TIDMMT
Luxembourg, February 7, 2019 - 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 and
twelve-month periods ended December 31, 2018.
2018 highlights:
-- Health and safety performance improved in FY 2018 with annual LTIF rate
of 0.69x vs. 0.78x in FY 2017
-- FY 2018 operating income of $6.5bn (+20.3% YoY); operating income of
$1.0bn in 4Q 2018 (-15.6% YoY)
-- FY 2018 EBITDA of $10.3bn (+22.1% YoY); EBITDA of $2.0bn in 4Q 2018
(-8.9% YoY)
-- FY 2018 net income of $5.1bn, +12.7% higher as compared to $4.6bn for FY
2017
-- FY 2018 steel shipments of 83.9Mt (-1.6% YoY); 4Q 2018 steel shipments of
20.2Mt (-3.6% YoY)
-- FY 2018 crude steel production of 92.5Mt (-0.6% YoY); 4Q 2018 crude steel
production of 22.8Mt (stable YoY)
-- FY 2018 iron ore shipments of 58.3Mt (+0.7% YoY), of which 37.6Mt shipped
at market prices (+5.5% YoY); 4Q 2018 iron ore shipments of 15.7Mt (+9.8%
YoY), of which 10.0Mt shipped at market prices (+18.2% YoY)
-- Gross debt of $12.6bn as of December 31, 2018. Net debt of $10.2bn as of
December 31, 2018, lower as compared to $10.5bn as of September 30, 2018
and broadly stable as compared to $10.1bn as of December 31, 2017
-- FY 2018 cash flow from operating activities of $4.2bn less capex of
$3.3bn for free cash flow (FCF) of $0.9bn despite working capital
investment of $4.4bn, premium to repay bonds ($0.1bn) and litigation
fines ($0.1bn)4
Strategic progress in 2018:
-- Improved asset portfolio through the completed acquisitions of Votorantim
in Brazil and Ilva in Italy, as well as being selected as the successful
bidder for Essar Steel India Limited (ESIL) in partnership with Nippon
Steel & Sumitomo Metal Corporation Group (NSSMC), which subject to
completion, would provide improvement potential and growth optionality
-- Continued progress as the leader in innovation including the LanzaTech
carbon capture and conversion project at Gent, Steligence(R) and new
products and solutions to address the automotive platforms of the future
-- Improvement in leverage ratio: FY 2018 net debt/EBITDA of 1.0x vs.1.2x in
FY 2017
-- Cash needs of the business in 2018 were limited to $5.0bn, below the
guidance of $5.8bn provided in mid-year. Capex of $3.3bn was below our
guidance of $3.7bn due to timing of payments which will therefore be
carried over to 2019. Net interest of $0.6bn was in line with our
guidance. "Taxes, pension and others" came in at $1.1bn, below our
guidance of $1.5bn, due to the combined effects of: certain cash tax
settlements being deferred from 2018 to 2019; higher than anticipated
dividends received from our investments in associates; and net gains on
other accounts
-- Achieved the primary financial objective of an investment grade rating
with all 3 credit rating agencies
-- Limited Action 2020 progress in 2018, with ongoing cost/mix gains
(+$0.4bn) offset in part by volumes losses (-$0.3bn) following
operational disruptions during the year. As a result, cumulative savings
2016-2018 of $1.6bn achieved; ongoing focus and execution to deliver
target of $3bn savings by 2020
Capital allocation: Continued focus on deleveraging and investment in
high return projects
-- An investment grade credit rating remains ArcelorMittal's financial
priority, with a target to reduce net debt to below $6bn, to support
solid investment grade metrics at all points of the cycle
-- The Company is capitalizing on opportunities to invest which will enhance
future returns, including Ilva (asset revitalization), Mexico hot strip
mill (mix improvement) and Vega HAV (Brazil mix improvement)
-- ArcelorMittal intends to progressively increase the base dividend paid to
its shareholders, and, on attainment of the net debt target, return a
percentage of free cash flow annually. Accordingly, the Board proposes an
increase in the base dividend for 2019 (paid from 2018 earnings) to $0.20
per share which will be proposed to the shareholders at the AGM in May
2019
Outlook and guidance:
-- ArcelorMittal expects global steel demand to slightly expand in FY 2019
as compared to FY 2018
-- Steel shipments are expected to increase, supported by improved
operational performance
-- The Company expects certain cash needs of the business (including capex,
interest, cash taxes, pensions and certain other cash costs but excluding
working capital changes) to increase in 2019 to approximately $6.4bn.
Capex is expected to increase to $4.3bn (versus $3.3bn in FY 2018)
including $0.4bn carried over from 2018, the impact of Ilva ($0.4bn) and
the continued investment in high returns projects in Mexico and Brazil.
Interest is expected to be stable at $0.6bn while cash taxes, pensions
and other cash costs are expected to increase by $0.4bn primarily on
account of certain cash tax settlements deferred from 2018 and
non-recurrence of certain gains on other accounts
Financial highlights (on the basis of IFRS(1) ):
(USDm) unless otherwise shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 18,327 18,522 17,710 76,033 68,679
Operating income 1,042 1,567 1,234 6,539 5,434
Net income attributable to equity
holders of the parent 1,193 899 1,039 5,149 4,568
Basic earnings per share (US$)(2) 1.18 0.89 1.02 5.07 4.48
Operating income/ tonne (US$/t) 51 76 59 78 64
EBITDA 1,951 2,729 2,141 10,265 8,408
EBITDA/ tonne (US$/t) 96 133 102 122 99
Steel-only EBITDA/ tonne (US$/t) 79 119 89 107 82
Crude steel production (Mt) 22.8 23.3 22.7 92.5 93.1
Steel shipments (Mt) 20.2 20.5 21.0 83.9 85.2
Own iron ore production (Mt) 14.9 14.5 14.4 58.5 57.4
Iron ore shipped at market price
(Mt) 10.0 8.5 8.4 37.6 35.7
---------------------------------- ------ ------ ------ ------ --------
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"2018 was a year of positive momentum for ArcelorMittal characterized by
important strategic and financial progress. Operating in a healthy
market environment, the Company enjoyed a strong financial performance,
delivering substantial profitability improvement. Having considerably
strengthened our balance sheet in recent years, we also regained our
investment grade credit rating.
With an established leadership position in many regions, ArcelorMittal
targets specific growth opportunities to complement our existing global
presence. The acquisitions of Votorantim and Ilva, both completed in
2018, provide us with enhanced leadership positions in key markets.
Meanwhile our bid for Essar can provide us with a quality, scalable
presence in the rapidly expanding India steel market.
Delivery against our Action 2020 targets is an important focus for the
Group in 2019. We did not perform at an optimum level operationally in
2018 and will seek to minimize operational disruption this year to
ensure we meet our volume targets.
Although the issue of global overcapacity persists and there are well
publicised macro-economic risks, we expect further, moderate global
steel demand growth this year. Having considerably strengthened the
Company in recent years, we are in a strong position to generate healthy
levels of free cash and prosper through the cycle."
Sustainable development and safety performance
Health and safety - Own personnel and contractors lost time injury
frequency rate
Health and safety performance (excluding the impact of the Ilva
acquisition), based on own personnel figures and contractors lost time
injury frequency (LTIF) rate was 0.70x in the fourth quarter of 2018
("4Q 2018") as compared to 0.62x for the third quarter of 2018 ("3Q
2018") and 0.87x for the fourth quarter of 2017 ("4Q 2017").
Health and safety performance (excluding the impact from the acquisition
of Ilva) improved to 0.69x in the twelve months of 2018 ("12M 2018" or
"FY 2018") as compared to 0.78x for the twelve months of 2017 ("12M
2017" or "FY 2017").
Health and safety performance inclusive of Ilva (as consolidated from
November 1, 2018) was 0.91x for 4Q 2018 and 0.73x for FY 2018.
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. The figures presented in the table below exclude
the Ilva acquisition.
