Regulatory News:
ArcelorMittal (referred to as “ArcelorMittal” or the “Company”)
(MT (New York, Amsterdam, Paris, Brussels, Luxembourg), MTS
(Madrid)), the world’s leading steel company, today announced
results1 for the three and nine month periods ended September 30,
2011.
Highlights:
- Health & Safety lost time injury
frequency rate2 remained constant at 1.5x in 3Q 2011
- 3Q 2011 EBITDA3 increased by 11.4% to
$2.4 billion compared to Q3 2010; EBITDA of $8.4 billion for first
nine months 2011, 25.9% higher than first nine months 2010
- 3Q 2011 steel shipments of 21.1 Mt,
2.7% higher than 3Q 2010
- 3Q 2011 EBITDA per tonne of $114, 8.3%
higher than 3Q 2010
- 3Q 2011 own iron ore production of 14.1
Mt, up 8.4% y-o-y; 6.7 Mt market price4 iron ore shipped (up 9.6%
y-o-y)
- Net debt5 at September 30, 2011 of
$24.9 billion as compared to $25.0 billion at June 30, 2011
Performance and industrial plan:
- $3.8 billion of annualized sustainable
cost reduction achieved by the end of Q3 2011; on track to reach
$4.8 billion by end of 2012
- New $1 billion asset optimization plan
launched to generate sustainable EBITDA improvement; intention to
close 2 blast furnaces, sinter plant, steel shop and continuous
casters in Liege, Belgium6
- Liberia iron ore phase 1 complete, with
2011 targeted production of 1 million metric tonnes, increasing to
4 million tonnes in 2012; phase 2 expansion to 15 million metric
tonnes is in final decision phase
- ArcelorMittal Mines Canada expansion
project on track to increase iron ore capacity from 16 Mt to 24 Mt
by 2013
Outlook and guidance:
- EBITDA for 2H 2011 is expected to be
above the comparable period of 2010
- Steel shipments in 4Q 2011 are expected
to be lower than 3Q 2011 levels reflecting customers’ “wait and
see” approach
- On track to increase FY 2011 own iron
ore and coal production by 10% and 20%, respectively, as compared
to 2010
- Net debt at year-end is expected to be
higher than 3Q 2011 levels primarily due to the temporary
investment in Macarthur
- Focus on core growth capex; full year
2011 capex therefore is expected to be below previous target of
$5.5 billion
Financial highlights on the basis of IFRS1
(amounts in USD):
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10 Sales $24,214 $25,126
$19,744 $71,524 $57,326 EBITDA 2,408
3,413 2,162 8,403 6,672 Operating
income 1,168 2,252 1,028 4,851
3,208 Income from discontinued operations - -
38 461 217 Net income 659 1,535
1,350 3,263 3,696 Basic earnings per share (USD)
0.43 0.99 0.89 2.11 2.45
Continuing operations
Own iron ore production
(Mt) 14.1 13.1 13.0 39.0 36.4
Iron ore shipped internally and externally
at market price (Mt)4
6.7 7.0 6.1 19.6 18.4 Crude
steel production (Mt) 22.4 24.4 22.2
70.2 69.0 Steel shipments (Mt) 21.1 22.2
20.5 65.2 63.8 EBITDA/tonne (US$/t) 114
154 105 129 105
Commenting, Mr. Lakshmi N. Mittal, Chairman and CEO,
ArcelorMittal, said:
Despite weakening economic conditions, ArcelorMittal has
reported EBITDA within the forecasted range. Uncertainties around
the economic outlook have increased in recent weeks, impacting the
confidence levels of our customers, so as we move in to the 4Q we
are facing both volume and price pressures. However, our core
profitability is resilient, supported by our growing mining
business, our market leading value-added steel franchise and our
management gains programs. As a result I remain confident that the
Group’s EBITDA in the second half of 2011 will be above that of the
second half of 2010”.
third quarter 2011 Earnings ANALYST Conference Call
Additionally, ArcelorMittal management will host a telephone
conference call for members of the investment community to discuss
the third quarter 2011 financial performance on:
Date New York London
Luxembourg November 3, 2011 10.30am 2.30pm
3.30pm The dial in numbers:
Location Dial in numbers
Access Code UK local: +44 (0)20 7970 0006
575343#
UK toll free 0800 169 3059 USA local:
+1 215 599 1757
575343#
USA free phone: 1 800 814 6417 Please
note there will not be a live webcast. Replay of the call
available:
Language English Replay
numbers Access code 413994# +49 (0) 18 05204 3089
The conference call will include a brief question and answer
session with the Group Management Board. The presentation will be
available on www.arcelormittal.com. In addition, a Questions and Answers document is
provided on the website, under “Investors and Shareholders”,
“Financial Results”.
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 Annual
Report on Form 20-F for the year ended December 31, 2010 filed 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 integrated steel and mining
company, with a presence in more than 60 countries.
ArcelorMittal is the leader in all major global carbon steel
markets, including automotive, construction, household appliances
and packaging, with leading R&D and technology. The Group also
has a world class mining business with a global portfolio of over
20 mines in operation and development, and is the world’s 4th
largest iron ore producer. With operations in over 22 countries
spanning four continents, the Company covers all of the key
industrial markets, from emerging to mature, and has outstanding
distribution networks.
Through its core values of sustainability, quality and
leadership, ArcelorMittal commits to operating in a responsible way
with respect to the health, safety and well-being of its employees,
contractors and the communities in which it operates. It is also
committed to the sustainable management of the environment. It
takes a leading role in the industry's efforts to develop
breakthrough steelmaking technologies and is actively researching
and developing steel-based technologies and solutions that
contribute to combat climate change. ArcelorMittal is a member of
the FTSE4Good Index and the Dow Jones Sustainability World
Index.
In 2010, ArcelorMittal had revenues of $78.0 billion and crude
steel production of 90.6 million tonnes, representing approximately
6 percent of world steel output. The Group's mining operations
produced 47 million tonnes of iron ore and 7 million tonnes of
metallurgical coal.
ArcelorMittal is listed on the stock exchanges of New York (MT),
Amsterdam (MT), Paris (MT), Brussels (MT), Luxembourg (MT) and on
the Spanish stock exchanges of Barcelona, Bilbao, Madrid and
Valencia (MTS).
For more information about ArcelorMittal visit
www.arcelormittal.com.
ARCELORMITTAL THIRD QUARTER 2011 RESULTS
ArcelorMittal, the world’s leading steel company, today
announced results for the three months and nine months ended
September 30, 2011.
Corporate social responsibility performance
Health and safety - Own personnel and contractors lost time
injury frequency rate2
Health and safety performance remained constant with a loss time
injury frequency rate of 1.5x in the third quarter of 2011 as
compared to the second quarter of 2011, with improvement in the
safety performance of the Mining and Flat Carbon Americas segments,
offset by weaker performance particularly in the Asia Africa and
CIS and Distribution Solutions segments, as well as in the Flat
Carbon Europe and Long Carbon Americas and Europe segments.
Health and safety performance improved for the nine months ended
September 30, 2011 with a loss time injury frequency rate of 1.5x
as compared to 1.9x for the nine months ended September 30, 2010,
with improvements in the safety performance of all segments other
than the Distribution Solutions and Flat Carbon America
segments.
