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