Luxembourg, January 31, 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 and twelve month periods ended December 31, 2017.
Highlights:
- Health and safety performance improved in FY 2017
with annual LTIF rate of 0.78x vs. 0.82x in FY 2016
- FY 2017 operating income of $5.4 billion (+30.6%
YoY); operating income of $1.2 billion in 4Q 2017 (+52.7% YoY)
- FY 2017 EBITDA of $8.4 billion (+34.4% YoY);
EBITDA of $2.1 billion in 4Q 2017 (+28.9% YoY)
- FY 2017 net income of $4.6 billion, higher as
compared to $1.8 billion for FY 2016
- FY 2017 steel shipments of 85.2Mt (+1.6% YoY); 4Q
2017 steel shipments of 21.0Mt (+4.7% YoY)
- FY 2017 iron ore shipments of 57.9Mt (+3.5% YoY),
of which 35.7Mt shipped at market prices (+6.1% YoY); 4Q 2017 iron
ore shipments of 14.3Mt (+5.4% YoY), of which 8.4Mt shipped at
market prices (+3.8% YoY)
- Gross debt of $12.9 billion as of December 31,
2017. Net debt decreased to $10.1 billion as of December 31, 2017,
lower as compared to $12.0 billion as of September 30, 2017 and
$11.1 billion as of December 31, 2016
Strategic progress in 2017:
- Action 2020 delivered a further $0.6 billion
contribution to 2017 operating results
- Investing in high return opportunities:
Anticipated ILVA (Italy), Mexico hot strip mill (HSM) and Brazil
long business
- Cash flow from operating activities less capex
(FCF)[2] of $1.7
billion despite working capital investment of $1.9 billion and $0.4
billion premium to repay bonds
- Cash requirements of the business limited to $4.4
billion, slightly below target (interest of $0.8 billion; capex of
$2.8 billion slightly below guidance of $2.9 billion; cash taxes,
pensions and other cash costs totalling $0.8 billion)
- Improvement on leverage ratio: Net debt/EBITDA
reduced to 1.2x in FY 2017 versus 1.8x in FY 2016
Capital allocation framework priorities:
- 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 will be proposed to the shareholders at the AGM in May 2018.
Given the current deleveraging bias, dividends will begin at
$0.10/share in 2018 (paid from 2017 results). Once it achieves net
debt at or below its target, the Company is committed to returning
a portion of annual FCF to shareholders
Outlook and guidance:
- Market conditions are favorable. The demand
environment remains positive (as evidenced by the continued high
readings from the ArcelorMittal weighted PMI) and steel spreads
remain healthy.
- The Company expects cash needs of the business
(capex, interest, cash taxes, pensions and other cash costs)
excluding working capital investment to increase in 2018 to
approximately $5.6 billion. The expected increase in capex to $3.8
billion in 2018 from $2.8 billion in 2017 largely reflects the
Mexico HSM project, anticipated ILVA capex, as well as other
projects.
Financial highlights (on the
basis of IFRS1):
(USDm)
unless otherwise shown |
4Q 17 |
3Q 17 |
4Q 16 |
12M 17 |
12M 16 |
Sales |
17,710 |
17,639 |
14,126 |
68,679 |
56,791 |
Operating
income |
1,234 |
1,234 |
809 |
5,434 |
4,161 |
Net income
attributable to equity holders of the parent |
1,039 |
1,205 |
403 |
4,568 |
1,779 |
Basic
earnings per share (US$)[3] |
1.02 |
1.18 |
0.40 |
4.48 |
1.87 |
|
|
|
|
|
|
Operating
income/ tonne (US$/t) |
59 |
57 |
40 |
64 |
50 |
EBITDA |
2,141 |
1,924 |
1,661 |
8,408 |
6,255 |
EBITDA/
tonne (US$/t) |
102 |
89 |
83 |
99 |
75 |
Steel-only
EBITDA/ tonne (US$/t) |
89 |
73 |
68 |
82 |
65 |
|
|
|
|
|
|
Crude steel
production (Mt) |
22.7 |
23.6 |
21.8 |
93.1 |
90.8 |
Steel
shipments (Mt) |
21.0 |
21.7 |
20.0 |
85.2 |
83.9 |
Own iron
ore production (Mt) |
14.4 |
14.2 |
13.9 |
57.4 |
55.2 |
Iron ore
shipped at market price (Mt) |
8.4 |
9.1 |
8.1 |
35.7 |
33.6 |
Commenting, Mr.
Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"The combination of improving market fundamentals
and delivery against our strategic objectives contributed to a
successful year for the Company. Action 2020 has delivered half of
its targeted EBITDA gains and we have succeeded in transforming the
Company's balance sheet. While we will retain a deleveraging
bias, we are also investing selectively in opportunities that will
strengthen the foundations of sustainable value creation. The
market environment remains supportive but the industry must
continue to address the twin challenges of overcapacity and unfair
trade."
Corporate
responsibility and safety performance
Health and safety
- Own personnel and contractors lost time injury frequency
rate
Health and safety performance based on own
personnel figures and contractors lost time injury frequency (LTIF)
rate, improved to 0.78x for the twelve months of 2017 ("12M 2017")
as compared to 0.82x for the twelve months of 2016 ("12M
2016").
LTIF deteriorated to 0.87x in the fourth quarter
of 2017 ("4Q 2017") as compared to 0.67x in the third quarter of
2017 ("3Q 2017"), and 0.84x for the fourth quarter of 2016 ("4Q
2016").
The Company's efforts to improve its Health and
Safety record remains focused on both further reducing the rate of
severe injuries and preventing fatalities.
Own personnel and
contractors - Frequency rate
Lost time
injury frequency rate |
4Q 17 |
3Q 17 |
4Q 16 |
12M
17 |
12M
16 |
Mining |
0.86 |
1.05 |
1.39 |
0.77 |
1.07 |
NAFTA |
0.76 |
0.57 |
0.87 |
0.73 |
0.95 |
Brazil |
0.46 |
0.45 |
0.42 |
0.43 |
0.37 |
Europe |
1.00 |
0.79 |
0.92 |
1.03 |
1.01 |
ACIS |
0.97 |
0.42 |
0.61 |
0.61 |
0.58 |
Total Steel |
0.88 |
0.60 |
0.75 |
0.78 |
0.78 |
Total (Steel and Mining) |
0.87 |
0.67 |
0.84 |
0.78 |
0.82 |
Key corporate
responsibility highlights for 4Q 2017:
-
The designs for ArcelorMittal new Luxembourg
headquarters, announced in December 2017, represent a leading
demonstration of steel's role in the circular economy (in which
industrial strategies shift away from the linear use of materials
and carbon, to a more closed-loop cycle). The design - by
architects Wilmotte & Associés, who worked closely with our
Global R&D team - ensures that the building can be dismantled,
and nearly all the steel products re-used in a new building without
the need for recycling.
-
The world's most prestigious award programme for
the circular economy, The Circulars, has highly commended
ArcelorMittal for demonstrating circular economy principles in its
business, including innovation in the utilisation of waste gases
and by-products, scrap recovery, and new business models in
collaboration with internal experts, academics, partner companies
and its customers.
-
We successfully piloted the ResponsibleSteel
standards at several sites in 2017.
Analysis of
results for the twelve months ended December 31, 2017 versus
results for the twelve months ended December 31, 2016
Total steel shipments for 12M 2017 increased +1.6%
to 85.2Mt as compared to 83.9Mt for 12M 2016. On a comparable
basis, excluding shipments from assets sold during the comparable
period i.e. sale of long steel producing subsidiaries in the US
(LaPlace and Vinton) and Zaragoza in Spain, and excluding the
impact of the optimization at Zumarraga in Spain (Europe segment)
total steel shipments in 12M 2017 increased by +2.3% as compared to
12M 2016.
