ILVA capex as well as additional strategic projects ($0.3 billion,
including further investment to enhance downstream optimization in
Europe and HAV in Canada and Europe). Net interest is expected to
decline to $0.6 billion from $0.8 billion in 2017 reflecting the
benefits of liability management exercises completed in 2017. Other
cash needs are expected to increase to $1.2 billion from $0.8
billion in 2017, primarily on account of higher expected cash taxes
due to timing impacts.
Working capital requirements for 2018 are expected
to be driven by market conditions.
The Company will continue to prioritize
deleveraging and believes that $6 billion is an appropriate net
debt target that will sustain investment grade metrics even at the
low point of the cycle. The Company will continue to invest in
opportunities that will enhance future returns. By investing in
these opportunities with focus and discipline, the cash flow
generation potential of the Company is expected to increase. The
Board has agreed on a new dividend policy which has been approved
by the shareholders at the AGM on May 9, 2018. Given the current
deleveraging bias, dividends will begin at $0.10/share in 2018
(paid from 2017 results[10]). Once it
achieves net debt at or below its target, the Company is committed
to returning a portion of annual FCF to shareholders.
ArcelorMittal Condensed
Consolidated Statement of Financial Position1
|
|
|
Mar 31, |
Dec 31, |
Mar 31, |
In millions
of U.S. dollars |
|
|
2018 |
2017 |
2017 |
ASSETS |
|
|
|
|
|
Cash and
cash equivalents (C) |
|
|
2,260 |
2,786 |
2,402 |
Trade
accounts receivable and other |
|
|
5,012 |
3,863 |
3,971 |
Inventories |
|
|
18,952 |
17,986 |
16,393 |
Prepaid
expenses and other current assets |
|
|
2,653 |
1,931 |
2,251 |
Assets held
for sale[11] |
|
|
224 |
179 |
126 |
Total Current Assets |
|
|
29,101 |
26,745 |
25,143 |
|
|
|
|
|
|
Goodwill
and intangible assets |
|
|
5,759 |
5,737 |
5,716 |
Property,
plant and equipment |
|
|
37,031 |
36,971 |
35,049 |
Investments
in associates and joint ventures |
|
|
5,231 |
5,084 |
4,470 |
Deferred
tax assets |
|
|
7,170 |
7,055 |
5,931 |
Other
assets |
|
|
3,671 |
3,705 |
2,182 |
Total Assets |
|
|
87,963 |
85,297 |
78,491 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Short-term
debt and current portion of long-term debt (B) |
|
|
4,084 |
2,785 |
3,452 |
Trade
accounts payable and other |
|
|
13,494 |
13,428 |
12,043 |
Accrued
expenses and other current liabilities |
|
|
5,389 |
5,147 |
4,853 |
Liabilities
held for sale11 |
|
|
42 |
50 |
38 |
Total Current Liabilities |
|
|
23,009 |
21,410 |
20,386 |
|
|
|
|
|
|
Long-term
debt, net of current portion (A) |
|
|
9,309 |
10,143 |
11,047 |
Deferred
tax liabilities |
|
|
2,605 |
2,684 |
2,626 |
Other
long-term liabilities |
|
|
10,349 |
10,205 |
10,503 |
Total Liabilities |
|
|
45,272 |
44,442 |
44,562 |
|
|