Own personnel and contractors - Frequency rate
Lost time injury frequency rate 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Mining 0.64 0.63 0.86 0.61 0.77
NAFTA 0.37 0.56 0.76 0.53 0.73
----- ----- ----- ------ ------
Brazil 0.28 0.39 0.46 0.36 0.43
----- ----- ----- ------ ------
Europe 1.11 0.76 1.00 0.93 1.03
----- ----- ----- ------ ------
ACIS 0.59 0.61 0.97 0.61 0.61
----- ----- ----- ------ ------
Total Steel 0.71 0.62 0.88 0.70 0.78
Total (Steel and Mining) 0.70 0.62 0.87 0.69 0.78
------------------------------- ----- ----- ----- ------ ------
Key sustainable development highlights for 4Q 2018:
-- ArcelorMittal reaffirmed its commitment to ResponsibleSteelTM, the steel
industry's first multi-stakeholder global certification initiative. The
Company has taken a leading role in forming the initiative with customers,
NGOs, banks as well as other steel and mining companies.
-- ArcelorMittal received a 'B' grade in CDP Climate for 2018, up from 'C'
in 2017, and regards this improvement as the result of its first
disclosures in line with the recommendations of the Task Force on
Climate-related Financial Disclosures ("TCFD").
-- ArcelorMittal was included for the first time in the 2019 Bloomberg
Gender Equality index, which distinguishes companies committed to
transparency in gender reporting and advancing women's equality in the
workplace.
Analysis of results for the twelve months ended December 31, 2018 versus
results for the twelve months ended December 31, 2017
Total steel shipments for 12M 2018 were 83.9 million metric tonnes
representing a decrease of 1.6% as compared to 12M 2017, primarily due
to lower steel shipments in ACIS (-10.3%, including unplanned
maintenance in Ukraine and operational issues in Kazakhstan/Ukraine)
offset in part by improvement in Brazil (+5.8%, including the impact of
the Votorantim acquisition), NAFTA (+1.0%) and Europe (+0.2%, including
the impact from the Ilva acquisition offset by impact of a flood in
Asturias (Spain), power outage in Fos (France) and slower ramp-up after
blast furnace reline in Poland).
Total steel shipments for 12M 2018 excluding the impact of Votorantim
acquisition (in 2Q 2018) and Ilva acquisition (in 4Q 2018) were 82.5
million metric tonnes representing a decrease of 3.0% as compared to 12M
2017, driven by lower steel shipments in ACIS (-10.3%) and Europe
(-1.2%), offset in part by improvement in Brazil (+0.5%) and NAFTA
(+1.0%).
Sales for 12M 2018 increased by 10.7% to $76.0 billion as compared with
$68.7 billion for 12M 2017, primarily due to higher average steel
selling prices (+13.5%) offset in part by lower steel shipments (-1.6%).
Depreciation of $2.8 billion for 12M 2018, stable as compared with 12M
2017 (marginally below 12M 2018 guidance of $2.9 billion).
Impairment charges net of purchase gains(14) for 12M 2018 were $810
million and include $0.7 billion primarily related to Ilva and the
remedy asset sales for the Ilva acquisition and the agreed remedy
package required for the approval of the Votorantim acquisition(3) .
Impairment charges for 12M 2017 were $206 million in South Africa.
Exceptional items for 12M 2018 were charges of $117 million primarily
consisting of $113 million in charges related to a blast furnace
dismantling in Florange (France), $60 million in charges related to the
new collective labour agreement in the US (including a signing bonus), a
$146 million provision taken in 1Q 2018 in respect of a litigation case
that was paid in 3Q 2018(4) offset in part by PIS/Cofins tax credits(13)
related to prior periods recognized in Brazil of $202 million.
Exceptional charges for 12M 2017 were nil.
Operating income for 12M 2018 was higher at $6.5 billion as compared to
$5.4 billion in 12M 2017 primarily driven by improved operating
conditions (positive price-cost effect in the steel segments) offset in
part by the impact of lower market priced iron ore prices. Operating
results for 12M 2018 and 12M 2017 were impacted by impairment charges
net of purchase gains and exceptional items as discussed above.
Income from associates, joint ventures and other investments for 12M
2018 were $652 million as compared to $448 million for 12M 2017. Income
in 12M 2018 included dividend income from Erdemir of $87 million as
compared to $45 million in 12M 2017. Income in 12M 2017 included a gain
from disposal of ArcelorMittal USA's 21% stake in the Empire Iron Mining
Partnership(5) ($133 million), offset in part by a loss on dilution of
the Company's stake in China Oriental ($44 million)(6) and the recycling
of cumulative foreign exchange translation losses incurred following the
disposal of the 50% stake in Kalagadi(7) ($187 million).
Net interest expense was lower at $615 million for 12M 2018, as compared
to $823 million for 12M 2017, driven by debt repayment and lower cost of
debt. The Company expects full year 2019 net interest expense of
approximately $0.6 billion.
Foreign exchange and other net financing losses(8) were $1.6 billion for
12M 2018 as compared to losses of $52 million for 12M 2017. 12M 2018
includes foreign exchange losses of $235 million (as compared to foreign
exchange gains of $546 million in 12M 2017) and includes non-cash
mark-to-market losses related to the mandatory convertible bond call
option totalling $0.5 billion (as compared to gains of $0.8 billion in
12M 2017). These also include $0.1 billion premium expense on the early
redemption of bonds in 12M 2018 (as compared to $0.4 billion in 12M
2017). In addition, 12M 2017 included mark-to-market losses on a
derivative relating to a pellet purchase agreement in the US of $0.3
billion(12) .
ArcelorMittal recorded an income tax benefit of $349 million for the 12M
2018 as compared to income tax expense of $432 million for 12M 2017. The
current income tax expense of $928 million for 12M 2018 as compared to
$583 million for 12M 2017 is primarily driven by improved results in a
number of countries. The deferred tax benefit of $1,277 million in 12M
2018 as compared with a deferred tax benefit of $151 million for 12M
2017 includes $1.4 billion deferred tax benefit recorded mainly in
Luxembourg, due to the expectation of higher future profits. For the 12M
2017 a deferred tax asset of $0.3 billion was recorded in Luxembourg.
Non-controlling interests income were $181 million for 12M 2018 as
compared to $7 million for 12M 2017. The difference is primarily due to
the improved operating performance of ArcelorMittal South Africa. In
addition, 12M 2017 was also impacted by impairment that was
proportionately allocated to minority shareholders of ArcelorMittal
South Africa.
ArcelorMittal's net income for 12M 2018 was $5.1 billion, or $5.07 basic
earnings per share, as compared to a net income in 12M 2017 of $4.6
billion, or $4.48 basic earnings per share.
Analysis of results for 4Q 2018 versus 3Q 2018 and 4Q 2017
Total steel shipments in 4Q 2018 were 1.5% lower at 20.2Mt as compared
with 20.5Mt for 3Q 2018 primarily due to lower steel shipments in ACIS
(-10.6%, impacted by operational issues in Temirtau, Kazakhstan), NAFTA
(-6.2%) and Brazil (-1.4%), offset in part by a 4.0% improvement in
Europe (due to the Ilva acquisition following its consolidation on
November 1, 2018). Excluding the impacts of Ilva, steel shipments were
4.2% lower as compared to 3Q 2018.
Total steel shipments in 4Q 2018 were 3.6% lower as compared with 21.0Mt
for 4Q 2017 primarily due to lower steel shipments in ACIS (-18.0%,
impacted by operational issues in Temirtau, Kazakhstan) and Europe (down
-0.5% impacted by slower demand in automotive and a weak export market,
compensated in part by consolidation of Ilva), offset in part by higher
shipments in NAFTA (+0.4%).
