Luxembourg, August 1, 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 six-month periods ended June 30, 2018.
Highlights: |
Health and safety: LTIF rate of 0.71x in 2Q 2018; 1H 2018 LTIF of
0.67x vs. 0.78x 1H 2017 Operating income of $2.4 billion in 2Q
2018; 1H 2018 operating income of $3.9 billion, 32.5% higher YoY
EBITDA of $3.1 billion in 2Q 2018, 22.3% higher vs. 1Q 2018; 1H
2018 EBITDA of $5.6 billion, 28.6% higher YoY Net income of $1.9
billion in 2Q 2018, 56.4% higher vs. 1Q 2018; 1H 2018 net income of
$3.1 billion, +31.5% YoY Steel shipments of 21.8Mt in 2Q 2018,
+1.8% vs. 1Q 2018; 1H 2018 steel shipments of 43.1Mt, up 1.3% YoY
2Q 2018 iron ore shipments of 14.6Mt, of which 10.0Mt shipped at
market prices (+5.4% YoY) Gross debt of $13.5 billion as of June
30, 2018. Net debt decreased to $10.5 billion as of June 30, 2018,
as compared to $11.1 billion as of March 31, 2018, despite further
$1.2 billion working capital investment. |
Strategic progress in 1H 2018: |
Balance sheet: ArcelorMittal has achieved its financial
priority of an investment grade credit rating following upgrades
from all 3 credit rating agencies in 2018 (S&P in February,
Moody's in June and Fitch in July); Deleveraging remains the
Group's priority and, in the absence of further working capital
investment, progress towards $6 billion net debt target should
accelerate Structural improvement: The Group's strategy to
drive structurally higher returns through the delivery of Action
2020 continues; we now operate from a more efficient, resized
footprint in Europe utilising enhanced digitalization of operations
to drive productivity improvements and support maintenance
excellence; Strategic investments continue in line with the
continuous shift towards higher added value products including
increased ultra-high strength steel capabilities at Gent/Liege
(commissioned); investing in high-return opportunities such as the
ongoing Mexico hot strip mill project; Votorantim acquisition
completed with integration underway to secure our position as the
leading long product producer in Brazil; European Commission
anti-trust approval received for the acquisition of Ilva
Industry leadership: ArcelorMittal's pioneering new
installation at Gent, Belgium, to apply LanzaTech carbon capture
and utilisation technology to convert carbon-containing gas from
blast furnaces into bioethanol reflecting our position as the
industry leader as well as the supplier-awards received from Honda,
General Motors and Ford during 1H 2018; The Group's ability to
leverage its R&D capabilities is exemplified through the launch
of Steligence®, ArcelorMittal's new concept for the use of steel in
construction, which will facilitate the next generation of high
performance buildings and construction techniques and create a more
sustainable life-cycle for buildings Shareholders returns:
ArcelorMittal resumed dividends in May 2018 and bought-back $0.2
billion of shares in March 2018; The Company is committed to
increase shareholders returns once the Group's net debt target is
achieved |
Financial highlights (on the basis of IFRS1):
(USDm)
unless otherwise shown |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Sales |
19,998 |
19,186 |
17,244 |
39,184 |
33,330 |
Operating
income |
2,361 |
1,569 |
1,390 |
3,930 |
2,966 |
Net
income attributable to equity holders of the parent |
1,865 |
1,192 |
1,322 |
3,057 |
2,324 |
Basic
earnings per share (US$)[2] |
1.84 |
1.17 |
1.30 |
3.01 |
2.28 |
|
|
|
|
|
|
Operating
income/ tonne (US$/t) |
109 |
73 |
65 |
91 |
70 |
EBITDA |
3,073 |
2,512 |
2,112 |
5,585 |
4,343 |
EBITDA/
tonne (US$/t) |
141 |
118 |
98 |
130 |
102 |
Steel-only EBITDA/ tonne (US$/t) |
127 |
101 |
83 |
114 |
83 |
|
|
|
|
|
|
Crude
steel production (Mt) |
23.2 |
23.3 |
23.2 |
46.5 |
46.8 |
Steel
shipments (Mt) |
21.8 |
21.3 |
21.5 |
43.1 |
42.5 |
Own iron
ore production (Mt) |
14.5 |
14.6 |
14.7 |
29.1 |
28.7 |
Iron ore
shipped at market price (Mt) |
10.0 |
9.1 |
9.5 |
19.1 |
18.1 |
Commenting, Mr. Lakshmi N. Mittal,
ArcelorMittal Chairman and CEO, said:
"This is an encouraging set of results reflecting the structural
improvements in both the global steel industry due to supply reform
dynamics and within ArcelorMittal as a result of Action
2020. The significant improvement in our balance sheet and
earnings outlook has been recognised by the main credit agencies
and the Company has achieved its stated aim of regaining its
investment grade credit rating.
"The outlook for the second half of the year is encouraging as
we anticipate current favourable market conditions continuing and
are well positioned to capitalise on this from our leadership
position across many key markets. We believe improvements in
underlying industry fundamentals are sustainable, although there is
still more to be done to thoroughly address the issue of global
overcapacity. We will retain a deleveraging bias, whilst also
pursuing selective opportunities to strengthen the foundations of
sustainable value creation."
Sustainable development and safety performance
Health and safety - Own personnel and contractors lost time
injury frequency rate
Health and safety performance, based on own personnel figures
and contractors lost time injury frequency (LTIF) rate was 0.71x in
the second quarter of 2018 ("2Q 2018") as compared to 0.62x for the
first quarter of 2018 ("1Q 2018") and 0.72x for the second quarter
of 2017 ("2Q 2017").
Health and safety performance improved to 0.67x in the first six
months of 2018 ("1H 2018") as compared to 0.78x for the first six
months of 2017 ("1H 2017").
The Company's efforts to improve its Health and Safety record
remain focused on both further reducing the rate of severe injuries
and preventing fatalities.
Own personnel and contractors - Frequency
rate
Lost time injury frequency rate |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Mining |
0.62 |
0.34 |
0.58 |
0.53 |
0.58 |
NAFTA |
0.64 |
0.39 |
0.51 |
0.52 |
0.75 |
Brazil |
0.35 |
0.41 |
0.37 |
0.36 |
0.40 |
Europe |
1.02 |
0.77 |
1.08 |
0.92 |
1.15 |
ACIS |
0.52 |
0.79 |
0.62 |
0.64 |
0.52 |
Total
Steel |
0.72 |
0.66 |
0.75 |
0.69 |
0.81 |
Total
(Steel and Mining) |
0.71 |
0.62 |
0.72 |
0.67 |
0.78 |
Key sustainable development highlights for 2Q
2018:
- Launch of Steligence®, ArcelorMittal's new concept for the use
of steel in construction, which will facilitate the next generation
of high performance buildings and construction techniques and
create a more sustainable life-cycle for buildings.
- Successful completion of pre-audits at our Atlantique-Lorraine
steel business against the draft Responsible Steel standards,
preparing us for the future implementation of this scheme designed
to provide our customers with reassurance about the sustainability
standards in their supply chains.
- Construction of new premises at Gent, Belgium, to house a new
low-carbon technology installation to convert carbon-containing gas
from the blast furnace into bioethanol, pioneered by Chicago-based
company, LanzaTech, with whom ArcelorMittal has entered into a
long-term partnership. The new concept has the potential to
revolutionise blast furnace carbon emissions capture and support
the decarbonisation of the transport sector. This investment has an
estimated cost of €150 million. Commissioning and first production
is expected by mid-2020.
Analysis of results for the six months ended
June 30, 2018 versus results for the six months ended June 30,
2017
Total steel shipments for 1H 2018 were 43.1 million metric
tonnes representing an increase of 1.3% as compared to 1H 2017,
primarily due to higher steel shipments in Brazil (+9.6%), NAFTA
(+3.0%), and Europe (+2.6%) offset by ACIS (-6.1%) (impacted by
planned and unplanned maintenance in Ukraine).