Sales for 12M 2017 increased by 20.9% to $68.7
billion as compared with $56.8 billion for 12M 2016, primarily due
to higher average steel selling prices (+20.4%), higher steel
volumes (+1.6%), higher seaborne iron ore reference prices (+22.3%)
and higher marketable iron ore shipments (+6.1%).
Depreciation of $2.8 billion for 12M 2017 was
higher as compared to $2.7 billion for 12M 2016. FY 2018
depreciation is expected to increase to approximately $2.9 billion
primarily due to anticipated foreign exchange impacts.
Impairment charges for 12M 2017 were $206 million
related to a downward revision of cash flow projections across
all steel facilities in ArcelorMittal South Africa as compared to
impairment charges for 12M 2016 of $205 million of which $49
million related to the sale of ArcelorMittal Zaragoza in
Spain[4] and $156
million related to the Vanderbijlpark and Saldanha plants in South
Africa.
Exceptional income for 12M 2017 was nil.
Exceptional income for 12M 2016 was $832 million relating to a
one-time gain on employee benefits following the signing of the new
US labour contract[5].
Operating income for 12M 2017 was $5.4 billion as
compared to $4.2 billion for 12M 2016. Operating income for 12M
2016 was positively impacted by exceptional income as discussed
above.
Income from associates, joint ventures and other
investments in 12M 2017 was $448 million as compared to $615
million in 12M 2016. Income in 12M 2017 includes a gain from
disposal of ArcelorMittal USA's 21% stake in the Empire Iron Mining
Partnership[6] ($133
million) and improved performance of Calvert and Chinese investees,
offset in part by a loss on dilution of the Company's stake in
China Oriental[7] and the
recycling of cumulative foreign exchange translation losses
incurred following disposal of the 50% stake in Kalagadi ($187
million)[8]. The income
in 12M 2016 was primarily due to the gain on disposal of stakes in
Gestamp[9] ($329
million) and Hunan Valin[10] ($74
million) as well as positive contribution of the Calvert joint
venture, Chinese and Spanish investees, offset in part by
impairments of the primary steel making assets at China
Oriental.
Net interest expense was lower at $823 million in
12M 2017, as compared to $1,114 million in 12M 2016, driven by debt
reduction including early bond repayments. The Company expects full
year 2018 net interest expense of approximately $0.6 billion.
Foreign exchange and other net financing losses
were $52 million for 12M 2017 as compared to losses of $942 million
for 12M 2016. Foreign exchange and other net financing losses for
12M 2017 include foreign exchange gains of $546 million as compared
to foreign exchange loss of $3 million in 12M 2016, mainly on
account of USD depreciation of 13.8% against the Euro (versus USD
appreciation against the Euro of 3.2% in prior period). These
foreign exchange gains and losses are largely non-cash and
primarily relate to the change of the USD exchange rate on the Euro
denominated deferred tax assets, partially offset by the impact on
Euro denominated debt. 12M 2017 includes non-cash mark-to-market
gains on derivatives (primarily mandatory convertible bonds call
options following the market price increase in the underlying
shares) totalling $0.8 billion as compared to $0.2 billion in 12M
2016. In addition, 12M 2017 includes mark-to-market losses on a
derivative relating to a pellet purchase agreement in the US of
$0.3 billion[11]. Foreign
exchange and other net financing losses for 12M 2017 and 12M 2016
also include $389 million and $399 million, respectively, for
premium expense on the early redemption of bonds. In addition, 12M
2016 includes $0.1 billion non-cash expense in connection with the
issuance of shares in the context of the B-BBEE transaction in
South Africa[12].
ArcelorMittal recorded an income tax expense of
$0.4 billion for 12M 2017 as compared to $1.0 billion for 12M
2016. The tax expense in 12M 2016 includes derecognition of
deferred tax assets (DTA) amounting to $0.7 billion in Luxembourg
(related to revised expectations of DTA recoverability in US dollar
terms).
ArcelorMittal's net income for 12M 2017 was $4.6
billion, or $4.48 earnings per share, as compared to net income in
12M 2016 of $1.8 billion, or $1.87 earnings per share.
Analysis of
results for 4Q 2017 versus 3Q 2017 and 4Q 2016
Total steel shipments in 4Q 2017 were 3.3% lower
at 21.0Mt as compared with 21.7Mt for 3Q 2017 primarily due to
lower steel shipments in NAFTA (-8.9%) and ACIS (-3.2%), offset in
part by improvements in Brazil (+3.8%).
Sales for 4Q 2017 were $17.7 billion as compared
to $17.6 billion for 3Q 2017 and $14.1 billion for 4Q 2016. Sales
in 4Q 2017 were 0.4% higher as compared to 3Q 2017, primarily due
to higher average steel selling prices (+2.7%), offset in part by
lower steel shipments (-3.3%), lower seaborne iron ore reference
prices (-8.1%) and lower market-priced iron ore shipments (-7.2%).
Sales in 4Q 2017 were 25.4% higher as compared to 4Q 2016 primarily
due to higher steel shipments (+4.7%), higher average steel selling
prices (+20.4%) and higher market-priced iron ore shipments
(+3.8%), offset in part by lower seaborne iron ore reference prices
(-7.1%).
Depreciation for 4Q 2017 was higher at $747
million as compared to $690 million for 3Q 2017 and $696 million in
4Q 2016.
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 3Q 2017 were nil. Impairment charges for 4Q 2016 were
$156 million related to the Vanderbijlpark and Saldanha plants in
South Africa.
Operating income for 4Q 2017 was stable at $1.2
billion as compared to 3Q 2017 and higher as compared to $0.8
billion in 4Q 2016.
Income from associates, joint ventures and other
investments for 4Q 2017 was higher at $125 million as compared to
$117 million for 3Q 2017 and $14 million in 4Q 2016. Income from
associates, joint ventures and other investments for 4Q 2017
includes positive contribution from Calvert and Chinese investees.
Income from associates, joint ventures and other investments for 3Q
2017 includes a gain on disposal of ArcelorMittal USA's 21% stake
in the Empire Iron Mining Partnership ($133 million) and positive
contribution from Calvert and Chinese investees offset in part by
the recycling of the cumulative foreign exchange translation losses
following the disposal of the 50% stake in Kalagadi ($187
million).
Net interest expense in 4Q 2017 was $188 million
as compared to $205 million in 3Q 2017 and $221 million in 4Q 2016.
Net interest expense was lower in 4Q 2017 as compared to 3Q 2017
and 4Q 2016, primarily due to early bond repayment via debt tenders
and bond repaid at maturity.
Foreign exchange and other net financing losses in
4Q 2017 were $261 million as compared to gains of $132 million for
3Q 2017 and losses of $278 million in 4Q 2016. For 4Q 2017, a
foreign exchange gain of $83 million was recorded (as compared to a
gain of $181 million for 3Q 2017) mainly on account of a 1.6%
depreciation of the USD against the Euro (versus 3.5% depreciation
in 3Q 2017). Both 4Q 2017 and 3Q 2017 include non-cash
mark-to-market gains on derivatives (primarily mandatory
convertible bonds call options following the market price increase
in the underlying shares) of $174 million and $327 million,
respectively. In addition, 4Q 2017 includes mark-to-market losses
on a derivative relating to a pellet purchase agreement in the US
of $0.3 billion. Foreign exchange and other net financing losses
for 3Q 2017 include $218 million for premium expense on the early
redemption of bonds. Foreign exchange and other net financing
losses in 4Q 2016 were $278 million and include a foreign exchange
loss of $128 million mainly as a result of a 5.6% appreciation of
the USD against the Euro and include $0.1 billion non-cash expense
in connection with the issuance of shares in the context of the
B-BBEE transaction in South Africa.
ArcelorMittal recorded an income tax benefit of
$119 million for 4Q 2017 as compared to an income tax expense of
$71 million for 3Q 2017 and an income tax benefit of $13 million in
4Q 2016. 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 4Q 2017 of
$1,039 million, or $1.02 earnings per share, as compared to a net
income for 3Q 2017 of $1,205 million, or $1.18 earnings per share,
and a net income for 4Q 2016 of $403 million, or $0.40 earnings per
share.