Sales in 4Q 2018 were $18.3 billion as compared to $18.5 billion for 3Q
2018 and $17.7 billion for 4Q 2017. Sales in 4Q 2018 were 1.0% lower as
compared to 3Q 2018 primarily due to lower steel shipments (-1.5%),
lower average steel selling prices (-1.4%), offset in part by higher
market-priced iron ore shipments (+16.8%). Sales in 4Q 2018 were 3.5%
higher as compared to 4Q 2017 primarily due to higher average steel
selling prices (+8.2%) and higher market-priced iron ore shipments
(+18.2%), offset in part by lower steel shipments (-3.6%).
Depreciation for 4Q 2018 was higher at $723 million as compared to $653
million for 3Q 2018 (primarily due to the Ilva acquisition) and lower
than $747 million in 4Q 2017.
Impairment charges net of purchase gains for 4Q 2018 and 3Q 2018 were
$215 million and $509 million, respectively, and primarily relate to
Ilva and the remedy asset sales for the Ilva acquisition. Impairment
charges for 4Q 2017 of $160 million related to ArcelorMittal South
Africa.
Exceptional net gains for 4Q 2018 were $29 million primarily related to
$202 million for PIS/Cofins tax credits related to prior periods
recognized in Brazil, offset in part by $113 million in charges related
to a blast furnace dismantling in Florange (France), and $60 million
related to the new collective labour agreement in the US (including a
signing bonus). Exceptional items for 3Q 2018 and 4Q 2017 were nil.
Operating income for 4Q 2018 was $1.0 billion as compared to $1.6
billion in 3Q 2018 and $1.2 billion in 4Q 2017. Operating results for 4Q
2018, 3Q 2018 and 4Q 2017 were impacted by impairment charges net of
purchase gains and exceptional charges as discussed above.
Income from associates, joint ventures and other investments for 4Q 2018
was $227 million as compared to $183 million for 3Q 2018 and $125
million for 4Q 2017. 4Q 2018 was positively impacted by $0.1 billion in
currency translation gains following the disposal of ArcelorMittal's
investment in MacSteel (South Africa), offset in part by reduced results
from our Chinese investee.
Net interest expense in 4Q 2018 was $140 million as compared to $152
million in 3Q 2018 and lower than $188 million in 4Q 2017, primarily due
to debt repayments and lower cost of debt.
Foreign exchange and other net financing losses in 4Q 2018 were $556
million as compared to $475 million for 3Q 2018 and $261 million in 4Q
2017. Foreign exchange loss for 4Q 2018 was $7 million as compared to a
gain of $9 million in 3Q 2018 and a gain of $83 million in 4Q 2017(8) .
4Q 2018 includes non-cash mark-to-market losses of $443 million related
to the mandatory convertible bonds call option as compared to losses of
$114 million in 3Q 2018 and non-cash mark-to-market gains of $174
million in 4Q 2017. 3Q 2018 also included premium expenses on the early
redemption of bonds of $0.1 billion. In addition, 4Q 2017 included
mark-to-market losses on a derivative relating to a pellet purchase
agreement in the US of $0.3 billion.
ArcelorMittal recorded an income tax benefit of $711 million for 4Q 2018
as compared to an income tax expense of $178 million for 3Q 2018 and an
income tax benefit of $119 million in 4Q 2017. The income tax benefit
for 4Q 2018 includes a $0.8 billion deferred tax benefit recorded mainly
in Luxembourg resulting from the expectation of higher future profits.
Non-controlling interests income was $91 million for 4Q 2018 as compared
to $46 million for 3Q 2018. Non-controlling interests income increased
in 4Q 2018 primarily in ArcelorMittal South Africa where the result was
positively impacted by a currency translation gain from the disposal of
MacSteel as discussed above.
ArcelorMittal recorded a net income for 4Q 2018 of $1.2 billion, or
$1.18 basic earnings per share, as compared to a net income for 3Q 2018
of $0.9 billion, or $0.89 basic earnings per share, and a net income for
4Q 2017 of $1.0 billion, or $1.02 basic earnings per share.
Analysis of segment operations
NAFTA
(USDm) unless otherwise
shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 4,857 5,367 4,296 20,332 17,997
Operating income 310 612 155 1,889 1,185
Depreciation (127) (132) (137) (522) (518)
-------------------------- ----- ----- ----- ------ ------
Exceptional charges (60) -- -- (60) --
--------------------------
EBITDA 497 744 292 2,471 1,703
Crude steel production
(kt) 5,026 5,723 5,598 22,559 23,480
Steel shipments (kt) 5,173 5,512 5,150 22,047 21,834
Average steel selling
price (US$/t) 882 896 748 852 742
-------------------------- ----- ----- ----- ------ ------
NAFTA segment crude steel production decreased by 12.2% to 5.0Mt in 4Q
2018 as compared to 5.7Mt in 3Q 2018 primarily due to market slowdown
and blast furnace reline delay in Mexico.
Steel shipments in 4Q 2018 decreased by 6.2% to 5.2Mt as compared to
5.5Mt in 3Q 2018, primarily due to seasonality and weak market
conditions in the US.
Sales in 4Q 2018 decreased by 9.5% to $4.9 billion as compared to $5.4
billion in 3Q 2018, primarily due to lower steel shipments (-6.2%) and
lower average steel selling prices -1.5% (flat products down -0.7% and
long products down -4.0%).
Exceptional charges for 4Q 2018 were $60 million related to the new
collective labour agreement in the US (which included a signing bonus).
Operating income in 4Q 2018 of $310 million was lower as compared to
$612 million in 3Q 2018 and higher as compared to $155 million in 4Q
2017. Operating results for 4Q 2018 were impacted by the exceptional
charges as discussed above.
EBITDA in 4Q 2018 decreased by 33.2% to $497 million as compared to $744
million in 3Q 2018 primarily due to lower steel shipment volumes and
negative price-cost effect. EBITDA in 4Q 2018 increased by 70.0% as
compared to $292 million in 4Q 2017 primarily due to a significant
positive price-cost impact.
Brazil
(USDm) unless otherwise
shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 2,429 2,103 2,252 8,711 7,755
Operating income 398 374 266 1,356 697
Depreciation (84) (71) (75) (298) (293)
Impairment -- -- -- (86) --
Exceptional income 202 -- -- 202 --
EBITDA 280 445 341 1,538 990
----- -----
Crude steel production
(kt) 3,191 3,158 2,989 12,264 11,210
Steel shipments (kt) 3,053 3,097 3,052 11,464 10,840
Average steel selling
price (US$/t) 687 714 685 719 667
-------------------------- ----- ----- ----- ------ ------
Brazil segment crude steel production increased by 1.0% to 3.2Mt in 4Q
2018 as compared to 3Q 2018.
Steel shipments in 4Q 2018 decreased by 1.4% to 3.1Mt as compared to 3Q
2018, driven by seasonally weak domestic demand.
Sales in 4Q 2018 increased by 15.5% to $2.4 billion as compared to $2.1
billion in 3Q 2018, due to the negative impact of hyperinflation
accounting in Argentina in 3Q 2018 (recorded as a nine-month
year-to-date accumulated impact), offset in part by lower average steel
selling prices (-3.7%) and lower steel shipments (-1.4%).
Exceptional gain for 4Q 2018 was $202 million related to PIS/Cofins tax
credits related to prior periods recognized in Brazil.
Operating income in 4Q 2018 was slightly higher at $398 million as
compared to $374 million in 3Q 2018 and higher than $266 million in 4Q
2017. Operating results for 4Q 2018 were impacted by the exceptional
gain as discussed above.
EBITDA in 4Q 2018 decreased by 37.2% to $280 million as compared to $445
million in 3Q 2018 primarily due to a negative price-cost effect. 4Q
2018 includes a one-time provision of $17 million for employee related
charges in Brazil. EBITDA in 4Q 2018 was 17.9% lower as compared to $341
million in 4Q 2017 primarily due to foreign exchange translation impact
and hyperinflation in Argentina.