Sales for 1H 2018 increased by 17.6% to $39.2 billion as
compared with $33.3 billion for 1H 2017, primarily due to higher
average steel selling prices (+16.7%) and higher steel shipments
(+1.3%).
Depreciation of $1.4 billion for 1H 2018 was higher as compared
with $1.3 billion in 1H 2017. FY 2018 depreciation is expected to
be approximately $2.9 billion (based on current exchange
rates).
Impairment charges for 1H 2018 were $86 million related to the
agreed remedy package required for the approval of the Votorantim
acquisition[3]. Impairment charges for 1H 2017 were $46 million in
South Africa.
Exceptional charges for 1H 2018 were $146 million related to a
provision taken in respect of a case that has now been settled[4].
Exceptional charges for 1H 2017 were nil.
Operating income for 1H 2018 was higher at $3.9 billion as
compared to $3.0 billion in 1H 2017 driven by improved operating
conditions. Operating results for 1H 2018 and 1H 2017 were impacted
by impairment and exceptional charges as discussed above.
Income from associates, joint ventures and other investments for
1H 2018 was $242 million as compared to $206 million for 1H 2017.
Performance of a Chinese investee improved in 1H 2018 as compared
to 1H 2017, offset in part by $132 million impairment of
ArcelorMittal's investment in Macsteel (South Africa) following the
announced sale of its 50% stake in May 2018. Upon closing of the
transaction, the charge is expected to be offset by currency
translation gains. Income from investments in associates, joint
ventures and other investments in 1H 2018 and 1H 2017 include the
annual dividend income from Erdemir of $87 million and $45 million,
respectively.
Net interest expense was lower at $323 million in 1H 2018, as
compared to $430 million in 1H 2017, driven by debt repayment and
lower cost of debt. The Company expects full year 2018 net interest
expense of approximately $0.6 billion reflecting the benefits of
liability management exercises completed in 2017.
Foreign exchange and other net financing losses were $564
million for 1H 2018 as compared to gains of $77 million for 1H
2017. Foreign exchange losses for 1H 2018 were $237 million as
compared to foreign exchange gains of $282 million in 1H 2017,
primarily related to the effect of the depreciation of the U.S.
dollar against the euro on the Company's euro denominated debt up
until April 1, 2018[5]. 1H 2017 includes non-cash mark-to-market
gains on derivatives (primarily mandatory convertible bonds call
option) totalling $0.3 billion offset by $159 million premium
expense on the early redemption of bonds.
ArcelorMittal recorded an income tax expense of $184 million for
1H 2018 as compared to an income tax expense of $480 million for 1H
2017. The deferred tax benefit of $340 million in 1H 2018 is the
result of recording a deferred tax asset primarily due to the
expectation of higher future profits mainly in Luxembourg,
following the share capital conversion.
ArcelorMittal's net income for 1H 2018 was $3.1 billion, or
$3.01 basic earnings per share, as compared to a net income in 1H
2017 of $2.3 billion, or $2.28 basic earnings per share.
Analysis of results for 2Q 2018 versus 1Q
2018 and 2Q 2017
Total steel shipments in 2Q 2018 were 1.8% higher at 21.8Mt as
compared with 21.3Mt for 1Q 2018 primarily due to higher steel
shipments in Brazil (+14%) (including the positive scope effect of
the Votorantim acquisition net of divestments (+0.2Mt), offset by
adverse impact from a nationwide truck strike (0.1Mt)), NAFTA
(+4.4%) and ACIS (+1.0%) (despite negative impact of unplanned
maintenance in Ukraine), offset in part by lower steel shipments in
Europe (-1.7%). Total steel shipments in 2Q 2018 were 1.2% higher
as compared with 21.5Mt for 2Q 2017 primarily due to higher steel
shipments in Brazil (+8%) and NAFTA (+7.1%), marginally higher
shipments in Europe (+0.5%) offset in part by lower shipments in
ACIS (-6.1%) on account of unplanned maintenance.
Sales in 2Q 2018 were $20 billion as compared to $19.2 billion
for 1Q 2018 and $17.2 billion for 2Q 2017. Sales in 2Q 2018 were
4.2% higher as compared to 1Q 2018 primarily due to higher average
steel selling prices (+2.1%), higher steel shipments (+1.8%), and
higher market-priced iron ore shipments (+9.3%), offset in part by
lower seaborne iron ore reference prices (-11.3%). Sales in 2Q 2018
were 16% higher as compared to 2Q 2017 primarily due to higher
average steel selling prices (+15.2%), higher steel shipments
(+1.2%), higher market-priced iron ore shipments (+5.4%) and higher
seaborne iron ore reference prices (+4.9%).
Depreciation for 2Q 2018 was stable at $712 million as compared
to $711 million for 1Q 2018. Depreciation was higher in 2Q 2018 as
compared to $676 million in 2Q 2017 primarily due to depreciation
of the US dollar against the Euro.
Impairment charges for 2Q 2018 were nil. Impairment charges for
1Q 2018 were $86 million related to the agreed remedy package
required for the approval of the Votorantim acquisition. Impairment
charges for 2Q 2017 were $46 million in South Africa.
Exceptional charges for 2Q 2018 and 2Q 2017 were nil.
Exceptional charges for 1Q 2018 were $146 million related to a
provision taken in respect of a case that has now been settled.
Operating income for 2Q 2018 was $2.4 billion as compared to
$1.6 billion in 1Q 2018 and $1.4 billion in 2Q 2017. Operating
income for 1Q 2018 was impacted by impairments and exceptional
charges as discussed above.
Income from associates, joint ventures and other investments for
2Q 2018 was $30 million as compared to $212 million for 1Q 2018. 2Q
2018 was positively impacted by improvement in operating gains
mainly in a Chinese investee and Calvert offset by a $132 million
impairment of ArcelorMittal's investment in Macsteel (South Africa)
following the announced sale of its 50% stake in May 2018. Upon
closing of the transaction, the charge is expected to be offset by
currency translation gains. 1Q 2018 included the annual dividend
declared by Erdemir ($87 million). Income from associates, joint
ventures and other investments for 2Q 2017 was $120 million.
Net interest expense in 2Q 2018 was $159 million as compared to
$164 million in 1Q 2018 and $207 million in 2Q 2017. Net interest
expense was lower in 2Q 2018 as compared to 2Q 2017, primarily due
to debt repayments and lower cost of debt.
Foreign exchange and other net financing losses in 2Q 2018 were
$390 million as compared to losses of $174 million for 1Q 2018 and
gains of $210 million in 2Q 2017. Foreign exchange losses for 2Q
2018 of $309 million compared to a foreign exchange gain of $72
million in 1Q 2018. Following the share capital conversion5 , the
Company reversed in 2Q 2018 a foreign exchange gain of $206 million
recognized in 1Q 2018 in respect of the deferred tax asset. As of
April 1, 2018, the Company's statement of operations no longer has
foreign exchange exposure to the euro denominated debt, which in 1Q
2018, amounted to $163 million loss. 2Q 2018 includes non-cash
mark-to-market gains of $91 million related to mandatory
convertible bonds call option (following the market price
variations of the underlying shares) as compared to non-cash mark
to market losses of $35 million in 1Q 2018 and a gain of $150
million in 2Q 2017. For 2Q 2017 a foreign exchange gain of $247
million was recorded mainly on account of a 6.7% depreciation of
the USD against the Euro.
ArcelorMittal recorded an income tax benefit of $19 million for
2Q 2018 as compared to an income tax expense of $203 million for 1Q
2018 and an income tax expense of $197 million in 2Q 2017. The tax
benefit of 2Q 2018 is the result of recording a deferred tax asset
primarily due to expectation of higher future profits mainly in
Luxembourg, following the share capital conversion.