Analysis of segment
operations
NAFTA
(USDm) unless otherwise shown |
4Q 17 |
3Q 17 |
4Q 16 |
12M 17 |
12M 16 |
Sales |
4,296 |
4,636 |
3,795 |
17,997 |
15,806 |
Operating
income |
155 |
256 |
164 |
1,185 |
2,002 |
Depreciation |
(137) |
(125) |
(137) |
(518) |
(549) |
Exceptional
income5 |
- |
- |
- |
- |
832 |
EBITDA |
292 |
381 |
301 |
1,703 |
1,719 |
Crude steel
production (kt) |
5,598 |
5,904 |
5,197 |
23,480 |
22,208 |
Steel
shipments (kt) |
5,150 |
5,655 |
5,011 |
21,834 |
21,281 |
Average
steel selling price (US$/t) |
748 |
741 |
681 |
742 |
672 |
NAFTA segment crude steel production decreased by
5.2% to 5.6Mt in 4Q 2017 as compared to 5.9Mt for 3Q 2017 primarily
due to an operational issue in Mexico, a planned maintenance in
Dofasco and a market slowdown in the US.
Steel shipments in 4Q 2017 decreased by 8.9% to
5.2Mt as compared to 5.7Mt in 3Q 2017, driven primarily by decrease
in volumes in flat and long products on account of a weak
market.
Sales in 4Q 2017 declined by 7.3% to $4.3 billion
as compared to $4.6 billion in 3Q 2017, primarily due to lower
steel shipment volumes as discussed above, offset in part by higher
average steel selling prices +0.8% (primarily in long products
+1.5%).
Operating income in 4Q 2017 decreased to $155
million as compared to $256 million in 3Q 2017 and $164 million in
4Q 2016.
EBITDA in 4Q 2017 decreased by 23.3% to $292
million as compared to $381 million in 3Q 2017 primarily due to
lower steel shipment volumes (-8.9%) offset in part by positive
price-cost effect. EBITDA in 4Q 2017 declined by 2.9% as compared
to $301 million in 4Q 2016.
Brazil
(USDm) unless otherwise shown |
4Q 17 |
3Q 17 |
4Q 16 |
12M 17 |
12M 16 |
Sales |
2,252 |
2,059 |
1,751 |
7,755 |
6,223 |
Operating
income |
266 |
128 |
143 |
697 |
614 |
Depreciation |
(75) |
(74) |
(70) |
(293) |
(258) |
EBITDA |
341 |
202 |
213 |
990 |
872 |
Crude steel
production (kt) |
2,989 |
2,797 |
2,778 |
11,210 |
11,133 |
Steel
shipments (kt) |
3,052 |
2,940 |
2,841 |
10,840 |
10,753 |
Average
steel selling price (US$/t) |
685 |
651 |
565 |
667 |
536 |
Brazil segment crude steel production increased by
6.9% to 3.0Mt in 4Q 2017 as compared to 3Q 2017, following planned
maintenance at Monlevade, Brazil, during the prior quarter.
Steel shipments in 4Q 2017 increased by 3.8% to
3.1Mt as compared to 2.9Mt in 3Q 2017, due to a 10.4% increase in
flat product steel shipments (primarily export) offset in part by a
6.1% seasonal decrease in long product steel shipments.
Sales in 4Q 2017 increased by 9.4% to $2.3 billion
as compared to $2.1 billion in 3Q 2017, due to higher average steel
selling prices 5.3% (with both domestic and export prices
increasing) and higher steel shipments (+3.8%).
Operating income in 4Q 2017 was higher at $266
million as compared to $128 million in 3Q 2017, and $143 million in
4Q 2016.
EBITDA in 4Q 2017 increased to $341 million as
compared to $202 million in 3Q 2017 due to higher steel shipment
volumes and positive price-cost effect. EBITDA in 4Q 2017 was 59.9%
higher as compared to $213 million in 4Q 2016 due to higher steel
shipment volumes and positive price-cost effect.
Europe
(USDm) unless otherwise shown |
4Q 17 |
3Q 17 |
4Q 16 |
12M 17 |
12M 16 |
Sales |
9,610 |
9,196 |
7,139 |
36,208 |
29,272 |
Operating
income |
525 |
546 |
387 |
2,359 |
1,270 |
Depreciation |
(336) |
(302) |
(311) |
(1,201) |
(1,184) |
Impairment |
- |
- |
- |
- |
(49) |
EBITDA |
861 |
848 |
698 |
3,560 |
2,503 |
Crude steel
production (kt) |
10,311 |
11,248 |
10,173 |
43,768 |
42,635 |
Steel
shipments (kt) |
10,151 |
10,116 |
9,535 |
40,941 |
40,247 |
Average
steel selling price (US$/t) |
736 |
723 |
590 |
702 |
568 |
Europe segment crude steel production decreased by
8.3% to 10.3Mt in 4Q 2017, as compared to 11.2Mt in 3Q 2017
primarily due to a reline in ArcelorMittal Bremen and a blast
furnace maintenance in ArcelorMittal Galati.
Steel shipments in 4Q 2017 increased marginally to
10.2Mt as compared to 10.1Mt in 3Q 2017, primarily due to a 2.8%
increase in flat product shipments offset in part by a 4.5% decline
in long product shipments.
Sales in 4Q 2017 were $9.6 billion, higher as
compared to $9.2 billion in 3Q 2017, with higher average steel
selling prices (+1.8%) predominantly in the long product business
and higher steel shipments.
Operating income in 4Q 2017 was $525 million as
compared to $546 million in 3Q 2017 and $387 million in 4Q
2016.
EBITDA in 4Q 2017 increased by 1.6% to $861
million as compared to $848 million in 3Q 2017 primarily due to
marginally higher volumes. EBITDA in 4Q 2017 improved by 23.5% as
compared to 4Q 2016 due to higher steel shipments (+6.5%), positive
price-cost effect and translation impact.
ACIS
(USDm) unless otherwise shown |
4Q 17 |
3Q 17 |
4Q 16 |
12M 17 |
12M 16 |
Sales |
2,039 |
1,941 |
1,526 |
7,621 |
5,885 |
Operating
income / (loss) |
182 |
159 |
(92) |
508 |
211 |
Depreciation |
(81) |
(80) |
(78) |
(313) |
(311) |
Impairment |
(160) |
- |
(156) |
(206) |
(156) |
EBITDA |
423 |
239 |
142 |
1,027 |
678 |
Crude steel
production (kt) |
3,832 |
3,669 |
3,646 |
14,678 |
14,792 |
Steel
shipments (kt) |
3,254 |
3,362 |
3,095 |
13,094 |
13,271 |
Average
steel selling price (US$/t) |
546 |
515 |
432 |
515 |
395 |
ACIS segment crude steel production in 4Q 2017
increased by 4.5% to 3.8Mt as compared to 3.7Mt in 3Q 2017.
Steel shipments in 4Q 2017 decreased by 3.2% to
3.3Mt as compared to 3.4Mt in 3Q 2017 primarily due to lower steel
shipments in CIS.
Sales in 4Q 2017 increased by 5.1% to $2.0 billion
as compared to $1.9 billion in 3Q 2017, primarily due to higher
average steel selling prices (+6.0%) primarily in CIS, offset in
part by lower steel shipments (-3.2%).
Operating income in 4Q 2017 was $182 million as
compared to $159 million in 3Q 2017 and an operating loss of $92
million in 4Q 2016. Operating income in 4Q 2017 was impacted by
impairments of $160 million related to a downward revision of cash
flow projections across all steel facilities in ArcelorMittal
South Africa. Operating loss in 4Q 2016 was impacted by impairments
of $156 million related to the Vanderbijlpark and Saldanha plants
in South Africa.