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
40,608 |
38,789 |
31,743 |
Non-controlling interests |
|
|
2,083 |
2,066 |
2,186 |
Total Equity |
|
|
42,691 |
40,855 |
33,929 |
Total Liabilities and Shareholders' Equity |
|
|
87,963 |
85,297 |
78,491 |
|
|
|
|
|
|
Net Debt (D=A+B-C) |
|
|
11,133 |
10,142 |
12,097 |
ArcelorMittal Condensed
Consolidated Statement of Operations1
|
Three
months ended |
In millions
of U.S. dollars unless otherwise shown |
Mar
31,
2018 |
Dec
31,
2017 |
Sep
30,
2017 |
Jun
30,
2017 |
Mar
31,
2017 |
Sales |
19,186 |
17,710 |
17,639 |
17,244 |
16,086 |
Depreciation (B) |
(711) |
(747) |
(690) |
(676) |
(655) |
Impairment
(B) |
(86) |
(160) |
- |
(46) |
- |
Exceptional
charges (B) |
(146) |
- |
- |
- |
- |
Operating income (A) |
1,569 |
1,234 |
1,234 |
1,390 |
1,576 |
Operating
margin % |
8.2% |
7.0% |
7.0% |
8.1% |
9.8% |
|
|
|
|
|
|
Income from
associates, joint ventures and other investments |
212 |
125 |
117 |
120 |
86 |
Net
interest expense |
(164) |
(188) |
(205) |
(207) |
(223) |
Foreign
exchange and other net financing gain/(loss) |
(174) |
(261) |
132 |
210 |
(133) |
Income before taxes and non-controlling interests |
1,443 |
910 |
1,278 |
1,513 |
1,306 |
Current tax expense |
(284) |
(134) |
(116) |
(126) |
(207) |
Deferred tax benefit / (expense) |
81 |
253 |
45 |
(71) |
(76) |
Income tax
(expense) / benefit |
(203) |
119 |
(71) |
(197) |
(283) |
Income including non-controlling interests |
1,240 |
1,029 |
1,207 |
1,316 |
1,023 |
Non-controlling interests (income) / loss |
(48) |
10 |
(2) |
6 |
(21) |
Net income attributable to equity holders of the
parent |
1,192 |
1,039 |
1,205 |
1,322 |
1,002 |
|
|
|
|
|
|
Basic
earnings per common share ($)4 |
1.17 |
1.02 |
1.18 |
1.30 |
0.98 |
Diluted
earnings per common share ($)4 |
1.17 |
1.01 |
1.18 |
1.29 |
0.98 |
|
|
|
|
|
|
Weighted
average common shares outstanding (in millions)4 |
1,019 |
1,020 |
1,020 |
1,020 |
1,020 |
Diluted
weighted average common shares outstanding (in millions)4 |
1,023 |
1,024 |
1,023 |
1,023 |
1,022 |
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
EBITDA (C =
A-B) |
2,512 |
2,141 |
1,924 |
2,112 |
2,231 |
EBITDA
Margin % |
13.1% |
12.1% |
10.9% |
12.2% |
13.9% |
|
|
|
|
|
|
Own iron
ore production (Mt) |
14.6 |
14.4 |
14.2 |
14.7 |
14.0 |
Crude steel
production (Mt) |
23.3 |
22.7 |
23.6 |
23.2 |
23.6 |
Steel
shipments (Mt) |
21.3 |
21.0 |
21.7 |
21.5 |
21.1 |
ArcelorMittal Condensed
Consolidated Statement of Cash flows1
|
Three
months ended |
In millions
of U.S. dollars |
Mar
31,
2018 |
Dec
31,
2017 |
Sep
30,
2017 |
Jun
30,
2017 |
Mar
31,
2017 |
Operating activities: |
|
|
|
|
|
Income
attributable to equity holders of the parent |
1,192 |
1,039 |
1,205 |
1,322 |
1,002 |
Adjustments to reconcile net income to net cash (used in) /
provided by operations: |
|
|
|
|
|
Non-controlling interest's income / (loss) |
48 |