Own personnel and contractors - Frequency rate Lost time
injury frequency rate 3Q 11 2Q 11 3Q 10
9M 11 9M 10
Total Mines 1.2
1.6 1.7 1.3 1.7
Lost time injury frequency rate 3Q 11
2Q 11 3Q 10 9M 11 9M 10 Flat Carbon Americas
1.7 2.0 1.7 1.9 1.8 Flat Carbon
Europe 1.6 1.5 2.1 1.7 2.3 Long
Carbon Americas and Europe 1.7 1.6 2.3
1.5 2.2 Asia Africa and CIS 0.9 0.5 1.2
0.7 0.9 Distribution Solutions 4.4 3.2
2.3 3.7 2.7
Total Steel
1.6 1.5 1.9 1.5
1.9
Lost time injury frequency rate
3Q 11 2Q 11 3Q 10 9M 11 9M 10
Total
(Steel and Mines) 1.5 1.5
1.9 1.5 1.9
Key initiatives for the three months ended September 30,
2011
- ArcelorMittal secured entry to the Dow
Jones Sustainability World Index (DJSI World). The Dow Jones
Sustainability Index tracks the financial performance of the
leading sustainability-driven companies worldwide. Securing
recognition from this benchmarking index for the second time
demonstrates ArcelorMittal’s commitment towards delivering safe,
sustainable steel. ArcelorMittal remains a member of the two major
sustainability and corporate responsibility indices: the DJSI World
and the FTSE4Good Index series.
- A report jointly issued by
ArcelorMittal, the European Metalworkers’ Federation, the
International Federation of Metalworkers and United Steel Workers
examines how the Company has worked together with unions throughout
the world to achieve better safety results. The report concludes
that the joint global Health & Safety Committee has helped
build a positive workplace culture and improved collaboration and
coordination between unions and management locally as well as
globally.
Analysis of results for the nine months ended September 30,
2011 versus the nine months ended September 30, 2010
ArcelorMittal’s net income for the nine months ended September
30, 2011 was $3.3 billion, or $2.11 per share, as compared with net
income of $3.7 billion, or $2.45 per share, for the nine months
ended September 30, 2010.
Total steel shipments for the nine months ended September 30,
2011 were 65.2 million metric tonnes as compared with 63.8 million
metric tonnes for the nine months ended September 30, 2010.
Sales for the nine months ended September 30, 2011 increased
24.8% to $71.5 billion as compared with $57.3 billion for the nine
months ended September 30, 2010. Sales were higher during the first
nine months of 2011 as compared to the first nine months of 2010
primarily due to higher average steel selling prices (20.8%) and
slightly higher steel volumes (2.1%).
Depreciation expense for the nine months ended September 30,
2011 was $3.4 billion as compared to $3.3 billion for the nine
months ended September 30, 2010.
Impairment expenses for the nine months ended September 30, 2011
were $103 million relating to a rolling facility in the Long Carbon
Americas segment and the announced intention to close two blast
furnaces, sinter plant, steel shop and continuous casters in Liege,
Belgium6. (Restoration, site cleaning, voluntary separation scheme
(VSS) and other costs will be recorded when social dialogue has
sufficiently progressed). This compared to impairment expenses of
$144 million for the nine months ended September 30, 2010 relating
to the sale of the Anzherkoye steam coal mine in Russia and
pickling line in Liege, Belgium.
Operating income for the nine months ended September 30, 2011
was $4.9 billion, an increase of 51.2% as compared with operating
income of $3.2 billion for the nine months ended September 30,
2010.
Operating performance for the nine months ended September 30,
2011 included a non-cash gain of $437 million related to unwinding
of hedges on raw material purchases as compared to $266 million
recorded in this respect in the nine months ended September 30,
2010.
Income from equity method investments and other income for the
nine months ended September 30, 2011 was $443 million, as compared
to $377 million for the nine months ended September 30, 2010.
Income for the nine months ended September 30, 2011 included an
impairment loss of $119 million as a result of the Company’s
intention to withdraw from the joint venture with Peabody Energy to
acquire ownership of Macarthur Coal. This charge reflects a higher
carrying value of the investment in Macarthur, which included
accrued share of net income. After considering dividends received
and changes in exchange rate through October 25, 2011 (date of the
divestiture announcement) the transaction was essentially cash
neutral. 7
Net interest expense (including interest expense and interest
income) for the nine months ended September 30, 2011 was higher at
$1.4 billion, as compared to $1.0 billion for the nine months ended
September 30, 2010 primarily due to higher level of borrowing.
As a result of hedging transactions undertaken by the Company in
December 2010, the mark-to-market impact from the convertible bonds
issued in the spring of 2009 has been minimized. Mark-to-market
gains on the mandatorily convertible bond issued in December 2009
were $55 million in the first nine months of 2011. During the nine
months ended September 30, 2010, the Company had recorded a
non-cash gain of $720 million as a result of mark-to-market
adjustments with respect to embedded derivatives in its convertible
bonds issued in 2009.
Foreign exchange and other net financing costs were $1.1 billion
for the nine months ended September 30, 2011 as compared to $0.7
billion for the nine months ended September 30, 2010.
ArcelorMittal recorded an income tax expense of $49 million for
the nine months ended September 30, 2011, as compared to an income
tax benefit of $1.0 billion for the nine months ended September 30,
2010.
Gain attributable to non-controlling interests for the nine
months ended September 30, 2011 was $21 million as compared to a
gain of $135 million for the nine months ended September 30,
2010.
Discontinued operations (i.e. the Company’s stainless steel
operations, which were spun-off into a separate company, Aperam) in
the nine months ended on September 30, 2011 amounted to a gain of
$461 million, including $42 million of the post-tax net results
contributed by the stainless steel operations prior to their
spin-off. The balance of $419 million represents a one-time
non-cash gain from the recognition through the income statement of
gains/losses relating to the demerged assets previously held in
equity. Discontinued operations for the nine months ended on
September 30, 2010 amounted to a gain of $217 million.
Analysis of results for the three months ended September 30,
2011 versus the three months ended June 30, 2011 and the three
months ended September 30, 2010
ArcelorMittal’s net income for the three months ended September
30, 2011 was $0.7 billion, or $0.43 per share, as compared with net
income of $1.5 billion, or $0.99 per share, for the three months
ended June 30, 2011 and net income of $1.4 billion, or $0.89 per
share, for the three months ended September 30, 2010.
Total steel shipments for the three months ended September 30,
2011 were 21.1 million metric tonnes as compared with 22.2 million
metric tonnes for the three months ended June 30, 2011, and 20.5
million metric tonnes for the three months ended September 30,
2010.
Sales for the three months ended September 30, 2011 decreased by
3.6% to $24.2 billion as compared with $25.1 billion for the three
months ended June 30, 2011, and were up 22.6% as compared with
$19.7 billion for the three months ended September 30, 2010. Sales
were lower during the third quarter of 2011 as compared to the
second quarter of 2011 primarily due to lower average steel selling
prices (-1.7%) and lower volume of shipments (-4.9%).
Depreciation expense for the three months ended September 30,
2011 remained constant at $1.2 billion as compared to the three
months ended June 30, 2011 and higher than the $1.1 billion for the
three months ended September 30, 2010.
Impairment expense for the three months ended September 30, 2011
was $85 million relating to costs associated with the announced
intention to close 2 blast furnaces, sinter plant, steel shop and
continuous casters in Liege, Belgium6, and nil for the three months
ended June 30, 2011. Impairment cost for the three months ended
September 30, 2010 of $26 million related to the impairment of a
pickling line in Liege, Belgium.
Operating income for the three months ended September 30, 2011
was $1.2 billion, as compared with operating income of $2.3 billion
for the three months ended June 30, 2011 and operating income of
$1.0 billion for the three months ended September 30, 2010.