EBITDA in 4Q 2017 increased by 77% to $423 million
as compared to $239 million in 3Q 2017, primarily due to improved
performance in both CIS and South Africa (positive price-cost
effect) partly offset by lower shipment volumes. EBITDA in 4Q 2017
was significantly higher as compared to $142 million in 4Q 2016,
primarily due to a positive price-cost effect in CIS and South
Africa as well as higher steel shipments (+5.1%).
Mining
(USDm) unless otherwise shown |
4Q 17 |
3Q 17 |
4Q 16 |
12M 17 |
12M 16 |
Sales |
959 |
1,029 |
896 |
4,033 |
3,114 |
Operating
income |
159 |
238 |
203 |
991 |
366 |
Depreciation |
(108) |
(103) |
(94) |
(416) |
(396) |
EBITDA |
267 |
341 |
297 |
1,407 |
762 |
|
|
|
|
|
|
Own iron ore production (a) (Mt) |
14.4 |
14.2 |
13.9 |
57.4 |
55.2 |
Iron ore shipped externally and internally at market price
(b) (Mt) |
8.4 |
9.1 |
8.1 |
35.7 |
33.6 |
Iron ore
shipment - cost plus basis (Mt) |
5.8 |
5.9 |
5.4 |
22.2 |
22.3 |
Own coal production(a) (Mt) |
1.5 |
1.5 |
1.8 |
6.3 |
6.3 |
Coal shipped externally and internally at market
price(b) (Mt) |
0.6 |
0.6 |
0.9 |
2.8 |
3.4 |
Coal
shipment - cost plus basis (Mt) |
0.9 |
0.9 |
0.9 |
3.5 |
3.4 |
(a) Own iron ore and coal production not including
strategic long-term contracts.
(b) Iron ore and coal shipments of market-priced based materials
include the Company's own mines, and share of production at other
mines, and exclude supplies under strategic long-term
contracts.
Own iron ore production in 4Q 2017 increased by
1.4% to 14.4Mt as compared to 14.2Mt in 3Q 2017. During 4Q 2017,
iron ore production in ArcelorMittal Mines Canada[13]
(AMMC) was negatively impacted by mine pit wall instability issues.
Despite weather related delays at the start of the quarter, Liberia
production increased and achieved its full 5Mt run-rate in December
2017. Own iron ore production in 4Q 2017 increased by 3.7% as
compared to 4Q 2016 primarily due to increased production in Mexico
(following the restart of the Volcan mine in February 2017) and
Liberia offset by lower production in AMMC.
Market-priced iron ore shipments in 4Q 2017
decreased by 7.2% to 8.4Mt as compared to 9.1Mt in 3Q 2017,
primarily driven by lower shipments in AMMC impacted by poor
weather conditions. Market-priced iron ore shipments in 4Q 2017
increased by 3.8% as compared to 4Q 2016 driven by increased
shipments in Mexico (following restart of Volcan mine in February
2017) and Liberia.
12M 2017 market-priced iron ore shipments grew by
6.1% versus 12M 2016. Market-priced iron ore shipments are expected
to grow by approximately 10% in FY 2018 versus 12M 2017, primarily
due to the ramp up of the Liberia mines (expected to grow by
approximately 3Mt on a full year basis to 5Mt in 12M 2018).
Own coal production in 4Q 2017 decreased by 1.4%
to 1.5Mt as compared to 3Q 2017 primarily due to lower production
in Kazakhstan. Own coal production in 4Q 2017 decreased by 16.1% as
compared to 4Q 2016 primarily due to lower production in Kazakhstan
and at Princeton (US) mines.
Market-priced coal shipments in 4Q 2017 was stable
at 0.6Mt as compared to 3Q 2017. Market-priced coal shipments in 4Q
2017 decreased by 34.5% as compared to 4Q 2016 primarily due to
decreased shipments at Kazakhstan driven mainly by geological
issues and lower yield.
Operating income in 4Q 2017 decreased to $159
million as compared to $238 million in 3Q 2017, and $203 million in
4Q 2016, primarily for the reasons discussed.
EBITDA in 4Q 2017 decreased by 21.8% to $267
million as compared to $341 million in 3Q 2017, primarily due to
decreased seaborne iron ore reference prices (-8.1%) and lower
market-priced iron ore shipments (-7.2%). EBITDA in 4Q 2017 was
lower as compared to $297 million in 4Q 2016, primarily due to
lower seaborne iron ore reference prices (-7.1%) and lower coal
shipments, offset in part by higher market-priced iron ore shipment
volumes (+3.8%).
Liquidity and Capital
Resources
For 4Q 2017, net cash provided by operating
activities was $2,885 million as compared to $763 million in 3Q
2017 and $1,653 million in 4Q 2016. The higher net cash provided by
operating activities during 4Q 2017 reflects in part a working
capital release of $1,657 million, as compared to an investment of
$801 million in 3Q 2017 and a release of $495 million in 4Q
2016.
Net cash used in investing activities during 4Q
2017 was $931 million as compared to $563 million during 3Q 2017
and to $809 million in 4Q 2016. Capital expenditure increased to
$1,036 million in 4Q 2017 as compared to $637 million in 3Q 2017
and to $802 million in 4Q 2016. FY 2018 capital expenditure is
expected to be $3.8 billion.
Cash provided by other investing activities in 4Q
2017 of $105 million primarily includes tangible asset disposals
and disposal proceeds of US long products (Georgetown). Cash
provided by other investing activities in 3Q 2017 of $74 million
primarily includes the first installment proceeds from disposal of
ArcelorMittal USA's 21% stake in the Empire Iron Mining Partnership
($44 million).
Net cash used by financing activities in 4Q 2017
includes $1.2 billion of bonds repurchased in October 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 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 and $0.6
billion (€500 million) euro 0.95% bond due January 17, 2023 issued
in December. Net cash provided by financing activities in 3Q 2017
includes borrowings and commercial paper, offset in part by a $0.5
billion repayment of the asset-based revolving credit facility at
ArcelorMittal USA. Net cash used in financing activities for 4Q
2016 primarily includes repayments of a $0.3 billion loan and $0.5
billion of short term facilities, offset in part by a $0.3 billion
increase in commercial paper issuances.
During 4Q 2017, the Company paid dividends of $21
million primarily to minority shareholders in Bekaert (Brazil) as
compared to $80 million in 3Q 2017 and $7 million in 4Q 2016.
As of December 31, 2017, the Company's cash and
cash equivalents amounted to $2.8 billion as compared to $3.0
billion at September 30, 2017 and $2.6 billion at December 31,
2016. Gross debt decreased to $12.9 billion as of December 31,
2017, as compared to $14.9 billion at September 30, 2017 and $13.7
billion at December 31, 2016.
As of December 31, 2017, net debt decreased to
$10.1 billion as compared with $12.0 billion at September 30, 2017
primarily due to positive free cash flow ($1.8 billion), and lower
as compared to $11.1 billion as of December 31, 2016 due to
positive free cash flow ($1.7 billion) offset in part by negative
foreign exchange impacts on Euro-denominated debt ($0.7
billion).
As of December 31, 2017, the Company had liquidity
of $8.3 billion, consisting of cash and cash equivalents of $2.8
billion and $5.5 billion of available credit lines[14]. The $5.5
billion credit facility contains a financial covenant of 4.25x Net
debt / EBITDA (as defined in the facility). On December 31, 2017,
the average debt maturity was 4.6 years.
ArcelorMittal's employee benefit net liabilities
decreased from $8.1 billion at December 31, 2016 to $7.5 billion at
December 31, 2017 following the increase of the return on plan
assets as well as impact of other actuarial assumptions partially
offset by the increase of the defined benefit obligation due to
decreased discount rates.
Action 2020 progress
The Company has made measurable progress on its
strategic Action 2020 plan resulting in $0.6 billion of
contribution to 2017 operating results, bringing the cumulative
benefit to $1.5 billion.
