Luxembourg, November 10, 2017
- 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 nine month periods ended September 30, 2017.
Highlights:
-
Health and safety: LTIF rate of 0.67x in 3Q 2017
as compared to 0.72x in 2Q 2017 and 0.84x in 3Q 2016
-
Operating income of $1.2 billion in 3Q 2017 as
compared to $1.4 billion in 2Q 2017; 2.5% higher YoY
-
EBITDA of $1.9 billion in 3Q 2017 as compared to
$2.1 billion in 2Q 2017; 1.5% higher YoY
-
Net income of $1.2 billion in 3Q 2017 lower as
compared to $1.3 billion in 2Q 2017 and higher as compared to $0.7
billion in 3Q 2016
-
Steel shipments of 21.7Mt in 3Q 2017, an
increase of 1.0% as compared to 2Q 2017; +6.8% YoY; steel shipments
of 64.2Mt in 9M 2017, up 0.6% YoY
-
3Q 2017 iron ore shipments of 15Mt (+8.1% YoY),
of which 9.1Mt shipped at market prices (+12.3% YoY); 9M 2017
market price iron ore shipments at 27.2Mt, up 6.8% YoY
-
Net debt of $12.0 billion as of September 30,
2017, as compared to $11.9 billion as of June 30, 2017, primarily
due to a negative foreign exchange impact ($0.2 billion)
Outlook and guidance:
Market conditions are favorable. The demand environment remains
positive (as evidenced by the continued high readings from the
ArcelorMittal weighted PMI) and steel spreads remain healthy.
The
Company continues to expect cash needs of the business (capex ($2.9
billion), interest ($0.8 billion), cash taxes, pensions and other
cash costs (totalling $0.9 billion) but excluding working capital
investment and premiums paid to retire debt early) to be
approximately $4.6 billion in 2017.
Given
the improved market conditions, the Company now expects a full year
2017 investment in working capital of approximately $2.0 billion
(as compared to previous guidance of approximately $1.5
billion).
Financial highlights (on the
basis of IFRS1):
(USDm)
unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
17,639 |
17,244 |
14,523 |
50,969 |
42,665 |
Operating
income |
1,234 |
1,390 |
1,204 |
4,200 |
3,352 |
Net income
attributable to equity holders of the parent |
1,205 |
1,322 |
680 |
3,529 |
1,376 |
Basic
earnings per share (US$)[2] |
1.18 |
1.30 |
0.67 |
3.46 |
1.48 |
|
|
|
|
|
|
Operating
income/ tonne (US$/t) |
57 |
65 |
59 |
65 |
52 |
EBITDA |
1,924 |
2,112 |
1,897 |
6,267 |
4,594 |
EBITDA/
tonne (US$/t) |
89 |
98 |
93 |
98 |
72 |
Steel-only
EBITDA/ tonne (US$/t) |
73 |
83 |
83 |
80 |
65 |
|
|
|
|
|
|
Crude steel
production (Mt) |
23.6 |
23.2 |
22.6 |
70.4 |
69.0 |
Steel
shipments (Mt) |
21.7 |
21.5 |
20.3 |
64.2 |
63.9 |
Own iron
ore production (Mt) |
14.2 |
14.7 |
13.7 |
42.9 |
41.3 |
Iron ore
shipped at market price (Mt) |
9.1 |
9.5 |
8.1 |
27.2 |
25.5 |
Commenting, Mr.
Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"Favorable market conditions have supported
another solid quarterly performance, with EBITDA for the first nine
months considerably improved year-on-year. Operating
conditions continue to improve, with key indicators including the
ArcelorMittal weighted PMI implying a positive outlook for
2018. While pleased with the progress that we are making, we
operate in a competitive global environment which is characterized
by overcapacity and high levels of imports. The
implementation of our strategic plan Action 2020 remains a clear
priority and we are making good progress in this regard."
Corporate
responsibility and safety performance
Health and safety
- Own personnel and contractors lost time injury frequency
rate
Health and safety performance, based on own
personnel figures and contractors lost time injury frequency (LTIF)
rate was 0.67x in the third quarter of 2017 ("3Q 2017") as compared
to 0.72x for the second quarter of 2017 ("2Q 2017") and 0.84x for
the third quarter of 2016 ("3Q 2016"). Health and safety
performance improved to 0.74x in the nine months of 2017 ("9M
2017") as compared to 0.80x for the first nine months of 2016 ("9M
2016").
The Company's efforts to improve its Health and
Safety record remains focused on both further reducing the rate of
severe injuries and preventing fatalities.
Own personnel and
contractors - Frequency rate
Lost time
injury frequency rate |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Mining |
1.05 |
0.58 |
1.08 |
0.75 |
0.93 |
NAFTA |
0.57 |
0.51 |
0.89 |
0.69 |
0.95 |
Brazil |
0.45 |
0.37 |
0.20 |
0.42 |
0.32 |
Europe |
0.79 |
1.08 |
1.17 |
1.05 |
1.03 |
ACIS |
0.42 |
0.62 |
0.55 |
0.49 |
0.58 |
Total Steel |
0.60 |
0.75 |
0.80 |
0.74 |
0.78 |
Total (Steel and Mining) |
0.67 |
0.72 |
0.84 |
0.74 |
0.80 |
Key corporate
responsibility highlights for 3Q 2017:
Update on the Group's 10 sustainable development
outcomes:
-
Outcome 2: Products that accelerate more
sustainable lifestyles: ArcelorMittal will invest €67 million in a
new production line for automotive steel in Florange, eastern
France, part of the Company's strategy to have a centre of
excellence for automotive steel production in the Lorraine
region.
-
Outcome 4: ArcelorMittal Brazil won the Steelie
Award for Excellence in Sustainability for its social value
programme created through its application of REVSOL®, a steel slag
by-product used in the construction of roads, car parks and storage
yards. Using REVSOL® to build local road networks has generated
improved trade, communications and essential services for local
communities whilst also replacing the use of non-renewable sources
and reduces the costs of road and vehicle maintenance. The
Steelie Awards, in their 8th year, are organised by the World Steel
Association.
-
Outcome 6: The Company engaged with a number of
stakeholders on carbon pricing schemes in order to explore
effective ways to leverage value for global climate change
mitigation efforts from the steel industry and avoid systems that
will not.
Analysis of
results for the nine months ended September 30, 2017 versus results
for the nine months ended September 30, 2016
Total steel shipments for 9M 2017 were 64.2Mt as
compared to 63.9Mt for 9M 2016. On a comparable basis, excluding
shipments from assets sold during the comparable period (i.e. sale
of long steel producing subsidiaries in the US (LaPlace and Vinton)
and Zaragoza in Spain), and excluding the impact of the
optimization at Zumarraga in Spain (Europe segment) total steel
shipments in 9M 2017 increased 1.6% as compared to 9M 2016.
Sales for 9M 2017 increased by 19.5% to $51.0
billion as compared with $42.7 billion for 9M 2016, primarily due
to higher average steel selling prices (+20.4%), marginally higher
steel volumes, higher seaborne iron ore reference prices (+35%) and
higher marketable iron ore shipments (+6.8%).
Depreciation of $2.0 billion for 9M 2017 was
stable as compared to 9M 2016. FY 2017 depreciation is expected to
be approximately $2.8 billion.
Impairment charges for 9M 2017 were $46 million
related to a downward revision of cash flow projections in
South Africa as compared to impairment charges for 9M 2016 of $49
million related to the sale of ArcelorMittal Zaragoza in
Spain[3].