Operating income for the three months ended September 30, 2011
included a non-cash gain of $129 million relating to unwinding of
hedges on raw material purchases as compared to non-cash gains
relating to such unwinding of $189 million recorded in the three
months ended June 30, 2011 and $85 million in the three months
ended September 30, 2010.
Income from equity method investments and other income for the
three months ended September 30, 2011 was $6 million, as compared
to $289 million for the three months ended June 30, 2011 and $107
million and for the three months ended September 30, 2010. Income
for the three months ended September 30, 2011 included an
impairment loss of $119 million as a result of the Company’s
intention to withdraw from the joint venture with Peabody Energy to
acquire ownership of Macarthur Coal. This charge reflects a higher
carrying value of the investment in Macarthur, which included
accrued share of net income. After considering dividends received
and changes in exchange rate through October 25, 2011 (date of the
divestiture announcement) the transaction was essentially cash
neutral. 7
Net interest expense (including interest expense and interest
income) of $477 million for the three months ended September 30,
2011 was higher than the $457 million for the three months ended
June 30, 2011. The net interest expense for the three months ended
September 30, 2010 was $376 million.
As a result of hedging transactions undertaken by the Company in
December 2010, the mark-to-market impact from the convertible bonds
issued in the spring of 2009 has been minimized. Mark-to-market
gains on the mandatorily convertible bond issued in December 2009
during the third quarter of 2011 were $59 million compared to
mark-to-market losses of $4 million for the second quarter of 2011.
During the three months ended September 30, 2010, the Company had
recorded a non-cash gain of $24 million as a result of the embedded
derivatives in its convertible bonds issued in 2009.
Foreign exchange and other net financing gains were $26 million
for the three months ended September 30, 2011 as compared to
foreign exchange and other net financing losses of $443 million
for the three months ended June 30, 2011. Foreign exchange and
other net financing losses for the three months ended September 30,
2010 were $31 million. Foreign exchange and other net financing
gains for the third quarter of 2011 were positively impacted by
foreign exchange gains on euro denominated debt (6.6% appreciation
of US$ as compared to 1.7% depreciation in the second quarter of
2011).
ArcelorMittal recorded an income tax expense of $154 million for
the three months ended September 30, 2011, as compared to an income
tax expense of $61 million for the three months ended June 30, 2011
and an income tax benefit of $576 million for the three months
ended September 30, 2010.
Losses attributable to non-controlling interests for the three
months ended September 30, 2011 was $31 million as compared with
gains of $41 million and $16 million for the three months ended
June 30, 2011 and September 30, 2010, respectively.
Capital expenditure projects
The following tables summarize the Company’s principal growth
and optimization projects involving significant capital
expenditures.
Completed Projects in Most Recent 4 Quarters
Segment Site Project
Capacity / particulars Actual Completion FCE
ArcelorMittal Dunkerque (France) Modernization of
continuous caster No.21 Slab capacity increase by 0.8mt /
year 4Q 10 Mining Princeton Coal (USA)
Underground mine expansion Capacity increase by 0.7mt / year
1Q 11 Mining Liberia mines Greenfield Liberia
Iron ore production of 4mt / year (Phase 1) 3Q 11(b)
Ongoing (a) Projects
Segment Site Project
Capacity / particulars Forecasted Completion
Mining Andrade Mines (Brazil) Andrade expansion
Increase iron ore production to 3.5mt / year 2012
Mining ArcelorMittal Mines Canada Replacement of
spirals for enrichment Increase iron ore production by 0.8mt
/ year 2013 Mining ArcelorMittal Mines Canada
Expansion Project Increase concentrator capacity by 8mt/year
(16 to 24mt/y) 2013 FCA ArcelorMittal Dofasco
(Canada) Optimization of galvanizing and galvalume
operations Optimize cost and increase galvalume production
by 0.1mt / year To be determined FCA ArcelorMittal
Vega Do Sul (Brazil) Expansion Project Increase HDG
capacity by 0.6mt / year and CR capacity by 0.7mt / year On
hold LCA Monlevade (Brazil) Wire rod production
expansion Increase in capacity of finished products by
1.15mt / year On hold
Projects through Joint Ventures
Country Site Project
Capacity / particulars Forecasted completion
Saudi Arabia Al-Jubail Seamless tube mill
Capacity of 0.6mt / year of seamless tube 2013(c) China
Hunan Province VAMA Auto Steel JV Capacity of
1.2mt / year for the auto market 2013 China Hunan
Province VAME Electrical Steel JV Capacity of 0.3mt /
year of electrical steel 2013 South Africa Kalahari
Basin Manganese mine and sinter plant Capacity of
2.4mt / year of manganese sinter product 2013
a) Ongoing projects refer to projects for which construction has
begun and exclude various projects that are under development.
b) Iron ore mining production has commenced. 2011 iron ore
production target of 1 million tonnes increasing to 4 million
tonnes in 2012. The expansion to 15 million tonnes with forecast
completion by 2015 (Phase 2) will require investment in a
concentrator which is currently in the final stage of approval.
c) Saudi Arabia project delay from 2012 to 2013 primarily due to
construction delays
Analysis of segment operations for the three months ended
September 30, 2011 as compared to the three months ended June 30,
2011
As from January 1, 2011 the Company’s mining operations are
reported as a separate operating segment. This change in
segmentation reflects the changes in ArcelorMittal’s approach to
managing its mining operations i.e. a dedicated mining management
team. Accordingly, as required by IFRS, prior periods have been
recast to reflect this new segmentation.
All raw materials consumed from ArcelorMittal mines that could
practically be sold outside the Company are now reported at market
prices. Production from “captive” mines (limited by logistics or
quality) continues to be reported at cost-plus to the steel
facilities. The principal impact of this change has been to
increase the costs of raw materials consumed by the FCA and AACIS
segments.
Flat Carbon Americas
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10 Sales $5,499 $5,567
$4,394 $16,005 $13,111 EBITDA 420 924
379 1,872 1,397 Operating income 193
697 166 1,197 758
Crude steel
production ('000t) 5,866 6,277 5,932
18,206 17,465 Steel shipments ('000t) 5,708
5,520 4,979 16,791 15,596 Average steel
selling price (US$/t) 910 961 826 900
786 EBITDA/tonne (US$/t) 74 167 76
111 90 Operating income /tonne (US$/t) 34
126 33 71 49
Flat Carbon Americas crude steel production decreased 6.5% to
5.9 million tonnes for the three months ended September 30, 2011,
as compared to 6.3 million tonnes for the three months ended June
30, 2011, due in part to production downtime in the North American
operations.
Steel shipments for the three months ended September 30, 2011
were 5.7 million tonnes, 3.4% higher as compared to 5.5 million
tonnes for the three months ended June 30, 2011 primarily due to
improved auto demand in the NAFTA market.
Sales in the Flat Carbon Americas segment were $5.5 billion for
the three months ended September 30, 2011, a marginal decline of
1.2% as compared to $5.6 billion for the three months ended June
30, 2011. Sales decreased primarily due to lower average steel
selling prices (-5.3%) primarily in Mexico and Brazil due to slab
shipments partially offset by higher steel volumes.
EBITDA in the third quarter of 2011 declined by 54.5% to $420
million as compared to $924 million in the second quarter of 2011,
driven primarily by margin compression on account of lower average
steel selling prices and higher costs.
