TIDMMT
Luxembourg, May 9, 2019 - ArcelorMittal (referred to as "ArcelorMittal"
or the "Company") (MT (New York, Amsterdam, Paris, Luxembourg), MTS
(Madrid)), the world's leading integrated steel and mining company,
today announced results(1) for the three-month period ended March 31,
2019.
Highlights:
-- Health and safety: LTIF rate2 of 1.14x in 1Q 2019
-- Operating income decreased to $0.8bn in 1Q 2019 as compared to $1.0bn in
4Q 2018 and $1.6bn in 1Q 2018
-- EBITDA of $1.7bn in 1Q 2019, 15.3% lower as compared to $2.0bn in 4Q
2018, primarily reflecting a negative price-cost effect; 1Q 2019 EBITDA
down 34.2% YoY
-- Net income of $0.4bn in 1Q 2019
-- Steel shipments of 21.8Mt in 1Q 2019, up 7.9% vs. 4Q 2018 and up 2.2% vs.
1Q 2018
-- 1Q 2019 iron ore shipments of 13.8Mt (stable YoY), of which 9.2Mt shipped
at market prices (+0.4% YoY)
-- Gross debt of $13.4bn as of March 31, 2019 as compared to $12.6bn as of
December 31, 2018. Net debt increased to $11.2bn as of March 31, 2019 due
to impact of IFRS 1612 lease accounting ($1.2bn). Excluding IFRS 16
Leases impact, net debt would be $10.0bn as of March 31, 2019 as compared
to $10.2bn as of December 31, 2018
-- Maintaining an investment grade credit rating through the cycle remains
ArcelorMittal's financial priority, with a target to reduce net debt to
below $7bn (previous target of $6bn adjusted to reflect the impact of
IFRS 16)
Financial highlights (on the basis of IFRS(1) ):
(USDm) unless otherwise shown 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
---------------------------------- ------ ------ ------ ------ --------
Sales 19,188 18,327 18,522 19,998 19,186
Operating income 769 1,042 1,567 2,361 1,569
Net income attributable to equity
holders of the parent 414 1,193 899 1,865 1,192
Basic earnings per share (US$) 0.41 1.18 0.89 1.84 1.17
Operating income/ tonne (US$/t) 35 51 76 109 73
EBITDA 1,652 1,951 2,729 3,073 2,512
EBITDA/ tonne (US$/t) 76 96 133 141 118
Steel-only EBITDA/ tonne (US$/t) 56 79 119 127 101
Crude steel production (Mt) 24.1 22.8 23.3 23.2 23.3
Steel shipments (Mt) 21.8 20.2 20.5 21.8 21.3
Own iron ore production (Mt) 14.1 14.9 14.5 14.5 14.6
Iron ore shipped at market price
(Mt) 9.2 10.0 8.5 10.0 9.1
---------------------------------- ------ ------ ------ ------ --------
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"Our first quarter results reflect the challenging operating environment
the industry has faced in recent months. Profitability has been impacted
by lower steel pricing due to weaker economic activity and continued
global overcapacity, as well as rising raw material costs as a result of
supply-side developments in Brazil.
"We continue to face a challenge from high levels of imports,
particularly in Europe, where safeguard measures introduced by the
European Commission have not been fully effective. Although we are
somewhat encouraged by the firmer price environment in China, this is
not being reflected in Europe where in order to adapt to the current
market environment we have recently announced annualized production cuts
of three million tonnes in our flat steel operations. It is important
there is a level playing field to address unfair competition, and this
includes a green border adjustment to ensure that imports into Europe
face the same carbon costs as producers in Europe.
"We remain focussed on our own initiatives to improve performance
through delivery of our Action2020 plan. Generating positive free cash
flow, demonstrating progress in our efforts to further strengthen our
balance sheet and improve shareholder returns are the priority."
Sustainable development and safety performance
Health and safety - Own personnel and contractors lost time injury
frequency rate
Health and safety performance (inclusive of ArcelorMittal Italia
(previously known as Ilva)), based on own personnel figures and
contractors lost time injury frequency (LTIF) rate was 1.14x(2) in the
first quarter of 2019 ("1Q 2019").
Excluding the impact of ArcelorMittal Italia, the LTIF was 0.66x for 1Q
2019 as compared to 0.70x for the fourth quarter of 2018 ("4Q 2018") and
0.62x for the first quarter of 2018 ("1Q 2018").
The Company's efforts to improve its Health and Safety record remain
focused on both further reducing the rate of severe injuries and
preventing fatalities.
Own personnel and contractors - Frequency rate(2)
4Q 3Q
Lost time injury frequency rate 1Q 19 18 18 2Q 18 1Q 18
----------------------------------- ----- ---- ---- ----- -------
Mining 0.38 0.64 0.63 0.62 0.34
NAFTA 0.58 0.37 0.56 0.64 0.39
Brazil 0.48 0.28 0.39 0.35 0.41
Europe 0.85 1.11 0.76 1.02 0.77
ACIS 0.75 0.59 0.61 0.52 0.79
Total Steel 0.71 0.71 0.62 0.72 0.66
Total (Steel and Mining) 0.66 0.70 0.62 0.71 0.62
----------------------------------- ----- ---- ---- ----- -----
ArcelorMittal Italia 11.05
-----
Total (Steel and Mining) including
ArcelorMittal Italia 1.14
-----
Key sustainable development highlights for 1Q 2019:
-- Recognized a Worldsteel Sustainability Champion for our achievements in
safety, water, lifecycle analysis and social and environmental
reporting.
-- Announced preparations for an industrial scale pilot of hydrogen based
steelmaking in Hamburg, Germany.
-- Completed independent pre-audit against ResponsibleSteel - a
multistakeholder standard due to launch at the end of 2019.
-- On April 25, 2019, ArcelorMittal released a new film to mark its 13th
global health and safety day. The new film is designed to reinforce the
critical importance of a safety-first approach at all times within the
organisation. The film, which explores the day's theme, "We always choose
the safest way", supports a day of activities designed to reinforce the
Company's safety culture. To watch the video, go to:
https://corporate.arcelormittal.com/news-and-media/news/2019/apr/25-04-2019.
Analysis of results for 1Q 2019 versus 4Q 2018 and 1Q 2018
Total steel shipments in 1Q 2019 were 7.9% higher at 21.8Mt as compared
with 20.2Mt for 4Q 2018 primarily due to higher steel shipments in
Europe (+14.4%) due in part to the acquisition of ArcelorMittal Italia
(following its consolidation from November 1, 2018) and NAFTA (+2.8%),
offset in part by lower steel shipments in Brazil (-5.7%). Excluding the
impact of ArcelorMittal Italia, steel shipments were 5.0% higher as
compared to 4Q 2018.
Total steel shipments in 1Q 2019 were 2.2% higher as compared with
21.3Mt for 1Q 2018 primarily due to higher steel shipments in Europe
(+8.0%) due in part to the acquisition of ArcelorMittal Italia and
Brazil (+16.0%) due in part to the impact of the Votorantim acquisition
following its consolidation as from April 2018, offset in part by lower
steel shipments in NAFTA (-4.3%) and ACIS (-12.1%) which was impacted by
operational issues in Temirtau, Kazakhstan. Excluding the impacts of the
ArcelorMittal Italia and Votorantim acquisitions, steel shipments were
3.6% lower as compared to 1Q 2018.
Sales in 1Q 2019 were $19.2 billion as compared to $18.3 billion for 4Q
2018 and $19.2 billion for 1Q 2018. Sales in 1Q 2019 were 4.7% higher as
compared to 4Q 2018 primarily due to higher steel shipments (+7.9%) and
higher seaborne iron ore reference prices (+15.2%), offset in part by
lower average steel selling prices (-3.1%) and seasonally lower
market-priced iron ore shipments (-8.2%). Sales in 1Q 2019 were stable
as compared to 1Q 2018 as the impacts of lower average steel selling
prices (-3.1%) were offset by higher steel shipments (+2.2%) and higher
seaborne iron ore reference prices (+10.8%).
Depreciation for 1Q 2019 was higher at $733 million as compared to $723
million for 4Q 2018. These charges now include the depreciation of
right-of-use assets recognized for the first time within property, plant
and equipment under IFRS 16 lease accounting, that were previously
recorded in cost of sales and selling, general and administrative
expenses. 1Q 2019 depreciation expense was higher than $711 million in
1Q 2018 primarily due to the impact of IFRS 16 partially offset by
foreign exchange gains. As a result of IFRS 16 and the impact of
ArcelorMittal Italia net of remedies depreciation expense for FY 2019 is
expected to increase to approximately $3.1 billion.
Impairment charges for 1Q 2019 were $150 million related to the remedy
asset sales for the ArcelorMittal Italia acquisition. Impairment charges
net of purchases gains for 4Q 2018 were $215 million(3) and primarily
related to the acquisition of ArcelorMittal Italia and the remedy asset
sales for the ArcelorMittal Italia acquisition. Impairment charges for
1Q 2018 were $86 million related to the agreed remedy package required
for the approval of the Votorantim acquisition(4) .