Exceptional income for 9M 2017 was nil.
Exceptional income for 9M 2016 was $832 million relating to a
one-time gain on employee benefits following the signing of the new
US labour contract[4].
Operating income for 9M 2017 was $4.2 billion as
compared to $3.4 billion for 9M 2016. Operating results for 9M 2016
were positively impacted by exceptional income as discussed
above.
Income from investments in associates, joint
ventures and other investments in 9M 2017 was $323 million as
compared to $601 million in 9M 2016. Income in 9M 2017 includes a
gain from disposal of ArcelorMittal USA's 21% stake in the Empire
Iron Mining Partnership[5] ($133
million) and improved performance of Calvert and Chinese investees,
offset in part by a loss on dilution of the Company's stake in
China Oriental[6] and the
recycling of cumulative foreign exchange translation losses
incurred following disposal of the 50% stake in Kalagadi ($187
million)[7]. Income in
9M 2016 included gains on disposal of Gestamp[8] ($329
million) and Hunan Valin[9] ($74
million).
Net interest expense was lower at $635 million in
9M 2017, as compared to $893 million in 9M 2016, driven by debt
reduction including early bond repayments. The Company expects full
year 2017 net interest expense of approximately $0.8 billion.
Foreign exchange and other net financing gains
were $209 million for 9M 2017 as compared to losses of $664 million
for 9M 2016. The foreign exchange gain in 9M 2017 is largely
non-cash and primarily relates to the gain from the impact of the
USD movements on Euro denominated deferred tax assets, partially
offset by foreign exchange losses on Euro denominated debt. Foreign
exchange and other net financing gains for 9M 2017 include foreign
exchange gains of $463 million as compared to $124 million in 9M
2016, mainly on account of USD depreciation of 12% against the Euro
(versus USD depreciation of 2.5% in prior period). 9M 2017 includes
non-cash mark-to-market gains on derivatives (primarily mandatory
convertible bonds call options following the market price increase
in the underlying shares) totalling $0.6 billion in 9M 2017 as
compared to $0.1 billion in 9M 2016. Foreign exchange and other net
financing gains/losses for 9M 2017 and 9M 2016 also includes $377
million and $395 million, respectively, for premium expense on the
early redemption of bonds.
ArcelorMittal recorded an income tax expense of
$0.6 billion for 9M 2017 as compared to an income tax expense of
$1.0 billion for 9M 2016. The tax expense in 9M 2016 includes
derecognition of deferred tax assets (DTA) amounting to $0.7
billion in Luxembourg (related to revised expectations of DTA
recoverability in US dollar terms).
ArcelorMittal's net income for 9M 2017 was $3.5
billion, or $3.46 earnings per share, as compared to net income in
9M 2016 of $1.4 billion, or $1.48 earnings per share.
Analysis of
results for 3Q 2017 versus 2Q 2017 and 3Q 2016
Total steel shipments in 3Q 2017 were 1.0% higher
at 21.7Mt as compared with 21.5Mt for 2Q 2017 primarily due to
higher steel shipments in Brazil (+12.1%), NAFTA (+4.3%) and ACIS
(+3.2%), offset in part by decline in Europe (-3.3%).
On a comparable basis, excluding shipments from
assets sold during the comparable period (i.e. considering the sale
of Zaragoza in Spain), and excluding the impact of the optimization
at Zumarraga in Spain (Europe segment), total steel shipments for
3Q 2017 were 7.5% higher as compared to 3Q 2016, primarily due to
higher steel shipment volumes in NAFTA (+5.4%), Brazil (+6.9%) and
Europe (+9.2%) offset by weaker steel shipment volumes in ACIS
(down -1.3% due to weak South Africa market and lower shipments in
Ukraine).
Sales for 3Q 2017 were $17.6 billion as compared
to $17.2 billion for 2Q 2017 and $14.5 billion for 3Q 2016. Sales
in 3Q 2017 were 2.3% higher as compared to 2Q 2017, primarily due
to higher steel shipments (+1.0%), higher average steel selling
prices (+1.5%), higher iron ore reference prices (+12.7%) offset in
part by lower market-priced iron ore shipments (-3.9%). Sales in 3Q
2017 were 21.5% higher as compared to 3Q 2016 primarily due to
higher steel shipments (+6.8%), higher average steel selling prices
(+14.8%), higher seaborne iron ore reference prices (21%) and
higher market-priced iron ore shipments (+12.3%).
Depreciation for 3Q 2017 was higher at $690
million as compared to $676 million for 2Q 2017 and stable as
compared to $693 million in 3Q 2016. Depreciation increased in 3Q
2017 as compared to 2Q 2017, primarily on account of foreign
exchange differences following the depreciation of USD vs major
currencies.
Impairment charges for 3Q 2017 and 3Q 2016 were
nil. Impairment charges for 2Q 2017 were $46 million related to a
downward revision of cash flow projections in South
Africa.
Operating income for 3Q 2017 was lower at $1.2
billion as compared to $1.4 billion in 2Q 2017, and stable as
compared to 3Q 2016.
Income from associates, joint ventures and other
investments for 3Q 2017 was $117 million as compared to $120
million for 2Q 2017 and $109 million in 3Q 2016. Income from
associates, joint ventures and other investments for 3Q 2017
includes the recycling of the cumulative foreign exchange
translation losses following the disposal of 50% stake in Kalagadi
($187 million) offset by a gain on disposal of ArcelorMittal USA's
21% stake in the Empire Iron Mining Partnership ($133 million) and
improved performance of Chinese investees.
Net interest expense in 3Q 2017 was $205 million
as compared to $207 million in 2Q 2017 and $255 million in 3Q 2016.
Net interest expense was lower in 3Q 2017 as compared to 3Q 2016
primarily due to debt reduction including early bond repayment via
debt tenders.
Foreign exchange and other net financing gains in
3Q 2017 were $132 million as compared to $210 million for 2Q 2017
and losses of $223 million in 3Q 2016. For 3Q 2017 a foreign
exchange gain of $181 million was recorded (as compared to a gain
of $247 million for 2Q 2017) mainly on account of a 3.5%
depreciation of the USD against the Euro (versus 6.7% depreciation
in 2Q 2017). Both 3Q 2017 and 2Q 2017 include non-cash
mark-to-market gains on derivatives (primarily mandatory
convertible bonds call options following the market price increase
in the underlying shares) of $327 million and $150 million,
respectively. 3Q 2017 includes $218 million on premium expenses
accrued in connection with the early repayment of bonds (settled in
October 2017). Foreign exchange and other net financing costs in 3Q
2016 was $223 million and included a foreign exchange gain of $65
million mainly on account of USD depreciation of 0.5% against the
Euro. 3Q 2016 also includes $158 million on premium expenses
accrued on the bond repayments via debt tenders.
ArcelorMittal recorded an income tax expense of
$71 million for 3Q 2017 as compared to $197 million for 2Q 2017 and
$146 million in 3Q 2016.
ArcelorMittal recorded net income for 3Q 2017 of
$1,205 million, or $1.18 earnings per share, as compared to net
income for 2Q 2017 of $1,322 million, or $1.30 earnings per share,
and a net income for 3Q 2016 of $680 million, or $0.67 earnings per
share.