Flat Carbon Europe
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10 Sales $7,696 $8,551
$6,268 $24,059 $18,733 EBITDA 367 636
452 1,474 1,472 Operating income / (loss)
(106) 245 80 245 392
Crude steel production ('000t) 7,390 7,870
7,107 22,891 23,020 Steel shipments ('000t)
6,385 7,166 6,521 20,935 20,917
Average steel selling price (US$/t) 1,021 1,026
855 990 794 EBITDA/tonne (US$/t) 57
89 69 70 70 Operating income/(loss)
/tonne (US$/t) (17) 34 12 12 19
Flat Carbon Europe crude steel production amounted to 7.4
million tonnes for the three months ended September 30, 2011, a
decrease of 6.1% as compared to 7.9 million tonnes for the three
months ended June 30, 2011. Production decreased reflecting weaker
market sentiment and seasonal slowdown.
Steel shipments for the three months ended September 30, 2011
were 6.4 million tonnes, a decrease of 10.9% as compared to 7.2
million tonnes for the three months ended June 30, 2011. Steel
shipments decreased during the third quarter due to weaker market
demand and seasonal slowdown.
Sales in the Flat Carbon Europe segment were $7.7 billion for
the three months ended September 30, 2011, a decrease of 10.0% as
compared to $8.6 billion for the three months ended June 30, 2011.
Sales decreased primarily due to lower steel shipment volumes while
average steel selling price remained relatively stable.
EBITDA for the three months ended September 30, 2011 was $367
million, a 42.3% decrease as compared to $636 million for the three
months ended June 30, 2011, primarily driven by lower steel volumes
and higher costs.
Operating results in the third quarter of 2011 include
impairment expense of $85 million relating to costs associated with
the announced intention to close 2 blast furnaces, sinter plant,
the steel shop and continuous casters in Liege, Belgium6. They also
include a $129 million non-cash gain relating to the unwinding of
the hedges on raw material purchases, as compared to a non-cash
gain of $189 million in the second quarter of 2011 and $85 million
in third quarter of 2010.
Long Carbon Americas and Europe
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10 Sales $6,676 $6,664
$5,514 $19,229 $15,748 EBITDA 438 610
603 1,528 1,760 Operating income 185
358 339 753 976
Crude steel
production ('000t) 5,611 6,414 5,472
18,084 17,225 Steel shipments ('000t) 5,984
6,167 5,772 18,023 17,450 Average steel
selling price (US$/t) 967 973 832 948
790 EBITDA/tonne (US$/t) 73 99 104
85 101 Operating income /tonne (US$/t) 31
58 59 42 56
Long Carbon Americas and Europe crude steel production amounted
to 5.6 million tonnes for the three months ended September 30,
2011, a decrease of 12.5% as compared to 6.4 million tonnes for the
three months ended June 30, 2011. Production was lower in the
Americas primarily due to drawdown of inventory mainly in Brazil
and the weaker market demand. Production was lower in Europe
primarily due to seasonal effects.
Steel shipments for the three months ended September 30, 2011
were 6.0 million tonnes, a decrease of 3.0% as compared to 6.2
million tonnes for the three months ended June 30, 2011,
particularly due to seasonal slowdown in Europe.
Sales in the Long Carbon Americas and Europe segment were $6.7
billion for the three months ended September 30, 2011, essentially
flat as compared to the three months ended June 30, 2011.
EBITDA for the three months ended September 30, 2011 was $438
million, a 28.2% decrease as compared to $610 million for the three
months ended June 30, 2011, primarily due to lower volumes and
higher costs.
Asia Africa and CIS (“AACIS”)
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10 Sales $2,619 $2,857
$2,511 $8,046 $7,162 EBITDA 284 462
274 1,000 920 Operating income 162
341 161 628 589
Crude steel
production ('000t) 3,493 3,830 3,726
11,029 11,295 Steel shipments ('000t) 3,005
3,304 3,261 9,451 9,874 Average steel selling
price (US$/t) 771 768 630 743
604 EBITDA/tonne (US$/t) 95 140 84 106
93 Operating income /tonne (US$/t) 54 103
49 66 60
AACIS segment crude steel production was 3.5 million tonnes for
the three months ended September 30, 2011, a decrease of 8.8% as
compared to 3.8 million tonnes for the three months ended June 30,
2011. The decrease in the third quarter of 2011 was primarily due
to operational issues impacting the South African operations.
Steel shipments for the three months ended September 30, 2011
amounted to 3.0 million tonnes, a decrease of 9.0% as compared to
3.3 million tonnes for the three months ended June 30, 2011.
Shipments were lower in the third quarter of 2011 primarily due to
operational issues in South Africa.
Sales in the AACIS segment were $2.6 billion for the three
months ended September 30, 2011, a decrease of 8.3% as compared to
$2.9 billion for the three months ended June 30, 2011, primarily
due to lower steel shipments, while average steel selling price
remained relatively stable.
EBITDA for the three months ended September 30, 2011 was $284
million, 38.5% lower as compared to $462 million for the three
months ended June 30, 2011. EBITDA during the third quarter of 2011
declined primarily due to lower steel shipments and higher
costs.
Distribution Solutions8
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10 Sales $4,899 $5,019
$3,977 $14,179 $11,468 EBITDA 48 115
126 290 370 Operating income 8
69 82 161 230
Steel shipments
('000t) 4,607 4,594 4,467 13,403
13,422 Average steel selling price (US$/t) 1,010
1,040 855 1,009 820
Steel shipments in the Distribution Solutions segment for the
three months ended September 30, 2011 were 4.6 million tonnes, flat
as compared to the three months ended June 30, 2011.
Sales in the Distribution Solutions segment declined to $4.9
billion for the three months ended September 30, 2011 as compared
to $5.0 billion for the three months ended June 30, 2011, due
primarily to lower average steel selling prices (-2.9%).
EBITDA for the three months ended September 30, 2011 was $48
million, down 58.3% as compared to $115 million for the three
months ended June 30, 2011, primarily due to lower margin from
European operations due to seasonal slowdown.
Mining
(VI)
USDm unless otherwise shown 3Q 11 2Q 11 3Q 10
9M 11 9M 10
Sales9
$1,678 $1,657 $1,181 $4,463
$3,163 EBITDA 842 835 726 2,284
1,693 Operating income 725 718 617
1,936 1,248
Own iron ore production (a)(Mt)
14.1 13.1 13.0 39.0 36.4
Iron ore shipped externally and internally
at market price (b)(Mt)
6.7 7.0 6.1 19.6 18.4
Iron ore shipped internally at cost-plus
(b)(Mt)
6.9 6.2 6.1 16.8 15.7
Total iron ore shipped externally and
internally (b)(Mt)
13.5 13.2 12.2 36.3 34.2
Own coal production(a)(Mt)
2.1 2.1 1.8 6.1 5.2
Coal shipped externally and internally at
market price(b)(Mt)
1.2 1.3 0.9 3.6 2.6
Coal shipped internally at
cost-plus(b)(Mt)
0.8 0.8 0.8 2.5 2.3
Total coal shipped externally and
internally (b)(Mt)
2.1 2.1 1.7 6.1 4.9
(a) Own iron ore and coal production excluding 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 supply under strategic long-term contracts
Own iron ore production (excluding supplies under strategic
long-term contracts) increased 7.4% to 14.1 million tonnes for the
three months ended September 30, 2011, as compared to 13.1 million
tonnes for the three months ended June 30, 2011.
Total iron ore shipped during the third quarter of 2011 amounted
to 13.5 million metric tonnes, an increase of 2.9% as compared to
13.2 million tonnes in the second quarter of 2011.
Own coal production for the three months ended September 30,
2011 remained constant at 2.1 million tonnes as compared to the
three months ended June 30, 2011.