Europe
(USDm) unless otherwise shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 9,761 9,559 9,610 40,488 36,208
Operating income 98 100 525 1,632 2,359
Depreciation (323) (262) (336) (1,195) (1,201)
Impairment charges net of purchase
gains (215) (509) -- (724) --
Exceptional charges (113) -- -- (259) --
EBITDA 749 871 861 3,810 3,560
Crude steel production (kt) 11,580 10,841 10,311 44,693 43,768
Steel shipments (kt) 10,098 9,709 10,151 41,020 40,941
Average steel selling price (US$/t) 771 776 736 787 702
----------------------------------- ------ ------ ------ ------ ------
Europe segment crude steel production increased by 6.8% to 11.6Mt in 4Q
2018 as compared to 10.8Mt in 3Q 2018 due primarily to the consolidation
of Ilva, as from November 1, 2018.
Steel shipments in 4Q 2018 increased by 4.0% to 10.1Mt as compared to
9.7Mt in 3Q 2018, primarily on account of the consolidation of Ilva
offset in part by weak market conditions, particularly in long products.
Steel shipments declined by 1.7% excluding the impact of Ilva on account
of a weaker long products export market.
Sales in 4Q 2018 were $9.8 billion, 2.1% higher as compared to $9.6
billion in 3Q 2018, with higher steel shipments, as discussed above,
offset in part by 0.6% lower average steel selling prices.
Impairment charges net of purchase gains for 4Q 2018 and 3Q 2018 were
$215 million and $509 million, respectively, primarily related to Ilva
and the remedy asset sales for the Ilva acquisition. Impairment charges
net of purchase gains for 4Q 2017 were nil.
Exceptional charges for 4Q 2018 were $113 million related to a blast
furnace dismantling in Florange (France).
Operating income in 4Q 2018 was stable at $98 million as compared to
$100 million in 3Q 2018 and lower as compared to $525 million in 4Q
2017. Operating results for 4Q 2018 and 3Q 2018 were impacted by
impairments charges net of purchase gains and exceptional items as
discussed above.
EBITDA in 4Q 2018 decreased by 14.0% to $749 million as compared to $871
million in 3Q 2018 primarily due to negative price-cost effect. EBITDA
in 4Q 2018 decreased by 13.0% as compared to $861 million in 4Q 2017,
primarily due to lower steel shipment volumes.
ACIS
(USDm) unless otherwise
shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 1,763 1,989 2,039 7,961 7,621
Operating income 121 371 182 1,094 508
Depreciation (77) (76) (81) (311) (313)
Impairment -- -- (160) -- (206)
EBITDA 198 447 423 1,405 1,027
Crude steel production
(kt) 2,975 3,560 3,832 13,022 14,678
Steel shipments (kt) 2,669 2,986 3,254 11,741 13,094
Average steel selling
price (US$/t) 561 597 546 598 515
-------------------------- ----- ----- ----- ------ ------
ACIS segment crude steel production in 4Q 2018 decreased by 16.4% to
3.0Mt as compared to 3.6Mt in 3Q 2018 primarily due to an explosion at a
gas pipeline at Temirtau (Kazakhstan).
Steel shipments in 4Q 2018 decreased by 10.6% to 2.7Mt as compared to
3.0Mt in 3Q 2018, primarily due to lower steel shipments in Kazakhstan
following the incident discussed above.
Sales in 4Q 2018 decreased by 11.3% to $1.8 billion as compared to $2.0
billion in 3Q 2018 primarily due to lower average steel selling prices
(-6.0%) and lower steel shipments (-10.6%).
Operating income in 4Q 2018 was lower at $121 million as compared to
$371 million in 3Q 2018 and $182 million in 4Q 2017.
EBITDA in 4Q 2018 decreased by 55.7% to $198 million as compared to $447
million in 3Q 2018 primarily due to a negative price-cost effect and
lower steel shipments. EBITDA in 4Q 2018 was lower as compared to $423
million in 4Q 2017, primarily due to lower steel shipments (-18.0%) and
negative price-cost effect.
Mining
(USDm) unless otherwise shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 1,114 1,008 959 4,211 4,033
Operating income 241 179 159 860 991
Depreciation (102) (102) (108) (418) (416)
EBITDA 343 281 267 1,278 1,407
Own iron ore production (a) (Mt) 14.9 14.5 14.4 58.5 57.4
Iron ore shipped externally and
internally at market price (b)
(Mt) 10.0 8.5 8.4 37.6 35.7
Iron ore shipment - cost plus
basis (Mt) 5.7 5.6 5.8 20.6 22.2
Own coal production (a) (Mt) 1.3 1.5 1.5 5.9 6.3
Coal shipped externally and internally
at market price (b) (Mt) 0.7 0.7 0.6 2.5 2.8
Coal shipment - cost plus basis
(Mt) 0.7 0.9 0.9 3.3 3.5
--------------------------------------- ----- ----- ---- ----- -----
(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 4Q 2018 increased by 3.4% to 14.9Mt as
compared to 14.5Mt in 3Q 2018, due to higher volumes in AMMC(9) ,
Kazakhstan and Liberia (impacted by heavy rains in 3Q 2018) offset by
lower production in Mexico. Own iron ore production in 4Q 2018 increased
by 3.5% as compared to 4Q 2017 primarily due to higher production in
Liberia and AMMC offset in part by lower production in Mexico. Own iron
ore production for 12M 2018 increased by 1.9% as compared to 12M 2017
primarily due to Liberia (production of 4.6Mt in 12M 2018 which,
although above the 12M 2017 level, was slightly below the approximate
5Mt full year 12M 2018 guidance), offset in part by lower production in
AMMC (lower yield from a new mix of ore bodies following a pit wall
instability issue which first occurred in 4Q 2017) and Mexico.
Market-priced iron ore shipments in 4Q 2018 increased by 16.8% to 10.0Mt
as compared to 8.5Mt in 3Q 2018, primarily driven by higher
market-priced iron ore shipments in Liberia (recovery following
handling/logistic constraints impacting 3Q 2018 volume for the new
Gangra product during the wet season) and AMMC. Market-priced iron ore
shipments in 4Q 2018 increased by 18.2% as compared to 4Q 2017 driven by
higher shipments in Liberia, AMMC and Ukraine offset in part by lower
shipments in Mexico. Market-priced iron ore shipments for 12M 2018 grew
in line with expectations at 5.5% as compared to 12M 2017.
Own coal production in 4Q 2018 decreased by 11.8% to 1.3Mt as compared
to 1.5Mt in 3Q 2018 primarily due to lower Kazakhstan production. Own
coal production in 4Q 2018 decreased by 11.2% as compared to 4Q 2017
primarily due to lower production in Kazakhstan.
Market-priced coal shipments in 4Q 2018 were stable at 0.7Mt as compared
to 3Q 2018. Market-priced coal shipments in 4Q 2018 increased by 21% as
compared to 4Q 2017 primarily due to increased shipments in Kazakhstan.
Operating income in 4Q 2018 increased to $241 million as compared to
$179 million in 3Q 2018 and $159 million in 4Q 2017.
EBITDA in 4Q 2018 increased by 22.0% to $343 million as compared to $281
million in 3Q 2018, primarily due to the impact of higher market-priced
iron ore shipments (+16.8%) and higher seaborne iron ore reference
prices (+7%). EBITDA in 4Q 2018 was higher as compared to $267 million
in 4Q 2017, primarily due to the combined effects of higher
market-priced iron ore shipments (+18.2%), and higher market-priced coal
shipments (+21%) and higher seaborne iron ore reference prices (+9.2%).
Liquidity and Capital Resources
For 4Q 2018 net cash provided by operating activities was $2,170 million
as compared to $634 million in 3Q 2018 and $2,885 million in 4Q 2017.
The higher net cash provided by operating activities during 4Q 2018
reflects in part a working capital release of $430 million (largely on
account of lower steel shipment volumes and prices in a weaker demand
environment, partially offset by higher inventory) as compared to a
working capital investment of $1,713 million in 3Q 2018. The 12M 2018
working capital investment of $4.4 billion largely reflects the price
effect of improved market conditions experienced (which impacted working
capital through higher inventories and higher trade receivables) during
12M 2018. The 12M 2017 working capital investment was $1.9 billion.