ArcelorMittal recorded a net income for 2Q 2018 of $1,865
million, or $1.84 basic earnings per share, as compared to a net
income for 1Q 2018 of $1,192 million, or $1.17 basic earnings per
share, and a net income for 2Q 2017 of $1,322 million, or $1.30
basic earnings per share.
Analysis of segment operations
NAFTA
(USDm)
unless otherwise shown |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Sales |
5,356 |
4,752 |
4,607 |
10,108 |
9,065 |
Operating
income |
660 |
308 |
378 |
968 |
774 |
Depreciation |
(131) |
(132) |
(128) |
(263) |
(256) |
EBITDA |
791 |
440 |
506 |
1,231 |
1,030 |
Crude
steel production (kt) |
5,946 |
5,864 |
5,762 |
11,810 |
11,978 |
Steel
shipments (kt) |
5,803 |
5,559 |
5,419 |
11,362 |
11,029 |
Average
steel selling price (US$/t) |
853 |
779 |
760 |
817 |
739 |
NAFTA segment crude steel production increased by 1.4% to 5.9Mt
in 2Q 2018 as compared to 1Q 2018.
Steel shipments in 2Q 2018 increased by 4.4% to 5.8Mt as
compared to 5.6Mt in 1Q 2018, driven primarily by improved market
demand in the US.
Sales in 2Q 2018 increased by 12.7% to $5.4 billion as compared
to $4.8 billion in 1Q 2018, primarily due to higher steel shipment
volumes as discussed above, and higher average steel selling prices
+9.4% (for both flat products +10.0% and long products +7.9%).
Operating income in 2Q 2018 of $660 million was significantly
higher as compared to $308 million in 1Q 2018 and $378 million in
2Q 2017.
EBITDA in 2Q 2018 increased by 79.8% to $791 million as compared
to $440 million in 1Q 2018 primarily due to significant positive
price-cost effect driven by higher average steel selling prices
(+9.4%) and higher steel shipment volumes (+4.4%). EBITDA in 2Q
2018 increased by 56.3% as compared to $506 million in 2Q 2017
primarily due to a significant positive price-cost impact and
higher steel shipments (+7.1%).
Brazil
(USDm)
unless otherwise shown |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Sales |
2,191 |
1,988 |
1,834 |
4,179 |
3,444 |
Operating
income |
369 |
215 |
128 |
584 |
303 |
Depreciation |
(74) |
(69) |
(73) |
(143) |
(144) |
Impairment |
- |
(86) |
- |
(86) |
- |
EBITDA |
443 |
370 |
201 |
813 |
447 |
Crude
steel production (kt) |
3,114 |
2,801 |
2,714 |
5,915 |
5,424 |
Steel
shipments (kt) |
2,831 |
2,483 |
2,622 |
5,314 |
4,848 |
Average
steel selling price (US$/t) |
728 |
752 |
655 |
739 |
666 |
Brazil segment crude steel production increased by 11.1% to
3.1Mt in 2Q 2018 as compared to 2.8Mt in 1Q 2018 primarily due to
an increase in long products resulting from the integration of
Votorantim.
Steel shipments in 2Q 2018 increased by 14.0% to 2.8Mt as
compared to 2.5Mt in 1Q 2018, primarily due to a seasonal increase
in flat product steel shipments (primarily export) and long
products. 2Q 2018 steel shipments were positively impacted by the
scope effect of the Votorantim acquisition net of divestments
(+0.2Mt), and adversely impacted by a nationwide truck strike
(0.1Mt).
Sales in 2Q 2018 increased by 10.2% to $2.2 billion as compared
to $2.0 billion in 1Q 2018, due to higher steel shipments (+14.0%),
offset in part by lower average steel selling prices -3.2%
(primarily due to currency effects as local currency prices
increased by 6.3%).
Operating income in 2Q 2018 was higher at $369 million as
compared to $215 million in 1Q 2018 and higher than $128 million in
2Q 2017. Operating income in 1Q 2018 was impacted by impairment of
$86 million (Cariacica and Itaúna industrial plants in Brazil)
related to the agreed remedy package required for the approval of
the Votorantim acquisition.
EBITDA in 2Q 2018 increased by 19.9% to $443 million as compared
to $370 million in 1Q 2018 due to a positive price-cost effect and
higher steel shipment volumes. EBITDA in 2Q 2018 was 120.1% higher
as compared to $201 million in 2Q 2017 due to positive price-cost
effect driven by improved market demand.
Europe
(USDm)
unless otherwise shown |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Sales |
10,527 |
10,641 |
9,180 |
21,168 |
17,402 |
Operating
income |
853 |
580 |
652 |
1,433 |
1,288 |
Depreciation |
(292) |
(318) |
(290) |
(610) |
(563) |
Exceptional charges |
- |
(146) |
- |
(146) |
- |
EBITDA |
1,145 |
1,044 |
942 |
2,189 |
1,851 |
Crude
steel production (kt) |
11,026 |
11,246 |
10,997 |
22,272 |
22,209 |
Steel
shipments (kt) |
10,516 |
10,697 |
10,466 |
21,213 |
20,674 |
Average
steel selling price (US$/t) |
800 |
801 |
698 |
800 |
674 |
Europe segment crude steel production decreased by 2.0% to
11.0Mt in 2Q 2018 as compared to 11.2Mt in 1Q 2018 primarily on
account of the impact of floods in Asturias, Spain and blast
furnace reline in ArcelorMittal Zenica, Bosnia.
Steel shipments in 2Q 2018 decreased by 1.7% to 10.5Mt as
compared to 10.7Mt in 1Q 2018, primarily on account of floods in
Asturias, Spain and the impact from rail strikes in France.
Sales in 2Q 2018 were $10.5 billion, 1.1% lower as compared to
$10.6 billion in 1Q 2018, with lower steel shipments, as discussed
above. Selling prices in local euro currency increased by 3.1%.
Operating income in 2Q 2018 was higher at $853 million as
compared to $580 million in 1Q 2018 and $652 million in 2Q 2017.
Operating income in 1Q 2018 was impacted by exceptional charges of
$146 million related to a provision taken in respect of a case that
has now been settled.
EBITDA in 2Q 2018 increased by 9.6% to $1,145 million as
compared to $1,044 million in 1Q 2018 primarily due to a positive
price-cost effect offset in part by lower steel shipment volumes
and foreign exchange translation impact. EBITDA in 2Q 2018 improved
by 21.6% as compared to 2Q 2017 primarily due to positive
price-cost effect and foreign exchange translation impact.
ACIS
(USDm)
unless otherwise shown |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Sales |
2,129 |
2,080 |
1,834 |
4,209 |
3,641 |
Operating
income |
312 |
290 |
51 |
602 |
167 |
Depreciation |
(85) |
(73) |
(77) |
(158) |
(152) |
Impairment |
- |
- |
(46) |
- |
(46) |
EBITDA |
397 |
363 |
174 |
760 |
365 |
Crude
steel production (kt) |
3,087 |
3,400 |
3,685 |
6,487 |
7,177 |
Steel
shipments (kt) |
3,057 |
3,029 |
3,257 |
6,086 |
6,478 |
Average
steel selling price (US$/t) |
621 |
610 |
499 |
616 |
500 |
ACIS segment crude steel production in 2Q 2018 decreased by 9.2%
to 3.1Mt as compared to 3.4Mt in 1Q 2018 primarily due to
operational issues in Ukraine.
Steel shipments in 2Q 2018 increased by 1.0% to 3.1Mt as
compared to 3.0Mt in 1Q 2018, primarily due to higher steel
shipments in Kazakhstan offset in part by lower Ukrainian steel
shipments (negatively impacted by operational issues).
Sales in 2Q 2018 increased by 2.3% to $2.1 billion as compared
to 1Q 2018 primarily due to higher average steel selling prices
(+1.9%) and higher steel shipments (+1.0%).
Operating income in 2Q 2018 was higher at $312 million as
compared to $290 million in 1Q 2018 and $51 million in 2Q 2017.