(10) |
2 |
(6) |
21 |
Depreciation and impairment |
797 |
907 |
690 |
722 |
655 |
Exceptional
charges |
146 |
- |
- |
- |
- |
Income from
associates, joint ventures and other investments |
(212) |
(125) |
(117) |
(120) |
(86) |
Deferred
tax (benefit)/ expense |
(81) |
(253) |
(45) |
71 |
76 |
Change in
working capital |
(1,869) |
1,657 |
(801) |
(548) |
(2,181) |
Other
operating activities (net) |
139 |
(330) |
(171) |
(227) |
214 |
Net cash provided by / (used in) operating activities
(A) |
160 |
2,885 |
763 |
1,214 |
(299) |
Investing activities: |
|
|
|
|
|
Purchase of
property, plant and equipment and intangibles (B) |
(752) |
(1,036) |
(637) |
(566) |
(580) |
Other
investing activities (net) |
76 |
105 |
74 |
(172) |
(18) |
Net cash used in investing activities |
(676) |
(931) |
(563) |
(738) |
(598) |
Financing activities: |
|
|
|
|
|
Net
proceeds / (payments) relating to payable to banks and long-term
debt |
263 |
(2,131) |
587 |
(726) |
743 |
Dividends
paid |
(50) |
(21) |
(80) |
- |
(40) |
Share
buyback |
(226) |
- |
- |
- |
- |
Other
financing activities (net) |
(20) |
(15) |
7 |
(18) |
(37) |
Net cash (used in) / provided by financing
activities |
(33) |
(2,167) |
514 |
(744) |
666 |
Net
(decrease) / increase in cash and cash equivalents |
(549) |
(213) |
714 |
(268) |
(231) |
Cash and
cash equivalents transferred from assets held for sale |
- |
- |
- |
- |
13 |
Effect of
exchange rate changes on cash |
17 |
16 |
9 |
30 |
3 |
Change in cash and cash equivalents |
(532) |
(197) |
723 |
(238) |
(215) |
|
|
|
|
|
|
Free cash flow (C=A+B) |
(592) |
1,849 |
126 |
648 |
(879) |
Appendix 1: Product shipments by
region
(000'kt) |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
Flat |
4,811 |
4,414 |
4,820 |
4,748 |
4,944 |
Long |
921 |
872 |
984 |
845 |
829 |
NAFTA |
5,559 |
5,150 |
5,655 |
5,419 |
5,610 |
Flat |
1,400 |
1,950 |
1,766 |
1,682 |
1,364 |
Long |
1,095 |
1,108 |
1,181 |
945 |
866 |
Brazil |
2,483 |
3,052 |
2,940 |
2,622 |
2,226 |
Flat |
7,704 |
7,298 |
7,098 |
7,482 |
7,377 |
Long |
2,961 |
2,821 |
2,954 |
2,913 |
2,806 |
Europe |
10,697 |
10,151 |
10,116 |
10,466 |
10,208 |
CIS |
1,866 |
2,209 |
2,297 |
2,212 |
2,119 |
Africa |
1,167 |
1,044 |
1,065 |
1,045 |
1,102 |
ACIS |
3,029 |
3,254 |
3,362 |
3,257 |
3,221 |
Note: "Others and eliminations" are not presented
in the table
Appendix 2a:
Capital expenditures
(USDm) |
1Q 18 |
4Q 17 |
3Q 17 |
2Q 17 |
1Q 17 |
NAFTA |
160 |
184 |
95 |
90 |
97 |
Brazil |
47 |
72 |
79 |
55 |
57 |
Europe |
313 |
430 |
213 |
248 |
252 |
ACIS |
117 |
165 |
114 |
75 |
73 |
Mining |
107 |
179 |
132 |
94 |
90 |
Total |
752 |
1,036 |
637 |
566 |
580 |
Note: "Others and eliminations"
are not presented in the
table
Appendix 2b: Capital expenditure
projects
The following tables summarize the Company's
principal growth and optimization projects involving significant
capital expenditures.