Net cash used in investing activities during 4Q 2018 was $1,926 million
as compared to $601 million during 3Q 2018 and $931 million in 4Q 2017.
Capital expenditures increased to $1,156 million in 4Q 2018 as compared
to $781 million in 3Q 2018 and $1,036 million in 4Q 2017. FY 2018
capital expenditure was $3.3 billion as compared to $2.8 billion in FY
2017 (versus FY 2018 initial guidance of $3.8 billion). FY 2018 capex
was lower than expected due to delayed spending as well as lower spend
at Ilva due to the acquisition only being completed in November 2018.
Capex in 2019 is expected to increase to $4.3 billion reflecting carry
over from underspend in 2018, the impact of Ilva and the continued
projected high return investments in Mexico and Brazil and other
strategic projects (largely cost optimization).
Cash used in other investing activities in 4Q 2018 of $770 million
primarily includes $1.0 billion investment for the Uttam Galva and KSS
Petron debts (India), quarterly lease payment for Ilva acquisition ($52
million) offset in part by MacSteel (South Africa) disposal proceeds
($220 million). Cash provided by other investing activities in 3Q 2018
of $180 million primarily includes cash received from Enerfos JV and the
second instalment of disposal proceeds from ArcelorMittal USA's 21%
stake in the Empire Iron Mining Partnership ($44 million). 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 in financing activities in 4Q 2018 was $411 million as
compared to $597 million and $2,167 million in 3Q 2018 and 4Q 2017,
respectively. In 4Q 2018, $406 million primarily includes repayment of
short term facilities. In 3Q 2018, $543 million primarily include
payments relating to bond repurchases pursuant to cash tender offers
($0.6 billion). Net cash used in financing activities in 4Q 2017
includes $1.2 billion of bonds repurchased in October pursuant to cash
tender offers, $0.6 billion (EUR540 million) repayment at maturity of
the euro 4.625% Notes due November 17, 2017, $644 million used to early
redeem in December the 6.125% Notes due June 1, 2018 and partial
repayment of borrowings offset in part by a $0.4 billion (EUR300
million) Schuldschein loan in October and $0.6 billion (EUR500 million)
euro 0.95% bond due January 17, 2023 issued in December.
During 4Q 2018, the Company paid dividends of $32 million primarily to
minority shareholders in Bekaert (Brazil). During 3Q 2018, the Company
paid dividends of $37 million primarily to minority shareholders in
ArcelorMittal Mines Canada. During 4Q 2017, the Company paid dividends
of $21 million primarily to minority shareholders in Bekaert (Brazil).
As of December 31, 2018, the Company's cash and cash equivalents
amounted to $2.4 billion as compared to $2.5 billion at September 30,
2018 and $2.8 billion at December 31, 2017.
Gross debt decreased to $12.6 billion as of December 31, 2018, as
compared to $13.0 billion at September 30, 2018 and $12.9 billion in
December 31, 2017.
As of December 31, 2018, net debt declined to $10.2 billion as compared
to $10.5 billion as of September 30, 2018, largely due to positive free
cashflow of $1.0 billion (including working capital release ($0.4
billion)), disposal proceeds from MacSteel sale ($0.2 billion) and
foreign exchange gain ($0.1 billion), offset in part by the investment
for the Uttam Galva and KSS Petron debts ($1.0 billion). Net debt as of
December 31, 2017 was $10.1 billion.
As of December 31, 2018, the Company had liquidity of $7.9 billion,
consisting of cash and cash equivalents of $2.4 billion and $5.5 billion
of available credit lines(10) . The $5.5 billion credit facility
contains a financial covenant not to exceed 4.25x Net debt / EBITDA (as
defined in the facility). As of December 31, 2018, the average debt
maturity was 4.0 years.
Action 2020 progress
The Company is approximately two-thirds of the way along the Action 2020
journey, but made limited progress in 2018 on its strategic Action 2020
plan due to operational disruptions.
We made $0.4 billion in cost and product mix improvements in 2018
including: South Africa savings with improved cost performance driven by
better mix following restart of coke oven battery and higher PCI usage;
further optimization savings through digital transformation in Europe
and saving in Ukraine at the coke oven battery; and Brazil cost and mix
improvements. This progress was however limited by operational
disruptions, which resulted in a volume loss of $0.3 billion,
effectively reversing the cumulative volume gains achieved in 2017. This
brings the cumulative savings from the Action 2020 plan to $1.6 billion.
The Company remains focussed on achieving its 2020 targets. Volume is a
key component of Action 2020 (5Mt volume improvement) and we expect to
see more progress in this area in 2019 and beyond, assuming market
conditions remain favorable.
Key recent developments
-- On February 7, 2019, ArcelorMittal announced a share buyback program
under the authorization given by the annual general meeting of
shareholders held on May 5, 2015 (the "Program"). The shares acquired
under this Program are intended to meet ArcelorMittal's obligations
arising from employee share programs. ArcelorMittal intends to repurchase
for an aggregate maximum amount of 4 million shares.
-- On January 17, 2019, ArcelorMittal issued EUR750 million 2.250% Notes due
2024. The Notes were issued under ArcelorMittal's EUR10 billion wholesale
Euro Medium Term Notes Programme. The proceeds from the issuance will be
used for general corporate purposes of the ArcelorMittal group.
-- On December 19, 2018, ArcelorMittal signed a $5,500,000,000 Revolving
Credit Facility (the "Facility"), with a five-year maturity plus two
one-year extension options. The Facility will replace the $5,500,000,000
revolving credit facility agreement signed April 30, 2015 and amended
December 21, 2016, and will be used for the general corporate purposes of
the ArcelorMittal group. The Facility gives ArcelorMittal considerably
improved terms over the former facility, and extends the average maturity
date by approximately three years.
-- On November 20, 2018, ArcelorMittal entered into a $7 billion term
facilities agreement with a group of lenders in connection with the
acquisition of ESIL. The agreement has a term of one year (i.e., until
November 20, 2019), subject to ArcelorMittal's option to extend the term
by six months. The facility may be used for certain payments by
ArcelorMittal as well as by the joint venture through which the Company
expects jointly to own and operate ESIL in partnership with Nippon Steel
& Sumitomo Metal Corporation ("NSSMC") (the "Joint Venture").
-- On October 12, 2018 and November 2, 2018, ArcelorMittal received two
binding offers from Liberty House Group for the acquisition of the Ilva
remedy assets consisting of ArcelorMittal Ostrava (Czech Republic),
ArcelorMittal Galati (Romania), ArcelorMittal Skopje (Macedonia),
ArcelorMittal Piombino (Italy), ArcelorMittal Dudelange (Luxembourg) and
several finishing lines at ArcelorMittal Liège (Belgium). On January
23, 2019, the Company submitted to the European Commission a revised
offer from Liberty House Group in respect of the same package of assets.
Transaction closing is conditional on European Commission approval and
the conclusion of consultations with local and European Works Councils.
Financial calendar for 2019
-- General Meeting of Shareholders:
-- May 7, 2019: ArcelorMittal General Annual Meeting
-- Earnings results announcements:
-- May 9, 2019: earnings release 1Q 2019
-- August 1, 2019: earnings release 2Q 2019 and half year 2019
-- November 7, 2019: earnings release 3Q 2019
Outlook and guidance
The following global apparent steel consumption ("ASC") figures reflect
the latest Company's estimates.