Operating performance in 2Q 2017 was impacted by impairment charges
of $46 million in South Africa.
EBITDA in 2Q 2018 increased by 9.1% to $397 million as compared
to $363 million in 1Q 2018, primarily due to positive price-cost
impact. EBITDA in 2Q 2018 was significantly higher as compared to
$174 million in 2Q 2017, primarily due to a positive price-cost
effect offset in part by lower steel shipments (-6.1%).
Mining
(USDm)
unless otherwise shown |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Sales |
1,065 |
1,024 |
1,015 |
2,089 |
2,045 |
Operating
income |
198 |
242 |
216 |
440 |
594 |
Depreciation |
(107) |
(107) |
(103) |
(214) |
(205) |
EBITDA |
305 |
349 |
319 |
654 |
799 |
|
|
|
|
|
|
Own iron
ore production (a) (Mt) |
14.5 |
14.6 |
14.7 |
29.1 |
28.7 |
Iron ore
shipped externally and internally at market price (b) (Mt) |
10.0 |
9.1 |
9.5 |
19.1 |
18.1 |
Iron ore
shipment - cost plus basis (Mt) |
4.6 |
4.7 |
5.8 |
9.3 |
10.5 |
Own coal
production(a) (Mt) |
1.6 |
1.5 |
1.6 |
3.1 |
3.3 |
Coal
shipped externally and internally at market price(b) (Mt) |
0.7 |
0.4 |
0.8 |
1.1 |
1.6 |
Coal
shipment - cost plus basis (Mt) |
0.9 |
0.9 |
0.9 |
1.8 |
1.8 |
(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 2Q 2018 decreased by 1.0% to 14.5Mt
as compared to 14.6Mt in 1Q 2018, due to lower production in
Ukraine offset in part by seasonally higher production at
ArcelorMittal Mines Canada (AMMC[6]). Own iron ore production in 2Q
2018 decreased by 1.5% as compared to 2Q 2017 primarily due to
lower AMMC and Ukrainian production offset in part by increased
production in Liberia, which remains on track to produce 5Mt in
2018.
Market-priced iron ore shipments in 2Q 2018 increased by 9.3% to
10.0Mt as compared to 9.1Mt in 1Q 2018, primarily driven by higher
shipments in AMMC and Ukraine. Market-priced iron ore shipments in
2Q 2018 increased by 5.4% as compared to 2Q 2017 driven by higher
shipments in Liberia and Ukraine offset in part by lower AMMC and
Brazilian shipments. Market-priced iron ore shipments are expected
to grow 10% in 2018 compared to 2017.
Own coal production in 2Q 2018 increased by 4.3% to 1.6Mt as
compared to 1Q 2018 primarily due to higher production at
Kazakhstan, offset in part by lower Princeton (US) mines
production. Own coal production in 2Q 2018 decreased by 1.8% as
compared to 2Q 2017 primarily due to lower production at Kazakhstan
following operational and geological issues.
Market-priced coal shipments in 2Q 2018 increased significantly
to 0.7Mt as compared to 0.4Mt in 1Q 2018 with increases at both
Princeton and Kazakhstan. Market-priced coal shipments in 2Q 2018
decreased by 20.7% as compared to 2Q 2017 primarily due to
decreased shipments at Kazakhstan.
Operating income in 2Q 2018 decreased to $198 million as
compared to $242 million in 1Q 2018 and $216 million in 2Q
2017.
EBITDA in 2Q 2018 decreased by 12.5% to $305 million as compared
to $349 million in 1Q 2018, primarily due to lower seaborne iron
ore reference prices (-11.3%) offset in part by higher
market-priced iron ore shipments (+9.3%) and higher market-priced
coal shipments. EBITDA in 2Q 2018 was lower as compared to $319
million in 2Q 2017, primarily due to lower market-priced coal
shipments (-20.7%) offset in part by higher market-priced iron ore
shipment volumes (+5.4%).
Liquidity and Capital Resources
For 2Q 2018, net cash provided by operating activities was
$1,232 million as compared to $160 million in 1Q 2018 and $1,214
million in 2Q 2017. The higher net cash provided by operating
activities during 2Q 2018 reflects higher earnings and includes
working capital investment of $1,232 million (reflecting ongoing
effect of higher steel shipments as well as the impact of higher
selling prices and higher inventory prices), as compared to working
capital investment of $1,869 million in 1Q 2018.
Net cash used in investing activities during 2Q 2018 was $556
million as compared to $676 million during 1Q 2018 and $738 million
in 2Q 2017. Capital expenditures decreased to $616 million in 2Q
2018 as compared to $752 million in 1Q 2018 and higher as compared
to $566 million in 2Q 2017. FY 2018 capital expenditure is now
expected to be $3.7 billion (from previous guidance of $3.8
billion). Cash provided by other investing activities in 2Q 2018 of
$60 million primarily relates to release of restricted cash related
to the Mandatory Convertible Bond due to contractual renegotiation.
Cash provided by other investing activities in 1Q 2018 of $76
million primarily includes proceeds from the sale of Frydek Mistek
in Czech Republic[7]. Investing activities in 2Q 2017 include $44
million cash consideration (net of cash acquired for $14 million)
for the acquisition of a 55.5% stake in Bekaert Sumare (a tire cord
manufacturer in Brazil) and $110 million deposited in a restricted
cash account in ArcelorMittal South Africa in connection with
various environmental obligations and true sale of receivable
programs.
Net cash provided by financing activities in 2Q 2018 of $352
million primarily includes proceeds from a $1 billion short-term
loan facility entered into on May 14, 2018 offset by repayment of a
€400 million ($491 million) bond at maturity on April 9, 2018. Net
cash used by financing activities in 1Q 2018 of $33 million
includes proceeds from commercial paper issuances ($0.2 billion)
offset by $0.2 billion cash used under the share buyback program.
Net cash used in financing activities for 2Q 2017 primarily
includes $851 million used for early redemption of the 9.85% Notes
due June 1, 2019.
During 2Q 2018, the Company paid dividends of $101 million to
ArcelorMittal shareholders. During 1Q 2018, the Company paid
dividends of $50 million to minority shareholders in AMMC
(Canada).
As of June 30, 2018, the Company's cash and cash equivalents
amounted to $3.1 billion as compared to $2.3 billion at March 31,
2018 and $2.8 billion at December 31, 2017.
Gross debt increased to $13.5 billion as of June 30, 2018, as
compared to $13.4 billion at March 31, 2018 and $12.9 billion in
December 31, 2017.
As of June 30, 2018, net debt decreased to $10.5 billion as
compared with $11.1 billion at March 31, 2018 primarily due to
higher net cash provided by operating activities less capex ($0.6
billion), positive foreign exchange impacts on Euro-denominated
debt ($0.4 billion) offset in part by incremental debt of M&A
($0.2 billion) and dividends ($0.1 billion). Net debt as of
December 31, 2017, was $10.1 billion.
As of June 30, 2018, the Company had liquidity of $8.6 billion,
consisting of cash and cash equivalents of $3.1 billion and $5.5
billion of available credit lines[8]. The $5.5 billion credit
facility contains a financial covenant to not to exceed 4.25x Net
debt / EBITDA (as defined in the facility). As of June 30, 2018,
the average debt maturity was 4.9 years.
Key recent developments
- In February 2018, ArcelorMittal India Private Limited, a
subsidiary of ArcelorMittal, submitted a competitive resolution
plan for Essar Steel India Limited (ESIL). The resolution plan set
out a detailed industrial plan for ESIL aimed at improving its
performance and profitability, and ensuring it can participate in
the anticipated growth of steel demand in India. The process has
faced various legal challenges at the National Company Law
Tribunal, and more recently at the National Company Law Appellate
Tribunal (NCLAT). The NCLAT hearing concluded on July 18, 2018, and
a ruling is expected in August 2018, which should provide further
clarity on the ESIL insolvency process.