Total coal shipped during the third quarter of 2011 amounted to
2.1 million tonnes, essentially flat as compared to the second
quarter of 2011.
EBITDA attributable to the Mining segment for the three months
ended September 30, 2011 was $842 million, marginally higher as
compared to $835 million for the three months ended June 30, 2011,
primarily due to improved cost position driven by higher overall
production volumes partially offset by lower market price
volumes.
Liquidity and Capital Resources
For the three months ended September 30, 2011, net cash provided
by operating activities was $0.8 billion, compared to net cash used
in operating activities of $0.6 billion for the three months ended
June 30, 2011. The cash flow used in operating activities for the
third quarter of 2011 included a $1.0 billion investment in
operating working capital as compared to a $2.8 billion investment
in the second quarter of 2011. The working capital investment in
the third quarter of 2011 primarily resulted from increased raw
material costs. Rotation days10 increased to 73 days during the
third quarter of 2011 from 71 days in the second quarter of
2011.
Net cash used in investing activities for the three months ended
September 30, 2011 remained constant at $1.3 billion, as compared
to the three months ended June 30, 2011. Capital expenditures
increased to $1.3 billion for the three months ended September 30,
2011 as compared to $1.1 billion for the three months ended June
30, 2011. The Company will continue to calibrate its steel growth
projects to evolving demand situations; at the same time the
Company intends to maintain the growth capex in its mining business
as these projects have more attractive return profiles. Accordingly
the Company’s full year 2011 capital expenditure is expected to be
below the previously targeted level of $5.5 billion (as compared to
$3.3 billion in 2010).
Other investing activities in the third quarter of 2011 include
an outflow of $31 million including the installment of $55 million
for an 11% stake in Ostrava acquired in 2009, offset in part by the
sale of various non-core fixed assets. Other investing activities
in the second quarter of 2011 of $186 million included outflows of
$67 million related to the acquisition of Cognor in Poland
(Distribution Solutions) and $205 million for the acquisition of
the Prosper coke plant in Germany, offset in part by net cash
inflows of $86 million representing cash proceeds from the sale of
certain non-core fixed assets and other recoveries.
Net cash provided by financing activities for the three months
ended September 30, 2011 was $0.3 billion, as compared to cash
provided by financing activities of $1.1 billion for the three
months ended June 30, 2011. During the third quarter of 2011, the
Company paid dividends amounting to $309 million as compared to
$302 million in the second quarter of 2011. Dividends paid during
the third quarter of 2011 included $17 million paid to minority
shareholders. During the third quarter of 2011, the Company
received a $250 million cash inflow from the increase in the
privately placed mandatorily convertible bond (MCB) issued on
December 28, 2009 by one of its wholly-owned Luxembourg
subsidiaries.
At September 30, 2011, the Company’s cash and cash equivalents
(including restricted cash and short-term investments) amounted to
$2.8 billion as compared to $3.2 billion at June 30, 2011. During
the quarter, net debt decreased by $0.1 billion to $24.9 billion as
compared with $25.0 billion at June 30, 2011.
The Company had liquidity of $11.311 billion at September 30,
2011, a decline of $1.0 billion as compared with liquidity of $12.3
billion at June 30, 2011, consisting of cash and cash equivalents
(including restricted cash and short-term investments) of $2.8
billion and $8.5 billion of available credit lines.
Update on management gains program and asset optimization
plan
At the end of the third quarter of 2011, the Company’s
annualized sustainable management gains increased to $3.8 billion
as compared to $3.6 billion at the end of June 30, 2011 (excluding
Aperam). The Company maintains its target (based on the revised
plan excluding Aperam) to reach management gains of $4.8 billion
from sustainable SG&A, fixed cost reductions and continuous
improvement by the end of 2012.
On September 23, 2011, the Company announced the launch of a new
asset optimization plan which will target a $1 billion improvement
in annualized EBITDA by the end of 2012.
Recent developments
- On October 25, 2011, ArcelorMittal
provided notice to Peabody Energy that, in accordance with the
Co-Operation and Contribution Agreement between the two companies,
following its acceptance of PEAMCoal Ltd’s offer for Macarthur Coal
Ltd, it has terminated the Co-Operation and Contribution Agreement
as provided for therein. ArcelorMittal will remain a shareholder in
PEAMCoal until the termination arrangements are completed which is
expected to be in approximately 90 days’ time. In taking this
decision, ArcelorMittal has determined that it would no longer be
appropriate to allocate substantial capital to the acquisition of a
non-controlling, minority business interest. This is in accordance
with the rights that ArcelorMittal originally negotiated with
Peabody at the time the Co-Operation and Contribution Agreement was
concluded.
Given the unanticipated level of acceptances into the offer,
ArcelorMittal believes that it is more appropriate to focus its
capital elsewhere in its business. ArcelorMittal considers that the
capital commitment that would be required to retain its Macarthur
interest and grow it materially further, exceeds what is
appropriate to allocate to a business that ArcelorMittal does not
fully control and consolidate. The unconditional PEAMCoal offer for
Macarthur will not be affected by ArcelorMittal’s acceptance and
will remain open until 7:00 p.m. (Brisbane time) on November 11,
2011 unless extended. ArcelorMittal will continue to perform its
funding obligations to PEAMCoal until the termination takes effect
as described in section 10.2(f) of PEAMCoal’s Bidder’s Statement
for Macarthur.
- On September 30, 2011, ArcelorMittal
extended to May 2015 the maturity of its $4 billion revolving
credit facility that was due to expire in May 2013.
- On September 28, 2011, ArcelorMittal
announced the increase by $250 million of its $750 million
privately placed mandatorily convertible bond (MCB) issued on
December 28, 2009 by one of its wholly-owned Luxembourg
subsidiaries. This amendment to the MCB, which is mandatorily
convertible into preferred shares of such subsidiary, was executed
on September 27, 2011. The other main features of the MCB remain
unchanged. The bond was placed privately with a Luxembourg
affiliate of Credit Agricole Corporate and Investment Bank and is
not listed.
- On August 1, 2011, ArcelorMittal
published its Half-Year Report for the six month period ended June
30, 2011. In addition, ArcelorMittal filed with the U.S. Securities
and Exchange Commission (www.sec.gov) a recast of its 2008-2010
Financial Statements, Business description and Management’s
Discussion and Analysis to reflect the fact that its mining
business is being reported as a segment since January 1, 2011.
For further information about these recent developments, please
refer to our website www.arcelormittal.com
Outlook and guidance
The Company’s EBITDA in the second half of 2011 is expected to
exceed the level achieved in the comparable period of 2010. The
Company expects shipments in 4Q 2011 to be lower than 3Q 2011
levels, reflecting economic uncertainties leading to customers
adopting a “wait and see” approach. Higher iron ore and coal
volumes will continue to be a positive underlying driver. Own iron
ore and coal production is expected to increase by 10% and 20%
respectively, by the end of 2011 as compared to 2010.
In light of recent market uncertainty the Company is focusing on
core growth capex. This will result in postponement of some planned
steel investments. Accordingly, full year 2011 capital expenditure
is expected to be below the previously targeted level of $5.5
billion.
Net debt at year end is expected to be higher than third quarter
of 2011 primarily due to the temporary investment in Macarthur Coal
(which will be reversed in the first quarter of 2012).