We are approximately one-half of the way along the
Action 2020 journey with all segments contributing to the progress.
The savings achieved in 2017 include volume contribution ($0.3
billion) as well as a combination of cost and product mix
improvements ($0.3 billion). Volume is a key component of Action
2020 (5Mt volume improvement) and we expect to see more progress in
this area in 2018 and beyond, assuming market conditions remain
favorable.
-
Europe: The transformation program has
progressed well. Savings at the cluster-leading plants continue to
be made, with changes to the operating model to restructure and
modernise the organisation now well embedded. The organisation is
benefiting from a more integrated, centrally co-ordinated approach,
further reducing costs. Additional gains are being made with
enhanced use of and investment in digitalisation in the
manufacturing process, supply chain and commercial teams. Overall,
net volume gains and improved mix contributed with higher hot strip
mill production offset in part by lower volumes caused by
operational issues primarily in the long business.
-
NAFTA: Indiana Harbor footprint optimization has
been completed: Savings achieved came from headcount
rationalization and efficiencies following closure of its 84" hot
strip mill (HSM), idling of the No.2 steel shop, ongoing benefits
from a new caster at No.3 steel shop. Restoration of the 80" HSM
and Indiana Harbor finishing will continue in 2018. Volume gains
have been offset in part by lower automotive sales.
-
NAFTA: Calvert ramp up is advancing with
automotive qualifications proceeding and increased capacity
utilization (up 10% YoY).
-
Brazil: Structural cost reductions are being
implemented; improved HAV mix from flat business.
-
ACIS: Ukraine benefited from the construction of
a new coke oven battery #6 and other PCI/energy saving initiatives.
Improving operational performance in Kazakhstan with production
records during the year was offset by lower shipment volumes in
Ukraine.
-
Mining: The business remains focussed on
service, quality and asset reliability. Cost focus maintained: FCF
breakeven remains at $40/t China CFR 62% Fe.
Key recent developments
-
On December 15, 2017, ArcelorMittal announced
the extension of the conversion date for the $1.0 billion privately
placed mandatory convertible bond (MCB) issued on December 28, 2009
by one of its wholly-owned Luxembourg subsidiaries. This amendment
to the MCB, which is mandatorily convertible into preferred shares
of such subsidiary, was executed on December 14, 2017. The
mandatory conversion date of the bond has been extended to January
29, 2021. The other main features of the MCB remain unchanged. The
bond was placed privately with Credit Agricole Corporate and
Investment Bank and is not listed. The subsidiary has
simultaneously executed amendments providing for the extension of
the outstanding Notes into which it invested the proceeds of the
bond issuance, which are linked to shares of the listed companies
Eregli Demir Va Celik Fab. T. AS of Turkey and China Oriental Group
Company Limited, both of which are held by ArcelorMittal
subsidiaries.
-
On December 13, 2017, ArcelorMittal and the
"Fonds d'Urbanisation et d'Aménagement du Plateau de Kirchberg,"
("the Fonds Kirchberg") announced that the architectural firm
Wilmotte & Associés ("W&A") was the winner of the
architectural consultation to design ArcelorMittal's new global
headquarters building in Luxembourg. W&A was selected by a
nine-person jury chaired by Aditya Mittal, CFO of ArcelorMittal and
CEO of ArcelorMittal Europe, following a highly competitive process
with designs proposed by many of the world's leading architects.
The ambitious winning design is primarily steel, and will showcase
the diverse benefits of steel over other building materials in
addition to highlighting the use of steel in 'green', sustainable
construction. As well as being ArcelorMittal's headquarters,
housing around 800 employees, some of the space will be leased for
other uses. There will also be a restaurant, sports facility and a
200-seat auditorium available to the public.
-
On December 4, 2017, ArcelorMittal announced the
issuance of €500 million 0.95%. Notes due January 17, 2023. The
Notes were issued under ArcelorMittal's €10 billion wholesale Euro
Medium Term Notes Programme. The proceeds of the issuance were used
for general corporate purposes, including the refinancing of
existing debt (such as the 6.125% Notes due June 1, 2018 being
early redeemed on December 28, 2017).
-
On November 28, 2017, ArcelorMittal confirmed
that it had given notice that it would redeem all of the then
outstanding U.S. $643.5 million of its U.S. $1.5 billion 6.125%
Notes due June 1, 2018. The settlement occurred on December 28,
2017, with total cash spent of $658 million including accrued
interest and premium on early repayment.
Financial calendar for
2018:
-
May 9, 2018: ArcelorMittal Annual General
Meeting
-
May 11, 2018: 1Q 2018 earnings release,
conference call with Heads of Finance and Investor Relations
-
August 1, 2018: 2Q 2018 earnings release, and
half year 2018 conference call with CEO and CFO (CEO office), Heads
of Finance and Investor Relations
-
November 1, 2018: 3Q 2018 earnings release,
conference call with Heads of Finance and Investor Relations
Outlook and guidance
Market conditions are favorable. The demand
environment remains positive (as evidenced by the continued high
readings from the ArcelorMittal weighted PMI) and steel spreads
remain healthy.
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) 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 estimated 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 HSM project and anticipated ILVA capex
as well as additional strategic projects (including further
investment to enhance downstream optimization in 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.
ArcelorMittal Condensed
Consolidated Statement of Financial Position1
|
|
|
Dec 31, |
Sept 30, |
Dec 31, |
In millions
of U.S. dollars |
|
|
2017 |
2017 |
2016 |
ASSETS |
|
|
|
|
|
Cash and
cash equivalents (C) |
|
|
2,786 |
2,978 |
2,615 |
Trade
accounts receivable and other |
|
|
3,863 |
4,443 |
2,974 |
Inventories |
|
|
17,986 |
17,780 |
14,734 |
Prepaid
expenses and other current assets |
|
|
1,931 |
2,719 |
1,665 |
Assets held
for sale[15] |
|
|
179 |
127 |
259 |
Total Current Assets |
|
|
26,745 |
28,047 |
22,247 |
|
|
|
|
|
|
Goodwill
and intangible assets |
|
|
5,737 |
5,856 |
5,651 |
Property,
plant and equipment |
|
|
36,971 |
36,471 |
34,831 |
Investments
in associates and joint ventures |
|
|
5,084 |
4,943 |
4,297 |
Deferred
tax assets |
|
|
7,055 |
6,697 |
5,837 |
Other
assets |
|
|
3,705 |
2,498 |
2,279 |
Total Assets |
|
|
85,297 |
84,512 |
75,142 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Short-term
debt and current portion of long-term debt (B) |
|
|
2,785 |
5,764 |
1,885 |
Trade
accounts payable and other |
|
|
13,428 |
12,074 |
11,633 |
Accrued
expenses and other current liabilities |
|
|
5,147 |
5,229 |
4,502 |
Liabilities
held for sale15 |
|
|
50 |
40 |
95 |
Total Current Liabilities |
|
|
21,410 |
23,107 |
18,115 |
|
|
|
|
|
|
Long-term
debt, net of current portion (A) |
|
|
10,143 |
9,185 |
11,789 |
Deferred
tax liabilities |
|
|
2,684 |
2,713 |
2,529 |
Other
long-term liabilities |
|
|
10,205 |
10,966 |
10,384 |
Total Liabilities |
|
|
44,442 |
45,971 |
42,817 |
|
|
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
38,789 |
36,374 |
30,135 |
Non-controlling interests |
|
|
2,066 |
2,167 |
2,190 |
Total Equity |
|
|
40,855 |
38,541 |
32,325 |
Total Liabilities and Shareholders' Equity |
|
|
85,297 |
84,512 |
75,142 |
|
|
|
|
|
|