Analysis of segment
operations
NAFTA
(USDm) unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
4,636 |
4,607 |
4,269 |
13,701 |
12,011 |
Operating
income |
256 |
378 |
424 |
1,030 |
1,838 |
Depreciation |
(125) |
(128) |
(142) |
(381) |
(412) |
Exceptional
income4 |
- |
- |
- |
- |
832 |
EBITDA |
381 |
506 |
566 |
1,411 |
1,418 |
Crude steel
production (kt) |
5,904 |
5,762 |
5,632 |
17,882 |
17,011 |
Steel
shipments (kt) |
5,655 |
5,419 |
5,364 |
16,684 |
16,270 |
Average
steel selling price (US$/t) |
741 |
760 |
715 |
740 |
670 |
NAFTA segment crude steel production increased by
2.5% to 5.9Mt in 3Q 2017 as compared to 5.8Mt for 2Q 2017 (which
was impacted by planned maintenance).
Steel shipments in 3Q 2017 increased by 4.3% to
5.7Mt as compared to 5.4Mt in 2Q 2017, driven primarily by an
increase in volumes in Mexico.
Sales in 3Q 2017 were stable at $4.6 billion as
compared to 2Q 2017, primarily due to higher steel shipment volumes
as discussed above offset by lower average steel selling prices
(-2.5%). Compared to 2Q 2017, average steel selling prices for flat
and long products declined by -1.8% and -2.2%, respectively.
Operating income in 3Q 2017 decreased to $256
million as compared to operating income of $378 million in 2Q 2017
and operating income of $424 million in 3Q 2016.
EBITDA in 3Q 2017 decreased by 24.7% to $381
million as compared to $506 million in 2Q 2017 primarily due to a
negative price-cost effect, offset in part by higher steel shipment
volumes (+4.3%). EBITDA in 3Q 2017 declined by 32.7% as compared to
$566 million in 3Q 2016.
Brazil
(USDm) unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
2,059 |
1,834 |
1,729 |
5,503 |
4,472 |
Operating
income |
128 |
128 |
233 |
431 |
471 |
Depreciation |
(74) |
(73) |
(68) |
(218) |
(188) |
EBITDA |
202 |
201 |
301 |
649 |
659 |
Crude steel
production (kt) |
2,797 |
2,714 |
2,888 |
8,221 |
8,355 |
Steel
shipments (kt) |
2,940 |
2,622 |
2,751 |
7,788 |
7,912 |
Average
steel selling price (US$/t) |
651 |
655 |
582 |
660 |
525 |
Brazil segment crude steel production increased by
3% to 2.8Mt in 3Q 2017 as compared to 2Q 2017 with improvement in
flat operations partially offset by lower long products production
following planned maintenance at Monlevade, Brazil, which was
completed during the quarter.
Steel shipments in 3Q 2017 increased by 12.1% to
2.9Mt as compared to 2.6Mt in 2Q 2017, primarily due to a 4.9%
increase in flat product steel shipments and a 25% increase in long
product steel shipments. Both domestic and export steel shipments
increased.
Sales in 3Q 2017 increased by 12.3% to $2.1
billion as compared to $1.8 billion in 2Q 2017, due to higher steel
shipments offset in part by lower average steel selling prices
primarily due to lower export prices.
Operating income in 3Q 2017 was stable at $128
million as compared to 2Q 2017, and lower as compared to operating
income of $233 million in 3Q 2016.
EBITDA in 3Q 2017 was stable at $202 million as
compared to $201 million in 2Q 2017 due to higher steel shipment
volumes offset by negative price-cost effect (largely due to lower
export prices). EBITDA in 3Q 2017 was 32.7% lower as compared to
$301 million in 3Q 2016.
Europe
(USDm) unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
9,196 |
9,180 |
7,172 |
26,598 |
22,133 |
Operating
income |
546 |
652 |
414 |
1,834 |
883 |
Depreciation |
(302) |
(290) |
(303) |
(865) |
(873) |
Impairment |
- |
- |
- |
- |
(49) |
EBITDA |
848 |
942 |
717 |
2,699 |
1,805 |
Crude steel
production (kt) |
11,248 |
10,997 |
10,571 |
33,457 |
32,462 |
Steel
shipments (kt) |
10,116 |
10,466 |
9,382 |
30,790 |
30,712 |
Average
steel selling price (US$/t) |
723 |
698 |
596 |
690 |
561 |
Europe segment crude steel production increased by
2.3% to 11.2Mt in 3Q 2017, as compared to 11.0Mt in 2Q 2017.
Steel shipments in 3Q 2017 decreased by 3.3% to
10.1Mt as compared to 10.5Mt in 2Q 2017, primarily due to a 5.1%
decrease in flat product shipments offset in part by a 1.4%
recovery in long product shipments. The decline in shipments was
notably less than the typical seasonal effects, reflecting
supportive market conditions.
Sales in 3Q 2017 were $9.2 billion, stable as
compared to 2Q 2017, with lower steel shipments being offset by
higher US dollar average steel selling prices (+3.5%). US dollar
flat and long product average steel selling prices increased (by
+3.1% and +7.8%, respectively), but this reflects currency impacts
(euro appreciation versus the US dollar) as average euro steel
selling prices for the Europe segment were lower than the previous
quarter.
Operating income in 3Q 2017 was $546 million as
compared to $652 million in 2Q 2017 and $414 million in 3Q
2016.
EBITDA in 3Q 2017 decreased by 9.9% to $848
million as compared to $942 million in 2Q 2017 primarily due to
lower steel volumes and a negative price-cost effect partially
offset by foreign exchange gains following the appreciation of the
Euro. EBITDA in 3Q 2017 improved 18.3% as compared to 3Q 2016
primarily on account of higher steel shipments (+7.8%) and higher
average steel selling prices (+21.4%).
ACIS
(USDm) unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
1,941 |
1,834 |
1,586 |
5,582 |
4,359 |
Operating
income |
159 |
51 |
156 |
326 |
303 |
Depreciation |
(80) |
(77) |
(77) |
(232) |
(233) |
Impairment |
- |
(46) |
- |
(46) |
- |
EBITDA |
239 |
174 |
233 |
604 |
536 |
Crude steel
production (kt) |
3,669 |
3,685 |
3,552 |
10,846 |
11,146 |
Steel
shipments (kt) |
3,362 |
3,257 |
3,408 |
9,840 |
10,176 |
Average
steel selling price (US$/t) |
515 |
499 |
419 |
505 |
383 |
ACIS segment crude steel production in 3Q 2017 was
stable at 3.7Mt as compared to 2Q 2017.
Steel shipments in 3Q 2017 increased by 3.2% to
3.4Mt as compared to 3.3Mt in 2Q 2017 primarily due to higher steel
shipments in CIS.
Sales in 3Q 2017 increased by 5.8% to $1.9 billion
as compared to 2Q 2017, primarily due to higher steel shipments
(+3.2%) and higher average steel selling prices (+3.3%) primarily
in Ukraine.
Operating income in 3Q 2017 was $159 million as
compared to $51 million in 2Q 2017 and $156 million in 3Q 2016.
Operating performance in 2Q 2017 was impacted by impairment charges
of $46 million related to a downward revision of cash flow
projections in South Africa.
EBITDA in 3Q 2017 increased 37.5% to $239 million
as compared to $174 million in 2Q 2017, primarily due to improved
performance in CIS (positive price-cost effect) and increased
shipment volumes. EBITDA in 3Q 2017 was 2.7% higher as compared to
$233 million in 3Q 2016, primarily due to a positive price-cost
effect in CIS offset in part by a negative price-cost effect in
South Africa.