ARCELORMITTAL CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
September 30, June 30, December 31, In
millions of U.S. dollars 2011 2011
201012
ASSETS Cash and
cash equivalents including restricted cash
$2,800
$3,205 $6,289 Trade accounts receivable and other
8,194 8,625 5,725 Inventories 23,397
23,920 19,583 Prepaid expenses and other current
assets 4,246 4,376 4,160 Assets held for
distribution - - 6,918
Total Current
Assets 38,637 40,126
42,675
Goodwill and intangible assets 14,683 15,134
14,373 Property, plant and equipment 54,052 56,124
54,344 Investments in affiliates and joint ventures and
other assets 19,956 22,135 19,512
Total
Assets $127,328 $133,519
$130,904
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term debt and current portion of
long-term debt $3,626 $3,688 $6,716 Trade
accounts payable and other 13,772 14,864
13,256 Accrued expenses and other current liabilities 8,527
8,545 8,714 Liabilities held for distribution
- - 2,037
Total Current Liabilities
25,925 27,097 30,723
Long-term debt, net of
current portion 24,061 24,530 19,292 Deferred
tax liabilities 3,678 4,010 4,006 Other
long-term liabilities 10,288 11,381 10,783
Total Liabilities 63,952 67,018
64,804
Equity attributable to the equity holders of the parent
59,586 62,615 62,430 Non–controlling interests
3,790 3,886 3,670
Total Equity
63,376 66,501 66,100 Total
Liabilities and Shareholders’ Equity $127,328
$133,519 $130,904
ARCELORMITTAL CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
Three months ended Nine months ended September 30,
June 30, September 30, September 30, September
30,
In millions of U.S. dollars 2011 2011
2010
2011 2010 Sales $24,214 $25,126
$19,744 $71,524 $57,326 Depreciation (1,155)
(1,161) (1,108) (3,449) (3,320)
Impairment (85) - (26) (103)
(144) Operating income 1,168 2,252 1,028
4,851 3,208 Operating margin % 4.8%
9.0% 5.2% 6.8% 5.6%
Income from
equity method investments and other income 6 289
107 443 377 Net interest expense (477)
(457) (376) (1,393) (1,032) Mark to
market on convertible bonds 59 (4) 24
55 720 Foreign exchange and other net financing gains
(losses) 26 (443) (31) (1,084)
(688) Income (loss) before taxes and non-controlling interest
782 1,637 752 2,872 2,585
Current Tax (209) (311) (209) (834)
(677) Deferred Tax 55 250 785
785 1,706 Income tax benefit (expense) (154)
(61) 576 (49) 1,029 Income from continuing
operations including non-controlling interest 628
1,576 1,328 2,823 3,614 Non-controlling
interests (relating to continuing operations) 31 (41)
(16) (21) (135) Income from continuing
operations 659 1,535 1,312 2,802
3,479 Income from discontinued operations, net of tax -
- 38 461 217 Net income attributable to
owners of the parent
$659 $1,535
$1,350 $3,263 $3,696
Basic earnings per common share 0.43 0.99
0.89 2.11 2.45 Diluted earnings per common
share 0.19 0.93 0.89 1.81 2.03
Weighted average common shares outstanding (in
millions) 1,549 1,549 1,510 1,549
1,510 Adjusted diluted weighted average common shares
outstanding (in millions) 1,611 1,638 1,537
1,637 1,599
EBITDA3 $2,408
$3,413 $2,162 $8,403 $6,672 EBITDA Margin %
9.9% 13.6% 11.0% 11.7% 11.6%
OTHER INFORMATION
Total iron ore production13 (million
metric tonnes)
17.4 15.9 17.4 46.9 49.6 Crude
steel production (million metric tonnes) 22.4 24.4
22.2 70.2 69.0
Total shipments of steel products14
(million metric tonnes)
21.1 22.2 20.5 65.2 63.8
Employees (in thousands) 265 265 266
265 266
ARCELORMITTAL CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
In millions of U.S. dollars Three Months Ended
Nine Months Ended September 30, June 30,
September 30, September 30, September 30, 2011
2011 2010 2011 2010
Operating
activities:
Net income from continuing operations
$659 $1,535 $1,312 $2,802 $3,479
Adjustments to reconcile net income (loss) to net cash provided
by operations:
Non-controlling interest (31) 41
16 21 135 Depreciation and impairment
1,240 1,161 1,134 3,552 3,464 Deferred
income tax (55) (250) (785) (785)
(1,706)
Change in operating working capital15
(1,013) (2,811) (1,045) (5,668)
(4,670) Other operating activities (net) (30) (249)
88 (833) (256) Net cash (used in) provided by
operating activities - Continued operations 770 (573)
720 (911) 446 Net cash (used in) provided by
operating activities - Discontinued operations - -
60 (190) -
Net cash (used in) provided by
operating activities 770 (573)
780 (1,101) 446
Investing activities:
Purchase of property, plant and
equipment and intangibles (1,267) (1,065)
(787) (3,363) (1,929) Other investing activities
(net) (31) (186) (26) 324 (263)
Net cash used in investing activities - Continued operations
(1,298) (1,251) (813) (3,039) (2,192)
Net cash used in investing activities - Discontinued operations
- - (22) (105) (68)
Net cash
used in investing activities (1,298)
(1,251) (835) (3,144)
(2,260) Financing activities:
Proceeds relating
to payable to banks and long-term debt 407 1,433
1,373 1,353 1,001 Dividends paid (309)
(302) (331) (905) (922) Proceeds from
mandatorily convertible bond 250 - -
250 - Acquisition of non-controlling interest (7)
- (207) (98) (590) Other financing
activities (net) (47) (25) (36) 20
(73) Net cash (used in) provided by financing activities -
Continued operations 294 1,106 799 620
(584) Net cash (used in) financing activities - Discontinued
operations - - (10) (8) (36)
Net cash (used in) provided by financing activities
294 1,106 789 612
(620) Net (decrease) increase in cash and cash
equivalents (234) (718) 734 (3,633)
(2,434) Effect of exchange rate changes on cash (178)
54 242 17 (101)
Change in cash and
cash equivalents $(412) $(664)
$976 $(3,616) $(2,535)
Appendix 1a - Key financial and
operational information - Third Quarter of 2011
Flat Carbon Flat Carbon Long Carbon
Distribution USDm unless otherwise shown
Americas Europe Americas AACIS
Solutions Mining
and Europe
FINANCIAL INFORMATION
Sales $5,499 $7,696 $6,676
$2,619 $4,899 $1,678 Depreciation and
impairment (227) (473) (253) (122)
(40) (117) Operating income (loss) 193
(106) 185 162 8 725 Operating margin
(as a % of sales) 3.5% (1.4%) 2.8% 6.2%
0.2% 43.2%
EBITDA
3
420 367 438 284 48 842
EBITDA margin (as a % of sales) 7.6% 4.8% 6.6%
10.9% 1.0% 50.2%
Capital expenditure16
173 266 280 184 34 319
OPERATIONAL INFORMATION
Crude steel production (Thousand MT) 5,866
7,390 5,611 3,493 - - Steel
shipments (Thousand MT) 5,708 6,385 5,984
3,005 4,607 -
Average steel selling price ($/MT)17
910 1,021 967 771 1,010 -
MINING INFORMATION (Million Mt)
Iron ore production13 - -
- - - 17.4 Coal production - -
- - - 2.2 Iron ore shipped externally
and internally at market price4 - - - -
- 6.7 Iron ore shipped internally at cost-plus4
- - - - - 6.9 Coal
shipment shipped externally and internally at market price4
- - - - - 1.2 Coal shipped
internally at cost-plus 4 - - - -
- 0.8