- In late June 2018, the government-appointed trustees overseeing
the insolvency liquidation of Ilva extended to September 15, 2018,
the deadline for the fulfilment of all the conditions precedent to
the completion of the contract with ArcelorMittal for the lease and
subsequent purchase of Ilva's assets. ArcelorMittal is committed to
the rehabilitation of Ilva, in particular addressing its
environmental, social and industrial challenges to reposition Ilva
as one of Europe's premier steel facilities.
- On July 13, 2018, Fitch Ratings announced it had upgraded
ArcelorMittal's Long-Term Issuer Default Rating (IDR) and senior
unsecured ratings to 'BBB-' from 'BB+'. The Outlook on the
Long-term IDR is stable. The Short-Term IDR and the CP programme
have been upgraded to 'F3' from 'B'.
- On June 22, 2018, Moody's Investors Service announced its
upgrade and assigned a 'Baa3' Long Term Issuer Rating to
ArcelorMittal, with a stable outlook.
- On June 19, 2018, ArcelorMittal unveiled a new concept for the
use of steel in construction, which will facilitate the next
generation of high performance buildings and construction
techniques and create a more sustainable life-cycle for buildings.
Known as Steligence®, the concept revolves around the idea of
buildings as holistic entities where all aspects of design are
considered in an integrated way, as part of the whole. As such, it
proposes the need for better dialogue between various specialist
architectural and engineering disciplines, recognizing not only
specialist expertise, but also the need for enhanced co-operation
between experts. Steligence® further suggests that the use of
best available technology in steelmaking, as well as modularization
of steel components in buildings where possible, has the capacity
to generate efficiency gains in the design, construction and
configurability of buildings as compared to those using traditional
construction methods.
- During the second quarter of 2018, ArcelorMittal was recognized
by three key automakers: Honda, General Motors and Ford Motor
Company - for excellence in developing and providing steel products
and solutions for their vehicle brands. Honda R&D Americas Inc.
awarded ArcelorMittal with its Excellence in Innovation Award.
General Motors awarded ArcelorMittal's AM/NS Calvert with its
Supplier Quality Award and ArcelorMittal with its Supplier
Diversity Award, while Ford announced that ArcelorMittal ranked #1
amongst its five main suppliers for the seventh consecutive
year.
- On June 11, 2018, ArcelorMittal began construction of new
premises at its site in Gent, Belgium, to house a pioneering new
installation which will convert carbon-containing gas from its
blast furnaces into bioethanol. If proved successful, the new
concept has the potential to revolutionise blast furnace carbon
emissions capture and support the decarbonisation of the transport
sector. The technology in the gas conversion process was pioneered
by Chicago-based company, LanzaTech, with whom ArcelorMittal has
entered into a long-term partnership. The technology licensed by
LanzaTech uses microbes that feed on carbon monoxide to produce
bioethanol. The bioethanol will be used as transport fuel or
potentially in the production of plastics. This is the first
installation of its kind on an industrial scale in Europe and once
complete, annual production of bioethanol at Gent is expected to
reach around 80 million litres, which will yield an annual
CO2 saving equivalent to putting 100,000 electrical cars on
the road. The new installation will create up to 500 construction
jobs over the next two years and 20 to 30 new permanent direct
jobs. Commissioning and first production is expected by
mid-2020.
- On May 16, 2018, the Extraordinary General Meeting (EGM) of
shareholders of ArcelorMittal held in Luxembourg approved the
resolution on the EGM agenda by a strong majority. The sole
proposal was to change the currency of the share capital of the
ArcelorMittal parent Company from Euro to US dollar.
Outlook and guidance
The following global apparent steel consumption ("ASC") figures
reflect the Company's latest 2018 estimates. Market conditions
remain favorable; the demand environment remains positive (as
evidenced by the continued readings from the ArcelorMittal weighted
PMI which signal expansion in demand) and together with the
benefits of structural supply side reform is supporting healthy
steel spreads.
Based on year-to-date growth and the current economic outlook,
ArcelorMittal expects global ASC to grow further in 2018 by between
+2.0% to +3.0% (up from previous expectation of +1.5% to +2.5%
growth). By region: ASC in US is expected to grow +2.0% to +3.0% in
2018 (up from previous expectation of +1.5% to +2.5%, driven by
demand in machinery and construction). In Europe, the strength in
machinery and construction end markets is now expected to support
ASC growth of between +2.0% to +3.0% in 2018 (up from previous
expectation of +1.0% to +2.0% growth). In Brazil, our 2018 ASC
forecasts have been slightly moderated to growth in a range of
+5.5% to +6.5% (from previous expectation of +6.5% to +7.5%)
to reflect the impacts of the nationwide truck strike and more
cautious sentiment ahead of the elections. In the CIS, ASC is still
expected to grow +2.0% to +3.0% in 2018 reflecting strong
consumption, particularly a rebound in auto sales and production in
Russia. Overall, World ex-China ASC is still expected to grow by
approximately +3.0% to +4.0% in 2018. In China, overall demand is
expected to now grow by between +1.0% to +2.0% in 2018 (up from
previous expectation -0.5% to +0.5%), as real estate demand
continues to surprise on the upside and ongoing robust machinery
and automotive demand, offset in part by a slowdown in
infrastructure.
The Company now expects that cash needs of the business
(excluding working capital investment) will total approximately
$5.8 billion in 2018 (from the $5.6 billion previous estimate). The
main changes to this guidance are as follows: Capex is now expected
to total $3.7 billion (from $3.8 billion previously) largely
reflecting the delayed completion of the Ilva acquisition; net
interest is expected to be $0.6 billion (no change from previous
guidance) reflecting the benefits of liability management exercises
completed in 2017; other cash needs are now expected to total $1.5
billion (an increase from the previous guidance of $1.2 billion)
due to expected higher cash taxes (excluding an exceptional item of
$0.2 billion relating to a one-time litigation expense).
Working capital requirements for 2018 are expected to be driven
by market conditions (in particular by how prices evolve over the
rest of the year).
Deleveraging remains the Group's priority and in the absence of
further working capital investment the progress towards $6 billion
net debt target is expected to accelerate. 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 Company resumed dividend to shareholders
in May 2018 and bought-back $0.2 billion of shares in March 2018.
The Company is committed to increase shareholder returns once the
Group's net debt target is achieved.