Completed
projects in most recent quarters
Segment |
Site /
unit |
Project |
Capacity /
details |
Actual
completion |
NAFTA |
AM/NS Calvert (US) |
Phase 2: Slab yard expansion (Bay 5) |
Increase coil production level from 4.6Mt/year to 5.3Mt/year
coils |
2Q 2017 |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Phase 2: Convert the current galvanizing line #4 to a
Galvalume line |
Allow the galvaline #4 to produce 160kt galvalume and 128kt
galvanize and closure of galvanize line #1 (capacity 170kt of
galvalume) |
2Q 2017
|
Europe |
ArcelorMittal Krakow (Poland) |
Hot strip mill (HSM) extension |
Increase hot rolled coil (HRC) capacity by 0.9Mt/year |
2Q 2017 |
Europe |
ArcelorMittal Krakow (Poland) |
Hot dipped galvanizing (HDG) capacity increase |
Increasing HDG capacity by 0.4Mt/year |
2Q 2017
|
Ongoing projects
Segment |
Site /
unit |
Project |
Capacity /
details |
Forecast
completion |
Europe |
Gent & Liège (Europe Flat Automotive UHSS
Program)
|
Gent: Upgrade HSM and new furnace
Liège: Annealing line transformation |
Increase ~400kt in Ultra High Strength Steel
capabilities |
2Q 2018 |
Europe |
ArcelorMittal Differdange (Luxembourg) |
Modernisation of finishing of "Grey rolling mill" |
Revamp finishing to achieve full capacity of Grey mill at
850kt/y |
2Q 2018 |
ACIS |
ArcelorMittal Kryvyi Rih (Ukraine) |
New LF&CC 2&3 |
Facilities upgrade to switch from ingot to continuous caster
route. Additional billets of 290kt over ingot route through yield
increase |
4Q 2018 |
NAFTA |
Indiana Harbor (US) |
Indiana Harbor "footprint optimization project" |
Restoration of 80" HSM and upgrades at Indiana Harbor
finishing |
2018(a) |
Europe |
Sosnowiec (Poland) |
Modernization of Wire Rod Mill |
Upgrade rolling technology improving the mix of HAV products
and increase volume by 90kt |
2019 |
NAFTA |
Mexico |
Build new HSM |
Production capacity of 2.5Mt/year |
2020(b) |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Hot Strip Mill Modernization |
Replace existing three end of life coilers with two states of
the art coilers and new runout tables. |
2020(c) |
NAFTA |
Burns Harbor (US) |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped galvanizing (HDG) capacity by 0.6Mt/year
and cold rolling (CR) capacity by 0.7Mt/year |
On hold |
Brazil |
Juiz de Fora |
Melt shop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On hold(d)
|
Brazil |
Monlevade |
Sinter plant, blast furnace and melt shop |
Increase in liquid steel capacity by 1.2Mt/year;
Sinter feed capacity of 2.3Mt/year |
On hold |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(e) |
a) In support of the Company's
Action 2020 program that was launched at its fourth quarter and
full-year 2015 earnings announcement, the footprint optimization
project at ArcelorMittal Indiana Harbor is now complete, which has
resulted in structural changes required to improve asset and cost
optimization. The plan involved idling redundant operations
including the #1 aluminize line, 84" hot strip mill (HSM), and #5
continuous galvanizing line (CGL) and No.2 steel shop (idled in 2Q
2017) whilst making further planned investments totalling ~$200
million including a new caster at No.3 steel shop (completed in 4Q
2016), restoration of the 80" hot strip mill and Indiana Harbor
finishing are ongoing. The full project scope is expected to be
completed in 2018.
b) On September 28, 2017,
ArcelorMittal announced a major US$1 billion, three-year investment
programme at its Mexican operations, which is focussed on building
ArcelorMittal Mexico's downstream capabilities, sustaining the
competitiveness of its mining operations and modernising its
existing asset base. The programme is designed to enable
ArcelorMittal Mexico to meet the anticipated increased demand
requirements from domestic customers, realise in full ArcelorMittal
Mexico's production capacity of 5.3 million tonnes and
significantly enhance the proportion of higher-value added products
in its product mix, in-line with the Company's Action 2020
strategic plan. The main investment will be the construction of a
new hot strip mill. Construction will take approximately three
years and, upon completion, will enable ArcelorMittal Mexico to
produce c. 2.5 million tonnes of flat rolled steel, long steel c.