Appendix 1b - Key financial and
operational information – Nine Months of 2011
Flat Carbon Flat Carbon Long Carbon
Distribution USDm unless otherwise shown
Americas Europe Americas AACIS
Solutions Mining
and Europe
FINANCIAL INFORMATION
Sales $16,005
$24,059 $19,229 $8,046 $14,179
$4,463 Depreciation and impairment (675) (1,229)
(775) (372) (129) (348) Operating
income 1,197 245 753 628 161
1,936 Operating margin (as a % of sales) 7.5%
1.0% 3.9% 7.8% 1.1% 43.4%
EBITDA
3
1,872 1,474 1,528 1,000 290
2,284 EBITDA margin (as a % of sales) 11.7%
6.1% 7.9% 12.4% 2.0% 51.2% Capital
expenditure16 436 766 760 487 94
816
OPERATIONAL INFORMATION
Crude steel production (Thousand MT)
18,206 22,891 18,084 11,029 - -
Steel shipments (Thousand MT) 16,791 20,935
18,023 9,451 13,403 - Average steel selling
price ($/MT) 17 900 990 948 743
1,009 -
MINING INFORMATION
(Million Mt)
Iron ore production13 -
- - - - 46.9 Coal production
- - - - - 6.5 Iron ore
shipped externally and internally at market price4 -
- - - - 19.6 Iron ore shipped
internally at cost-plus4 - - - -
- 16.8 Coal shipment shipped externally and internally at
market price4 - - - - -
3.6 Coal shipped internally at cost-plus 4 - -
- - - 2.5
Appendix 2a: Steel Shipments by
geographical location18
(Amounts in thousands tonnes) 3Q 11 2Q 11 3Q 10 9M 11 9M 10
Flat Carbon America: 5,708 5,520 4,979
16,791 15,596 North America 4,271 4,186
3,680 12,878 11,406 South America 1,437
1,334 1,299 3,913 4,190
Flat Carbon Europe: 6,385 7,166 6,521
20,935 20,917
Long Carbon:
5,984 6,167 5,772 18,023 17,450
North America 1,190 1,187 1,125 3,450
3,185 South America 1,471 1,404 1,342
4,212 3,968 Europe 3,037 3,315
3,083 9,554 9,638
Other19
286 261 222 807 659
AACIS: 3,005 3,304 3,261
9,451 9,874 Africa 1,109 1,263 1,115
3,644 3,781 Asia, CIS & Other 1,896
2,041 2,146 5,807 6,093
Appendix 2b: Steel EBITDA3 by geographical
location
Amounts in USDm 3Q 11 2Q 11 3Q 10 9M 11 9M 10
Flat Carbon
America: $420 $924 $379 $1,872
$1,397 North America 366 681 179
1,449 588 South America 54 243 200
423 809
Flat Carbon Europe:
367 636 452 1,474 1,472
Long Carbon: 438 610 603
1,528 1,760 North America 51 33 38
120 90 South America 227 278 414
743 1,210 Europe 84 233 103
460 337
Other19
76 66 48 205 123
AACIS: 284 462 274 1,000
920 Africa (7) 138 104 223 487
Asia, CIS & Other 291 324 170 777
433
Distribution Solutions: 48
115 126 290 370
Appendix 2c: Iron ore production
(million metric tonnes)
Million metric tonnes (a) Type
Product 3Q 11 2Q 11
3Q 10 9M 11 9M 10 North
America (b) Open Pit Concentrate and Pellets
7.8 7.2 7.4 21.7 20.7 South America
Open pit Lump and Sinter feed 1.3 1.3
1.3 3.8 3.5 Europe Open pit Lump
and fines 0.6 0.4 0.4 1.4 1.1
Africa Open Pit / Underground Lump and fines
0.7 0.4 0.3 1.3 0.8 Asia, CIS &
Other Open Pit / Underground Concentrate, lump and
fines 3.7 3.7 3.5 10.7 10.3
Own iron ore production 14.1
13.1 13.0 39.0
36.4 North America (c) Open Pit Pellets
1.8 0.9 2.2 2.7 7.9 Africa (d)
Open Pit Lump and Fines 1.4 1.8 2.2
5.1 5.3
Strategic contracts - iron ore
3.3 2.8
4.4 7.9 13.2 Group
17.4 15.9
17.4 46.9 49.6
a) Total of all finished production of fines, concentrate,
pellets and lumps.
b) Includes own mines and share of production from Hibbing
(USA-62.30%) and Pena (Mexico-50%).
c) Includes two long term supply contracts with Cleveland Cliffs
for periods prior to 2011. On April 8, 2011, ArcelorMittal
announced that it had reached a negotiated settlement with Cliffs
Natural Resources Inc. (“Cliffs”) regarding all pending contract
disputes related to the procurement of iron ore pellets for certain
facilities in the U.S. As part of the settlement, Cliffs and
ArcelorMittal agreed to specific pricing levels for 2009 and 2010
pellet sales and related volumes. Accordingly as from the first
quarter of 2011, this excludes the long term supply contract for
which settlement was reached.
d) Includes long term lease - prices on a cost-plus basis and
purchases made under the July 2010 interim agreement with Kumba
(South Africa).
Appendix 2d: Iron ore shipments
(million metric tonnes)
Millions tonnes
3Q 11 2Q 11 3Q 10 9M
11 9M 10 External sales – Third party
2.1 1.5 1.9
4.7 4.6
Internal sales –
Market-priced 4.6 5.5
4.2 14.9 13.8
Internal sales – Cost-plus basis 6.9
6.2 6.1 16.8 15.7
FCA 2.6 2.4 2.1 5.3 4.1 Long
1.4 1.1 1.1 3.3 2.9 AACIS
2.9 2.7 2.8 8.1 8.7
Total sales 13.5 13.2
12.2 36.3 34.2
Strategic contracts 3.3 2.8
4.4 7.9 13.2 FCA
1.8 0.9 2.2 2.7 7.9 AACIS 1.4
1.8 2.2 5.1 5.3
Total 16.8 15.9
16.6 44.2 47.4
Appendix 2d: Coal production (Million
metric tonnes)
Million metric tonnes 3Q 11
2Q 11 3Q 10 9M 11 9M
10 North America 0.57 0.61 0.60
1.73 1.76 Asia, CIS & Other 1.53 1.45
1.24 4.37 3.41
Own coal production
2.10 2.06 1.83
6.10 5.17 North America(a) 0.05
0.08 0.06 0.18 0.16 Africa(b) 0.07
0.09 0.06 0.23 0.16
Strategic
contracts - coal (a),(b) 0.12
0.17 0.12 0.41
0.33 Group 2.22 2.23
1.95 6.51 5.50
a) Includes strategic agreement - prices on a cost-plus
basis
b) Includes long term lease - prices on a cost-plus basis
Appendix 2e: Coal shipment (Million
metric tonnes)
Million metric tonnes 3Q 11
2Q 11 3Q 10 9M 11
9M 10 External sales - Third party
0.80
0.95 0.51 2.55
1.61 Internal sales - Market-priced
0.42
0.35 0.42 1.08
0.97 Internal sales (AACIS) - Cost-plus basis
0.83 0.77 0.78
2.50 2.31 Total sales 2.05
2.06 1.72 6.13
4.89 Strategic contracts
0.12
0.17 0.12 0.41
0.33 Total 2.17 2.23
1.83 6.54 5.22
Appendix 3: Debt repayment schedule as
of September 30, 2011
Debt repayment schedule ($ billion) 2011 2012
2013 2014 2015 >2015 Total
Term loan repayments
-
Convertible bonds - - 0.1 2.1 -
-
2.2 - Bonds - - 3.5
1.3 1.7 11.1
17.6
Subtotal - - 3.6
3.4 1.7 11.1
19.8 LT revolving credit lines
- $6bn syndicated credit facility - -
- - - 1.8
1.8 - $4bn
syndicated credit facility - - - -
- -
- - $0.6bn bilateral credit
facilities - - 0.3 - - -
0.3
Commercial paper20
1.0 0.2 - - - -
1.2 Other loans 1.1 1.5 0.5 0.3
0.3 0.9
4.6 Total Gross Debt
2.1 1.7 4.4
3.7 2.0 13.8 27.7
Appendix 4: Credit lines available as
of September 30, 2011
Credit lines available ($ billion)
Maturity Equiv. $ Drawn Available -
$6bn syndicated credit facility 18/03/2016 $6.0
$1.8
$4.2 - $4bn syndicated credit facility
06/05/2015 $4.0 -
$4.0 - $0.6bn
bilateral credit facilities 30/06/2013 $0.6
$0.3
$0.3 Total committed lines
$10.6 $2.1 $8.5
Appendix 5 - Other ratios
Ratios 3Q 11 2Q 11
Gearing21
39% 38% Net debt to average EBITDA ratio based on
yearly average EBITDA from Jan 1, 2004 1.7X 1.7X Net
debt to EBITDA ratio based on last twelve months EBITDA 2.4X
2.5X
Appendix 6 – Earnings per Share
Three months ended Nine months ended Sept 30,
June 30, Sept 30,
Sept 30,
Sept 30,
In U.S. dollars 2011 2011 2010
2011 2010
Earnings per share - Discontinued
operations
Basic earnings (loss) per common share