Net Debt (D=A+B-C) |
|
|
10,142 |
11,971 |
11,059 |
ArcelorMittal Condensed
Consolidated Statement of Operations1
|
Three
months ended |
Twelve months ended |
In millions
of U.S. dollars unless otherwise shown |
Dec
31,
2017 |
Sep
30,
2017 |
Dec
31,
2016 |
Dec
31,
2017 |
Dec
31,
2016 |
Sales |
17,710 |
17,639 |
14,126 |
68,679 |
56,791 |
Depreciation (B) |
(747) |
(690) |
(696) |
(2,768) |
(2,721) |
Impairment
(B) |
(160) |
- |
(156) |
(206) |
(205) |
Exceptional
income5 (B) |
- |
- |
- |
- |
832 |
Operating income (A) |
1,234 |
1,234 |
809 |
5,434 |
4,161 |
Operating
margin % |
7.0% |
7.0% |
5.7% |
7.9% |
7.3% |
|
|
|
|
|
|
Income from
associates, joint ventures and other investments |
125 |
117 |
14 |
448 |
615 |
Net
interest expense |
(188) |
(205) |
(221) |
(823) |
(1,114) |
Foreign
exchange and other net financing gain/(loss) |
(261) |
132 |
(278) |
(52) |
(942) |
Income before taxes and non-controlling interests |
910 |
1,278 |
324 |
5,007 |
2,720 |
Current tax expense |
(134) |
(116) |
(80) |
(583) |
(254) |
Deferred tax benefit / (expense) |
253 |
45 |
93 |
151 |
(732) |
Income tax
benefit / (expense) |
119 |
(71) |
13 |
(432) |
(986) |
Income including non-controlling interests |
1,029 |
1,207 |
337 |
4,575 |
1,734 |
Non-controlling interests (income) / loss |
10 |
(2) |
66 |
(7) |
45 |
Net income attributable to equity holders of the
parent |
1,039 |
1,205 |
403 |
4,568 |
1,779 |
|
|
|
|
|
|
Basic
earnings per common share ($)3 |
1.02 |
1.18 |
0.40 |
4.48 |
1.87 |
Diluted
earnings per common share ($)3 |
1.01 |
1.18 |
0.39 |
4.46 |
1.86 |
|
|
|
|
|
|
Weighted
average common shares outstanding (in millions)3 |
1,020 |
1,020 |
1,020 |
1,020 |
953 |
Diluted
weighted average common shares outstanding (in millions)3 |
1,024 |
1,023 |
1,021 |
1,024 |
955 |
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
EBITDA (C =
A-B) |
2,141 |
1,924 |
1,661 |
8,408 |
6,255 |
EBITDA
Margin % |
12.1% |
10.9% |
11.8% |
12.2% |
11.0% |
|
|
|
|
|
|
Own iron
ore production (Mt) |
14.4 |
14.2 |
13.9 |
57.4 |
55.2 |
Crude steel
production (Mt) |
22.7 |
23.6 |
21.8 |
93.1 |
90.8 |
Total
shipments of steel products (Mt) |
21.0 |
21.7 |
20.0 |
85.2 |
83.9 |
ArcelorMittal Condensed
Consolidated Statement of Cash flows1
|
Three
months ended |
Twelve months ended |
In millions
of U.S. dollars |
Dec
31,
2017 |
Sept
30,
2017 |
Dec
31,
2016 |
Dec
31,
2017 |
Dec
31,
2016 |
Operating activities: |
|
|
|
|
|
Income
attributable to equity holders of the parent |
1,039 |
1,205 |
403 |
4,568 |
1,779 |
Adjustments to reconcile net income to net cash (used in) /
provided by operations: |
|
|
|
|
|
Non-controlling interest's income / (loss) |
(10) |
2 |
(66) |
7 |
(45) |
Depreciation and impairment |
907 |
690 |
852 |
2,974 |
2,926 |
Exceptional
income5 |
- |
- |
- |
- |
(832) |
Income from
associates, joint ventures and other investments |
(125) |
(117) |
(14) |
(448) |
(615) |
Deferred
tax (benefit)/ expense |
(253) |
(45) |
(93) |
(151) |
732 |
Change in
working capital |
1,657 |
(801) |
495 |
(1,873) |
(1,023) |
Other
operating activities (net) |
(330) |
(171) |
76 |
(514) |
(214) |
Net cash provided by operating activities (A) |
2,885 |
763 |
1,653 |
4,563 |
2,708 |
Investing activities: |
|
|
|
|
|
Purchase of
property, plant and equipment and intangibles (B) |
(1,036) |
(637) |
(802) |
(2,819) |
(2,444) |
Other
investing activities (net) |
105 |
74 |
(7) |
(11) |
1,301 |
Net cash used in investing activities |
(931) |
(563) |
(809) |
(2,830) |
(1,143) |
Financing activities: |
|
|
|
|
|
Net
(payments) / proceeds relating to payable to banks and long-term
debt |
(2,131) |
587 |
(450) |
(1,527) |
(6,007) |
Dividends
paid |
(21) |
(80) |
(7) |
(141) |
(61) |
Equity
offering |
- |
- |
- |
- |
3,115 |
Other
financing activities (net) |
(15) |
7 |
(11) |
(63) |
27 |
Net cash (used in) / provided by financing
activities |
(2,167) |
514 |
(468) |
(1,731) |
(2,926) |
Net
(decrease) / increase in cash and cash equivalents |
(213) |
714 |
376 |
2 |
(1,361) |
Cash and
cash equivalents transferred from assets held for sale |
- |
- |
(13) |
13 |
(13) |
Effect of
exchange rate changes on cash |
16 |
9 |
(15) |
58 |
(127) |
Change in cash and cash equivalents |
(197) |
723 |
348 |
73 |
(1,501) |
|
|
|
|
|
|
Free cash flow (C=A+B) |
1,849 |
126 |
851 |
1,744 |
264 |
Appendix 1: Product shipments by
region
(000'kt) |
4Q 17 |
3Q 17 |
4Q 16 |
12M
17 |
12M
16 |
Flat |
4,414 |
4,820 |
4,301 |
18,926 |
18,207 |
Long |
872 |
984 |
817 |
3,530 |
3,647 |
NAFTA |
5,150 |
5,655 |
5,011 |
21,834 |
21,281 |
Flat |
1,950 |
1,766 |
1,877 |
6,762 |
6,689 |
Long |
1,108 |
1,181 |
964 |
4,100 |
4,064 |
Brazil |
3,052 |
2,940 |
2,841 |
10,840 |
10,753 |
Flat |
7,298 |
7,098 |
6,541 |
29,255 |
27,971 |
Long |
2,821 |
2,954 |
2,967 |
11,494 |
12,114 |
Europe |
10,151 |
10,116 |
9,535 |
40,941 |
40,247 |
CIS |
2,209 |
2,297 |
2,198 |
8,837 |
9,181 |
Africa |
1,044 |
1,065 |
895 |
4,256 |
4,087 |
ACIS |
3,254 |
3,362 |
3,095 |
13,094 |
13,271 |
Note: "Others and eliminations" lines are not
presented in the
table
Appendix 2a:
Capital expenditures
(USDm) |
4Q 17 |
3Q 17 |
4Q 16 |
12M
17 |
12M
16 |
NAFTA |
184 |
95 |
138 |
466 |
445 |
Brazil |
72 |
79 |
81 |
263 |
237 |
Europe |
430 |
213 |
313 |
1,143 |
951 |
ACIS |
165 |
114 |
128 |
427 |
397 |
Mining |
179 |
132 |
137 |
495 |
392 |
Total |
1,036 |
637 |
802 |
2,819 |
2,444 |
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 |
Phase 2: Slab yard expansion (Bay 5) |
Increase coil production level from 4.6Mt/year to 5.3Mt/year
coils |
2Q 2017 |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Phase 2: Convert the current galvanizing line #4 to a
Galvalume line |
Allow the galvaline #4 to produce 160kt galvalume and 128kt
galvanize and closure of galvanize line #1 (capacity 170kt of
galvalume) |
2Q 2017
|
Europe |
ArcelorMittal Krakow (Poland) |
Hot strip mill (HSM) extension |
Increase hot rolled coil (HRC) capacity by 0.9Mt/year |
2Q 2017 |
Europe |
ArcelorMittal Krakow (Poland) |
Hot dipped galvanizing (HDG) increase |
Increasing HDG capacity by 0.4Mt/year |
2Q 2017
|
Ongoing projects
Segment |
Site /
unit |
Project |
Capacity /
details |
Forecast
completion |
Europe |
Gent & Liège (Europe Flat Automotive UHSS
Program)
|
Gent: Upgrade HSM and new furnace
Liège: Annealing line transformation |
Increase ~400kt in Ultra High Strength Steel
capabilities |
1Q 2018 |
Europe |
ArcelorMittal Differdange |
Modernisation of finishing of "Grey rolling mill" |
Revamp finishing to achieve full capacity of Grey mill at
850kt/y |
1Q 2018 |
ACIS |
ArcelorMittal Kryvyi Rih |
New LF&CC 2&3 |
Facilities upgrade to switch from ingot to continuous caster
route. Additional billets of 290kt over ingot route through yield
increase |
4Q 2018 |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
Restoration of 80" HSM and upgrades at Indiana Harbor
finishing |
2018(a) |
Europe |
Sosnowiec (Poland) |
Modernization of Wire Rod Mill |
Upgrade rolling technology improving the mix of HAV products
and increase volume by 90kt |
2019 |
NAFTA |
Mexico |
Build new HSM |
Production capacity of 2.5Mt/year |
2020(b) |
NAFTA |
Burns Harbor |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped galvanizing (HDG) capacity by 0.6Mt/year
and cold rolling (CR) capacity by 0.7Mt/year |
On hold |
Brazil |
Juiz de Fora |
Meltshop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On hold(c)
|
Brazil |
Monlevade |
Sinter plant, blast furnace and meltshop |
Increase in liquid steel capacity by 1.2Mt/year;
Sinter feed capacity of 2.3Mt/year |
On hold |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(d) |
-
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 steelshop (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.