1.8 million tonnes and the remainder made up of semi-finished
slabs. Coils from the new hot strip mill will be supplied to
domestic, non-auto, general industry customers. The project
commenced late 4Q 2017 and is expected to be completed in the
second quarter of 2020. The Company expects capital expenditures of
approximately $350 million with respect to this programme in
2018.
c) Investment in
ArcelorMittal Dofasco (Canada) to modernise the hot strip mill. The
project is to install two new state of the art coilers and runout
tables to replace three end of life coilers. The strip cooling
system will be upgraded and include innovative power cooling
technology to improve product capability. The project is expected
to be completed in 2020.
d) Although the Monlevade wire
rod expansion project and Juiz de Fora rebar expansion were
completed in 2015, the Juiz de Fora melt shop project is
currently on hold and is expected to be completed upon Brazil
domestic market recovery.
e) ArcelorMittal Liberia has
moved ore extraction from its depleting DSO (direct shipping ore)
deposit at Tokadeh to the nearby, lower impurity DSO Gangra deposit
with planned production of 5Mt in 2018. The Gangra mine, haul road
and related existing plant and equipment upgrades have now been
completed. Following a period of exploration cessation caused by
the onset of Ebola, ArcelorMittal Liberia recommenced drilling for
DSO resource extensions in late 2015. During 2016, the operation at
Tokadeh was right-sized to focus on its "natural" Atlantic markets.
The originally planned phase 2 project of 15Mtpa of concentrate
sinter fine ore product was delayed in August 2014 due to the
declaration of force majeure by contractors following the Ebola
virus outbreak, and then reassessed following rapid iron ore price
declines over the ensuing period since.
Now that mining at the Gangra deposit has
commenced, ArcelorMittal Liberia has launched a feasibility study
to identify the optimal concentration solution in a phased approach
for utilising the significant lower grade resources at Tokadeh. The
results of the feasibility study are anticipated at the end of
2018.
ArcelorMittal remains committed to Liberia where
it operates a full value chain of mine, rail and port and
where it has been operating the mine on a DSO basis since
2011. The Company believes that ArcelorMittal Liberia presents a
strong, competitive source of product ore for the international
market based on continuing DSO mining and subsequent shift to a
high grade, long-term sinter feed concentration phase.
Appendix 3: Debt repayment
schedule as of March 31, 2018
Debt
repayment schedule (USD billion) |
2018 |
2019 |
2020 |
2021 |
2022 |
>=2023 |
Total |
Bonds |
0.5 |
0.9 |
1.9 |
1.4 |
1.6 |
2.8 |
9.1 |
Commercial
paper |
1.3 |
- |
- |
- |
- |
- |
1.3 |
Other
loans |
1.2 |
0.4 |
0.2 |
0.4 |
0.2 |
0.6 |
3.0 |
Total gross debt |
3.0 |
1.3 |
2.1 |
1.8 |
1.8 |
3.4 |
13.4 |
Appendix 4: Terms and
definitions
Unless indicated otherwise, or the context
otherwise requires, references in this earnings release report to
the following terms have the meanings set out next to them
below:
Average steel selling prices:
calculated as steel sales divided by steel shipments.
Cash and cash equivalents: represents cash and
cash equivalents, restricted cash and short-term
investments.
Capex: represents the purchase of property,
plant and equipment and intangibles.
EBITDA: operating income plus depreciation,
impairment expenses and exceptional income/ (charges).
EBITDA/tonne: calculated as EBITDA divided by
total steel shipments.
Exceptional income / (charges): relate to
transactions that are significant, infrequent or unusual and are
not representative of the normal course of business of the
period.
Foreign exchange and other net financing (loss) /
gain: include foreign currency exchange impact, bank fees,
interest on pensions, impairments of financial instruments,
revaluation of derivative instruments and other charges that cannot
be directly linked to operating income/(loss).
Free cash flow (FCF): Refers to net cash
provided by (used in) operating activities less capex.
Gross debt: long-term debt, plus short-term
debt (including those held as part of liabilities held for
sale).
Liquidity: Cash and cash equivalents plus
available credit lines excluding back-up lines for the commercial
paper program.
LTIF: lost time injury frequency rate equals
lost time injuries per 1,000,000 worked hours, based on own
personnel and contractors.