Based on the current economic outlook, ArcelorMittal expects a slight
expansion in global ASC in 2019 by +0.5% to +1% (versus growth of +2.8%
in 2018). By region: ASC in US is expected to grow +0.5% to +1.5% in
2019, with automotive demand to remain broadly stable, growth is driven
by continued albeit weaker demand in machinery and construction (a
moderation of growth versus +1.7% in 2018). In Europe, continued
strength in construction is balanced by stable automotive demand and
slower growth in machinery and is expected to support ASC growth of
approximately +0.5% to +1.0% in 2019 (a moderation of growth versus
+2.9% in 2018). In Brazil, ASC growth in 2019 is forecasted in the range
of +3.5% to +4.5% (a moderation of growth versus +7.3% in 2018) as
growth in automotive and machinery slows but construction activity grows
for the first time since 2013. In the CIS, ASC is expected to grow +1.0%
to +2.0% in 2019 (versus +1.8% in 2018). Overall, World ex-China ASC is
expected to grow by approximately +2.0% to +3.0% in 2019, slight
stronger than in 2018 due to stabilization in Turkey after a significant
decline in 2018 (versus +2.1% in 2018). In China, overall demand is
expected to decline by between -0.5% to -1.5% in 2019 (versus growth of
+3.5% in 2018) as relatively stable demand from automotive and
construction is offset by declining machinery output. Given these demand
expectations, as well as the expectation that operational disruptions
(both controllable and uncontrollable) that negatively impacted 2018
shipments will not recur, the Group's steel shipments are expected to
increase in 2019 vs 2018.
Market-priced iron ore shipments for FY 2019 are expected to be broadly
stable as compared to FY 2018 with increases in Liberia and AMMC to be
offset by lower volume in Mexico (in part due to the end of life of
Volcan mine).
The Company expects certain cash needs of the business (including capex,
interest, cash taxes, pensions and certain other cash costs but
excluding working capital changes) to increase in 2019 to approximately
$6.4 billion from $5.0 billion in 2018. Capex is expected to increase by
$1.0 billion to $4.3 billion (versus $3.3 billion in FY 2018) including
$0.4 billion carried over from 2018, the impact of Ilva ($0.4 billion)
and the continued investment in high returns projects in Mexico and
Brazil. Interest is expected to be stable at $0.6 billion while cash
taxes, pensions and other cash costs are expected to increase by $0.4
billion to $1.5 billion primarily on account of certain cash tax
settlements deferred from 2018 and non-recurrence of certain gains on
other accounts.
Due to a smaller than anticipated release in the final quarter, the
Group invested more in working capital than expected in 2018 ($4.4
billion versus guidance of $3.0-3.5 billion). The Group expects this
additional investment to be released over the course of 2019. The extent
of any further changes in working capital in 2019 will be dictated by
market conditions, particularly the price and volume environment in the
final weeks.
ArcelorMittal Condensed Consolidated Statement of Financial Position(1)
Dec 31, Sept 30, Dec 31,
In millions of U.S. dollars 2018 2018 2017
------------------------------------------------- ------- -------- -------
ASSETS
Cash and cash equivalents 2,354 2,482 2,786
Trade accounts receivable and other 4,432 4,561 3,863
Inventories 20,744 18,380 17,986
Prepaid expenses and other current assets 2,834 2,799 1,931
Assets held for sale(11) 2,111 2,587 179
Total Current Assets 32,475 30,809 26,745
Goodwill and intangible assets 5,728 5,329 5,737
Property, plant and equipment 35,638 34,027 36,971
Investments in associates and joint ventures 4,906 4,863 5,084
Deferred tax assets 8,287 7,487 7,055
Other assets 4,215 3,288 3,705
Total Assets 91,249 85,803 85,297
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion of long-term
debt 3,167 4,662 2,785
Trade accounts payable and other 13,981 11,797 13,428
Accrued expenses and other current liabilities 5,486 4,864 5,147
Liabilities held for sale(11) 821 722 50
Total Current Liabilities 23,455 22,045 21,410
Long-term debt, net of current portion 9,316 8,280 10,143
Deferred tax liabilities 2,374 2,483 2,684
Other long-term liabilities 11,996 10,405 10,205
Total Liabilities 47,141 43,213 44,442
Equity attributable to the equity holders of
the parent 42,086 40,590 38,789
Non-controlling interests 2,022 2,000 2,066
Total Equity 44,108 42,590 40,855
Total Liabilities and Shareholders' Equity 91,249 85,803 85,297
------------------------------------------------- ------- -------- -------
ArcelorMittal Condensed Consolidated Statement of Operations(1)
Three months ended Twelve months ended
In millions of U.S. dollars unless Dec 31, Sep 30, Dec 31, Dec 31, Dec 31,
otherwise shown 2018 2018 2017 2018 2017
---------------------------------------- ---------- ---------- ---------- ---------- ----------
Sales 18,327 18,522 17,710 76,033 68,679
Depreciation (B) (723) (653) (747) (2,799) (2,768)
Impairment charges net of purchase
gains (B) (215) (509) (160) (810) (206)
Exceptional items (B) 29 -- -- (117) --
Operating income (A) 1,042 1,567 1,234 6,539 5,434
Operating margin % 5.7% 8.5% 7.0% 8.6% 7.9%
Income from associates, joint
ventures and other investments 227 183 125 652 448
Net interest expense (140) (152) (188) (615) (823)
Foreign exchange and other net
financing loss (556) (475) (261) (1,595) (52)
Income before taxes and non-controlling
interests 573 1,123 910 4,981 5,007
Current tax expense (198) (206) (134) (928) (583)
Deferred tax benefit 909 28 253 1,277 151
Income tax (expense) / benefit 711 (178) 119 349 (432)
Income including non-controlling
interests 1,284 945 1,029 5,330 4,575
Non-controlling interests (income)
/ loss (91) (46) 10 (181) (7)
Net income attributable to equity
holders of the parent 1,193 899 1,039 5,149 4,568
Basic earnings per common share
($)(2) 1.18 0.89 1.02 5.07 4.48
Diluted earnings per common share
($)(2) 1.17 0.88 1.01 5.04 4.46
Weighted average common shares
outstanding (in millions)(2) 1,014 1,014 1,020 1,015 1,020
Diluted weighted average common
shares outstanding (in millions)(2) 1,020 1,019 1,024 1,021 1,024
OTHER INFORMATION
EBITDA (C = A-B) 1,951 2,729 2,141 10,265 8,408
EBITDA Margin % 10.6% 14.7% 12.1% 13.5% 12.2%
Own iron ore production (Mt) 14.9 14.5 14.4 58.5 57.4
Crude steel production (Mt) 22.8 23.3 22.7 92.5 93.1
---------- ---------- ---------- ---------- ----------
Steel shipments (Mt) 20.2 20.5 21.0 83.9 85.2
---------------------------------------- ---------- ---------- ---------- ---------- ----------
ArcelorMittal Condensed Consolidated Statement of Cash flows(1)
Twelve months
Three months ended ended
Dec 31, Sep 30, Dec 31, Dec 31, Dec 31,
In millions of U.S. dollars 2018 2018 2017 2018 2017
-------------------------------------- ------- ------- ------- ------- ---------
Operating activities:
Income attributable to equity
holders of the parent 1,193 899 1,039 5,149 4,568
Adjustments to reconcile net income
to net cash provided by operations:
Non-controlling interests income/
(loss) 91 46 (10) 181 7
Depreciation and impairment charges
net of purchase gains 938 1,162 907 3,609 2,974
Exceptional items(4) (29) -- -- 117 --
Income from associates, joint
ventures and other investments (227) (183) (125) (652) (448)
Deferred tax (benefit) (909) (28) (253) (1,277) (151)
Change in working capital 430 (1,713) 1,657 (4,384) (1,873)
Other operating activities (net) 683 451 (330) 1,453 (514)
Net cash provided by operating
activities (A) 2,170 634 2,885 4,196 4,563
Investing activities:
Purchase of property, plant and
equipment and intangibles (B) (1,156) (781) (1,036) (3,305) (2,819)
Other investing activities (net) (770) 180 105 (454) (11)
Net cash used in investing activities (1,926) (601) (931) (3,759) (2,830)
Financing activities:
Net payments relating to payable
to banks and long-term debt (406) (543) (2,131) (212) (1,527)
Dividends paid (32) (37) (21) (220) (141)
Share buyback -- -- -- (226) --
Other financing activities (net) 27 (17) (15) (31) (63)