0.00 0.00 0.02 0.30 0.15 Diluted
earnings (loss) per common share 0.00 0.00
0.02 0.28 0.13
Earnings per share - Continued
operations
Basic earnings (loss) per common share
0.43 0.99 0.87 1.81 2.30 Diluted
earnings (loss) per common share 0.19 0.93
0.87 1.53 1.90
Earnings per share
Basic earnings (loss) per common share 0.43 0.99
0.89 2.11 2.45 Diluted earnings (loss) per
common share 0.19 0.93 0.89 1.81
2.03
Appendix 7 – EBITDA Bridge between 2Q
11 v 3Q 11
USD millions
EBITDA 2Q11 Volume & Mix (a) Price-cost
(b) Non -Steel EBITDA (c) Other (d) EBITDA
3Q11
Group 3,413 (333) (576)
(20) (76) 2,408
Note: Table excludes analysis on account of others and
eliminations.
a) The volume variance indicates the sales value gain/loss
through selling a higher/lower volume compared to the reference
period, valued at reference period contribution (selling
price–variable cost). The product/shipment mix variance indicates
sales value gain/loss through selling different proportion of mix
(product, choice, customer, market including domestic/export),
compared to the reference period contribution.
b) The price-cost variance is a combination of the selling price
and cost variance. The selling price variance indicates the sales
value gain/loss through selling at a higher/lower price compared to
the reference period after adjustment for mix, valued with the
current period volumes sold. The cost variance indicates
increase/decrease in cost (after adjustment for mix, one time
items, non-steel cost and others) compared to the reference period
cost. Cost variance includes the gain/loss through consumptions of
input materials at a higher price/lower price, movement in fixed
cost, changes in valuation of inventory due to movement in capacity
utilization etc.
c) Non-steel EBITDA variance primarily represents the gain/loss
through the sale of by-products.
d) Other represents the gain/loss through movements in
provisions including write downs, write backs of inventory, onerous
contracts, reversal of provisions, dynamic delta hedge on raw
materials, foreign exchange etc as compared to the reference
period.
Appendix 8 – Capex16
Capex USD millions
3Q 11 2Q 11 3Q 10 9M 11 9M 10 Flat
Carbon Europe 266 239 150 766
428 Flat Carbon Americas 173 151 132
436 403 Long Carbon Steel 280 229 182
760 394 Asia, Africa and CIS 184 113
144 487 345 Distribution Solutions 34
32 25 94 61 Mining 319
297 112 816 265
Appendix 9 – End notes
1 The financial information in this press release has been
prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). While the interim financial information
included in this announcement has been prepared in accordance with
IFRS applicable to interim periods, this announcement does not
contain sufficient information to constitute an interim financial
report as defined in International Accounting Standards 34,
“Interim Financial Reporting”. Unless otherwise noted the numbers
in the 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.
2 Lost time injury frequency rate equals lost time injuries per
1,000,000 worked hours, based on own personnel and contractors.
3 EBITDA is defined as operating income plus depreciation,
impairment expenses and exceptional items.
4 Market price 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 at the prevailing market price. Shipments
of raw materials that do not constitute market price tonnes are
transferred internally on a cost-plus basis.
5 Net debt refers to long-term debt, plus short-term debt, less
cash and cash equivalents, restricted cash and short-term
investments.
6 The Company concluded that the assets subject to intended
permanent idling were impaired and recorded an impairment loss of
$85 million during the quarter. Restoration, site cleaning,
voluntary separation scheme (VSS) and other costs will be recorded
when social dialogue has sufficiently progressed.
7 The Company’s investment in Macarthur is accounted for under
the equity method. As a result of the Company’s intention to
withdraw from the joint venture with Peabody Energy to acquire
ownership of Macarthur Coal, the Company recognized an impairment
loss of $119 million in the third quarter of 2011. This charge
reflects a higher carrying value of the investment in Macarthur,
which included accrued share of net income. After considering
dividends received and changes in exchange rate through October 25,
2011 (date of the divestiture announcement) the transaction was
essentially cash neutral.
8 As from January 1, 2010 the Steel Solutions and Services
segment has been renamed ArcelorMittal Distribution Solutions
(AMDS).
9 There are three categories of sales: 1) “External sales”:
mined product sold to third parties at market price; 2)
“Market-priced tonnes”: internal sales of mined product to
ArcelorMittal facilities at prevailing market prices; 3) “Cost-plus
tonnes” - internal sales of mined product to ArcelorMittal
facilities on a cost-plus basis. The determinant of whether
internal sales are transferred at market price or cost-plus is
whether or not 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).
10 Rotation days are defined as days of accounts receivable plus
days of inventory minus days of accounts payable. Days of accounts
payable and inventory are a function of cost of goods sold. Days of
accounts receivable are a function of sales.
11 Includes back-up lines for the commercial paper program of
approximately $2.7 billion (€2 billion).
12 In accordance with IFRS the Company has adjusted the 2009
financial information retrospectively for the finalization in 2010
of the allocation of purchase price for certain business
combinations carried out in 2009. The adjustments have been
reflected in the Company’s consolidated financial statements for
the year ended December 31, 2010.
13 Total of all finished production of fines, concentrate,
pellets and lumps (includes share of production and strategic
long-term contracts).
14 ArcelorMittal Distribution Solutions shipments are eliminated
in consolidation as they primarily represent shipments originating
from other ArcelorMittal operating subsidiaries.
15 Changes in operating working capital are defined as trade
accounts receivable plus inventories less trade accounts
payable.
16 Capex includes the acquisition of intangible assets (such as
concessions for mining and IT support).
17 Average steel selling prices are calculated as steel sales
divided by steel shipments.
18 Shipments originating from a geographical location.
19 Includes Tubular products business.
20 Commercial paper is expected to continue to be rolled over in
the normal course of business.
21 Gearing is defined as (A) long-term debt, plus short-term
debt, less cash and cash equivalents, restricted cash and
short-term investments, divided by (B) total equity.
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