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 tonnes
Market-priced tonnes: represent amounts of
iron ore and coal from ArcelorMittal mines that could be sold to
third parties on the open market. Market-priced tonnes that are not
sold to third parties are transferred from the Mining segment to
the Company's steel producing segments and reported at the
prevailing market price. Shipments of raw materials that do not
constitute market-priced tonnes are transferred internally and
reported on a cost-plus basis.
Mining segment sales: i) "External sales":
mined product sold to third parties at market price; ii)
"Market-priced tonnes": internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) "Cost-plus tonnes" - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market).
Net debt: long-term debt, plus short-term debt
less cash and cash equivalents (including those held as part of
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 income
On-going projects: Refer to projects for which
construction has begun (excluding various projects that are under
development), even if such projects have been placed on hold
pending improved operating conditions.
Operating results: Refers to operating
income/(loss).
Operating segments: The NAFTA segment includes
the Flat, Long and Tubular operations of USA, Canada and Mexico.
The Brazil segment includes the Flat, Long and Tubular operations
of Brazil and its neighboring countries including Argentina, Costa
Rica and Venezuela. The Europe segment comprises the Flat, Long and
Tubular operations of the European business, as well as Downstream
Solutions. The ACIS segment includes the Flat, Long and Tubular
operations of Kazakhstan, Ukraine and South Africa. Mining segment
includes iron ore and coal operations.
Own iron ore production: Includes total of all
finished production of fines, concentrate, pellets and lumps and
includes share of production (excludes strategic long-term
contracts).
PMI: Refers to purchasing managers index
(based on ArcelorMittal estimates)
Seaborne iron ore reference
prices: refers to iron ore prices for 62% Fe CFR
China
Shipments: information at segment and group
level eliminates intra-segment shipments (which are primarily
between Flat/Long plants and Tubular plants) and inter-segment
shipments respectively. Shipments of Downstream Solutions are
excluded.
Steel-only EBITDA: calculated as Group EBITDA
less Mining segment EBITDA.
Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.
Working capital: 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
Statements
This document may contain forward-looking information and
statements about ArcelorMittal and its subsidiaries. These
statements include financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives and
expectations with respect to future operations, products and
services, and statements regarding future performance.
Forward-looking statements may be identified by the words
"believe", "expect", "anticipate", "target" or similar expressions.
Although ArcelorMittal's management believes that the expectations
reflected in such forward-looking statements are reasonable,
investors and holders of ArcelorMittal's securities are cautioned
that forward-looking information and statements are subject to
numerous risks and uncertainties, many of which are difficult to
predict and generally beyond the control of ArcelorMittal, that
could cause actual results and developments to differ materially
and adversely from those expressed in, or implied or projected by,
the forward-looking information and statements. These risks and
uncertainties include those discussed or identified in the filings
with the Luxembourg Stock Market Authority for the Financial
Markets (Commission de Surveillance du
Secteur Financier) and the United States
Securities and Exchange Commission (the "SEC") made or to be made
by ArcelorMittal, including ArcelorMittal's latest Annual Report on
Form 20-F on file with the SEC. ArcelorMittal undertakes no
obligation to publicly update its forward-looking statements,
whether as a result of new information, future events, or
otherwise.
About ArcelorMittal
ArcelorMittal is the world's leading steel and mining company, with
a presence in 60 countries and an industrial footprint in 18
countries. Guided by a philosophy to produce safe, sustainable
steel, we are the leading supplier of quality steel in the major
global steel markets including automotive, construction, household
appliances and packaging, with world-class research and development
and outstanding distribution networks.
Through our core values of sustainability, quality
and leadership, we operate responsibly with respect to the health,
safety and wellbeing of our employees, contractors and the
communities in which we operate. For us, steel is the fabric of
life, as it is at the heart of the modern world from railways to
cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of
the products and components people use in their everyday lives more
energy efficient.
We are one of the world's five largest producers
of iron ore and metallurgical coal. With a geographically
diversified portfolio of iron ore and coal assets, we are
strategically positioned to serve our network of steel plants and
the external global market. While our steel operations are
important customers, our supply to the external market is
increasing as we grow. In 2017, ArcelorMittal had revenues of $68.7
billion and crude steel production of 93.1 million metric tonnes,
while own iron ore production reached 57.4 million metric
tonnes.
ArcelorMittal is listed on the stock exchanges of
New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on
the Spanish stock exchanges of Barcelona, Bilbao, Madrid and
Valencia (MTS). For more information about ArcelorMittal please
visit: http://corporate.arcelormittal.com/
Enquiries
ArcelorMittal investor relations: Europe: +44 207 543 1128;
Americas: +1 312 899 3985; Retail: +44 207 543 1156; SRI: +44 207
543 1156 and Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44
203 214 2419; France (Image 7) Tel: +33 153 70 94 17.