Net cash used in financing activities (411) (597) (2,167) (689) (1,731)
Net (decrease) / increase in cash
and cash equivalents (167) (564) (213) (252) 2
Cash and cash equivalents transferred
from/(to) assets held for sale 13 -- -- (10) 13
Effect of exchange rate changes
on cash 3 (56) 16 (140) 58
--------------------------------------
Change in cash and cash equivalents (151) (620) (197) (402) 73
--------------------------------------
Free cash flow (C=A+B) 1,014 (147) 1,849 891 1,744
-------------------------------------- ------ ------ ------ ------ ------
Appendix 1: Product shipments by region
(000'kt) 4Q 18 3Q 18 4Q 17 12M 18 12M 17
--------- ------ ----- ------ ------ --------
Flat 4,406 4,885 4,414 19,113 18,926
Long 890 774 872 3,554 3,530
NAFTA 5,173 5,512 5,150 22,047 21,834
Flat 1,832 1,695 1,950 6,421 6,762
Long 1,232 1,415 1,108 5,087 4,100
Brazil 3,053 3,097 3,052 11,464 10,840
Flat 7,398 6,855 7,298 29,510 29,255
Long 2,666 2,798 2,821 11,367 11,494
Europe 10,098 9,709 10,151 41,020 40,941
CIS 1,645 1,879 2,209 7,251 8,837
Africa 1,023 1,102 1,044 4,491 4,256
ACIS 2,669 2,986 3,254 11,741 13,094
--------- ------ ----- ------ ------ ------
Note: "Others and eliminations" are not presented in the table
Appendix 2a: Capital expenditures
(USDm) 4Q 18 3Q 18 4Q 17 12M 18 12M 17
------- ----- ----- ----- ------ --------
NAFTA 244 155 184 669 466
Brazil 102 59 72 244 263
Europe 499 298 430 1,336 1,143
ACIS 159 141 165 534 427
Mining 143 116 179 485 495
Total 1,156 781 1,036 3,305 2,819
------- ----- ----- ----- ------ ------
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 quarter
Segment Site / unit Project Capacity / details Actual
completion
NAFTA Indiana Harbor (US) Indiana Harbor "footprint Restoration of 80" HSM and 4Q 2018
optimization project" upgrades at Indiana Harbor (a)
finishing
------- ------------------------- ------------------------- --------------------------------- -----------
Europe ArcelorMittal Differdange Modernisation of Revamp finishing to achieve 2Q 2018
(Luxembourg) finishing of "Grey full capacity of Grey mill
rolling mill" at 850kt/y
Europe Gent & Liège Gent: Upgrade HSM Increase 400kt in Ultra 2Q 2018
(Europe Flat Automotive and new furnace High Strength Steel capabilities
UHSS Program) Liège: Annealing
line transformation
Ongoing projects
Segment Site / unit Project Capacity / details Forecasted
completion
ACIS ArcelorMittal Kryvyi New LF&CC 2&3 Facilities upgrade to switch 2019
Rih (Ukraine) from ingot to continuous
caster route. Additional
billets of 290kt over ingot
route through yield increase
Europe Sosnowiec (Poland) Modernization of Upgrade rolling technology 2019
Wire Rod Mill improving the mix of HAV
products and increase volume
by 90kt
NAFTA Mexico New Hot strip mill Production capacity of 2.5Mt/year 2020(b)
NAFTA ArcelorMittal Dofasco Hot Strip Mill Replace existing three end 2020(c)
(Canada) Modernization of life coilers with two
states of the art coilers
and new runout tables
NAFTA Burns Harbor (US) New Walking Beam Two new walking beam reheat 2021
Furnaces furnaces bringing benefits
on productivity, quality
and operational cost
Brazil ArcelorMittal Vega Expansion project Increase hot dipped / cold 2021(d)
Do Sul rolled coil capacity and
construction of a new 700kt
continuous annealing line
(CAL) and continuous galvanising
line (CGL) combiline
Brazil Juiz de Fora Melt shop expansion Increase in meltshop capacity On hold(e)
by 0.2Mt/year
Brazil Monlevade Sinter plant, blast Increase in liquid steel On hold
furnace and melt capacity by 1.2Mt/year;
shop Sinter feed capacity of
2.3Mt/year
Mining Liberia Phase 2 expansion Increase production capacity Under
project to 15Mt/year review(f)
------- --------------------- ------------------- --------------------------------- -----------
a) In support of the Company's Action 2020 program, 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. The
full project scope was completed in 4Q 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 added-value products in its product mix,
in-line with the Company's Action 2020 plan. The main investment will be
the construction of a new hot strip mill. Upon completion, the project
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.
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) In August 2018, ArcelorMittal announced the resumption of the Vega
Do Sul expansion to provide an additional 700kt of cold-rolled annealed
and galvanised capacity to serve the growing domestic market. The
three-year $0.3 billion investment programme to increase rolling
capacity with construction of a new continuous annealing line and CGL
combiline (and the option to add a ca. 100kt organic coating line to
serve construction and appliance segments), and upon completion, will
strengthen ArcelorMittal's position in the fast growing automotive and
industry markets through Advanced High Strength Steel products. The
investments will look to facilitate a wide range of products and
applications whilst further optimizing current ArcelorMittal Vega
facilities to maximize site capacity and its competitiveness,
considering comprehensive digital and automation technology.
e) 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.
f) ArcelorMittal had previously announced a Phase 2 project that
envisaged the construction of 15 million tonnes of concentrate sinter
fines capacity and associated infrastructure. The Phase 2 project was
initially delayed due to the declaration of force majeure by contractors
in August 2014 due to the Ebola virus outbreak in West Africa, and then
reassessed following rapid iron ore price declines over the ensuing
period. ArcelorMittal Liberia is now undertaking the engineering phase
of a feasibility study to identify the optimal concentration solution
for utilising the resources at Tokadeh. The feasibility study is
expected to be completed by mid-2019.
Appendix 3: Debt repayment schedule as of December 31, 2018
(USD billion) 2019 2020 2021 2022 2023 >=2024 Total
Bonds 0.9 1.9 1.3 1.5 0.5 1.6 7.7
Commercial paper 1.3 -- -- -- -- -- 1.3
Other loans 1.0 1.3 0.5 0.2 0.3 0.3 3.6
Total gross debt 3.2 3.2 1.8 1.7 0.8 1.9 12.6
----------------- ---- ---- ---- ---- ---- ------ -----
Appendix 4: Reconciliation of gross debt to net debt
Dec 31, Sept 30, Dec 31,
(USD million) 2018 2018 2017
------------------------------------------------ ------- -------- ---------
Gross debt (excluding that held as part of the
liabilities held for sale) 12,483 12,942 12,928
Gross debt held as part of the liabilities held
for sale 77 79 --
Gross debt 12,560 13,021 12,928
Less:
Cash and cash equivalents (2,354) (2,482) (2,786)
Cash and cash equivalents held as part of the
assets held for sale (10) (23) --
Net debt (including that held as part of the
assets and the liabilities held for sale) 10,196 10,516 10,142
------------------------------------------------ ------ ------- ------
Net debt / EBITDA 1.0 - 1.2
------------------------------------------------ ------ -------- ------
Appendix 5: 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:
Apparent steel consumption: calculated as the sum of production plus
imports minus exports.
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.
Crude steel production: steel in the first solid state after melting,
suitable for further processing or for sale.
EBITDA: operating income plus depreciation, impairment expenses and
exceptional income/ (charges).
EBITDA/tonne: calculated as EBITDA divided by total steel shipments.
Exceptional items (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 assets, revaluation of derivative instruments and other
charges that cannot be directly linked to operating results.
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 that held as
part of the 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 assets and liabilities held
for sale).
Net debt/EBITDA: refers to Net debt divided by last twelve months EBITDA
calculation.
Net interest expense: includes interest expense less 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: 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 Group EBITDA less Mining segment
EBITDA.