Mining
(USDm) unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
1,029 |
1,015 |
809 |
3,074 |
2,218 |
Operating
income |
238 |
216 |
103 |
832 |
163 |
Depreciation |
(103) |
(103) |
(101) |
(308) |
(302) |
EBITDA |
341 |
319 |
204 |
1,140 |
465 |
|
|
|
|
|
|
Own iron ore production (a) (Mt) |
14.2 |
14.7 |
13.7 |
42.9 |
41.3 |
Iron ore shipped externally and internally at market price
(b) (Mt) |
9.1 |
9.5 |
8.1 |
27.2 |
25.5 |
Iron ore
shipment - cost plus basis (Mt) |
5.9 |
5.8 |
5.8 |
16.4 |
16.9 |
Own coal production(a) (Mt) |
1.5 |
1.6 |
1.6 |
4.8 |
4.5 |
Coal shipped externally and internally at market
price(b) (Mt) |
0.6 |
0.8 |
1.0 |
2.2 |
2.5 |
Coal
shipment - cost plus basis (Mt) |
0.9 |
0.9 |
0.9 |
2.7 |
2.5 |
(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 3Q 2017 decreased by
3.1% to 14.2Mt as compared to 14.7Mt in 2Q 2017 due to lower
production in Canada and Ukraine (on account of unplanned
maintenance), offset in part by increased production in USA. Own
iron ore production in 3Q 2017 increased by 4.2% as compared to 3Q
2016 primarily due to increased production in Mexico (following
restart of Volcan mine in February 2017).
Market-priced iron ore shipments in 3Q 2017
decreased 3.9% to 9.1Mt as compared to 9.5Mt in 2Q 2017, primarily
driven by lower shipments in ArcelorMittal Mines Canada[10] and
Ukraine. Market-priced iron ore shipments in 3Q 2017 increased by
12.3% as compared to 3Q 2016 driven by increased shipments in
Mexico and Liberia. FY 2017 market-priced iron ore shipments are
expected to increase by approximately 10% versus FY 2016.
Own coal production in 3Q 2017 decreased by 7.2%
to 1.5Mt as compared to 1.6Mt at 2Q 2017 due to lower production in
both Kazakhstan and Princeton (US) mines. Own coal production in 3Q
2017 decreased by 7.2% as compared to 3Q 2016 with lower production
in Kazakhstan offset in part by higher production at Princeton (US)
mines.
Market-priced coal shipments in 3Q 2017 decreased
to 0.6Mt as compared to 0.8Mt in 2Q 2017 primarily due to decreased
shipments at Kazakhstan. Market-priced coal shipments in 3Q 2017
decreased as compared to 3Q 2016 primarily due to decreased
shipments at Princeton (US) and Kazakhstan.
Operating income in 3Q 2017 increased to $238
million as compared to $216 million in 2Q 2017, and $103 million in
3Q 2016, primarily for the reasons discussed below.
EBITDA in 3Q 2017 increased by 7.2% to $341
million as compared to $319 million in 2Q 2017, primarily due to
increased seaborne iron ore reference prices (+12.7%), partially
offset by lower market-priced iron ore shipments (-3.9%) and lower
coal shipments. EBITDA in 3Q 2017 was significantly higher as
compared to $204 million in 3Q 2016, primarily due to higher
seaborne iron ore reference prices (+21%) and higher market-priced
iron ore shipment volumes (+12.3%).
Liquidity and Capital
Resources
For 3Q 2017, net cash provided by operating
activities was $763 million as compared to $1,214 million in 2Q
2017 and $876 million in 3Q 2016. The lower net cash provided by
operating activities during 3Q 2017 reflects in part a higher
working capital investment of $801 million, as compared to an
investment of $548 million in 2Q 2017 and $565 million in 3Q
2016.
Net cash used in investing activities during 3Q
2017 was $563 million as compared to $738 million during 2Q 2017
and compared to $300 million in 3Q 2016. Capital expenditure
increased to $637 million in 3Q 2017 as compared to $566 million in
2Q 2017 and compared to $535 million in 3Q 2016. FY 2017 capital
expenditure is expected to be $2.9 billion.
Cash provided by other investing activities in 3Q
2017 of $74 million primarily includes the first instalment of
disposal proceeds from ArcelorMittal USA's 21% stake in the Empire
Iron Mining Partnership ($44 million). Cash used in other investing
activities in 2Q 2017 of $172 million, includes $44 million cash
consideration (net of cash acquired of $14 million) for the
acquisition of a 55.5% stake in Bekaert Sumare (a tire cord
manufacturer in Brazil) and $110 million deposited in a restricted
cash account in ArcelorMittal South Africa in connection with
various environmental obligations and true sale of receivable
programs. Cash provided by other investing activities in 3Q 2016 of
$235 million primarily consisted of proceeds from the sale of
ArcelorMittal's stake in Hunan Valin ($165 million) and from the
sale of ArcelorMittal Zaragoza ($89 million)3.
Net cash provided by financing activities in 3Q
2017 was $514 million as compared to net cash used in financing
activities for 2Q 2017 of $744 million and $741 million for 3Q
2016. Net cash provided by financing activities in 3Q 2017 includes
borrowings and commercial paper, offset in part by a $0.5 billion
repayment of drawings under the asset-based revolving credit
facility at ArcelorMittal USA. Net cash used in financing
activities for 2Q 2017 primarily included $851 million used to
early redeem the 9.85% Notes due June 1, 2019. On May 25, 2017,
ArcelorMittal South Africa signed a 4.5 billion South African Rand
(approximately $350 million) revolving borrowing base finance
facility maturing on May 25, 2020. As of September 30, 2017, $288
million was drawn under this facility. Net cash used in financing
activities for 3Q 2016 primarily includes payments relating to bond
repurchases pursuant to cash tender offers ($1.4 billion), offset
by proceeds of $1.0 billion from drawings under other short-term
facilities (including $0.5 billion from the asset-based revolving
credit facility at ArcelorMittal USA which matures in 2021). During
3Q 2017, the Company paid dividends of $80 million primarily to
minority shareholders in ArcelorMittal Mines Canada and in Bekaert
(Brazil).
As of September 30, 2017, the Company's cash and
cash equivalents amounted to $3.0 billion as compared to $2.3
billion at June 30, 2017 and $2.3 billion at September 30, 2016.
Gross debt increased to $14.9 billion as of September 30, 2017, as
compared to $14.2 billion at June 30, 2017 and $14.4 billion at
September 30, 2016. The amount as of September 30, 2017 does not
reflect the usage of cash to repurchase bonds on October 16,
2017.
As of September 30, 2017, net debt increased to
$12.0 billion as compared with $11.9 billion at June 30, 2017
primarily due to negative foreign exchange impacts on
Euro-denominated debt ($0.2 billion) offset in part by positive
free cashflow $0.1 billion (despite a $0.8 billion investment in
working capital), and lower than the net debt of $12.2 billion as
of September 30, 2016 due to positive free cash flow offsetting
$0.3 billion foreign exchange impacts.
As of September 30, 2017, the Company had
liquidity of $8.5 billion, consisting of cash and cash equivalents
of $3.0 billion and $5.5 billion of available credit
lines[11]. The $5.5
billion credit facility contains a financial covenant of 4.25x Net
debt / EBITDA (as defined in the facility). On September 30, 2017,
the average debt maturity was 4.7 years.