Exceptional items for 1Q 2019 were nil. Exceptional income for 4Q 2018
were $29 million primarily related to $202 million for PIS/Cofins tax
credits(10) related to prior periods recognized in Brazil, offset in
part by $113 million in charges related to a blast furnace dismantling
in Florange (France), and $60 million related to the new collective
labour agreement in the US (including a signing bonus). Exceptional
charges for 1Q 2018 were $146 million related to a provision taken in
respect of a litigation case that was paid in 3Q 2018(5) .
Operating income for 1Q 2019 was lower at $0.8 billion as compared to
$1.0 billion in 4Q 2018 and $1.6 billion in 1Q 2018 primarily driven by
weaker operating conditions (negative price-cost effect in the steel
segments) reflecting both the impact of the decline in steel prices
since 4Q 2018 and higher raw material prices, offset in part by the
impact of higher seaborne iron ore reference prices and higher steel
shipments. Operating results for 1Q 2019, 4Q 2018, and 1Q 2018 were
impacted by impairment charges net of purchase gains and exceptional
items as discussed above.
Income from associates, joint ventures and other investments for 1Q 2019
was $208 million as compared to $227 million for 4Q 2018 and $212
million for 1Q 2018. 1Q 2019 and 1Q 2018 were positively impacted by the
annual dividend declared by Erdemir ($93 million and $87 million,
respectively). 4Q 2018 was positively impacted by $0.1 billion in
currency translation gains following the disposal of ArcelorMittal's
investment in MacSteel (South Africa).
Net interest expense in 1Q 2019 was $161 million as compared to $140
million in 4Q 2018 and lower than $164 million in 1Q 2018. 1Q 2019 net
interest increased due to new bonds issued during the quarter and the
first-time adoption of IFRS 16 leases. The Company expects full year
2019 net interest expense to increase to approximately $0.65 billion
from previous guidance of approximately $0.6 billion primarily due to
the impact of IFRS 16.
Foreign exchange and other net financing losses in 1Q 2019 were $231
million as compared to $556 million for 4Q 2018 and $174 million in 1Q
2018. Foreign exchange loss for 1Q 2019 was $48 million as compared to a
loss of $7 million in 4Q 2018 and a gain of $72 million in 1Q 2018(6) .
1Q 2019 includes non-cash mark-to-market losses of $6 million related to
the mandatory convertible bonds call option as compared to losses of
$443 million in 4Q 2018 and $35 million in 1Q 2018.
ArcelorMittal recorded an income tax expense of $135 million in 1Q 2019
as compared to an income tax benefit of $711 million for 4Q 2018 and an
income tax expense of $203 million for 1Q 2018. The income tax benefit
for 4Q 2018 includes a $0.8 billion deferred tax benefit recorded mainly
in Luxembourg resulting from the expectation of higher future profits.
Income attributable to non-controlling interests was $36 million for 1Q
2019 as compared to $91 million for 4Q 2018 and $48 million in 1Q 2018
and relates primarily to profits in ArcelorMittal Mines Canada and
Bekaert (Brazil). Income attributable to non-controlling interests in 4Q
2018 included the share of currency translation gain following the
disposal of MacSteel as mentioned above.
ArcelorMittal recorded a net income for 1Q 2019 of $0.4 billion, or
$0.41 basic earnings per share, as compared to a net income for 4Q 2018
of $1.2 billion, or $1.18 basic earnings per share, and a net income for
1Q 2018 of $1.2 billion, or $1.17 basic earnings per share.
Analysis of segment operations
NAFTA
(USDm) unless otherwise
shown 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
---------------------------- ------ ------ ------ ------ --------
Sales 5,085 4,857 5,367 5,356 4,752
Operating income 216 310 612 660 308
Depreciation (134) (127) (132) (131) (132)
Exceptional charges -- (60) -- -- --
EBITDA 350 497 744 791 440
Crude steel production (kt) 5,388 5,026 5,723 5,946 5,864
Steel shipments (kt) 5,319 5,173 5,512 5,803 5,559
Average steel selling price
(US$/t) 874 882 896 853 779
---------------------------- ----- ----- ----- ----- -----
NAFTA segment crude steel production increased by 7.2% to 5.4Mt in 1Q
2019 as compared to 5.0Mt in 4Q 2018. This increase reflects higher
production in the US, despite an approximate 100kt loss due to a power
outage at Burns Harbor, and to a much lesser extent the eventual restart
of the blast furnace in Mexico which had suffered delays following
scheduled maintenance in 3Q 2018.
Steel shipments in 1Q 2019 increased by 2.8% to 5.3Mt as compared to
5.2Mt in 4Q 2018 with improvements in the flat business (+7.8%) offset
by weaker long product shipments (-19.0%), primarily in Mexico due to
less availability of material due to delayed restart of the blast
furnace as discussed above.
Sales in 1Q 2019 increased by 4.7% to $5.1 billion as compared to $4.9
billion in 4Q 2018, primarily due to higher steel shipments (+2.8%)
offset in part by lower average steel selling prices (-0.9%, flat
products were down -2.3% whilst long products increased 1.7%).
Exceptional charges for 4Q 2018 were $60 million related to the new
collective labour agreement in the US (which included a signing bonus).
Operating income in 1Q 2019 of $216 million was lower as compared to
$310 million in 4Q 2018 and $308 million in 1Q 2018. Operating results
for 4Q 2018 were impacted by the exceptional charges as discussed above.
EBITDA in 1Q 2019 decreased by 29.6% to $350 million as compared to $497
million in 4Q 2018 primarily due to negative price-cost effect offset in
part by higher steel shipment volumes. EBITDA in 1Q 2019 was also
negatively impacted by $32 million on account of the Burns Harbor power
outage discussed above. EBITDA in 1Q 2019 decreased by 20.5% as compared
to $440 million in 1Q 2018 primarily due to lower steel shipments
(-4.3%).
Brazil
(USDm) unless otherwise
shown 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
---------------------------- ------ ------ ------ ------ --------
Sales 2,156 2,429 2,103 2,191 1,988
Operating income 239 398 374 369 215
Depreciation (70) (84) (71) (74) (69)
Impairment -- -- -- -- (86)
Exceptional income -- 202 -- -- --
EBITDA 309 280 445 443 370
Crude steel production (kt) 3,013 3,191 3,158 3,114 2,801
Steel shipments (kt) 2,880 3,053 3,097 2,831 2,483
Average steel selling price
(US$/t) 704 687 714 728 752
---------------------------- ----- ----- ----- ----- -----
Brazil segment crude steel production decreased by 5.6% to 3.0Mt in 1Q
2019 as compared to 3.2Mt for 4Q 2018.
Steel shipments in 1Q 2019 decreased by 5.7% to 2.9Mt as compared to 4Q
2018, due to lower export volumes for both flat and long products,
partially offset by increased domestic shipments of flat products.
Sales in 1Q 2019 decreased by 11.2% to $2.2 billion as compared to $2.4
billion in 4Q 2018, due to lower steel shipments offset in part by 2.4%
higher average steel selling prices mainly due to improvement in long
products.
Exceptional income for 4Q 2018 was $202 million related to PIS/Cofins
tax credits related to prior periods recognized in Brazil.
Operating income in 1Q 2019 was lower at $239 million as compared to
$398 million in 4Q 2018 but higher than $215 million in 1Q 2018.
Operating results for 4Q 2018 were impacted by the exceptional income as
discussed above. 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 2019 increased by 10.6% to $309 million as compared to $280
million in 4Q 2018 primarily due to a positive price-cost effect. 4Q
2018 included a one-time provision of $17 million for employee related
charges. EBITDA in 1Q 2019 was 16.3% lower as compared to $370 million
in 1Q 2018 primarily due to foreign exchange translation impact and
challenging market conditions in Argentina.
Europe
(USDm) unless otherwise shown 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
Sales 10,494 9,761 9,559 10,527 10,641
Operating income 11 98 100 853 580
Depreciation (309) (323) (262) (292) (318)
Impairment charges net of purchase
gains (150) (215) (509) -- --
Exceptional charges -- (113) -- -- (146)
EBITDA 470 749 871 1,145 1,044
Crude steel production (kt) 12,372 11,580 10,841 11,026 11,246
Steel shipments (kt) 11,553 10,098 9,709 10,516 10,697
Average steel selling price (US$/t) 729 771 776 800 801
----------------------------------- ------ ------ ------ ------ ------
Europe segment crude steel production increased by 6.8% to 12.4Mt in 1Q
2019 as compared to 11.6Mt in 4Q 2018 due in part to the ArcelorMittal
Italia acquisition (consolidated as from November 1, 2018).
Steel shipments in 1Q 2019 increased by 14.4% to 11.6Mt as compared to
10.1Mt in 4Q 2018. Excluding the impact of ArcelorMittal Italia, steel
shipments increased by 9% as compared to 4Q 2018, but were 2.8% lower
than 1Q 2018.