Steel-only EBITDA/tonne: calculated as steel-only EBITDA divided by
total steel shipments.
Working capital change (working capital investment / release): Movement
of change in working capital - trade accounts receivable plus
inventories less trade and other accounts payable.
YoY: refers to year-on-year.
Footnotes
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 measures 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 and change in working capital as additional measures to enhance the
understanding of its financial position, changes to its capital structure
and its credit assessment. ArcelorMittal also presents free cash flow
(FCF), 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. The Company also presents the ratio of net debt to EBITDA for
the last twelve months to show trends that investors may find useful in
understanding the company's ability to service its debt. 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. 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).
3. 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 wire
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 wire 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.
4. In July 2018, as a result of a settlement process, the Company and the
German Federal Cartel Office agreed to a EUR118 million ($146 million)
fine to be paid by ArcelorMittal Commercial Long Deutschland GmbH ending
an investigation that began in the first half of 2016 into antitrust
violations concerning the ArcelorMittal entities that were under
investigation. The payment was made in August 2018.
5. On August 7, 2017, ArcelorMittal USA and Cliffs Natural Resources
("Cliffs") agreed that Cliffs would acquire ArcelorMittal USA's 21%
ownership interest in the Empire Iron Mining Partnership for $133 million
plus assumptions of all partnership liabilities. The payment of $133
million will be made in 3 equal installments with the first payment of
$44 million received in August 2017, the second payment received in
August 2018 and the final payment to be received in 2019.
6. On January 27, 2017 China Oriental completed a share placement to restore
the minimum 25% free float as per HKEx 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.
7. On August 25, 2017, following a sales agreement signed on October 21,
2016, ArcelorMittal completed the sale of its 50% shareholding in
Kalagadi Manganese (Proprietary) Limited to Kgalagadi Alloys
(Proprietary) Limited for consideration to be paid during the life of the
mine, which is contingent on the financial performance of the mine and
cash flow availability. The investment classified as held for sale as of
December 31, 2016 had a nil carrying amount as it was fully impaired in
2015 but the Company recycled upon disposal accumulated foreign exchange
translation losses of $187 million in income from associates, joint
ventures and other investments.
8. Following the May 16, 2018 approval of the Extraordinary General Meeting
to convert the share capital of the ArcelorMittal parent company from
Euro to US dollar, the Euro denominated tax losses and the related
deferred tax asset (DTA) held by the ArcelorMittal parent company were
translated into US dollars. The Company designated its euro denominated
debt as a hedge of certain euro denominated net investments in foreign
operations. Following this change, periodic revaluations of such external
euro-denominated debt are recorded in other comprehensive income rather
than the statement of operations. The conversion of the euro denominated
DTA was effective as of January 1, 2018, whilst the impacts on euro
denominated debt has been applied prospectively from April 1, 2018. As a
result, the Company's statement of operations no longer has foreign
exchange exposure to euro denominated debt and DTA.
9. ArcelorMittal Mines Canada, otherwise known as ArcelorMittal Mines and
Infrastructure Canada.
10. On December 19, 2018, ArcelorMittal signed a $5,500,000,000 Revolving
Credit Facility, with a five-year maturity plus two one-year extension
options (i.e. the options to extend are in the first and second years, so
at end 2019 and at end 2020). The facility will replace the
$5,500,000,000 revolving credit facility agreement signed April 30, 2015
and amended December 21, 2016, and will be used for the general corporate
purposes of the ArcelorMittal group. The facility gives ArcelorMittal
considerably improved terms over the former facility, and extends the
average maturity date by approximately three years. As of December 31,
2018, the $5.5 billion revolving credit facility was fully available.
11. Assets and liabilities held for sale, as of December 31, 2018, include
the Ilva remedy package assets, and carrying value of the USA long
product facilities at Steelton ("Steelton"). Assets and liabilities held
for sale, as of September 30, 2018, include the carrying value of Ilva
remedy assets, Macsteel investment (South Africa) and carrying value of
Steelton. Asset and liabilities held for sale, as of December 31, 2017,
include the carrying value of Steelton and Frydek Mistek assets in Czech
Republic (which was sold in 1Q 2018).
12. Effective October 31, 2016, the Company entered into a pellet purchase
agreement in the US including a special payment component that varies
according to the price of steel in the US domestic market. This feature
corresponds to a derivative instrument recognized at fair value. The
charge relates to outstanding minimum volumes to be purchased over the
remaining life of the contract (8 years).
13. The PIS (Program of Social Integration) and COFINS (Contribution for the
Financing of Social Security) are Brazilian federal taxes based on the
turnover of companies. The PIS is intended to finance the unemployment
insurance system, and COFINS to fund Social Security. For over two
decades, ArcelorMittal Brasil has been challenging the basis of the
calculation of the COFINS and PIS, specifically, whether Brazilian ICMS
(tax on sales and services) may be deducted from the base amount on which
PIS and COFINS taxes are calculated. Following the Supreme Court's
decision in the leading case and certain lower court decisions applying
it, the Court issued final and unappealable judgments in certain of the
cases filed by ArcelorMittal Brasil, thereby granting ArcelorMittal
Brasil the right to exclude ICMS from the PIS/COFINS' tax base and the
right to recognize the relevant credits from the past. Accordingly,
ArcelorMittal Brasil recognized $202 million additional PIS/COFINS
credits in 4Q 2018 for the period of 2005 to 2013 and is awaiting the
Court's final judgment on other pending cases related to the PIS/COFINS
topic.
14. Impairment charges net of purchase gains for 4Q 2018 include $0.4 billion
impairment expenses for Ilva remedies and $0.2 billion purchase gains on
Ilva acquisition.
Fourth quarter 2018 earnings analyst conference call
ArcelorMittal management (including CEO and CFO) will host a conference
call for members of the investment community to discuss the fourth
quarter period ended December 31, 2018 on: Thursday February 7, 2019 at
9.30am US Eastern time; 2.30pm London time and 3.30pm CET.
The dial in numbers are:
--------------------------------------
Toll free dial in Local dial in
Location numbers numbers Participant
-------------------
UK local: 0800 0515 931 +44 (0)203 364 5807 12722991#
-------------------
US local: 1 86 6719 2729 +1 24 0645 0345 12722991#
------------------- -----------------
US (New York): 1 86 6719 2729 + 1 646 663 7901 12722991#
------------------- -----------------
France: 0800 914780 +33 1 7071 2916 12722991#
------------------- -----------------
Germany: 0800 965 6288 +49 692 7134 0801 12722991#
------------------- -----------------
Spain: 90 099 4930 +34 911 143436 12722991#
------------------- -----------------
Luxembourg: 800 26908 +352 27 86 05 07 12722991#
------------------ --------------------- ------------------- -----------------
A replay of the conference call will be available for one week by dialing:
+49 (0) 1805 2047 088; Access code 2523083#
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 2018, ArcelorMittal had revenues of $76.0
billion and crude steel production of 92.5 million metric tonnes, while
own iron ore production reached 58.5 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:
https://www.globenewswire.com/Tracker?data=7ZUJC-fcjrD4omSzBqd2Q_4dVNJ9rQqIu8uTv6U0MBk8LjXxyuTdvosfb0aRb7qhqZmnJiMUn_imXzruIo_6AYKo3UUjti8N-UXZrnA5MRkfJbvxmqDZtk5Y0kN0BED7
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:
https://www.globenewswire.com/Tracker?data=ThY88h5FynXjzQ3lNjSvBDw9wFeO8Cw2poJ_us4LzCrmfVx477uDrtHTY-cTT81VoW0FehTcqgoFdXt3Exo4Xq09EPdcR_dsblNKbleZdU4=
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44 203
214 2419
Attachment
-- ArcelorMittal reports fourth quarter 2018 and full year 2018 results
https://ml-eu.globenewswire.com/Resource/Download/3f84fffa-5748-4239-988b-a577adead173
(END) Dow Jones Newswires
February 07, 2019 01:15 ET (06:15 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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