ArcelorMittal Condensed Consolidated Statement of Financial
Position1
|
|
|
Jun
30, |
Mar
31, |
Dec
31, |
In
millions of U.S. dollars |
|
|
2018 |
2018 |
2017 |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
|
|
3,100 |
2,260 |
2,786 |
Trade accounts receivable and other |
|
|
4,839 |
5,012 |
3,863 |
Inventories |
|
|
17,745 |
18,952 |
17,986 |
Prepaid expenses and other current assets |
|
|
2,802 |
2,653 |
1,931 |
Assets held for sale[9] |
|
|
2,943 |
224 |
179 |
Total Current Assets |
|
|
31,429 |
29,101 |
26,745 |
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
5,451 |
5,759 |
5,737 |
Property, plant and equipment |
|
|
34,290 |
37,031 |
36,971 |
Investments in associates and joint ventures |
|
|
4,711 |
5,231 |
5,084 |
Deferred tax assets |
|
|
7,496 |
7,170 |
7,055 |
Other assets |
|
|
3,587 |
3,671 |
3,705 |
Total Assets |
|
|
86,964 |
87,963 |
85,297 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Short-term debt and current portion of long-term
debt |
|
|
4,556 |
4,084 |
2,785 |
Trade accounts payable and other |
|
|
12,418 |
13,494 |
13,428 |
Accrued expenses and other current liabilities |
|
|
4,893 |
5,389 |
5,147 |
Liabilities held for sale9 |
|
|
846 |
42 |
50 |
Total Current Liabilities |
|
|
22,713 |
23,009 |
21,410 |
|
|
|
|
|
|
Long-term debt, net of current portion |
|
|
8,963 |
9,309 |
10,143 |
Deferred tax liabilities |
|
|
2,506 |
2,605 |
2,684 |
Other long-term liabilities |
|
|
10,447 |
10,349 |
10,205 |
Total Liabilities |
|
|
44,629 |
45,272 |
44,442 |
|
|
|
|
|
|
Equity attributable to the equity holders of the
parent |
|
|
40,320 |
40,608 |
38,789 |
Non-controlling interests |
|
|
2,015 |
2,083 |
2,066 |
Total Equity |
|
|
42,335 |
42,691 |
40,855 |
Total Liabilities and Shareholders' Equity |
|
|
86,964 |
87,963 |
85,297 |
ArcelorMittal Condensed Consolidated Statement of
Operations1
|
Three months ended |
Six months ended |
In
millions of U.S. dollars unless otherwise shown |
Jun 30, 2018 |
Mar 31, 2018 |
Jun 30, 2017 |
Jun 30, 2018 |
Jun 30, 2017 |
Sales |
19,998 |
19,186 |
17,244 |
39,184 |
33,330 |
Depreciation (B) |
(712) |
(711) |
(676) |
(1,423) |
(1,331) |
Impairment (B) |
- |
(86) |
(46) |
(86) |
(46) |
Exceptional charges (B) |
- |
(146) |
- |
(146) |
- |
Operating income (A) |
2,361 |
1,569 |
1,390 |
3,930 |
2,966 |
Operating
margin % |
11.8% |
8.2% |
8.1% |
10.0% |
8.9% |
|
|
|
|
|
|
Income
from associates, joint ventures and other investments |
30 |
212 |
120 |
242 |
206 |
Net
interest expense |
(159) |
(164) |
(207) |
(323) |
(430) |
Foreign
exchange and other net financing (loss)/gain |
(390) |
(174) |
210 |
(564) |
77 |
Income
before taxes and non-controlling interests |
1,842 |
1,443 |
1,513 |
3,285 |
2,819 |
Current tax expense |
(240) |
(284) |
(126) |
(524) |
(333) |
Deferred tax benefit / (expense) |
259 |
81 |
(71) |
340 |
(147) |
Income
tax benefit / (expense) |
19 |
(203) |
(197) |
(184) |
(480) |
Income
including non-controlling interests |
1,861 |
1,240 |
1,316 |
3,101 |
2,339 |
Non-controlling interests loss/(income) |
4 |
(48) |
6 |
(44) |
(15) |
Net income
attributable to equity holders of the parent |
1,865 |
1,192 |
1,322 |
3,057 |
2,324 |
|
|
|
|
|
|
Basic
earnings per common share ($)2 |
1.84 |
1.17 |
1.30 |
3.01 |
2.28 |
Diluted
earnings per common share ($)2 |
1.83 |
1.17 |
1.29 |
2.99 |
2.27 |
|
|
|
|
|
|
Weighted average common shares outstanding (in millions)2 |
1,013 |
1,019 |
1,020 |
1,016 |
1,020 |
Diluted
weighted average common shares outstanding (in millions)2 |
1,018 |
1,023 |
1,023 |
1,021 |
1,023 |
|
|
|
|
|
|
OTHER
INFORMATION |
|
|
|
|
|
EBITDA (C
= A-B) |
3,073 |
2,512 |
2,112 |
5,585 |
4,343 |
EBITDA
Margin % |
15.4% |
13.1% |
12.2% |
14.3% |
13.0% |
|
|
|
|
|
|
Own iron
ore production (Mt) |
14.5 |
14.6 |
14.7 |
29.1 |
28.7 |
Crude
steel production (Mt) |
23.2 |
23.3 |
23.2 |
46.5 |
46.8 |
Steel
shipments (Mt) |
21.8 |
21.3 |
21.5 |
43.1 |
42.5 |
ArcelorMittal Condensed Consolidated Statement of Cash
flows1
|
Three months ended |
Six months ended |
In
millions of U.S. dollars |
Jun 30, 2018 |
Mar 31, 2018 |
Jun 30, 2017 |
Jun 30, 2018 |
Jun 30, 2017 |
Operating activities: |
|
|
|
|
|
Income
attributable to equity holders of the parent |
1,865 |
1,192 |
1,322 |
3,057 |
2,324 |
Adjustments to reconcile net income to net cash (used in) /
provided by operations: |
|
|
|
|
|
Non-controlling interest's (loss) / income |
(4) |
48 |
(6) |
44 |
15 |
Depreciation and impairment |
712 |
797 |
722 |
1,509 |
1,377 |
Exceptional charges |
- |
146 |
- |
146 |
- |
Income
from associates, joint ventures and other investments |
(30) |
(212) |
(120) |
(242) |
(206) |
Deferred
tax (benefit)/ expense |
(259) |
(81) |
71 |
(340) |
147 |
Change in
working capital |
(1,232) |
(1,869) |
(548) |
(3,101) |
(2,729) |
Other
operating activities (net) |
180 |
139 |
(227) |
319 |
(13) |
Net
cash provided by / (used in) operating activities (A) |
1,232 |
160 |
1,214 |
1,392 |
915 |
Investing activities: |
|
|
|
|
|
Purchase
of property, plant and equipment and intangibles (B) |
(616) |
(752) |
(566) |
(1,368) |
(1,146) |
Other
investing activities (net) |
60 |
76 |
(172) |
136 |
(190) |
Net
cash used in investing activities |
(556) |
(676) |
(738) |
(1,232) |
(1,336) |
Financing activities: |
|
|
|
|
|
Net
proceeds / (payments) relating to payable to banks and long-term
debt |
474 |
263 |
(726) |
737 |
17 |
Dividends
paid |
(101) |
(50) |
- |
(151) |
(40) |
Share
buyback |
- |
(226) |
- |
(226) |
- |
Other
financing activities (net) |
(21) |
(20) |
(18) |
(41) |
(55) |
Net
cash provided by / (used in) financing activities |
352 |
(33) |
(744) |
319 |
(78) |
Net
increase/ (decrease) in cash and cash equivalents |
1,028 |
(549) |
(268) |
479 |
(499) |
Cash and
cash equivalents transferred (to)/from assets held for sale |
(23) |
- |
- |
(23) |
13 |
Effect of
exchange rate changes on cash |
(104) |
17 |
30 |
(87) |
33 |
Change
in cash and cash equivalents |
901 |
(532) |
(238) |
369 |
(453) |
|
|
|
|
|
|
Free
cash flow (C=A+B) |
616 |
(592) |
648 |
24 |
(231) |
Appendix 1: Product shipments by region
(000'kt) |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
Flat |
5,011 |
4,811 |
4,748 |
9,822 |
9,692 |
Long |
969 |
921 |
845 |
1,890 |
1,674 |
NAFTA |
5,803 |
5,559 |
5,419 |
11,362 |
11,029 |
Flat |
1,494 |
1,400 |
1,682 |
2,894 |
3,046 |
Long |
1,345 |
1,095 |
945 |
2,440 |
1,811 |
Brazil |
2,831 |
2,483 |
2,622 |
5,314 |
4,848 |
Flat |
7,553 |
7,704 |
7,482 |
15,257 |
14,859 |
Long |
2,942 |
2,961 |
2,913 |
5,903 |
5,719 |
Europe |
10,516 |
10,697 |
10,466 |
21,213 |
20,674 |
CIS |
1,861 |
1,866 |
2,212 |
3,727 |
4,331 |
Africa |
1,199 |
1,167 |
1,045 |
2,366 |
2,147 |
ACIS |
3,057 |
3,029 |
3,257 |
6,086 |
6,478 |
Note: "Others and eliminations" are not presented in the
table
Appendix 2a: Capital expenditures
(USDm) |
2Q 18 |
1Q 18 |
2Q 17 |
1H 18 |
1H 17 |
NAFTA |
110 |
160 |
90 |
270 |
187 |
Brazil |
36 |
47 |
55 |
83 |
112 |
Europe |
226 |
313 |
248 |
539 |
500 |
ACIS |
117 |
117 |
75 |
234 |
148 |
Mining |
119 |
107 |
94 |
226 |
184 |
Total |
616 |
752 |
566 |
1,368 |
1,146 |
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
quarter
Segment |
Site / unit |
Project |
Capacity / details |
Actual completion |
Europe |
ArcelorMittal Differdange (Luxembourg) |
Modernisation of finishing of "Grey rolling mill" |
Revamp finishing to achieve full capacity of Grey mill at
850kt/y |
2Q
2018 |
Europe |
Gent & Liège (Europe Flat Automotive UHSS Program) |
Gent: Upgrade HSM and new furnace Liège: Annealing line
transformation |
Increase ~400kt in Ultra High Strength Steel capabilities |
2Q
2018 |
Ongoing projects
Segment |
Site / unit |
Project |
Capacity / details |
Forecast completion |
NAFTA |
Indiana Harbor (US) |
Indiana Harbor "footprint optimization project" |
Restoration of 80" HSM and upgrades at Indiana Harbor
finishing |
2018(a) |
ACIS |
ArcelorMittal Kryvyi Rih (Ukraine) |
New LF&CC 2&3 |
Facilities upgrade to switch from ingot to continuous caster route.