MT: Refers to million metric tonnes
Market-priced tonnes: represent amounts of
iron ore and coal from ArcelorMittal mines that could be sold to
third parties on the open market. Market-priced tonnes that are not
sold to third parties are transferred from the Mining segment to
the Company's steel producing segments and reported at the
prevailing market price. Shipments of raw materials that do not
constitute market-priced tonnes are transferred internally and
reported on a cost-plus basis.
Mining segment sales: i) "External sales":
mined product sold to third parties at market price; ii)
"Market-priced tonnes": internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) "Cost-plus tonnes" - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market).
Net debt: long-term debt, plus short-term debt
less cash and cash equivalents (including those held as part of
liabilities held for sale).
Net debt/EBITDA: Refers to Net debt divided by
last twelve months EBITDA calculation.
Net interest: includes interest expense and
interest income
On-going projects: Refer to projects for which
construction has begun (excluding various projects that are under
development), even if such projects have been placed on hold
pending improved operating conditions.
Operating results: Refers to operating
income/(loss).
Operating segments: The NAFTA segment includes
the Flat, Long and Tubular operations of USA, Canada and Mexico.
The Brazil segment includes the Flat, Long and Tubular operations
of Brazil and its neighboring countries including Argentina, Costa
Rica and Venezuela. The Europe segment comprises the Flat, Long and
Tubular operations of the European business, as well as Downstream
Solutions. The ACIS segment includes the Flat, Long and Tubular
operations of Kazakhstan, Ukraine and South Africa. Mining segment
includes iron ore and coal operations.
Own iron ore production: Includes total of all
finished production of fines, concentrate, pellets and lumps and
includes share of production (excludes strategic long-term
contracts).
PMI: Refers to purchasing managers index
(based on ArcelorMittal estimates)
Seaborne iron ore reference
prices: refers to iron ore prices for 62% Fe CFR
China
Shipments: information at segment and group
level eliminates intra-segment shipments (which are primarily
between Flat/Long plants and Tubular plants) and inter-segment
shipments respectively. Shipments of Downstream Solutions are
excluded.
Steel-only EBITDA: calculated as EBITDA less
Mining segment EBITDA.
Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.
Working capital: trade accounts receivable
plus inventories less trade and other accounts payable.
YoY: Refers to year-on-year.
[1] The
financial information in this press release has been prepared
consistently with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and as adopted by the European Union. The interim
financial information included in this announcement has been also
prepared in accordance with IFRS applicable to interim periods,
however this announcement does not contain sufficient information
to constitute an interim financial report as defined in
International Accounting Standard 34, "Interim Financial
Reporting". The numbers in this press release have not been
audited. The financial information and certain other information
presented in a number of tables in this press release have been
rounded to the nearest whole number or the nearest decimal.
Therefore, the sum of the numbers in a column may not conform
exactly to the total figure given for that column. In addition,
certain percentages presented in the tables in this press release
reflect calculations based upon the underlying information prior to
rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. This press release also includes
certain non-GAAP financial measures. ArcelorMittal presents EBITDA,
and EBITDA/tonne, which are non-GAAP financial measures and defined
in the Condensed Consolidated Statement of Operations, as
additional measurements to enhance the understanding of operating
performance. ArcelorMittal believes such indicators are relevant to
describe trends relating to cash generating activity and provides
management and investors with additional information for comparison
of the Company's operating results to the operating results of
other companies. ArcelorMittal also presents net debt as an
additional measurement to enhance the understanding of its
financial position, changes to its capital structure and its credit
assessment. ArcelorMittal also presents free cash flow, which is a
non-GAAP financial measure defined in the Condensed Consolidated
Statement of Cash flows, because it believes it is a useful
supplemental measure for evaluating the strength of its cash
generating capacity. Non-GAAP financial measures should be read in
conjunction with and not as an alternative for, ArcelorMittal's
financial information prepared in accordance with IFRS. Such
non-GAAP measures may not be comparable to similarly titled
measures applied by other companies.