Key recent developments
-
On November 8, 2017, ArcelorMittal confirmed
that the European Commission had initiated a Phase II review of AM
Investco Italy Srl ('AM Investco')'s proposed acquisition of Ilva
S.p.A. ArcelorMittal will continue to work closely and
constructively with the European Commission to explain the dynamics
of the steel industry, the rationale of the proposed acquisition
and the benefits it will bring to industry, customers, the
environment and the local economy. The Company looks forward to
ongoing dialogue with the Commission to secure approval for this
transaction in a timely manner. ArcelorMittal notified AM
Investco's proposed acquisition of Ilva S.p.A to the European
Commission on September 21, 2017, and submitted commitments on
October 19, 2017. AM Investco reached a binding agreement
concerning the lease and obligation to purchase Ilva S.p.A and its
subsidiaries with the Italian Government in June 2017.
-
On September 28, 2017, ArcelorMittal announced
the launch of its tender offers to purchase for cash, for a
combined aggregate purchase price of up to $1,250,000,000 (the
"Maximum Tender Cap"), its outstanding 6.250% notes due 2022,
7.000% notes due 2039 and 6.750% notes due 2041. On October 13,
2017, the Company announced its decision to increase the Maximum
Tender Cap to $1,410,627,664 so as to avoid proration of any series
of validly tendered Notes: the Company repurchased notes in such
amount on October 16, 2017, using $1.4 billion of cash and
liquidity resources.
-
On September 28, 2017, ArcelorMittal announced a
major US$1 billion, three-year investment programme at its Mexican
operations, which is focussed on building ArcelorMittal Mexico's
downstream capabilities, sustaining the competitiveness of its
mining operations and modernising its existing asset base. The
programme is designed to enable ArcelorMittal Mexico to meet the
anticipated increased demand requirements from domestic customers,
realise in full ArcelorMittal Mexico's production capacity of 5.3
million tonnes and significantly enhance the proportion of
higher-value added products in its product mix, in-line with the
Company's Action 2020 strategic plan. The main investment will be
the construction of a new hot strip mill. Construction will take
approximately three years and, upon completion, will enable
ArcelorMittal Mexico to produce c. 2.5 million tonnes of flat
rolled steel, long steel c. 1.8 million tonnes and the remainder
made up of semi-finished slabs. Coils from the new hot strip mill
will be supplied to domestic, non-auto, general industry
customers.
-
On August 25, 2017, ArcelorMittal completed the
sale (per a sales agreement entered into in October 2016) 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.
-
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, and two subsequent payments to be received
in August 2018 and 2019.
Outlook and guidance
The Company's forecasts for global apparent steel
consumption ("ASC") remain as presented at the time of 2Q 2017
results with the balance of risks now to the upside.
ArcelorMittal expects 2017 global ASC to grow by
approximately +2.5% to +3.0%. By region: ASC in the US (excluding
Pipe & Tube) is expected to grow +2.0% to +3.0% reflecting
higher machinery and construction demand offset by lower automotive
production. In Europe, ArcelorMittal expects the pick-up in
underlying demand to continue, driven primarily by the strength of
the construction and machinery markets, and apparent demand is
expected at +0.5% to +1.5% in 2017 on top of around 3% growth in
2016. In Brazil, ASC is expected to grow by +2.0% to +3.0% in
2017 as the continued weakness in construction is partially offset
by mild improvement in consumer confidence and automotive
demand. In the CIS, ASC is expected to grow +2.0% to +2.5%
reflecting stronger economic growth in Russia. In China, ASC growth
of +2.5% to +3.5% is expected in 2017, primarily due to strength in
automotive and machinery.
Market conditions are favourable. The demand
environment remains positive (as evidenced by the continued high
readings from the ArcelorMittal weighted PMI), and steel spreads
remain healthy.
The Company continues to expect cash needs of the
business (capex, interest expense, cash taxes, pensions and other
cash costs but excludes working capital investment and premiums
paid to retire debt early) to be approximately $4.6 billion in
2017.
Given the improved market conditions, the Company
now expects a full year 2017 investment in working capital of
approximately $2.0 billion (as compared to previous guidance of
approximately $1.5 billion).
ArcelorMittal Condensed
Consolidated Statement of Financial Position1
|
|
|
Sep 30, |
Jun 30, |
Dec 31, |
In millions
of U.S. dollars |
|
|
2017 |
2017 |
2016 |
ASSETS |
|
|
|
|
|
Cash and
cash equivalents (C) |
|
|
2,978 |
2,272 |
2,615 |
Trade
accounts receivable and other |
|
|
4,443 |
4,263 |
2,974 |
Inventories |
|
|
17,780 |
17,458 |
14,734 |
Prepaid
expenses and other current assets |
|
|
2,719 |
2,286 |
1,665 |
Assets held
for sale[12] |
|
|
127 |
127 |
259 |
Total Current Assets |
|
|
28,047 |
26,406 |
22,247 |
|
|
|
|
|
|
Goodwill
and intangible assets |
|
|
5,856 |
5,769 |
5,651 |
Property,
plant and equipment |
|
|
36,471 |
35,765 |
34,831 |
Investments
in associates and joint ventures |
|
|
4,943 |
4,679 |
4,297 |
Deferred
tax assets |
|
|
6,697 |
6,470 |
5,837 |
Other
assets |
|
|
2,498 |
2,371 |
2,279 |
Total Assets |
|
|
84,512 |
81,460 |
75,142 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Short-term
debt and current portion of long-term debt (B) |
|
|
5,764 |
3,936 |
1,885 |
Trade
accounts payable and other |
|
|
12,074 |
12,555 |
11,633 |
Accrued
expenses and other current liabilities |
|
|
5,229 |
4,930 |
4,502 |
Liabilities
held for sale12 |
|
|
40 |
39 |
95 |
Total Current Liabilities |
|
|
23,107 |
21,460 |
18,115 |
|
|
|
|
|
|
Long-term
debt, net of current portion (A) |
|
|
9,185 |
10,220 |
11,789 |
Deferred