Additional billets of 290kt over ingot route through yield
increase |
2019 |
Europe |
Sosnowiec (Poland) |
Modernization of Wire Rod Mill |
Upgrade rolling technology improving the mix of HAV products and
increase volume by 90kt |
2019 |
NAFTA |
Mexico |
Build new HSM |
Production capacity of 2.5Mt/year |
2020(b) |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Hot Strip Mill Modernization |
Replace existing three end of life coilers with two states of the
art coilers and new runout tables. |
2020(c) |
NAFTA |
Burns Harbor (US) |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped / cold rolled coil capacity and construction of
a new 700kt continuous annealing line (CAL) and continuous
galvanising line (CGL) combiline |
2021(d) |
Brazil |
Juiz de Fora |
Melt shop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On
hold(e) |
Brazil |
Monlevade |
Sinter plant, blast furnace and melt shop |
Increase in liquid steel capacity by 1.2Mt/year;Sinter feed
capacity of 2.3Mt/year |
On
hold |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(f) |
a) In support of the Company's Action 2020
program that was launched at its fourth quarter and full-year 2015
earnings announcement, the footprint optimization project at
ArcelorMittal Indiana Harbor is now complete, which has resulted in
structural changes required to improve asset and cost optimization.
The plan involved idling redundant operations including the #1
aluminize line, 84" hot strip mill (HSM), and #5 continuous
galvanizing line (CGL) and No.2 steel shop (idled in 2Q 2017)
whilst making further planned investments totalling ~$200 million
including a new caster at No.3 steel shop (completed in 4Q 2016),
restoration of the 80" hot strip mill and Indiana Harbor finishing
are ongoing. The full project scope is expected to be completed in
2018.
b) On September 28, 2017, ArcelorMittal
announced a major US$1 billion, three-year investment programme at
its Mexican operations, which is focussed on building ArcelorMittal
Mexico's downstream capabilities, sustaining the competitiveness of
its mining operations and modernising its existing asset base. The
programme is designed to enable ArcelorMittal Mexico to meet the
anticipated increased demand requirements from domestic customers,
realise in full ArcelorMittal Mexico's production capacity of 5.3
million tonnes and significantly enhance the proportion of higher
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. Construction will take approximately three
years and, upon completion, will enable ArcelorMittal Mexico to
produce c. 2.5 million tonnes of flat rolled steel, long steel c.
1.8 million tonnes and the remainder made up of semi-finished
slabs. Coils from the new hot strip mill will be supplied to
domestic, non-auto, general industry customers. The project
commenced late 4Q 2017 and is expected to be completed in the
second quarter of 2020. The Company expects capital expenditures of
approximately $350 million with respect to this programme in
2018.
c) Investment in ArcelorMittal Dofasco
(Canada) to modernise the hot strip mill. The project is to install
two new state of the art coilers and runout tables to replace three
end of life coilers. The strip cooling system will be upgraded and
include innovative power cooling technology to improve product
capability. The project is expected to be completed in 2020.
d) 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 investment programme to
increase rolling capacity with construction of a new CAL 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, the Juiz de Fora melt shop project is currently on
hold and is expected to be completed upon Brazil domestic market
recovery.
f) ArcelorMittal Liberia has moved ore
extraction from its depleting DSO (direct shipping ore) deposit at
Tokadeh to the nearby, lower impurity DSO Gangra deposit with
planned production of 5Mt in 2018. The Gangra mine, haul road and
related existing plant and equipment upgrades have now been
completed. Following a period of exploration cessation caused by
the onset of Ebola, ArcelorMittal Liberia recommenced drilling for
DSO resource extensions in late 2015. During 2016, the operation at
Tokadeh was right-sized to focus on its "natural" Atlantic markets.
The originally planned phase 2 project of 15Mtpa of concentrate
sinter fine ore product was delayed in August 2014 due to the
declaration of force majeure by contractors following the Ebola
virus outbreak, and then reassessed following rapid iron ore price
declines over the ensuing period since.
Now that mining at the Gangra deposit has commenced,
ArcelorMittal Liberia has launched a feasibility study to identify
the optimal concentration solution in a phased approach for
utilising the significant lower grade resources at Tokadeh. The
results of the feasibility study are expected at the end of
2018.
ArcelorMittal remains committed to Liberia where it operates a
full value chain of mine, rail and port and where it has
been operating the mine on a DSO basis since 2011. The Company
believes that ArcelorMittal Liberia presents a strong, competitive
source of product ore for the international market based on
continuing DSO mining and subsequent shift to a high grade,
long-term sinter feed concentration phase.
Appendix 3: Debt repayment schedule as of June 30,
2018
(USD billion) |
2018 |
2019 |
2020 |
2021 |
2022 |
>=2023 |
Total |
Bonds |
- |
0.9 |
1.9 |
1.3 |
1.5 |
2.8 |
8.4 |
Commercial paper |
1.3 |
0.1 |
- |
- |
- |
- |
1.4 |
Other
loans |
2.0 |
0.4 |
0.2 |
0.4 |
0.2 |
0.5 |
3.7 |
Total
gross debt |
3.3 |
1.4 |
2.1 |
1.7 |
1.7 |
3.3 |
13.5 |
Appendix 4: Reconciliation of gross debt to net debt
(USD million) |
Jun 30, 2018 |
Mar 31, 2018 |
Dec 31, 2017 |
Gross
debt |
13,519 |
13,393 |
12,928 |
Gross
debt held as part of the liabilities held for sale |
82 |
- |
- |
Gross
debt (including those held as part of the liabilities held for
sale) |
13,601 |
13,393 |
12,928 |
Less: |
|
|
|
Cash and
cash equivalents |
(3,100) |
(2,260) |
(2,786) |
Cash and
cash equivalents held as part of the assets held for sale |
(23) |
- |
- |
Net
debt (including those held as part of the assets and the
liabilities held for sale) |
10,478 |
11,133 |
10,142 |
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 income / (charges): relate
to transactions that are significant, infrequent or unusual and are
not representative of the normal course of business of the period.
