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First Quarter 2015
Questions and Answers
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 forwardlooking 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 Annual Report on Form 20-F for the year ended
December 31, 2014 filed 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.
Operating Results
Q1: What happened to steel shipments in 1Q 2015?
A: Total steel shipments for 1Q 2015 were 2% higher at 21.6 million metric tonnes as
compared with 21.2 million metric tonnes for 4Q 2014, and 3% higher as compared to
21.0 million metric tonnes for 1Q 2014.
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NAFTA: Steel shipments in 1Q 2015 decreased by 5.9% to 5.5 million tonnes as
compared to 4Q 2014, primarily driven by a 7.9% decline in flat product steel
shipment volumes due to weaker demand resulting in particular from a strong
inventory destock.
Brazil: Steel shipments in 1Q 2015 decreased by 6.5% to 2.7 million tonnes as
compared to 4Q 2014, driven by a 7.8% decline in flat product steel shipment
volumes (primarily due to decreased slab exports from Brazil), and 4.8% decline in
long product steel shipment volumes primarily due to weak domestic demand in
Brazil and Argentina.
Europe: Steel shipments in 1Q 2015 increased by 10.9% to 10.7 million tonnes as
compared to 4Q 2014. Flat product shipment volumes increased by 12.9% and long
product shipment volumes increased by 6.4%, both benefiting from seasonality and
improved demand.
ACIS: Steel shipments in 1Q 2015 decreased by 3.4% to 3.0 million metric tonnes
as compared to 4Q 2014, primarily due to seasonally lower shipments in our CIS
operations offset in part by higher volumes in South Africa.
Q2: What happened to shipments of market priced iron ore in 1Q 2015?
A: Market price iron ore shipments in 1Q 2015 decreased by 5.7% to 9.4 million metric
tonnes as compared to 4Q 2014, primarily driven by seasonally lower shipments Mines
Canada driven by weather related issues. Market price iron ore shipments in 1Q 2015
were stable as compared to 1Q 2014 primarily due to lower shipments in Mexico and
Ukraine offset by increased shipments in Mines Canada following operational efficiency
gains.
Financial Results
Q3: What was capital expenditure in 1Q 2015 and what is the forecast for FY
2015?
A: Capital expenditure decreased significantly to $0.7 billion in 1Q 2015 as compared to
$1.1 billion in 4Q 2014. Due to the benefits of foreign exchange as well as the
postponement of some investment projects, the Company has reduced the FY 2015
capital expenditure budget to approximately $3.0 billion.
Q4: Can you explain the change in net debt during 1Q 2015?
A: Net debt increased $0.8 billion to $16.6 billion as compared with $15.8 billion at
December 31, 2014, primarily driven by the investment of operating working capital of
$1.2 billion, partially offset by asset disposal proceeds ($0.3 billion) and forex and other
effects ($0.6 billion). This is a normal seasonal increase. If we compare to the same
period of 2014, net debt declined by $1.9 billion. The Company maintains its medium
term net debt target of $15 billion.
Q5: What was depreciation during 1Q 2015 and what is the expectation for 2015?
A: Depreciation was lower at $0.8 billion in 1Q 2015 as compared to $1.0 billion in 4Q
2014 primarily on account of foreign exchange impact due to depreciation of all major
currencies (Brazilian real, Euro and Canadian dollar) against the US. Assuming
exchange rates remain, full year depreciation is expected to be approximately $3.5
billion.
Q6: What is the dividend for 2015?
A: As approved by shareholders at our annual general meeting on May 5, 2015, the
2015 dividend of $0.20/share will be paid on June 15, 2015.
Q7: What is guidance for FY 2015?
A: Given ArcelorMittal’s specific geographical and end market exposures, the Company
expects its steel shipments to increase by between +3% to 5% in 2015 as compared to
2014.
Whilst steel markets have evolved largely as per expectations, the subsequent
deterioration of iron ore prices as well as a weaker U.S. market results in a headwind to
guidance. Although the Company expects to benefit from further improvement in costs,
both in mining and steel segments (including lower raw material costs), the Company
now expects 2015 EBITDA within the range of $6.0 - $7.0 billion.
Due to the benefits of foreign exchange as well as the postponement of some
investment projects the Company has further reduced the FY 2015 capital expenditure
budget to approximately $3.0 billion.
The Company expects net interest expense of approximately $1.4 billion in 2015.
Importantly, the Company continues to expect positive free cash flow in 2015 and to
achieve progress towards the medium term net debt target of $15 billion.
Q8: What is your forecast for global apparent steel consumption in 2015?
A: The Company forecast 0.5% to 1.5% increase in global apparent steel consumption
in 2015 as compared to 2014. The regional breakdown has been updated as follows:
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+0.5% to +1.5% in China
-2.0% to -3.0% in US
+1.5% to +2.5% in EU28
-5.0% to -7.0% in Brazil, and
-5.0% to -7.0% in CIS
Q9: What is ArcelorMittal’s view on the threat of alternative materials for
automotive applications?
A: We believe that steel is material of choice for automotive customers. Steel can
provide all the weight reduction that automotive producers require to satisfy the new fuel
efficiency standards for all types of vehicles.
ArcelorMittal is the leader in advanced high strength steels (AHSS) globally. We have a
large R&D budget, much of which is invested on the development of automotive
solutions. We are continuously working on new steel grades in order to meet
manufacturers’ needs for the automotive industry. At any one time, up to 80 new grades
are under development.
For example, today we are using 1500 MPa press-hardened product called Usibor®.
Our goal is to have another Usibor® product of 2000 MPa within the year. In September
2014, we unveiled Fortiform® in Europe, a range of advanced high strength steels
(AHSS) for cold stamping that could lead to further weight savings of up to 20% in
vehicle parts, compared with the weight savings already offered by our current AHSS.
Another example is our S-in motion offering for light trucks, which following the
successful award-winning launch of our S-in motion catalogue for standard, C-segment
automobiles, solutions have now been refined and extended to help meet the specific
challenges facing the North American light truck market.
Q10: How is the integration of Calvert progressing?
A: The integration of ArcelorMittal Mexico, Tubarao and ArcelorMittal USA as slab
suppliers to AM/NS Calvert is progressing. These sources provide us with a diverse
range of steel types to fully service our customers along with increased flexibility in
supporting market demands.
AM/NS Calvert is approved on 157 of 182 identified automotive qualification packages
with 20 or more new qualifications that are targeted in 2015.
We continue to work with our structural, OCTG and line pipe customers with plants
located in the south and Mexico to qualify them for shipments from Calvert. This
qualification is an ongoing process, and we have made significant progress with this
important customer segment.