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
tonnesMarket-priced tonnes: represent amounts of iron ore
and coal from ArcelorMittal mines that could be sold to third
parties on the open market. Market-priced tonnes that are not sold
to third parties are transferred from the Mining segment to the
Company's steel producing segments and reported at the prevailing
market price. Shipments of raw materials that do not constitute
market-priced tonnes are transferred internally and reported on a
cost-plus basis.Mining segment sales: i) "External sales":
mined product sold to third parties at market price; ii)
"Market-priced tonnes": internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) "Cost-plus tonnes" - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market). Net debt: long-term debt, plus
short-term debt less cash and cash equivalents (including those
held as part of liabilities held for sale).Net debt/EBITDA:
Refers to Net debt divided by last twelve months EBITDA
calculation.Net interest: includes interest expense and
interest incomeOn-going projects: Refer to projects for
which construction has begun (excluding various projects that are
under development), even if such projects have been placed on hold
pending improved operating conditions.Operating results:
Refers to operating income/(loss).Operating segments: The
NAFTA segment includes the Flat, Long and Tubular operations of
USA, Canada and Mexico. The Brazil segment includes the Flat
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 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
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