Foreign exchange and other net financing (loss) / gain:
include foreign currency exchange impact, bank fees, interest on
pensions, impairments of financial instruments, revaluation of
derivative instruments and other charges that cannot be directly
linked to operating 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.Liquidity: Cash and cash equivalents plus available
credit lines excluding back-up lines for the commercial paper
program.LTIF: lost time injury frequency rate equals lost
time injuries per 1,000,000 worked hours, based on own personnel
and contractors.MT: Refers to million metric
tonnesMarket-priced tonnes: represent amounts of iron ore
and coal from ArcelorMittal mines that could be sold to third
parties on the open market. Market-priced tonnes that are not sold
to third parties are transferred from the Mining segment to the
Company's steel producing segments and reported at the prevailing
market price. Shipments of raw materials that do not constitute
market-priced tonnes are transferred internally and reported on a
cost-plus basis.Mining segment sales: i) "External sales":
mined product sold to third parties at market price; ii)
"Market-priced tonnes": internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) "Cost-plus tonnes" - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market). Net debt: long-term debt, plus
short-term debt less cash and cash equivalents (including those
held as part of assets and liabilities held for sale).Net
debt/EBITDA: Refers to Net debt divided by last twelve months
EBITDA calculation.Net interest expense: includes interest
expense less interest incomeOn-going projects: Refer to
projects for which construction has begun (excluding various
projects that are under development), even if such projects have
been placed on hold pending improved operating
conditions.Operating results: Refers to operating
income/(loss).Operating segments: The NAFTA segment includes
the Flat, Long and Tubular operations of USA, Canada and Mexico.
The Brazil segment includes the Flat, Long and Tubular operations
of Brazil and its neighboring countries including Argentina, Costa
Rica and Venezuela. The Europe segment comprises the Flat, Long and
Tubular operations of the European business, as well as Downstream
Solutions. The ACIS segment includes the Flat, Long and Tubular
operations of Kazakhstan, Ukraine and South Africa. Mining segment
includes iron ore and coal operations.Own iron ore
production: Includes total of all finished production of fines,
concentrate, pellets and lumps and includes share of production
(excludes strategic long-term contracts).PMI: Refers to
purchasing managers index (based on ArcelorMittal
estimates)Seaborne iron ore reference prices: refers
to iron ore prices for 62% Fe CFR ChinaShipments:
information at segment and group level eliminates intra-segment
shipments (which are primarily between Flat/Long plants and Tubular
plants) and inter-segment shipments respectively. Shipments of
Downstream Solutions are excluded.Steel-only EBITDA:
calculated as Group 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] At the Extraordinary General Meeting held on May 10, 2017,
the shareholders approved a share consolidation based on a ratio
1:3, whereby every three shares were consolidated into one share
(with a change in the number of shares outstanding and the
accounting par value per share). The figures presented for the
basic and diluted earnings per share reflect this change for 2Q
2017 and 1H 2017.
[3] 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 were sold to the company Aço Verde do
Brasil as part of CADE's conditional approval.
[4] In July 2018, as a result of a settlement process, the
Company and the German Federal Cartel Office agreed to a €118
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 as concerns the
ArcelorMittal entities.
[5] 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.
[6] ArcelorMittal Mines Canada, otherwise known as ArcelorMittal
Mines and Infrastructure Canada.
[7] In December 2017, ArcelorMittal committed to
a plan to sell its 100% owned subsidiary Go Steel Frýdek Místek
("Frýdek Mistek"). At December 31, 2017, the carrying amount of
assets and liabilities subject to the transaction were classified
as held for sale. The sale was completed in 1Q 2018.
[8] On December 21, 2016, ArcelorMittal signed an agreement for
a $5.5 billion revolving credit facility (the "Facility"). The
agreement incorporates a first tranche of $2.3 billion maturing on
December 21, 2019, and a second tranche of $3.2 billion maturing on
December 21, 2021. The Facility may be used for general corporate
purposes. As of June 30, 2018, the $5.5 billion revolving credit
facility was fully available.
[9] Assets and liabilities held for sale, as of June 30, 2018,
include the Ilva remedy package assets (as previously disclosed in
the 1Q 2018 earnings release), Macsteel investment (South Africa)
and carrying value of the USA long product facilities at Steelton
("Steelton"). Assets and liabilities held for sale, as of March 31,
2018, include the carrying value of Steelton and Cariacica and
Itauna industrial plants in Brazil (sold in May 2018 as remedy
package for Votorantim acquisition). Assets and liabilities held
for sale, as of December 31, 2017, include the carrying value of
Steelton and Frydek Mistek assets in Czech Republic (which was sold
in 1Q 2018).
Second quarter 2018 earnings analyst conference call
ArcelorMittal management (including CEO and CFO)
will host a conference call for members of the investment community
to discuss the second quarter period ended June 30, 2018 on:
Wednesday August 1, 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 |
72687242# |
US
local: |
1 86 6719
2729 |
+1 24 0645 0345 |
72687242# |
US (New
York): |
1 86 6719
2729 |
+ 1 646 663 7901 |
72687242# |
France: |
0800
914780 |
+33 1 7071 2916 |
72687242# |
Germany: |
0800 965
6288 |
+49 692 7134 0801 |
72687242# |
Spain: |
90 099
4930 |
+34 911 143436 |
72687242# |
Luxembourg: |
800
26908 |
+352 27 86 05 07 |
72687242# |
A replay of
the conference call will be available for one week by dialing: +49
(0) 1805 2047 088; Access code 521733# |
Forward-Looking StatementsThis document may contain
forward-looking information and statements about ArcelorMittal and
its subsidiaries. These statements include financial projections
and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, products and services, and statements regarding future
performance. Forward-looking statements may be identified by the
words "believe", "expect", "anticipate", "target" or similar
expressions. Although ArcelorMittal's management believes that the
expectations reflected in such forward-looking statements are
reasonable, investors and holders of ArcelorMittal's securities are
cautioned that forward-looking information and statements are
subject to numerous risks and uncertainties, many of which are
difficult to predict and generally beyond the control of
ArcelorMittal, that could cause actual results and developments to
differ materially and adversely from those expressed in, or implied
or projected by, the forward-looking information and statements.
These risks and uncertainties include those discussed or identified
in the filings with the Luxembourg Stock Market Authority for the
Financial Markets (Commission de Surveillance du Secteur Financier)
and the United States Securities and Exchange Commission (the
"SEC") made or to be made by ArcelorMittal, including
ArcelorMittal's latest Annual Report on Form 20-F on file with the
SEC. ArcelorMittal undertakes no obligation to publicly update its
forward-looking statements, whether as a result of new information,
future events, or otherwise.
About ArcelorMittalArcelorMittal is the world's leading
steel and mining company, with a presence in 60 countries and an
industrial footprint in 18 countries. Guided by a philosophy to
produce safe, sustainable steel, we are the leading supplier of
quality steel in the major global steel markets including
automotive, construction, household appliances and packaging, with
world-class research and development and outstanding distribution
networks.
Through our core values of sustainability, quality and
leadership, we operate responsibly with respect to the health,
safety and wellbeing of our employees, contractors and the
communities in which we operate. For us, steel is the fabric of
life, as it is at the heart of the modern world from railways to
cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of
the products and components people use in their everyday lives more
energy efficient.
We are one of the world's five largest producers of iron ore and
metallurgical coal. With a geographically diversified portfolio of
iron ore and coal assets, we are strategically positioned to serve
our network of steel plants and the external global market. While
our steel operations are important customers, our supply to the
external market is increasing as we grow. In 2017, ArcelorMittal
had revenues of $68.7 billion and crude steel production of 93.1
million metric tonnes, while own iron ore production reached 57.4
million metric tonnes.
ArcelorMittal is listed on the stock exchanges of New York (MT),
Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish
stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
For more information about ArcelorMittal please visit:
http://corporate.arcelormittal.com/
EnquiriesArcelorMittal investor relations: Europe: +44
207 543 1128; Americas: +1 312 899 3985; Retail: +44 207 543 1156;
SRI: +44 207 543 1156 and Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44
203 214 2419; France (Image 7) Tel: +33 153 70 94 17.
ArcelorMittal (EU:MT)
Historical Stock Chart
From Jun 2024 to Jul 2024
ArcelorMittal (EU:MT)
Historical Stock Chart
From Jul 2023 to Jul 2024