Sales in 1Q 2019 were $10.5 billion, 7.5% higher as compared to $9.8
billion in 4Q 2018, with higher steel shipments, as discussed above,
offset in part by 5.4% lower average steel selling prices (both flat and
long products declining).
Impairment charges net of purchase gains for 1Q 2019 and 4Q 2018 were
$150 million and $215 million, respectively, primarily related to the
ArcelorMittal Italia acquisition in 4Q 2018 and the associated remedy
asset sales for the ArcelorMittal Italia in 2018 and 1Q 2019. Impairment
charges net of purchase gains for 1Q 2018 were nil.
Exceptional charges for 1Q 2019 were nil. Exceptional charges for 4Q
2018 were $113 million related to a blast furnace dismantling in
Florange (France). Exceptional charges for 1Q 2018 were $146 million
related to a provision taken in respect of a litigation case that was
paid in 3Q 2018.
Operating income in 1Q 2019 was $11 million as compared to $98 million
in 4Q 2018 and $580 million in 1Q 2018. Operating results were impacted
by impairment charges net of purchase gains and exceptional items as
discussed above.
Despite higher steel shipments, EBITDA in 1Q 2019 decreased by 37.3% to
$470 million as compared to $749 million in 4Q 2018 primarily due to a
negative price-cost effect. EBITDA in 1Q 2019 decreased by 55.0% as
compared to $1,044 million in 1Q 2018, primarily due to lower steel
shipments, foreign exchange, negative price-cost effect and losses of
ArcelorMittal Italia.
ACIS
(USDm) unless otherwise
shown 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
---------------------------- ------ ------ ------ ------ --------
Sales 1,645 1,763 1,989 2,129 2,080
Operating income 64 121 371 312 290
Depreciation (81) (77) (76) (85) (73)
EBITDA 145 198 447 397 363
Crude steel production (kt) 3,323 2,975 3,560 3,087 3,400
Steel shipments (kt) 2,662 2,669 2,986 3,057 3,029
Average steel selling price
(US$/t) 541 561 597 621 610
---------------------------- ----- ----- ----- ----- -----
ACIS segment crude steel production in 1Q 2019 increased by 11.7% to
3.3Mt as compared to 3.0Mt in 4Q 2018 primarily due to the restart of
production in Temirtau (Kazakhstan) following an explosion at a gas
pipeline in 4Q 2018.
Steel shipments in 1Q 2019 were stable at 2.7Mt as compared to 4Q 2018.
Sales in 1Q 2019 decreased by 6.7% to $1.6 billion as compared to $1.8
billion in 4Q 2018 primarily due to lower average steel selling prices
(-3.6%).
Operating income in 1Q 2019 was lower at $64 million as compared to $121
million in 4Q 2018 and $290 million in 1Q 2018.
EBITDA in 1Q 2019 decreased by 26.9% to $145 million as compared to $198
million in 4Q 2018 primarily due to a negative price-cost effect. EBITDA
in 1Q 2019 was lower as compared to $363 million in 1Q 2018, primarily
due to lower steel shipments (-12.1%) and negative price-cost effect.
Mining
(USDm) unless otherwise shown 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
--------------------------------------- ------ ------ ------ ------ --------
Sales 1,127 1,114 1,008 1,065 1,024
Operating income 313 241 179 198 242
Depreciation (107) (102) (102) (107) (107)
EBITDA 420 343 281 305 349
Own iron ore production (a) (Mt) 14.1 14.9 14.5 14.5 14.6
Iron ore shipped externally and
internally at market price (b)
(Mt) 9.2 10.0 8.5 10.0 9.1
Iron ore shipment - cost plus
basis (Mt) 4.6 5.7 5.6 4.6 4.7
Own coal production (a) (Mt) 1.2 1.3 1.5 1.6 1.5
Coal shipped externally and internally
at market price (b) (Mt) 0.7 0.7 0.7 0.7 0.4
Coal shipment - cost plus basis
(Mt) 0.7 0.7 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 2019 decreased by 5.8% to 14.1Mt as
compared to 14.9Mt in 4Q 2018, due to seasonally lower production in
ArcelorMittal Mines Canada(7) (AMMC), the temporary suspension of Serra
Azul in Brazil (following evacuation on February 8, 2019 which has since
been restarted on March 18, 2019; see key recent developments), and
lower production in Temirtau and Hibbing (US) offset by increased
production in Liberia. Own iron ore production in 1Q 2019 decreased by
3.7% as compared to 1Q 2018 primarily due to lower production in
Temirtau, Mexico and Serra Azul in Brazil offset in part by increased
production at AMMC.
Market-priced iron ore shipments in 1Q 2019 decreased by 8.2% to 9.2Mt
as compared to 10.0Mt in 4Q 2018, primarily driven by seasonally lower
market-priced iron ore shipments in AMMC. Market-priced iron ore
shipments in 1Q 2019 were largely stable as compared to 1Q 2018 driven
by higher shipments in Liberia, offset by lower shipments in AMMC
(extreme weather conditions) and in Ukraine. Market-priced iron ore
shipments for FY 2019 are expected to be broadly stable as compared to
FY 2018 with increases in Liberia and AMMC to be offset by lower volume
in Mexico (in part due to the end of life of Volcan mine).
Own coal production in 1Q 2019 decreased by 6.8% to 1.2Mt as compared to
1.3Mt in 4Q 2018 primarily due to lower production at Princeton (US).
Own coal production in 1Q 2019 decreased by 19.7% as compared to 1.5Mt
in 1Q 2018 due to lower production at Kazakhstan and Princeton (US).
Market-priced coal shipments in 1Q 2019 were stable at 0.7Mt as compared
to 4Q 2018. Market-priced coal shipments in 1Q 2019 increased by 59.9%
as compared to 1Q 2018 primarily due to increased shipments at
Kazakhstan.
Operating income in 1Q 2019 increased to $313 million as compared to
$241 million in 4Q 2018 and $242 million in 1Q 2018.
EBITDA in 1Q 2019 increased by 22.5% to $420 million as compared to $343
million in 4Q 2018, primarily due to the impact of higher seaborne iron
ore reference prices (+15.2%) offset in part by lower market-priced iron
ore shipments (-8.2%). EBITDA in 1Q 2019 was 20.4% higher as compared to
$349 million in 1Q 2018, primarily due to higher seaborne iron ore
reference prices (+10.8%).
Liquidity and Capital Resources
For 1Q 2019 net cash provided by operating activities was $971 million
as compared to $2,170 million in 4Q 2018 and $160 million in 1Q 2018.
The cash provided by operating activities during 1Q 2019 reflects in
part a working capital investment of $553 million (largely on account of
higher steel shipment volumes) as compared to a working capital release
of $430 million in 4Q 2018. The net cash provided by operating
activities during 1Q 2018 reflected a working capital investment of
$1,869 million.
Due to a smaller than anticipated release in 4Q 2018, the Group invested
more in working capital than expected in 2018 ($4.4 billion versus
guidance of $3.0-3.5 billion). The Group continues to expect this excess
working capital to be released over the course of 2019. The 1Q 2019
working capital investment followed the normal seasonal pattern but was
less pronounced than in prior years given the excess build-up in 4Q
2018. The extent of any further changes in working capital in 2019 will
be dictated by market conditions, particularly the price and volume
environment in the final weeks of the year.
Net cash used in investing activities during 1Q 2019 was $693 million as
compared to $1,926 million during 4Q 2018 and $676 million in 1Q 2018.
Capex decreased to $947 million in 1Q 2019 as compared to $1,156 million
in 4Q 2018 and increased as compared to $752 million in 1Q 2018. Capex
in 2019 is expected to increase to $4.3 billion (as compared to $3.3
billion in 2018) reflecting carry over from underspend in 2018, the
impact of ArcelorMittal Italia, the continued projected high return
investments in Mexico and Brazil and other strategic projects (largely
cost optimization). Net cash provided by other investing activities in
1Q 2019 of $254 million primarily includes $0.3 billion due to the
rollover of the Indian rupee hedge at market price which protects the
dollar funds needed for the Essar transaction as per the resolution plan
approved by the Committee of Creditors and the National Company Law
Tribunal in Ahmedabad, offset in part by the quarterly lease payment for
the ArcelorMittal Italia acquisition ($51 million). Net cash used in
other investing activities in 4Q 2018 of $770 million primarily includes
$1.0 billion investment for the repayment of Uttam Galva and KSS Petron
debts (India), quarterly lease payment for ArcelorMittal Italia
acquisition ($52 million) offset in part by MacSteel (South Africa)
disposal proceeds ($220 million). Net cash provided by other investing
activities in 1Q 2018 of $76 million primarily included proceeds from
the sale of Frydek Mistek in Czech Republic.