-
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.
-
Although the Monlevade wire rod expansion
project and Juiz de Fora rebar expansion were completed in
2015, the Juiz de Fora melt shop project is currently on
hold and is expected to be completed upon Brazil domestic market
recovery, and the Company does not expect to increase
shipments until domestic demand improves.
-
ArcelorMittal Liberia is moving ore extraction
from its depleting DSO (direct shipping ore) deposit at Tokadeh to
the nearby, low strip ratio and higher-grade DSO Gangra deposit
where planned ramp up has progressed, reaching a 5Mt run rate at
the end of December 2017. Following a period of exploration
cessation caused by the onset of Ebola, ArcelorMittal Liberia
recommenced drilling for DSO resource extensions in late 2015.
During 2016, the operation at Tokadeh was right-sized to focus on
its "natural" Atlantic markets. The nearby Gangra deposit has now
been developed as part of the staged approach as opposed to the
originally planned phase 2 step up to 15Mtpa of concentrate sinter
fine ore product that was delayed in August 2014 due to the
declaration of force majeure by contractors following the Ebola
virus outbreak, and then reassessed following rapid iron ore price
declines over the period since. The Gangra mine, haul road and
related existing plant and equipment upgrades are nearing
completion. ArcelorMittal remains committed to Liberia where it
operates a full value chain of mine, rail and port and where
it has been operating the mine on a DSO basis since 2011.
The Company believes that ArcelorMittal Liberia presents a strong,
competitive source of product ore for the international market
based on continuing DSO mining and then moving to a long-term
sinter feed concentration phase.
Appendix 3: Debt repayment
schedule as of December 31, 2017
Debt
repayment schedule (USD billion) |
2018 |
2019 |
2020 |
2021 |
2022 |
>2023 |
Total |
Bonds |
0.9 |
0.9 |
1.9 |
1.4 |
1.5 |
2.8 |
9.4 |
Commercial
paper |
1.1 |
- |
- |
- |
- |
- |
1.1 |
Other
loans |
0.8 |
0.3 |
0.2 |
0.4 |
0.2 |
0.5 |
2.4 |
Total gross debt |
2.8 |
1.2 |
2.1 |
1.8 |
1.7 |
3.3 |
12.9 |
Appendix 4: Terms and
definitions
Unless indicated otherwise, or the context
otherwise requires, references in this earnings release report to
the following terms have the meanings set out next to them
below:
Average steel selling prices:
calculated as steel sales divided by steel shipments.
Cash and cash equivalents: represents cash and
cash equivalents, restricted cash and short-term
investments.
Capex: includes the acquisition of tangible
and intangible assets.
EBITDA: operating income plus depreciation,
impairment expenses and exceptional income/(charges).
EBITDA/tonne: calculated as EBITDA divided by
total steel shipments.
Exceptional income / (charges): relate to
transactions that are significant, infrequent or unusual and are
not representative of the normal course of business such as
restructuring costs or asset disposals.
Foreign exchange and other net financing (loss) /
gain: include foreign currency exchange impact, bank fees,
interest on pensions, impairments of financial instruments,
revaluation of derivative instruments and other charges that cannot
be directly linked to operating results.
Free cash flow (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).
Iron ore unit cash cost: includes weighted
average pellet and concentrate cost of goods sold across all
mines.
Liquidity: Cash and cash equivalents plus
available credit lines excluding back-up lines for the commercial
paper program.
LTIF: lost time injury frequency rate equals
lost time injuries per 1,000,000 worked hours, based on own
personnel and contractors.
MT: Refers to million metric tonnes
Market-priced tonnes: represent amounts of
iron ore and coal from ArcelorMittal mines that could be sold to
third parties on the open market. Market-priced tonnes that are not
sold to third parties are transferred from the Mining segment to
the Company's steel producing segments and reported at the
prevailing market price. Shipments of raw materials that do not
constitute market-priced tonnes are transferred internally and
reported on a cost-plus basis.
Mining segment sales: i) "External sales":
mined product sold to third parties at market price; ii)
"Market-priced tonnes": internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) "Cost-plus tonnes" - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market).
Net debt: long-term debt, plus short-term debt
less cash and cash equivalents (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 income
On-going projects: Refer to projects for which
construction has begun (excluding various projects that are under
development), even if such projects have been placed on hold
pending improved operating conditions.
Operating results: Refers to operating
income/(loss).
Operating segments: The NAFTA segment includes
the Flat, Long and Tubular operations of USA, Canada and Mexico.
The Brazil segment includes the Flat operations of Brazil, and the
Long and Tubular operations of Brazil and its neighboring countries
including Argentina, Costa Rica and Venezuela. The Europe segment
comprises the Flat, Long and Tubular operations of the European
business, as well as Downstream Solutions. The ACIS segment
includes the Flat, Long and Tubular operations of Kazakhstan,
Ukraine and South Africa. Mining segment includes iron ore and coal
operations.
Own iron ore production: Includes total of all
finished production of fines, concentrate, pellets and lumps
(excludes share of production and strategic long-term
contracts).
PMI: Refers to purchasing managers index
(based on ArcelorMittal estimates)
Seaborne iron ore reference
prices: refers to iron ore prices for 62% Fe CFR
China.
Shipments: information at segment and group
level eliminates intra-segment shipments (which are primarily
between Flat/Long plants and Tubular plants) and inter-segment
shipments respectively. Shipments of Downstream Solutions are
excluded.
Steel-only EBITDA: calculated as EBITDA less
Mining segment EBITDA.
Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.
Working capital: trade accounts receivable
plus inventories less trade and other accounts payable.
YoY: Refers to year-on-year.