tax liabilities |
|
|
2,713 |
2,690 |
2,529 |
Other
long-term liabilities |
|
|
10,966 |
10,838 |
10,384 |
Total Liabilities |
|
|
45,971 |
45,208 |
42,817 |
|
|
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
36,374 |
34,027 |
30,135 |
Non-controlling interests |
|
|
2,167 |
2,225 |
2,190 |
Total Equity |
|
|
38,541 |
36,252 |
32,325 |
Total Liabilities and Shareholders' Equity |
|
|
84,512 |
81,460 |
75,142 |
|
|
|
|
|
|
Net Debt (D=A+B-C) |
|
|
11,971 |
11,884 |
11,059 |
ArcelorMittal Condensed
Consolidated Statement of Operations1
|
Three
months ended |
Nine
months ended |
In millions
of U.S. dollars unless otherwise shown |
Sept
30,
2017 |
Jun
30,
2017 |
Sept
30,
2016 |
Sept
30,
2017 |
Sept
30,
2016 |
Sales |
17,639 |
17,244 |
14,523 |
50,969 |
42,665 |
Depreciation (B) |
(690) |
(676) |
(693) |
(2,021) |
(2,025) |
Impairment
(B) |
- |
(46) |
- |
(46) |
(49) |
Exceptional
income4 (B) |
- |
- |
- |
- |
832 |
Operating income (A) |
1,234 |
1,390 |
1,204 |
4,200 |
3,352 |
Operating
margin % |
7.0% |
8.1% |
8.3% |
8.2% |
7.9% |
|
|
|
|
|
|
Income from
associates, joint ventures and other investments |
117 |
120 |
109 |
323 |
601 |
Net
interest expense |
(205) |
(207) |
(255) |
(635) |
(893) |
Foreign
exchange and other net financing gain/(loss) |
132 |
210 |
(223) |
209 |
(664) |
Income before taxes and non-controlling interests |
1,278 |
1,513 |
835 |
4,097 |
2,396 |
Current tax expense |
(116) |
(126) |
(67) |
(449) |
(174) |
Deferred tax benefit / (expense) |
45 |
(71) |
(79) |
(102) |
(825) |
Income tax
expense |
(71) |
(197) |
(146) |
(551) |
(999) |
Income including non-controlling interests |
1,207 |
1,316 |
689 |
3,546 |
1,397 |
Non-controlling interests (income) / loss |
(2) |
6 |
(9) |
(17) |
(21) |
Net income attributable to equity holders of the
parent |
1,205 |
1,322 |
680 |
3,529 |
1,376 |
|
|
|
|
|
|
Basic
earnings per common share ($)2 |
1.18 |
1.30 |
0.67 |
3.46 |
1.48 |
Diluted
earnings per common share ($)2 |
1.18 |
1.29 |
0.67 |
3.45 |
1.48 |
|
|
|
|
|
|
Weighted
average common shares outstanding (in millions)2 |
1,020 |
1,020 |
1,020 |
1,020 |
931 |
Diluted
weighted average common shares outstanding (in millions)2 |
1,023 |
1,023 |
1,021 |
1,023 |
932 |
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
EBITDA (C =
A-B) |
1,924 |
2,112 |
1,897 |
6,267 |
4,594 |
EBITDA
Margin % |
10.9% |
12.2% |
13.1% |
12.3% |
10.8% |
|
|
|
|
|
|
Own iron
ore production (Mt) |
14.2 |
14.7 |
13.7 |
42.9 |
41.3 |
Crude steel
production (Mt) |
23.6 |
23.2 |
22.6 |
70.4 |
69.0 |
Total
shipments of steel products (Mt) |
21.7 |
21.5 |
20.3 |
64.2 |
63.9 |
ArcelorMittal Condensed
Consolidated Statement of Cash flows1
|
Three
months ended |
Nine
months ended |
In millions
of U.S. dollars |
Sept
30,
2017 |
Jun
30,
2017 |
Sept
30,
2016 |
Sept
30,
2017 |
Sept
30,
2016 |
Operating activities: |
|
|
|
|
|
Income
attributable to equity holders of the parent |
1,205 |
1,322 |
680 |
3,529 |
1,376 |
Adjustments to reconcile net income to net cash (used in) /
provided by operations: |
|
|
|
|
|
Non-controlling interest's income / (loss) |
2 |
(6) |
9 |
17 |
21 |
Depreciation and impairment |
690 |
722 |
693 |
2,067 |
2,074 |
Exceptional
income4 |
- |
- |
- |
- |
(832) |
Income from
associates, joint ventures and other investments |
(117) |
(120) |
(109) |
(323) |
(601) |
Deferred
tax (benefit)/ expense |
(45) |
71 |
79 |
102 |
825 |
Change in
working capital |
(801) |
(548) |
(565) |
(3,530) |
(1,518) |
Other
operating activities (net) |
(171) |
(227) |
89 |
(184) |
(290) |
Net cash provided by operating activities (A) |
763 |
1,214 |
876 |
1,678 |
1,055 |
Investing activities: |
|
|
|
|
|
Purchase of
property, plant and equipment and intangibles (B) |
(637) |
(566) |
(535) |
(1,783) |
(1,642) |
Other
investing activities (net) |
74 |
(172) |
235 |
(116) |
1,308 |
Net cash used in investing activities |
(563) |
(738) |
(300) |
(1,899) |
(334) |
Financing activities: |
|
|
|
|
|
Net
proceeds / (payments) relating to payable to banks and long-term
debt |
587 |
(726) |
(717) |
604 |
(5,557) |
Dividends
paid |
(80) |
- |
(7) |
(120) |
(54) |
Equity
offering |
- |
- |
- |
- |
3,115 |
Other
financing activities (net) |
7 |
(18) |
(17) |
(48) |
38 |
Net cash provided by / (used in) financing
activities |
514 |
(744) |
(741) |
436 |
(2,458) |
Net
decrease in cash and cash equivalents |
714 |
(268) |
(165) |
215 |
(1,737) |
Cash and
cash equivalents transferred from assets held for sale |
- |
- |
- |
13 |
- |
Effect of
exchange rate changes on cash |
9 |
30 |
29 |
42 |
(112) |
Change in cash and cash equivalents |
723 |
(238) |
(136) |
270 |
(1,849) |
|
|
|
|
|
|
Free cashflow (C=A+B) |
126 |
648 |
341 |
(105) |
(587) |
Appendix 1: Product shipments by
region
(000'kt) |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Flat |
4,820 |
4,748 |
4,698 |
14,512 |
13,906 |
Long |
984 |
845 |
829 |
2,658 |
2,830 |
NAFTA |
5,655 |
5,419 |
5,364 |
16,684 |
16,270 |
Flat |
1,766 |
1,682 |
1,730 |
4,812 |
4,812 |
Long |
1,181 |
945 |
1,026 |
2,992 |
3,100 |
Brazil |
2,940 |
2,622 |
2,751 |
7,788 |
7,912 |
Flat |
7,098 |
7,482 |
6,562 |
21,957 |
21,430 |
Long |
2,954 |
2,913 |
2,767 |
8,673 |
9,147 |
Europe |
10,116 |
10,466 |
9,382 |
30,790 |
30,712 |
CIS |
2,297 |
2,212 |
2,459 |
6,628 |
6,983 |
Africa |
1,065 |
1,045 |
950 |
3,212 |
3,192 |
ACIS |
3,362 |
3,257 |
3,408 |
9,840 |
10,176 |
Note: "Others and eliminations" lines are not
presented in the
table
Appendix 2a:
Capital expenditures
(USDm) |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
NAFTA |
95 |
90 |
98 |
282 |
307 |
Brazil |
79 |
55 |
44 |
191 |
156 |
Europe |
213 |
248 |
171 |
713 |
638 |
ACIS |
114 |
75 |
105 |
262 |
269 |
Mining |
132 |
94 |
113 |
316 |
255 |
Total |
637 |
566 |
535 |
1,783 |
1,642 |
Note: "Others and eliminations"
are not presented in the table
Appendix 2b: Capital expenditure
projects
The following tables summarize the Company's
principal growth and optimization projects involving significant
capital expenditures.