Net cash used in financing activities in 1Q 2019 was $344 million as
compared to $411 million and $33 million in 4Q 2018 and 1Q 2018,
respectively. In 1Q 2019, net outflow of debt repayments and issuances
of $136 million includes $1 billion repayment of amounts borrowed in
connection with the purchase of the Uttam Galva and KSS Petron debts,
$0.9 billion repayment of the EUR750 million 5-year, 3% bond at
maturity; and offset in part by $1.6 billion cash received from the
issuance of two new bonds (EUR750 million 2.25% notes due 2024 and $750
million 4.55% notes due 2026) and $0.2 billion commercial paper
issuance. In 4Q 2018, net outflow of debt repayments and issuances of
$406 million primarily includes repayment of short-term facilities.
During 1Q 2019, the Company paid dividends of $46 million to minority
shareholders in AMMC (Canada). During 4Q 2018, the Company paid
dividends of $32 million primarily to minority shareholders in Bekaert
(Brazil). During 1Q 2018, the Company paid dividends of $50 million to
minority shareholders in AMMC (Canada).
During 1Q 2019, the Company completed its share buyback programme having
repurchased 4 million shares for a total value of $90 million (EUR80
million) at an approximate average price per share of $22.42 (EUR19.89
per share).
Outflows from lease principal payments and other financing activities
(net) were $72 million in 1Q 2019 as compared to inflows of $27 million
in 4Q 2018 and outflows of $20 million in 1Q 2018. The cash outflow
increased as a result of the first-time application of IFRS 16, as the
repayments of the principal portion of the operating leases are
presented under financing activities (previously reported under
operating activities). 4Q 2018 also included the net proceeds from
transactions with minority shareholders primarily in relation to the
ArcelorMittal Italia transactions.
As of March 31, 2019, the Company's cash and cash equivalents amounted
to $2.2 billion as compared to $2.4 billion at December 31, 2018 and
$2.3 billion at March 31, 2018.
Gross debt increased to $13.4 billion as of March 31, 2019, as compared
to $12.6 billion at December 31, 2018, following the adoption of the new
IFRS 16 Leases standard effective from January 1, 2019, which requires
most operating leases to be recognized on the balance sheet as debt
($1.2 billion). As of March 31, 2019, net debt increased to $11.2
billion as compared to $10.2 billion as of December 31, 2018, largely
due to the impact of IFRS 16 lease accounting as discussed above.
Excluding the impact of IFRS 16, net debt was $10.0 billion, lower as
compared to December 31, 2018 ($10.2 billion).
As of March 31, 2019, the Company had liquidity of $7.7 billion,
consisting of cash and cash equivalents of $2.2 billion and $5.5 billion
of available credit lines(8) . The $5.5 billion credit facility contains
a financial covenant not to exceed 4.25x Net debt / LTM EBITDA (as
defined in the facility). As of March 31, 2019, the average debt
maturity was 4.9 years.
Key recent developments
-- On May 7, 2019, ArcelorMittal announced that due to the continuing
uncertainties surrounding the long-term future of iron ore production in
Prijedor, ArcelorMittal Prijedor has had to take the difficult decision
to reduce iron ore production from 1.5 to 1 million tonnes at its Omarska
mine in order to protect the maximum possible number of jobs for the
longer term. ArcelorMittal Prijedor's sole customer -- ArcelorMittal
Zenica -- is consequently reducing its consumption of iron ore from
Omarska and will instead import additional iron ore from outside Bosnia
and Herzegovina. By lowering production to one million tonnes a year, the
effective life of the Omarska mine will be extended by up to 10 years.
Without taking these measures, the mine would have to close in 2025. The
new plan is expected to commence from September 1, 2019. We deeply regret
that these essential measures will unavoidably lead to the loss of 300
jobs at ArcelorMittal Prijedor. This is significant proportion of the
approximately 800 people currently employed by ArcelorMittal Prijedor but
we have been forced to take this difficult decision due to the lack of
certainty surrounding the future of mining in Prijedor. The company will
work closely with Union representatives and provide all possible
assistance to those affected.
-- On May 7, 2019, the Annual General Meeting of shareholders of
ArcelorMittal held in Luxembourg approved all resolutions by a strong
majority. 69.77% of the voting rights were represented at the general
meeting. The results of the votes will be posted shortly
on www.arcelormittal.com under "Investors > Equity Investors >
Shareholders' meetings > Annual General Meeting of shareholders, 7 May
2019" where the full documentation regarding the general meeting is
available. The shareholders re-elected Mrs. Vanisha Mittal Bhatia, Mrs.
Suzanne Nimocks, Mr.Jeannot Krecké and Mr. Karel De Gucht as
directors of ArcelorMittal for a term of three years each.
-- On May 6, 2019, ArcelorMittal announced its intention to temporarily idle
production at its steelmaking facilities in Kraków, Poland and
reduce production in Asturias, Spain. In addition, the planned increase
of shipments at ArcelorMittal Italia to a six million tonne annual
run-rate will be slowed down following a decision to optimise cost and
quality over volume in this environment. Together, these actions will
result in a temporary annualised production reduction of around three
million tonnes.
-- On April 17, 2019, ArcelorMittal announced that it had received European
Commission ('EC') approval for the sale of several steelmaking assets to
Liberty House Group. The assets form a divestment package the Company
agreed with the European Commission ('EC') during its merger control
investigation into the Company's acquisition of Ilva S.p.A. Assets
included within the divestment package are ArcelorMittal Ostrava (Czech
Republic), ArcelorMittal Galati (Romania), ArcelorMittal Skopje
(Macedonia), ArcelorMittal Piombino (Italy), ArcelorMittal Dudelange
(Luxembourg) and several finishing lines at ArcelorMittal Liège
(Belgium). Transaction closing is expected to occur before the end of the
first half of this year, with the majority of proceeds expected to be
received on closing.
-- Pursuant to Essar Steel India Limited's ('ESIL') corporate insolvency
process, the Company's Resolution Plan was conditionally approved by
India's National Company Law Tribunal ('NCLT') on March 8, 2019. There
have been several appeals from, among others, the Committee of Creditors
and ESIL creditors to the National Company Law Appellate Tribunal
('NCLAT') over how the Committee of Creditors has decided to distribute
the 42,000-crore rupee upfront payment from the Company's Resolution Plan
and how such payment should be distributed among the creditors of ESIL.
On April 12, 2019 India's Supreme Court stayed the disbursement of funds
to creditors, pending the final outcome of the NCLAT hearing, which is
ongoing. The transaction closing is expected 2Q 2019 / 3Q 2019.
-- On March 19 and 20, 2019, ArcelorMittal hosted an investor event at the
ArcelorMittal Italia facility in Taranto (Italy). The event, hosted by
Aditya Mittal and other members of the senior management team, included
presentations focused on the competitive progress at ArcelorMittal Europe
Flat Products, including its significant contribution to Action 2020
through its Transformation plan (and the equally impactful next phase in
the Transformation plan, driven by digitalization, positioning the
Company to increase the performance gap compared to competitors), and the
strategy to transform ArcelorMittal Italia into a modern, best-in-class,
integrated steel producer, capable of producing high-quality products,
satisfying its natural customer base and re-establishing a trusted and
transparent relationship with the local community and other key
stakeholders.
-- On March 11, 2019, ArcelorMittal issued US$750,000,000 aggregate
principal amount of its 4.550% notes due 2026. The proceeds to
ArcelorMittal, amounting to approximately $745 million, were used towards
repayment of existing debt including the $1 billion outstanding under a
$7 billion term facilities agreement entered into in connection with the
proposed acquisition of Essar Steel India Limited through a joint venture
with Nippon Steel Corporation.
-- On February 19, 2019, ArcelorMittal announced the completion of its share
buyback programme on February 15, 2019. ArcelorMittal has repurchased 4
million shares for a total value of approximately EUR79,577,540
(equivalent $US 89,679,370) at an approximate average price per share of
$22.42 (EUR19.89). All details are available on its website on:
https://corporate.arcelormittal.com/investors/equity-investors/share-buyback-2019
https://corporate.arcelormittal.com/investors/equity-investors/share-buyback-2019.
-- On February 8, 2019, the Company decided to implement an evacuation plan
downstream of its dormant Serra Azul tailing dam in Brazil, evacuating
the community situated downstream to the dam as a precautionary measure
based on an updated stability report following recent incidents in the
Brazilian mining sector in order to undertake further testing and
implement any necessary mitigation measures. Movement of evacuated
families to temporary rented houses is now largely complete. Monthly
emergency payments are being made to those families relocated as well as
people who lost access to their land -- in total there are 115 families
(355 people) directly impacted. For safety reasons, access to the
evacuated area continues to be restricted and controlled according to
guidance from local authorities. The reassessment of the dam is
progressing with support of international and in-country specialists
including the development of a plan to eventually remove the material
from the dormant dam for reprocessing, which was due to commence in
January 2019 as part of a longer-term plan to remove that dormant
tailings facility. An independent technical audit reporting directly to
the Public Prosecutors office has been engaged by ArcelorMittal and will
issue regular reports. Continuous 24/7 monitoring of the tailings storage
facility continues via radar, accelerometers, on line water level,
piezometers and imaging. The Mining operations at Serra Azul were
restarted on March 18, 2019.