[2] On March
28, 2018, ArcelorMittal announced the completion of its share
buyback program. ArcelorMittal has repurchased 7 million shares for
a total value of approximately €184 million (equivalent $226
million) at an approximate average price per share of €26.34
(equivalent to $32.36)
[3] At the
Extraordinary General Meeting held on May 10, 2017, the
shareholders approved a share consolidation based on a ratio 1:3,
whereby every three shares were consolidated into one share (with a
change in the number of shares outstanding and the accounting par
value per share). The figures presented for the basic and diluted
earnings per share reflect this change.
[4] On April
20, 2018, following the approval by the Brazilian antitrust
authority - CADE of the combination of ArcelorMittal Brasil's and
Votorantim's long steel businesses in Brazil subject to the
fulfilment of divestment commitments, ArcelorMittal Brasil
agreed to dispose of its two production sites of Cariacica and
Itaúna, as well as some drawing equipment of ArcelorMittal Brasil
and ArcelorMittal Sul-Fluminense. The sale was completed early May
2018 to the Mexican Group Simec S.A.B. de CV. A second
package of some drawing equipment of ArcelorMittal Brasil and
ArcelorMittal Sul-Fluminense were sold to the company Aço Verde do
Brasil as part of CADE's conditional approval.
[5] China
Oriental completed a share placement to restore the minimum 25%
free float as per Hong Kong Exchange listing requirements.
Following the share placement, ArcelorMittal's interest in China
Oriental decreased from 47% to 39%, as a result of which
ArcelorMittal recorded a net dilution loss of $44 million. In
January 2018, China Oriental issued 192 million additional shares
in connection with the exercise of all outstanding stock option
plans. As a result, ArcelorMittal's interest decreased from 39% to
37%.
[6]
ArcelorMittal Mines Canada, otherwise known as ArcelorMittal Mines
and Infrastructure Canada.
[7] In December
2017, ArcelorMittal committed to a plan to sell its 100% owned
subsidiary Go Steel Frýdek Místek ("Frýdek Mistek"). At December
31, 2017, the carrying amount of assets and liabilities subject to
the transaction were classified as held for sale. The sale was
completed in 1Q 2018.
[8] On December
16, 2016, ArcelorMittal signed a €350 million finance contract with
the European Investment Bank in order to finance European research,
development and innovation projects over the 2017-2020 period
within the European Union, predominantly France, Belgium and Spain,
but also in the Czech Republic, Poland, Luxembourg and Romania. The
Company benefits from a guarantee from the European Union under the
European Fund for Strategic Investments.
[9] On December
21, 2016, ArcelorMittal signed an agreement for a $5.5 billion
revolving credit facility (the "Facility"). The agreement
incorporates a first tranche of $2.3 billion maturing on December
21, 2019, and a second tranche of $3.2 billion maturing on December
21, 2021. The Facility may be used for general corporate purposes.
As of March 31, 2018, the $5.5 billion revolving credit facility
was fully available.
[10] Dividends
are announced in US dollars. Dividends are paid in US dollars for
shares traded in the United States in the form of New York registry
shares. Dividends are paid in EUR for shares listed on the European
Stock Exchanges (Amsterdam, Paris, Luxembourg, MTS) and converted
from US dollars to EUR based on the European Central Bank exchange
rate at May 15, 2018. A Luxembourg withholding tax of 15% is
applied on the gross dividend amounts. Dividend record date is May
18, 2018 and payment date June 13, 2018.
[11] Assets and
liabilities held for sale, as of March 31, 2018, primarily include
the carrying value of the USA long product facilities at Steelton
("Steelton"), and Cariacica and Itauna industrial plants in Brazil
(sold in May 2018 as remedy package for Votorantim acquisition).
Assets and liabilities held for sale, as of December 31, 2017,
primarily include the carrying value of Steelton and Frydek Mistek
assets in Czech Republic (which was sold in 1Q 2018). Assets and
liabilities held for sale, as of March 31, 2017, primarily include
the carrying value of Steelton.