Completed
projects in most recent quarters
Segment |
Site /
unit |
Project |
Capacity /
details |
Actual
completion |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
New caster at No.3 Steelshop installed |
4Q 2016(a) |
NAFTA |
AM/NS Calvert |
Phase 2: Slab yard expansion (Bay 5) |
Increase coil production level from 4.6Mt/year to 5.3Mt/year
coils |
2Q 2017 |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Phase 2: Convert the current galvanizing line #4 to a
Galvalume line |
Allow the galvaline #4 to produce 160kt galvalume and 128kt
galvanize and closure of galvanize line #1 (capacity 170kt of
galvalume) |
2Q 2017
|
Europe |
ArcelorMittal Krakow (Poland) |
Hot strip mill (HSM) extension |
Increase hot rolled coil (HRC) capacity by 0.9Mt/year |
2Q 2017 |
Europe |
ArcelorMittal Krakow (Poland) |
Hot dipped galvanizing (HDG) increase |
Increasing HDG capacity by 0.4Mt/year |
2Q 2017
|
Ongoing projects
Segment |
Site /
unit |
Project |
Capacity /
details |
Forecast
completion |
Europe |
Gent & Liège (Europe Flat Automotive UHSS
Program)
|
Gent: Upgrade HSM and new furnace
Liège: Annealing line transformation |
Increase ~400kt in Ultra High Strength Steel
capabilities |
1Q 2018 |
Europe |
ArcelorMittal Differdange |
Modernisation of finishing of "Grey rolling mill" |
Revamp finishing to achieve full capacity of Grey mill at
850kt/y |
1Q 2018 |
ACIS |
ArcelorMittal Kryvyi Rih |
New LF&CC 2&3 |
Facilities upgrade to switch from ingot to continuous caster
route. Additional billets of 290kt over ingot route through yield
increase |
4Q 2018 |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
Restoration of 80" HSM and upgrades at Indiana Harbor
finishing and logistics |
2018(a) |
Europe |
Sosnowiec (Poland) |
Modernization of Wire Rod Mill |
Upgrade rolling technology improving the mix of HAV products
and increase volume by 90kt |
2019 |
NAFTA |
Mexico |
Build new HSM |
Production capacity of 2.5Mt/year |
2020(b) |
NAFTA |
Burns Harbor |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped galvanizing (HDG) capacity by 0.6Mt/year
and cold rolling (CR) capacity by 0.7Mt/year |
On hold |
Brazil |
Juiz de Fora |
Meltshop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On hold(c)
|
Brazil |
Monlevade |
Sinter plant, blast furnace and meltshop |
Increase in liquid steel capacity by 1.2Mt/year;
Sinter feed capacity of 2.3Mt/year |
On hold |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(d) |
a)
In support of the Company's Action 2020 program that was launched
at its fourth quarter and full-year 2015 earnings announcement, the
footprint optimization project at ArcelorMittal Indiana Harbor is
now underway, which has resulted in structural changes required to
improve asset and cost optimization. The plan involves 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 steelshop
(completed in 4Q 2016), restoration of the 80" hot strip mill,
logistics and Indiana Harbor finishing are ongoing. The full
project scope is expected to be completed in 2018.
b)
On September 28, 2017, ArcelorMittal announced a major US$1
billion, three-year investment programme at its Mexican operations,
which is focussed on building ArcelorMittal Mexico's downstream
capabilities, sustaining the competitiveness of its mining
operations and modernising its existing asset base. The programme
is designed to enable ArcelorMittal Mexico to meet the anticipated
increased demand requirements from domestic customers, realise in
full ArcelorMittal Mexico's production capacity of 5.3 million
tonnes and significantly enhance the proportion of higher-value
added products in its product mix, in-line with the Company's
Action 2020 strategic plan. The main investment will be the
construction of a new hot strip mill. Construction will take
approximately three years and, upon completion, will enable
ArcelorMittal Mexico to produce c. 2.5 million tonnes of flat
rolled steel, long steel c. 1.8 million tonnes and the remainder
made up of semi-finished slabs. Coils from the new hot strip mill
will be supplied to domestic, non-auto, general industry
customers.
c)
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, and the
Company does not expect to increase shipments until domestic demand
improves.
d)
ArcelorMittal Liberia is moving ore extraction from its depleting
DSO (direct shipping ore) deposit at Tokadeh to the nearby, low
strip ratio and higher-grade DSO Gangra deposit where planned ramp
up is underway. Following a period of exploration cessation caused
by the onset of Ebola, ArcelorMittal Liberia recommenced drilling
for DSO resource extensions in late 2015. During 2016, the
operation at Tokadeh was right-sized to focus on its "natural"
Atlantic markets. The nearby Gangra deposit is now the next
development in a staged approach as opposed to the originally
planned phase 2 step up to 15Mtpa of concentrate sinter fine ore
product that was delayed in August 2014 due to the declaration of
force majeure by contractors following the Ebola virus outbreak,
and then reassessed following rapid iron ore price declines over
the period since. The Gangra mine, haul road and related existing
plant and equipment upgrades are nearing completion. ArcelorMittal
remains committed to Liberia where it operates a full value chain
of mine, rail and port and where it has been operating
the mine on a DSO basis since 2011. The Company believes that
ArcelorMittal Liberia presents a strong, competitive source of
product ore for the international market based on continuing DSO
mining and then moving to a long-term sinter feed concentration
phase.
Appendix 3: Debt repayment
schedule as of September 30, 2017
Debt
repayment schedule (USD billion) |
2017 |
2018 |
2019 |
2020 |
2021 |
>2021 |
Total |
Bonds* |
1.8 |
1.5 |
0.9 |
1.9 |
1.3 |
3.7 |
11.1 |
Commercial
paper |
0.7 |
0.4 |
- |
- |
- |
- |
1.1 |
Other
loans |
1.0 |
0.4 |
0.3 |
0.2 |
0.2 |
0.6 |
2.7 |
Total gross debt |
3.5 |
2.3 |
1.2 |
2.1 |
1.5 |
4.3 |
14.9 |
*The 2017 maturities include $1.2 billion of bonds
originally maturing in 2022, 2039 and 2041 that were repurchased on
October 16, 2017.
Appendix 4: Terms and
definitions
Unless indicated otherwise, or the context
otherwise requires, references in this earnings release report to
the following terms have the meanings set out next to them
below:
Average steel selling prices:
calculated as steel sales divided by steel shipments.
Cash and cash equivalents: represents cash and
cash equivalents, restricted cash and short-term
investments.
Capex: includes the acquisition of tangible
and intangible assets.
EBITDA: operating income plus depreciation,
impairment expenses and exceptional income/(charges).
EBITDA/tonne: calculated as EBITDA divided by
total steel shipments.
Exceptional income / (charges): relate to
transactions that are significant, infrequent or unusual and are
not representative of the normal course of business such as
restructuring costs or asset disposals.
Foreign exchange and other net financing (loss) /
gain: include foreign currency exchange impact, bank fees,
interest on pensions, impairments of financial instruments,
revaluation of derivative instruments and other charges that cannot
be directly linked to operating results.
Free cash flow: Refers to net cash provided by
(used in) operating activities less capex.
Gross debt: long-term debt, plus short-term
debt (including those held as part of liabilities held for
sale).
Iron ore unit cash cost: includes weighted
average pellet and concentrate cost of goods sold across all
mines.
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.
Net debt/EBITDA: Refers to Net debt divided by
last twelve months EBITDA calculation.
Net interest: includes interest expense and
interest income
On-going projects: Refer to projects for which
construction has begun (excluding various projects that are under
development), even if such projects have been placed on hold
pending improved operating conditions.
Operating results: Refers to operating
income/(loss).
Operating segments: The NAFTA segment includes
the Flat, Long and Tubular operations of USA, Canada and Mexico.
The Brazil segment includes the Flat operations of Brazil, and the
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.
Own iron ore production: Includes total of all
finished production of fines, concentrate, pellets and lumps
(excludes share of production and strategic long-term
contracts).