Recent publications and filings
-- On April 29, 2019, ArcelorMittal published its 2018 integrated annual
review. The review underpins the Company's commitment to transparent
reporting. It has been produced in-line with the International Integrated
Reporting Council's framework and demonstrates the Company's approach to
ensuring it brings long-term, sustainable value to its broad stakeholder
base. It outlines the Company's progress against its four strategic
priorities, namely: improving its safety performance; achieving its
financial targets; delivering on its Action 2020 strategic plan and
integrating sustainability into the business. The review, which can be
accessed online at http://annualreview2018.arcelormittal.com includes
videos of several members of ArcelorMittal's senior management team,
including: Lakshmi Mittal, Chairman and CEO; Aditya Mittal, President and
CFO, ArcelorMittal and CEO, ArcelorMittal Europe; Brian Aranha, executive
vice president; and David Clarke, vice president.
-- On March 27, 2019, ArcelorMittal published the statutory financial
statements of ArcelorMittal parent company for the year ended December
31, 2018. These financial statements have been filed with the electronic
database of the Luxembourg Stock Exchange ( http://www.bourse.lu
www.bourse.lu) and are available on http://corporate.arcelormittal.com
http://corporate.arcelormittal.com under "Investors > Financial reports >
Annual reports".
-- On March 1, 2019, ArcelorMittal published its annual report for the year
ended December 31, 2018. The report has been filed with the electronic
database of the Luxembourg Stock Exchange ( http://www.bourse.lu
www.bourse.lu) and is available on http://corporate.arcelormittal.com
http://corporate.arcelormittal.com under "Investors > Financial reports >
Annual reports".
-- On February 25, 2019, ArcelorMittal filed its Annual Report 2018 on Form
20-F with the U.S. Securities and Exchange Commission (SEC). The report
is now available on http://corporate.arcelormittal.com
http://corporate.arcelormittal.com under "Investors > Financials reports
> SEC filings".
Outlook and guidance
Based on year-to-date growth and the current economic outlook,
ArcelorMittal expects global apparent steel consumption ("ASC") to grow
further in 2019 by between +1.0% to +1.5% (up from previous expectation
of +0.5% to +1.0% growth). By region:
ArcelorMittal expects ASC in US to grow by +0.5% to +1.5% in 2019 (no
change from previous expectation), driven by continued growth in
machinery and non-residential construction. In Europe, driven by weak
manufacturing and declining automotive production, demand is now
expected to contract by up to -1.0% (versus previous expectation of a
slight growth of up to +1.0%). In Brazil, our 2019 ASC forecasts have
been slightly moderated to grow in a range of +3.0% to +4.0% (from
previous expectation of +3.5% to +4.5%) after weaker than expected
economic growth early in 2019. In the CIS, ASC is expected to grow +1.0%
to +2.0% in 2019 (no change from previous expectation). Overall, World
ex-China ASC is expected to grow by approximately +1.0% to +2.0% in 2019
(down from previous expectation of +2.0% to +3.0%). In China, overall
demand is expected to now grow by between +0% to +1.0% in 2019 (up from
previous forecast for a contraction in demand by -0.5% to -1.5%), due to
economic stimulus and as real estate demand continues to surprise on the
upside.
Given these demand expectations, the positive scope effect of the
ArcelorMittal Italia and Votorantim acquisition (net of the remedy
assets sales for the ArcelorMittal Italia acquisition), the expectation
that operational disruptions (both controllable and uncontrollable) that
negatively impacted 2018 shipments will not recur, offset in part by
impact of European production reduction, the Group's steel shipments are
expected to increase in 2019 vs 2018.
Market-priced iron ore shipments for FY 2019 are expected to be broadly
stable as compared to FY 2018 with increases in Liberia and AMMC to be
offset by lower volume in Mexico (in part due to the end of life of
Volcan mine).
The Company expects certain cash needs of the business (including capex,
interest, cash taxes, pensions and certain other cash costs) but
excluding working capital investment to be approximately $6.4 billion in
2019. Capex is expected to be $4.3 billion including the continued
investment in high returns projects in Mexico and Brazil. Interest
expense is expected to increase in 2019 to approximately $0.65 billion
as compared to previous forecast of $0.6 billion (primarily due to IFRS
16 impact) while cash taxes, pensions and other cash costs are expected
be $1.5 billion.
Due to a smaller than anticipated release in the final quarter of 2018,
the Group invested more in working capital than expected in 2018 ($4.4
billion versus guidance of $3.0-3.5 billion). The Group expects this
additional investment of approximately $1 billion to be released over
the course of 2019. The extent of any further changes in working capital
in 2019 will be dictated by market conditions, particularly the price
and volume environment in the final weeks.
The Company will continue to prioritize deleveraging and believes that
$7 billion (previous target of $6 billion adjusted to reflect impact of
IFRS 16) 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.
At meeting of shareholders at the Annual General Meeting on May 7, 2019,
the shareholders voted in favor of an increase in the base dividend for
2019(11) (paid from 2018 earnings) to $0.20 per share from $0.10 per
share. ArcelorMittal intends to progressively increase the base dividend
paid to its shareholders, and, on attainment of the net debt target, the
Company is committed to returning a portion of annual FCF to
shareholders.
ArcelorMittal Condensed Consolidated Statement of Financial Position(1)
Mar 31, Dec 31, Mar 31,
In millions of U.S. dollars 2019 2018 2018
ASSETS
Cash and cash equivalents 2,246 2,354 2,260
Trade accounts receivable and other 5,131 4,432 5,012
Inventories 20,583 20,744 18,952
Prepaid expenses and other current assets 3,000 2,834 2,653
Assets held for sale(9) 1,950 2,111 224
Total Current Assets 32,910 32,475 29,101
Goodwill and intangible assets 5,549 5,728 5,759
Property, plant and equipment 36,647 35,638 37,031
Investments in associates and joint ventures 5,000 4,906 5,231
Deferred tax assets 8,318 8,287 7,170
Other assets 4,236 4,215 3,671
Total Assets 92,660 91,249 87,963
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt and current portion of long-term
debt 2,739 3,167 4,084
Trade accounts payable and other 14,232 13,981 13,494
Accrued expenses and other current liabilities 5,699 5,486 5,389
Liabilities held for sale(9) 828 821 42
Total Current Liabilities 23,498 23,455 23,009
Long-term debt, net of current portion 10,591 9,316 9,309
Deferred tax liabilities 2,337 2,374 2,605
Other long-term liabilities 11,945 11,996 10,349
Total Liabilities 48,371 47,141 45,272
Equity attributable to the equity holders of
the parent 42,286 42,086 40,608
Non-controlling interests 2,003 2,022 2,083
Total Equity 44,289 44,108 42,691
Total Liabilities and Shareholders' Equity 92,660 91,249 87,963
------------------------------------------------- ------- ------- -------
ArcelorMittal Condensed Consolidated Statement of Operations(1)
Three months ended
In millions of U.S. dollars unless Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
otherwise shown 2019 2018 2018 2018 2018
----------------------------------------
Sales 19,188 18,327 18,522 19,998 19,186
Depreciation (B) (733) (723) (653) (712) (711)
Impairment charges net of purchase
gains (B) (150) (215) (509) -- (86)
Exceptional items (B) -- 29 -- -- (146)
Operating income (A) 769 1,042 1,567 2,361 1,569
Operating margin % 4.0% 5.7% 8.5% 11.8% 8.2%
Income from associates, joint
ventures and other investments 208 227 183 30 212
Net interest expense (161) (140) (152) (159) (164)
Foreign exchange and other net
financing loss (231) (556) (475) (390) (174)
Income before taxes and non-controlling
interests 585 573 1,123 1,842 1,443
Current tax expense (180) (198) (206) (240) (284)
Deferred tax benefit 45 909 28 259 81
Income tax (expense) / benefit (135) 711 (178) 19 (203)
Income including non-controlling
interests 450 1,284 945 1,861 1,240
Non-controlling interests (income)
/ loss (36) (91) (46) 4 (48)
Net income attributable to equity
holders of the parent 414 1,193 899 1,865 1,192
Basic earnings per common share
($) 0.41 1.18 0.89 1.84 1.17
Diluted earnings per common share
($) 0.41 1.17 0.88 1.83 1.17
Weighted average common shares
outstanding (in millions) 1,014 1,014 1,014 1,013 1,019
Diluted weighted average common
shares outstanding (in millions) 1,017 1,020 1,019 1,018 1,023
OTHER INFORMATION
EBITDA (C = A-B) 1,652 1,951 2,729 3,073 2,512
EBITDA Margin % 8.6% 10.6% 14.7% 15.4% 13.1%
Own iron ore production (Mt) 14.1 14.9 14.5 14.5 14.6
---------------------------------------- ------ ------ ------ ------ ------
Crude steel production (Mt) 24.1 22.8 23.3 23.2 23.3
------ ------ ------ ------ ------
Steel shipments (Mt) 21.8 20.2 20.5 21.8 21.3
------ ------ ------ ------ ------
ArcelorMittal Condensed Consolidated Statement of Cash flows(1)
Three months ended
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
In millions of U.S. dollars 2019 2018 2018 2018 2018
--------------------------------------