[1] The
financial information in this press release has been prepared
consistently with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and as adopted by the European Union. The interim
financial information included in this announcement has been also
prepared in accordance with IFRS applicable to interim periods,
however this announcement does not contain sufficient information
to constitute an interim financial report as defined in
International Accounting Standard 34, "Interim Financial
Reporting". The numbers in this press release have not been
audited. The financial information and certain other information
presented in a number of tables in this press release have been
rounded to the nearest whole number or the nearest decimal.
Therefore, the sum of the numbers in a column may not conform
exactly to the total figure given for that column. In addition,
certain percentages presented in the tables in this press release
reflect calculations based upon the underlying information prior to
rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. This press release also includes
certain non-GAAP financial measures. ArcelorMittal presents EBITDA,
and EBITDA/tonne, which are non-GAAP financial measures and defined
in the Condensed Consolidated Statement of Operations, as
additional measurements to enhance the understanding of operating
performance. ArcelorMittal believes such indicators are relevant to
describe trends relating to cash generating activity and provides
management and investors with additional information for comparison
of the Company's operating results to the operating results of
other companies. ArcelorMittal also presents net debt as an
additional measurement to enhance the understanding of its
financial position, changes to its capital structure and its credit
assessment. ArcelorMittal also presents free cash flow, which is a
non-GAAP financial measure defined in 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] Free cash
flow for the full year 2017 totalled $1.7 billion including cash
flow from operations of $4.6 billion less capex of $2.8 billion
[3] At the
Extraordinary General Meeting held on May 10, 2017, the
ArcelorMittal Shareholders approved a share consolidation based on
a ratio 1:3, whereby every three 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 July 28,
2016, ArcelorMittal and Megasa Siderúgica S.L. ("Megasa") signed a
shares sale and purchase agreement in respect of ArcelorMittal's
100% interest in ArcelorMittal Zaragoza ("AM Zaragoza"). The
closing conditions were completed on September 30, 2016. As a
result, ArcelorMittal transferred its shareholding in AM Zaragoza
to Megasa and simultaneously received the total cash consideration
of €80 million ($89 million). The cash consideration was calculated
on a cash and debt free basis.
[5] On June 23,
2016, following the ratification by the United Steelworkers of a
new labor agreement which is valid until September 1, 2018,
ArcelorMittal made changes mainly to healthcare post-retirement
benefits in its subsidiary ArcelorMittal USA (NAFTA). The changes
resulted in a gain of $832 million recorded in 2Q 2016.
[6] On August
7, 2017, ArcelorMittal USA and Cliffs Natural Resources ("Cliffs")
agreed that Cliffs would acquire ArcelorMittal USA's 21% ownership
interest in the Empire Iron Mining Partnership for $133 million
plus assumptions of all partnership liabilities. The payment of
$133 million will be made in 3 equal installments with the first
payment of $44 million received in August 2017, and two subsequent
payments to be received in August 2018 and 2019.
[7] On January
27, 2017 China Oriental completed a share placement to restore the
minimum 25% free float as per HKEx listing requirements. Following
the share placement, ArcelorMittal's interest in China Oriental
decreased from 47% to 39%, as a result of which ArcelorMittal
recorded a net dilution loss of $44 million.
[8] On August
25, 2017, following a sales agreement signed on October 21, 2016,
ArcelorMittal completed the sale of its 50% shareholding in
Kalagadi Manganese (Proprietary) Limited to Kgalagadi Alloys
(Proprietary) Limited for consideration to be paid during the life
of the mine, which is contingent on the financial performance of
the mine and cash flow availability. The investment classified as
held for sale as of December 31, 2016 had a nil carrying amount as
it was fully impaired in 2015 but the Company recycled upon
disposal accumulated foreign exchange translation losses of $187
million in income from associates, joint ventures and other
investments.
[9] On February
5, 2016 ArcelorMittal announced it had sold its 35% stake in
Gestamp Automoción ("Gestamp") to the majority shareholder, the
Riberas family, for a total cash consideration of €875 million
($971 million). In addition to the cash consideration,
ArcelorMittal received in 2Q 2016 a payment of $11 million as a
2015 dividend.
[10] On August
2, 2016, the Company signed an agreement for the sale of its 10.08%
interest in Hunan Valin to a private equity fund. On September 14,
2016, the Company transferred the Hunan Valin shares and
simultaneously received the full proceeds of $165 million (RMB1,103
million) from the buyer and recorded a gain of $74
million.
[11] Effective
October 31, 2016, the Company entered into a pellet purchase
agreement in the US including a special payment component that
varies according to the price of steel in the US domestic market.
This feature corresponds to a derivative instrument recognized at
fair value. The charge relates to outstanding minimum volumes to be
purchased over the remaining life of the contract (9 years).
[12] On
September 28, 2016, ArcelorMittal South Africa ("AMSA") announced
that it had entered into agreements to implement a Broad-Based
Black Economic Empowerment (B-BBEE) transaction which includes: the
issuance of a 17% shareholding in AMSA using a new class of
notionally funded shares to a special purpose vehicle owned by
Likamva Resources Proprietary Limited (Likamva). Likamva has
undertaken to introduce broad-based social and community
development organisations as shareholders to hold an effective 5%
interest (of the 17%, leaving Likamva with a 12% shareholding)
within 24 months; and a 5.1% shareholding in AMSA using another new
class of notionally funded shares to the ArcelorMittal South Africa
Employee Empowerment Share Trust for the benefit of AMSA
employees and AMSA management. All the shares have certain
restrictions on disposal for a period of 10 years ("Lock-in
Period"), thereby promoting long-term sustainable B-BBEE in
AMSA.
[13]
ArcelorMittal Mines Canada, otherwise known as ArcelorMittal Mines
and Infrastructure Canada.
[14] On
December 21, 2016, ArcelorMittal signed an agreement for a $5.5
billion revolving credit facility (the "Facility"). This Facility
amends and restates the $6 billion revolving credit facility dated
April 30, 2015. The amended agreement incorporates a first tranche
of $2.3 billion maturing on December 21, 2019, and a second tranche
of $3.2 billion maturing on December 21, 2021. The Facility may be
used for general corporate purposes. As of December 31, 2017, the
$5.5 billion revolving credit facility remains fully available.
[15] Assets and
liabilities held for sale, as of December 31, 2017, primarily
include the carrying value of the USA long product facilities at
Steelton ("Steelton") and Frydek Mistek assets in Ostrava. Assets
and liabilities held for sale, as of September 30, 2017, primarily
include the carrying value of the USA long product facilities at
Steelton ("Steelton"). Assets and liabilities held for sale as of
December 31, 2016, include the carrying value of Steelton and some
activities of ArcelorMittal Downstream Solutions in the Europe
segment and America's Tailored Blanks.
Fourth quarter 2017 and full year
2017 earnings analyst conference call
ArcelorMittal management (Mr. Mittal, Chairman and
CEO & Aditya Mittal, CFO and CEO Europe) will host a conference
call for members of the investment community to discuss the
three-month and twelve-month periods ended December 31, 2017 on:
Wednesday January 31, 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 |
63663485# |
US
local: |
1 86 6719
2729 |
+1 24 0645
0345 |
63663485# |
US (New
York): |
1 86 6719
2729 |
+ 1 64 6663
7901 |
63663485# |
France: |
0800
914780 |
+33 1 7071
2916 |
63663485# |
Germany: |
0800 965
6288 |
+49 692
7134 0801 |
63663485# |
Spain: |
90 099
4930 |
+34 911
143436 |
63663485# |
Luxembourg: |
800
26908 |
+352 27 86
05 07 |
63663485# |
A replay of the conference call will be
available for one week by dialing: +49 (0) 1805 2047 088; Access
code 518172#
|
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 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/
Enquiries
ArcelorMittal investor relations: Europe: +44 207 543 1128;
Americas: +1 312 899 3985; Retail: +44 207 543 1156; SRI: +44 207
543 1156 and Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44
203 214 2419; France (Image 7) Tel: +33 153 70 94 17
ArcelorMittal reports fourth
quarter 2017 and full year 2017 results