First quarter 2018 earnings
analyst conference call
ArcelorMittal will hold a conference call hosted
by Heads of Finance and Investor Relations for members of the
investment community to discuss the three-month period ended March
31, 2018 on: Friday May 11,
2018 at 9.30am US Eastern time; 2.30pm London time and 3.30pm
CET.
The dial in
numbers are: |
|
|
Location |
Toll free
dial in numbers |
Local dial
in numbers |
Participant |
UK
local: |
0800 0515
931 |
+44 (0)203
364 5807 |
10560913# |
US
local: |
1 86 6719
2729 |
+1 24 0645
0345 |
10560913# |
US (New
York): |
1 86 6719
2729 |
+ 1 646 663
7901 |
10560913# |
France: |
0800
914780 |
+33 1 7071
2916 |
10560913# |
Germany: |
0800 965
6288 |
+49 692
7134 0801 |
10560913# |
Spain: |
90 099
4930 |
+34 911
143436 |
10560913# |
Luxembourg: |
800
26908 |
+352 27 86
05 07 |
10560913# |
A replay of the conference call will be
available for one week by dialing: +49 (0) 1805 2047 088; Access
code 520877#
|
Forward-Looking
Statements
This document may contain forward-looking information and
statements about ArcelorMittal and its subsidiaries. These
statements include financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives and
expectations with respect to future operations, products and
services, and statements regarding future performance.
Forward-looking statements may be identified by the words
"believe", "expect", "anticipate", "target" or similar expressions.
Although ArcelorMittal's management believes that the expectations
reflected in such forward-looking statements are reasonable,
investors and holders of ArcelorMittal's securities are cautioned
that forward-looking information and statements are subject to
numerous risks and uncertainties, many of which are difficult to
predict and generally beyond the control of ArcelorMittal, that
could cause actual results and developments to differ materially
and adversely from those expressed in, or implied or projected by,
the forward-looking information and statements. These risks and
uncertainties include those discussed or identified in the filings
with the Luxembourg Stock Market Authority for the Financial
Markets (Commission de Surveillance du
Secteur Financier) and the United States
Securities and Exchange Commission (the "SEC") made or to be made
by ArcelorMittal, including ArcelorMittal's latest Annual Report on
Form 20-F on file with the SEC. ArcelorMittal undertakes no
obligation to publicly update its forward-looking statements,
whether as a result of new information, future events, or
otherwise.
About ArcelorMittal
ArcelorMittal is the world's leading steel and mining company, with
a presence in 60 countries and an industrial footprint in 18
countries. Guided by a philosophy to produce safe, sustainable
steel, we are the leading supplier of quality steel in the major
global steel markets including automotive, construction, household
appliances and packaging, with world-class research and development
and outstanding distribution networks.
Through our core values of sustainability, quality
and leadership, we operate responsibly with respect to the health,
safety and wellbeing of our employees, contractors and the
communities in which we operate. For us, steel is the fabric of
life, as it is at the heart of the modern world from railways to
cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of
the products and components people use in their everyday lives more
energy efficient.
We are one of the world's five largest producers
of iron ore and metallurgical coal. With a geographically
diversified portfolio of iron ore and coal assets, we are
strategically positioned to serve our network of steel plants and
the external global market. While our steel operations are
important customers, our supply to the external market is
increasing as we grow. In 2017, ArcelorMittal had revenues of $68.7
billion and crude steel production of 93.1 million metric tonnes,
while own iron ore production reached 57.4 million metric
tonnes.
ArcelorMittal is listed on the stock exchanges of
New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on
the Spanish stock exchanges of Barcelona, Bilbao, Madrid and
Valencia (MTS). For more information about ArcelorMittal please
visit: http://corporate.arcelormittal.com/
Enquiries
ArcelorMittal investor relations: Europe: +44 207 543 1128;
Americas: +1 312 899 3985; Retail: +44 207 543 1156; SRI: +44 207
543 1156 and Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44
203 214 2419; France (Image 7) Tel: +33 153 70 94 17.
ArcelorMittal reports results for
the first quarter 2018