Operating activities:
Income attributable to equity
holders of the parent 414 1,193 899 1,865 1,192
Adjustments to reconcile net income
to net cash provided by operations:
Non-controlling interests income/
(loss) 36 91 46 (4) 48
Depreciation and impairment charges
net of purchase gains 883 938 1,162 712 797
Exceptional items(5) -- (29) -- -- 146
Income from associates, joint
ventures and other investments (208) (227) (183) (30) (212)
Deferred tax (benefit) (45) (909) (28) (259) (81)
Change in working capital (553) 430 (1,713) (1,232) (1,869)
Other operating activities (net) 444 683 451 180 139
Net cash provided by operating
activities (A) 971 2,170 634 1,232 160
Investing activities:
Purchase of property, plant and
equipment and intangibles (B) (947) (1,156) (781) (616) (752)
Other investing activities (net) 254 (770) 180 60 76
Net cash used in investing activities (693) (1,926) (601) (556) (676)
Financing activities:
Net (payments) / proceeds relating
to payable to banks and long-term
debt (136) (406) (543) 474 263
Dividends paid (46) (32) (37) (101) (50)
Share buyback (90) -- -- -- (226)
Lease principal payments and other
financing activities (net) (72) 27 (17) (21) (20)
Net cash (used in) provided by
financing activities (344) (411) (597) 352 (33)
Net (decrease) / increase in cash
and cash equivalents (66) (167) (564) 1,028 (549)
Cash and cash equivalents transferred
to assets held for sale (11) 13 -- -- (23) --
Effect of exchange rate changes
on cash (15) 3 (56) (104) 17
--------------------------------------
Change in cash and cash equivalents (92) (151) (620) 901 (532)
Free cash flow (C=A+B) 24 1,014 (147) 616 (592)
-------------------------------------- ----- ------ ------- ------ ------
Appendix 1: Product shipments by region
(000'kt) 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
--------- ------ ------ ----- ------ --------
Flat 4,750 4,406 4,885 5,011 4,811
Long 721 890 774 969 921
NAFTA 5,319 5,173 5,512 5,803 5,559
Flat 1,699 1,832 1,695 1,494 1,400
Long 1,194 1,232 1,415 1,345 1,095
Brazil 2,880 3,053 3,097 2,831 2,483
Flat 8,647 7,398 6,855 7,553 7,704
Long 2,821 2,666 2,798 2,942 2,961
------
Europe 11,553 10,098 9,709 10,516 10,697
CIS 1,617 1,645 1,879 1,861 1,866
Africa 1,049 1,023 1,102 1,199 1,167
ACIS 2,662 2,669 2,986 3,057 3,029
--------- ------ ------ ----- ------ ------
Note: "Others and eliminations" are not presented in the table
Appendix 2a: Capex
(USDm) 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18
NAFTA 182 244 155 110 160
Brazil 84 102 59 36 47
Europe 353 499 298 226 313
ACIS 137 159 141 117 117
Mining 115 143 116 119 107
Total 947 1,156 781 616 752
------- ----- ----- ----- ----- -----
Note: "Others" are not presented in the table
Appendix 2b: Capex projects
The following tables summarize the Company's principal growth and
optimization projects involving significant capex.
Completed projects in most recent quarter
Segment Site / unit Project Capacity / details Actual
completion
NAFTA Indiana Harbor (US) Indiana Harbor "footprint Restoration of 80" HSM and 4Q 2018
optimization project" upgrades at Indiana Harbor (a)
finishing
------- ------------------------- ------------------------- --------------------------------- -----------
Europe ArcelorMittal Differdange Modernisation of Revamp finishing to achieve 2Q 2018
(Luxembourg) finishing of "Grey full capacity of Grey mill
rolling mill" at 850kt/y
Europe Gent & Liège Gent: Upgrade HSM Increase 400kt in Ultra 2Q 2018
(Europe Flat Automotive and new furnace High Strength Steel capabilities
UHSS Program) Liège: Annealing
line transformation
Ongoing projects
Segment Site / unit Project Capacity / details Forecasted
completion
------- --------------------- ------------------- --------------------------------- -----------
ACIS ArcelorMittal Kryvyi New LF&CC 2&3 Facilities upgrade to switch 2019
Rih (Ukraine) from ingot to continuous
caster route. Additional
billets of 290kt over ingot
route through yield increase
Europe Sosnowiec (Poland) Modernization of Upgrade rolling technology 2019
Wire Rod Mill improving the mix of HAV
products and increase volume
by 90kt
NAFTA Mexico New Hot strip mill Production capacity of 2.5Mt/year 2020(b)
NAFTA ArcelorMittal Dofasco Hot Strip Mill Replace existing three end 2021(c)
(Canada) Modernization of life coilers with two
states of the art coilers
and new runout tables
NAFTA Burns Harbor (US) New Walking Beam Two new walking beam reheat 2021
Furnaces furnaces bringing benefits
on productivity, quality
and operational cost
Brazil ArcelorMittal Vega Expansion project Increase hot dipped / cold 2021(d)
Do Sul rolled coil capacity and
construction of a new 700kt
continuous annealing line
(CAL) and continuous galvanising
line (CGL) combiline
Brazil Juiz de Fora Melt shop expansion Increase in meltshop capacity On hold(e)
by 0.2Mt/year
Brazil Monlevade Sinter plant, blast Increase in liquid steel On hold(e)
furnace and melt capacity by 1.2Mt/year;
shop Sinter feed capacity of
2.3Mt/year
------- --------------------- ------------------- --------------------------------- -----------
Mining Liberia Phase 2 expansion Increase production capacity Under
project to 15Mt/year review(f)
a) In support of the Company's Action 2020 program, the footprint
optimization project at ArcelorMittal Indiana Harbor is now complete,
which has resulted in structural changes required to improve asset and
cost optimization. The plan involved idling redundant operations
including the #1 aluminize line, 84" hot strip mill (HSM), and #5
continuous galvanizing line (CGL) and No.2 steel shop (idled in 2Q 2017)
whilst making further planned investments totalling approximately $200
million including a new caster at No.3 steel shop (completed in 4Q 2016),
restoration of the 80" hot strip mill and Indiana Harbor finishing. The
full project scope was completed in 4Q 2018.
b) On September 28, 2017, ArcelorMittal announced a major US$1
billion, three-year investment programme at its Mexican operations,
which is focussed on building ArcelorMittal Mexico's downstream
capabilities, sustaining the competitiveness of its mining operations
and modernising its existing asset base. The programme is designed to
enable ArcelorMittal Mexico to meet the anticipated increased demand
requirements from domestic customers, realise in full ArcelorMittal
Mexico's production capacity of 5.3 million tonnes and significantly
enhance the proportion of higher added-value products in its product mix,
in-line with the Company's Action 2020 plan. The main investment will be
the construction of a new hot strip mill. Upon completion, the project
will enable ArcelorMittal Mexico to produce c. 2.5 million tonnes of
flat rolled steel, long steel c. 1.8 million tonnes and the remainder
made up of semi-finished slabs. Coils from the new hot strip mill will
be supplied to domestic, non-auto, general industry customers. The
project commenced late 4Q 2017 and is expected to be completed in the
second quarter of 2020.
c) Investment in ArcelorMittal Dofasco (Canada) to modernise the hot
strip mill. The project is to install two new state of the art coilers
and runout tables to replace three end of life coilers. The strip
cooling system will be upgraded and include innovative power cooling
technology to improve product capability. Engineering and equipment
manufacturing is complete. Construction activities for coiler are on
track. Runout table installation work originally scheduled for April
2019 will be effectively carried out during April 2020 shut down due to
change in design and delay in manufacturing. The project is expected to
be completed in 2021.
d) In August 2018, ArcelorMittal announced the resumption of the Vega
Do Sul expansion to provide an additional 700kt of cold-rolled annealed
and galvanised capacity to serve the growing domestic market. The
three-year $0.3 billion investment programme to increase rolling
capacity with construction of a new continuous annealing line and CGL
combiline (and the option to add a ca. 100kt organic coating line to
serve construction and appliance segments), and upon completion, will
strengthen ArcelorMittal's position in the fast growing automotive and
industry markets through Advanced High Strength Steel products. The
investments will look to facilitate a wide range of products and
applications whilst further optimizing current ArcelorMittal Vega
facilities to maximize site capacity and its competitiveness,
considering comprehensive digital and automation technology.
e) Although the Monlevade wire rod expansion project and Juiz de Fora
rebar expansion were completed in 2015, both projects are currently on
hold and are expected to be completed upon Brazil domestic market
recovery.
f) ArcelorMittal had previously announced a Phase 2 project that
envisaged the construction of 15 million tonnes of concentrate sinter
fines capacity and associated infrastructure. The Phase 2 project was
initially delayed due to the declaration of force majeure by contractors
in August 2014 due to the Ebola virus outbreak in West Africa, and then
reassessed following rapid iron ore price declines over the ensuing
period. ArcelorMittal Liberia is now undertaking the engineering phase
of a feasibility study to identify the optimal concentration solution
for utilising the resources at Tokadeh. The feasibility study is
expected to be completed by mid-2019.