PMI: Refers to purchasing managers index
(based on ArcelorMittal estimates)
Seaborne iron ore reference
prices: refers to iron ore prices for 62% Fe CFR
China.
Shipments: information at segment and group
level eliminates intra-segment shipments (which are primarily
between Flat/Long plants and Tubular plants) and inter-segment
shipments respectively. Shipments of Downstream Solutions are
excluded.
Steel-only EBITDA: calculated as EBITDA less
Mining segment EBITDA.
Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.
Working capital: trade accounts receivable
plus inventories less trade and other accounts payable.
YoY: Refers to year-on-year.
[1] The
financial information in this press release has been prepared
consistently with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and as adopted by the European Union. The interim
financial information included in this announcement has been also
prepared in accordance with IFRS applicable to interim periods,
however this announcement does not contain sufficient information
to constitute an interim financial report as defined in
International Accounting Standard 34, "Interim Financial
Reporting". The numbers in this press release have not been
audited. The financial information and certain other information
presented in a number of tables in this press release have been
rounded to the nearest whole number or the nearest decimal.
Therefore, the sum of the numbers in a column may not conform
exactly to the total figure given for that column. In addition,
certain percentages presented in the tables in this press release
reflect calculations based upon the underlying information prior to
rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. This press release also includes
certain non-GAAP financial measures. ArcelorMittal presents EBITDA,
and EBITDA/tonne, which are non-GAAP financial measures and defined
in the Condensed Consolidated Statement of Operations, as
additional measurements to enhance the understanding of operating
performance. ArcelorMittal believes such indicators are relevant to
describe trends relating to cash generating activity and provides
management and investors with additional information for comparison
of the Company's operating results to the operating results of
other companies. ArcelorMittal also presents net debt as an
additional measurement to enhance the understanding of its
financial position, changes to its capital structure and its credit
assessment. ArcelorMittal also presents free cash flow, which is a
non-GAAP financial measure defined in Condensed Consolidated
Statement of Cashflows, because it believes it is a useful
supplemental measure for evaluating the strength of its cash
generating capacity. Non-GAAP financial measures should be read in
conjunction with and not as an alternative for, ArcelorMittal's
financial information prepared in accordance with IFRS. Such
non-GAAP measures may not be comparable to similarly titled
measures applied by other companies.
[2] At the
Extraordinary General Meeting held on May 10, 2017, the
ArcelorMittal Shareholders approved a share consolidation based on
a ratio 1:3, whereby every three current shares are consolidated
into one share (with a change in the number of shares outstanding
and the accounting par value per share). The figures presented for
the basic and diluted earnings per share reflect this change.
[3] On July 28,
2016, ArcelorMittal and Megasa Siderúgica S.L. ("Megasa") signed a
shares sale and purchase agreement in respect of ArcelorMittal's
100% interest in ArcelorMittal Zaragoza ("AM Zaragoza"). The
closing conditions were completed on September 30, 2016. As a
result, ArcelorMittal transferred its shareholding in AM Zaragoza
to Megasa and simultaneously received the total cash consideration
of €80 million ($89 million). The cash consideration has been
calculated on a cash and debt free basis.
[4] On June 23,
2016, following the ratification by the United Steelworkers of a
new labor agreement which is valid until September 1, 2018,
ArcelorMittal made changes mainly to healthcare post-retirement
benefits in its subsidiary ArcelorMittal USA (NAFTA). The changes
resulted in a gain of $832 million recorded in 2Q 2016.
[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, and two subsequent
payments to be received in August 2018 and 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] On February
5, 2016 ArcelorMittal announced it had sold its 35% stake in
Gestamp Automoción ("Gestamp") to the majority shareholder, the
Riberas family, for a total cash consideration of €875 million
($971 million). In addition to the cash consideration,
ArcelorMittal received in 2Q 2016 a payment of $11 million as a
2015 dividend. ArcelorMittal continues its supply relationship with
Gestamp through its 35% shareholding in Gonvarri, a sister company
of Gestamp. ArcelorMittal sells coils to Gonvarri for processing
before being passed to Gestamp and other customers. Further,
ArcelorMittal continues to have a board presence in Gestamp,
collaborates in automotive R&D and remains its major steel
supplier.
[9] On August
2, 2016, the Company signed an agreement for the sale of its 10.08%
interest in Hunan Valin to a private equity fund. On September 14,
2016, the Company transferred the Hunan Valin shares and
simultaneously received the full proceeds of $165 million (RMB1,103
million) from the buyer and recorded a gain of $74
million.
[10]
ArcelorMittal Mines Canada, otherwise known as ArcelorMittal Mines
and Infrastructure Canada.
[11] On
December 21, 2016, ArcelorMittal signed an agreement for a $5.5
billion revolving credit facility (the "Facility"). This Facility
amends and restates the $6 billion revolving credit facility dated
April 30, 2015. The amended agreement incorporates a first tranche
of $2.3 billion maturing on December 21, 2019, and a second tranche
of $3.2 billion maturing on December 21, 2021. The Facility may be
used for general corporate purposes. As of September 30, 2017, the
$5.5 billion revolving credit facility remains fully available.
[12] Assets and
liabilities held for sale, as of September 30, 2017, and as of June
30, 2017, primarily include the carrying value of the USA long
product facilities at Steelton ("Steelton"). Assets and liabilities
held for sale as of December 31, 2016, include the carrying value
of Steelton and some activities of ArcelorMittal Downstream
Solutions in the Europe segment and America's Tailored Blanks.
Third quarter 2017 earnings
analyst conference call
ArcelorMittal will host a conference call hosted by Heads of
Finance and Investor Relations for members of the investment
community to discuss the three-month period ended September 30,
2017 on: Friday November 10, 2017 at 9.30am US Eastern time; 2.30pm
London time and 3.30pm CET.
The dial in
numbers are: |
|
|
Location |
Toll free
dial in numbers |
Local dial
in numbers |
Participant |
UK
local: |
0800 0515
931 |
+44 (0)203
364 5807 |
75635458# |
US
local: |
1 86 6719
2729 |
+1 24 0645
0345 |
75635458# |
US (New
York): |
1 86 6719
2729 |
+ 1 64 6663
7901 |
75635458# |
France: |
0800
914780 |
+33 1 7071
2916 |
75635458# |
Germany: |
0800 965
6288 |
+49 692
7134 0801 |
75635458# |
Spain: |
90 099
4930 |
+34 911
143436 |
75635458# |
Luxembourg: |
800
26908 |
+352 27 86
05 07 |
75635458# |
A replay of the conference call will be
available for one week by dialing: +49 (0) 1805 2047 088; Access
code 515139# |
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 2016, ArcelorMittal had revenues of $56.8
billion and crude steel production of 90.8 million metric tonnes,
while own iron ore production reached 55.2 million metric
tonnes.
ArcelorMittal is listed on the stock exchanges of
New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on
the Spanish stock exchanges of Barcelona, Bilbao, Madrid and
Valencia (MTS).
For more information about ArcelorMittal please visit:
http://corporate.arcelormittal.com/
Enquiries
ArcelorMittal investor relations:
Europe: +44 207 543 1128; Americas: +1 312 899 3985; Retail: +44
207 543 1156; SRI: +44 207 543 1156 and Bonds/credit: +33 1 71 92
10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988
Contact: Paul Weigh +44 203 214 2419; France (Image 7) Tel: +33 153
70 94 17
ArcelorMittal reports third quarter
2017 results