Appendix 3: Debt repayment schedule as of March 31, 2019
(USD billion) 2019 2020 2021 2022 2023 >=2024 Total
Bonds -- 1.8 1.3 1.5 0.6 3.3 8.5
Commercial paper 1.5 -- -- -- -- -- 1.5
Other loans 1.1 0.5 0.6 0.3 0.3 0.6 3.4
Total gross debt 2.6 2.3 1.9 1.8 0.9 3.9 13.4
----------------- ---- ---- ---- ---- ---- ------ -----
Appendix 4: Reconciliation of gross debt to net debt
Mar 31, Dec 31, Mar 31,
(USD million) 2019 2018 2018
------------------------------------------------
Gross debt (excluding that held as part of the
liabilities held for sale) 13,330 12,483 13,393
Gross debt held as part of the liabilities held
for sale 96 77 --
Gross debt 13,426 12,560 13,393
Less:
Cash and cash equivalents (2,246) (2,354) (2,260)
Cash and cash equivalents held as part of the
assets held for sale (21) (10) --
Net debt (including that held as part of the
assets and the liabilities held for sale) 11,159 10,196 11,133
------------------------------------------------
Net debt / EBITDA - 1.0 -
------- ------ ---------
Appendix 5: Terms and definitions
Unless indicated otherwise, or the context otherwise requires,
references in this earnings release report to the following terms have
the meanings set out next to them below:
Apparent steel consumption: calculated as the sum of production plus
imports minus exports.
Average steel selling prices: calculated as steel sales divided by steel
shipments.
Cash and cash equivalents: represents cash and cash equivalents,
restricted cash and short-term investments.
Capex: represents the purchase of property, plant and equipment and
intangibles.
Crude steel production: steel in the first solid state after melting,
suitable for further processing or for sale.
EBITDA: operating income plus depreciation, impairment expenses and
exceptional income/ (charges).
EBITDA/tonne: calculated as EBITDA divided by total steel shipments.
Exceptional items (income / (charges)): relate to transactions that are
significant, infrequent or unusual and are not representative of the
normal course of business of the period.
Foreign exchange and other net financing (loss) / gain: include foreign
currency exchange impact, bank fees, interest on pensions, impairments
of financial assets, revaluation of derivative instruments and other
charges that cannot be directly linked to operating results.
Free cash flow (FCF): refers to net cash provided by operating
activities less capex.
Gross debt: long-term debt, plus short-term debt and IFRS 16 liabilities
impact (including that held as part of the liabilities held for sale).
Liquidity: cash and cash equivalents plus available credit lines
excluding back-up lines for the commercial paper program.
LTIF: lost time injury frequency rate equals lost time injuries per
1,000,000 worked hours, based on own personnel and contractors.
MT: refers to million metric tonnes
Market-priced tonnes: represent amounts of iron ore and coal from
ArcelorMittal mines that could be sold to third parties on the open
market. Market-priced tonnes that are not sold to third parties are
transferred from the Mining segment to the Company's steel producing
segments and reported at the prevailing market price. Shipments of raw
materials that do not constitute market-priced tonnes are transferred
internally and reported on a cost-plus basis.
Mining segment sales: i) "External sales": mined product sold to third
parties at market price; ii) "Market-priced tonnes": internal sales of
mined product to ArcelorMittal facilities and reported at prevailing
market prices; iii) "Cost-plus tonnes" - internal sales of mined product
to ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics exist to
access that market).
Net debt: long-term debt, plus short-term debt and IFRS 16 liabilities
impact less cash and cash equivalents (including those held as part of
assets and liabilities held for sale).
Net debt/LTM EBITDA: refers to Net debt divided by last twelve months
(LTM) EBITDA calculation.
Net interest expense: includes interest expense less interest income
On-going projects: refer to projects for which construction has begun
(excluding various projects that are under development), even if such
projects have been placed on hold pending improved operating conditions.
Operating results: refers to operating income/(loss).
Operating segments: NAFTA segment includes the Flat, Long and Tubular
operations of USA, Canada and Mexico. The Brazil segment includes the
Flat, Long and Tubular operations of Brazil and its neighboring
countries including Argentina, Costa Rica and Venezuela. The Europe
segment comprises the Flat, Long and Tubular operations of the European
business, as well as Downstream Solutions. The ACIS segment includes the
Flat, Long and Tubular operations of Kazakhstan, Ukraine and South
Africa. Mining segment includes iron ore and coal operations.
Own iron ore production: includes total of all finished production of
fines, concentrate, pellets and lumps and includes share of production
(excludes strategic long-term contracts).
PMI: refers to purchasing managers index (based on ArcelorMittal
estimates)
Seaborne iron ore reference prices: refers to iron ore prices for 62% Fe
CFR China
Shipments: information at segment and group level eliminates
intra-segment shipments (which are primarily between Flat/Long plants
and Tubular plants) and inter-segment shipments respectively. Shipments
of Downstream Solutions are excluded.
Steel-only EBITDA: calculated as Group EBITDA less Mining segment
EBITDA.
Steel-only EBITDA/tonne: calculated as steel-only EBITDA divided by
total steel shipments.
Working capital change (working capital investment / release): Movement
of change in working capital - trade accounts receivable plus
inventories less trade and other accounts payable.
YoY: refers to year-on-year.
Footnotes
1. The financial information in this press release has been prepared
consistently with International Financial Reporting Standards ("IFRS") as
issued by the International Accounting Standards Board ("IASB") and as
adopted by the European Union. The interim financial information included
in this announcement has also 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/alternative performance measures. ArcelorMittal presents EBITDA,
and EBITDA/tonne, which are non-GAAP financial/alternative performance
measures and calculated as shown in the Condensed Consolidated Statement
of Operations, as additional measures to enhance the understanding of
operating performance. ArcelorMittal believes such indicators are
relevant to describe trends relating to cash generating activity and
provides management and investors with additional information for
comparison of the Company's operating results to the operating results of
other companies. ArcelorMittal also presents net debt and change in
working capital as additional measures to enhance the understanding of
its financial position, changes to its capital structure and its credit
assessment. ArcelorMittal also presents free cash flow (FCF), which is a
non-GAAP financial/alternative performance measure calculated as shown in
the Condensed Consolidated Statement of Cash flows, because it believes
it is a useful supplemental measure for evaluating the strength of its
cash generating capacity. The Company also presents the ratio of net debt
to EBITDA for the twelve months ended December 31, 2018 which investors
may find useful in understanding the company's ability to service its
debt. Non-GAAP financial/alternative performance 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/alternative performance measures may not be comparable to
similarly titled measures applied by other companies.
2. Health and safety performance inclusive of ArcelorMittal Italia and
related facilities ("ArcelorMittal Italia") (consolidated as from
November 1, 2018) was 1.14x for 1Q 2019 and 0.91 for 4Q 2018. Health and
safety figures excluding ArcelorMittal Italia were 0.66x for 1Q 2019 as
compared to 0.70x for 4Q 2018. Previously published 4Q 2018 health and
safety performance figures for ArcelorMittal (inclusive of ArcelorMittal
Italia) and ArcelorMittal Italia have not been shown in the table for
comparative purposes. From 1Q 2019 onwards, the methodology and metrics
used to calculate health and safety figures for ArcelorMittal Italia have
been harmonized with those of ArcelorMittal.
3. Impairment charges net of purchase gains for 4Q 2018 include $0.4 billion
impairment expenses for ArcelorMittal Italia remedies and $0.2 billion
purchase gains on the ArcelorMittal Italia acquisition.
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 wire
drawing equipment of ArcelorMittal Brasil and ArcelorMittal
Sul-Fluminense. The sale was completed early May 2018 to the Mexican
Group Simec S.A.B. de CV. A second package of some wire drawing equipment
of ArcelorMittal Brasil and ArcelorMittal Sul-Fluminense was sold to the
company Aço Verde do Brasil as part of CADE's conditional approval.
5. In July 2018, as a result of a settlement process, the Company and the
German Federal Cartel Office agreed to a EUR118 million ($146 million)
fine to be paid by ArcelorMittal Commercial Long Deutschland GmbH ending
an investigation that began in the first half of 2016 into antitrust
violations concerning the ArcelorMittal entities that were under
investigation. The payment was made in August 2018.
6. Following the May 16, 2018 approval of the Extraordinary General Meeting
to convert the share capital of the ArcelorMittal parent company from
Euro to US dollar, the Euro denominated tax losses and the related
deferred tax asset (DTA) held by the ArcelorMittal parent company were
translated into US dollars. The Company designated its euro denominated
debt as a hedge of certain euro denominated net investments in foreign
operations. Following this change, periodic revaluations of such external
euro-denominated debt are recorded in other comprehensive income rather
than the statement of operations. The conversion of the euro denominated
DTA was effective as of January 1, 2018, whilst the impacts on euro
denominated debt has been applied prospectively from April 1, 2018. As a
result, the Company's statement of operations no longer has foreign
exchange exposure to euro denominated debt and DTA.
7. ArcelorMittal Mines Canada, otherwise known as ArcelorMittal Mines and
Infrastructure Canada.
8. On December 19, 2018, ArcelorMittal signed a $5,500,000,000 Revolving
Credit Facility, with a five-year maturity plus two one-year extension
options (i.e. the options to extend are in the first and second years, so
at end 2019 and at end 2020). The facility will replace the
$5,500,000,000 revolving credit facility agreement signed April 30, 2015
and amended December 21, 2016, and will be used for the general corporate
purposes of the ArcelorMittal group. The facility gives ArcelorMittal
considerably improved terms over the former facility, and extends the
average maturity date by approximately three years. As of March 31, 2019,
the $5.5 billion revolving credit facility was fully available.
9. Assets and liabilities held for sale, as of March 31, 2019 and December
31, 2018, include the ArcelorMittal Italia remedy package assets (as
previously disclosed in the 1Q 2018 earnings release), and carrying value
of the USA long product facilities at Steelton ("Steelton"). Assets and
liabilities held for sale, as of March 31, 2018, primarily include the
carrying value of the USA long product facilities at Steelton, and
Cariacica and Itauna industrial plants in Brazil (sold in May 2018 as
remedy package for Votorantim acquisition).
10. The PIS (Program of Social Integration) and COFINS (Contribution for the
Financing of Social Security) are Brazilian federal taxes based on the
turnover of companies. The PIS is intended to finance the unemployment
insurance system, and COFINS to fund Social Security. For over two
decades, ArcelorMittal Brasil has been challenging the basis of the
calculation of the COFINS and PIS, specifically, whether Brazilian ICMS
(tax on sales and services) may be deducted from the base amount on which
PIS and COFINS taxes are calculated. Following the Supreme Court's
decision in the leading case and certain lower court decisions applying
it, the Court issued final and unappealable judgments in certain of the
cases filed by ArcelorMittal Brasil, thereby granting ArcelorMittal
Brasil the right to exclude ICMS from the PIS/COFINS' tax base and the
right to recognize the relevant credits from the past. Accordingly,
ArcelorMittal Brasil recognized $202 million additional PIS/COFINS
credits in 4Q 2018 for the period of 2005 to 2013 and is awaiting the
Court's final judgment on other pending cases related to the PIS/COFINS
topic.
11. 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
16, 2019. A Luxembourg withholding tax of 15% is applied on the gross
dividend amounts. Dividend record date is May 17, 2019 and payment date
June 13, 2019.
12. ArcelorMittal has applied IFRS 16 Leases as of January 1, 2019. Due to
the transition option selected, the prior-period data has not been
restated. IFRS 16 Leases provides a single lessee accounting model
requiring lessees to recognize right-of-use assets and lease liabilities
for all non-cancellable leases except for short-term leases and low value
assets. The right-of-use assets are recognized as property, plant and
equipment and measured on January 1, 2019 at an amount equal to the lease
liability recognized as debt (short term $0.3 billion and long term $0.9
billion impact as of January 1, 2019) and measured on the basis of the
net present value of remaining lease payments. Net debt increased
accordingly by $1.2 billion in 1Q 2019. The recognition of the lease
expense in EBITDA for leases previously accounted for as operating leases
is replaced by a depreciation expense related to the right-of-use assets
and an interest expense reflecting the amortization of the lease
liability. IFRS 16 contributed to a positive EBITDA impact of $56 million
(majority in segment others) in 1Q 2019. In addition, cash payments
relating to the repayment of the principal amount of the lease liability
are presented in the consolidated statements of cash flows as outflows
from financing activities while lease payments for operating leases were
previously recognized as outflows from operating activities.
First quarter 2019 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, 2019 on: Thursday May 9, 2019 at
9.30am US Eastern time; 2.30pm London time and 3.30pm CET.
The dial in numbers are:
Toll free dial in Local dial in
Location numbers numbers Participant
UK local: 0800 0515 931 +44 (0)203 364 5807 48013763#
US local: 1 86 6719 2729 +1 24 0645 0345 48013763#
-----------------
US (New York): 1 86 6719 2729 + 1 646 663 7901 48013763#
France: 0800 914780 +33 1 7071 2916 48013763#
Germany: 0800 965 6288 +49 692 7134 0801 48013763#
Spain: 90 099 4930 +34 911 143436 48013763#
Luxembourg: 800 26908 +352 27 86 05 07 48013763#
------------------ ---------------------
A replay of the conference call will be available for one week by dialing:
+49 (0) 1805 2047 088; Access code 2523725#
Forward-Looking Statements
This document may contain forward-looking information and statements
about ArcelorMittal and its subsidiaries. These statements include
financial projections and estimates and their underlying assumptions,
statements regarding plans, objectives and expectations with respect to
future operations, products and services, and statements regarding
future performance. Forward-looking statements may be identified by the
words "believe", "expect", "anticipate", "target" or similar
expressions. Although ArcelorMittal's management believes that the
expectations reflected in such forward-looking statements are reasonable,
investors and holders of ArcelorMittal's securities are cautioned that
forward-looking information and statements are subject to numerous risks
and uncertainties, many of which are difficult to predict and generally
beyond the control of ArcelorMittal, that could cause actual results and
developments to differ materially and adversely from those expressed in,
or implied or projected by, the forward-looking information and
statements. These risks and uncertainties include those discussed or
identified in the filings with the Luxembourg Stock Market Authority for
the Financial Markets (Commission de Surveillance du Secteur Financier)
and the United States Securities and Exchange Commission (the "SEC")
made or to be made by ArcelorMittal, including ArcelorMittal's latest
Annual Report on Form 20-F on file with the SEC. ArcelorMittal
undertakes no obligation to publicly update its forward-looking
statements, whether as a result of new information, future events, or
otherwise.
About ArcelorMittal
ArcelorMittal is the world's leading steel and mining company, with a
presence in 60 countries and an industrial footprint in 18 countries.
Guided by a philosophy to produce safe, sustainable steel, we are the
leading supplier of quality steel in the major global steel markets
including automotive, construction, household appliances and packaging,
with world-class research and development and outstanding distribution
networks.
Through our core values of sustainability, quality and leadership, we
operate responsibly with respect to the health, safety and wellbeing of
our employees, contractors and the communities in which we operate. For
us, steel is the fabric of life, as it is at the heart of the modern
world from railways to cars and washing machines. We are actively
researching and producing steel-based technologies and solutions that
make many of the products and components people use in their everyday
lives more energy efficient.
We are one of the world's five largest producers of iron ore and
metallurgical coal. With a geographically diversified portfolio of iron
ore and coal assets, we are strategically positioned to serve our
network of steel plants and the external global market. While our steel
operations are important customers, our supply to the external market is
increasing as we grow. In 2018, ArcelorMittal had revenues of $76.0
billion and crude steel production of 92.5 million metric tonnes, while
own iron ore production reached 58.5 million metric tonnes.
ArcelorMittal is listed on the stock exchanges of New York (MT),
Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock
exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). For more
information about ArcelorMittal please visit:
https://www.globenewswire.com/Tracker?data=x-jAJbAYq8oCwWJ1ekL5bL27wdBOKTj4Dfztg0Jir1ppQ_3YPhGznizcSq9A0txtU01nNDlBOTUpI6mgA8Rk_MoXTKU7Ssai64NjPeRXwvesRllNPQfpYsTSCkqJH1m1
http://corporate.arcelormittal.com/
Enquiries
ArcelorMittal investor relations: Europe: +44 207 543 1128; Americas: +1
312 899 3985; Retail: +44 207 543 1156; SRI: +44 207 543 1156 and
Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
https://www.globenewswire.com/Tracker?data=lqgn638gbDVCqxZafQg3rlPSVI7XM2UPcxMMvhrRTHgVdlXBmcEkFnsXNCYr-c2DC_eBuEdxCs3XEUVgYh-mtH6NcrvjrG51Imh-ZcZRDpY=
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44 203
214 2419
Attachment
-- ArcelorMittal reports first quarter 2019 results
https://ml-eu.globenewswire.com/Resource/Download/a25681ea-4deb-40fe-a1f4-a38422f4478f
(END) Dow Jones Newswires
May 09, 2019 01:16 ET (05:16 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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