1Q 2015 Results
Lakshmi N Mittal, Chairman and Chief Executive Officer
Aditya Mittal, Chief Financial Officer
7 May 2015
Disclaimer
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 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.
1
Agenda
• Results overview and market outlook
• Results analysis
• Outlook and guidance
2
Safety focus
Health & Safety Lost time injury frequency (LTIF) rate*
Mining & steel, employees and contractors
Health and safety performance
• Safety: LTIF rate of 0.88x in 1Q’15 vs 0.89x in
3.1
4Q’14 and 0.85x in 1Q’14
2.5
• The Company’s effort to improve the Group’s
1.9
Health and Safety record will continue
1.8
1.4
• The Company is focused on further reducing the
1.0
2007
2008
2009
2010
2011
2012
0.85 0.85 0.88
2013
rate of severe injuries and fatality prevention
2014 1Q’15
Our goal is to be the safest Metals & Mining company
* LTIF = Lost time injury frequency defined as Lost Time Injuries per 1.000.000 worked hours; based on own personnel and contractors
3
Lower mining, stable steel performance
•
•
•
•
•
•
•
1Q’15 EBITDA of $1.4bn (includes $0.1bn onerous contracts)*
Ex-Mining Segment, Underlying EBITDA stable YoY*
Steel shipments +3.0% YoY
Own iron ore production +5% YoY
Iron ore unit cash costs down 13% YoY
FY’15 capex expectation lowered to approx. $3.0bn
Net debt at end of 1Q’15 of $16.6bn, compared to $18.5bn at end of 1Q’14
(USDm) unless otherwise shown
1Q'15*
4Q'14*
3Q'14
2Q'14*
1Q'14
9.4
9.9
10.0
10.5
9.3
21.6
21.2
21.5
21.5
21.0
17,118
18,723
20,067
20,704
19,788
EBITDA
1,378
1,815
1,905
1,763
1,754
Net income / (loss)
(728)
(955)
22
52
(205)
Iron ore shipments at market price (Mt)
Steel Shipments (Mt)
Sales
EBITDA impacted by lower iron ore prices; Steel-only margins stable YoY
* Underlying basis; EBITDA in 1Q’15 includes the negative impact a $69m provision related to onerous hot rolled and cold rolled contracts in the US. 4Q’14 includes a $76m provision related to onerous
annual tin plate contracts at Weirton in the US, offset by the $79m gain on disposal of Kuzbass coal mines in Russia. 2Q’14 includes the negative impact of $90m following the settlement of US antitrust
litigation
4
Stable steel performance offset by weaker
mining performance
• Ex-Mining segment, EBITDA stable YoY
 Good progress in Europe reflecting improved
market fundamentals and results of cost
optimization
 Ongoing evidence of turnaround in ACIS
 Brazil impacted by weak domestic demand,
somewhat offset by slab exports
 NAFTA performance significantly impacted by
weak demand and low prices due to inventory
destock following period of exceptional imports
•
Mining segment result impacted by 48% drop in
iron ore price partially offset by improved costs
Underlying* steel-only EBITDA $m
1,340
1,335
1,330
1,325
1,333
0.9%
1,321
0
1Q’14
1Q’15
Mining EBITDA $m
600
433
400
-73.8%
200
114
0
1Q’14
1Q’15
Despite EUR translation headwind, Ex-Mining profitability stable YoY
* Underlying basis; EBITDA in 1Q’15 includes the negative impact a $69m provision related to onerous hot rolled and cold rolled contracts in the US. 4Q’14 includes a $76m provision related to onerous
annual tin plate contracts at Weirton in the US, offset by the $79m gain on disposal of Kuzbass coal mines in Russia. 2Q’14 includes the negative impact of $90m following the settlement of US antitrust
litigation
5
Lower costs in Mining segment
 1Q’15 iron ore unit cash cost 13% lower than 1Q’14
 Particular improvement at AMMC reflecting operational improvement gains, lower fuel rates and FX
 15% reduction in group iron ore units costs* expected in 2015 v 2014 (revised from previous 10%
estimate)
 Further benefit from lower freight rates improving FOB price realisation
Total iron ore unit cash cost index*
AMMC concentrate cost index
Vs. Feb 2015
estimate of
30% reduction
Vs. Feb 2015
estimate of
10% reduction
-7%
2013
-38%
-15%
2014
2015 Revised
2013
2014
2015 Revised
Aggressive cost improvement
* Iron ore unit cash cost: includes weighted average pellet and concentrate cost of goods sold across all mines. Note: Index calculated on base 100 = 2013
6
Capex discipline – lower spend in 2015
Capex split ($ billions)
4.9
1.6
Flexible capital allocation
4.7
1.8
3.5
1.1
3.3
2011
2.9
2012
2.4
2013
3.7
0.9
3.0
•
FY’15 capex reduced further to approx
$3bn reflecting forex and project
postponements
•
FY’15 capex estimate ~18% lower than
2014 levels
•
Growth capex continues to decline with
lower Mining spend
-18%
2.8
2014
Revised
2015F
Growth
Maintenance
Flexible capex plans; FY’15 capex ~18% lower than FY’14
7
Global indicators remain positive
•
•
•
•
•
Global manufacturing output continues to expand,
albeit more slowly; ArcelorMittal PMI down to 51.7 in
Mar’15
United States: consumers and auto supported by
lower oil prices; but manufacturing growth slowing
impacted by strength of US$ and reduced energy
sector capex
European growth gradually accelerating, with PMI’s
improving on QE, the weak euro, low oil prices and
rising employment helping retail sales expand at their
fastest pace in over a decade
China’s slowdown continues, prompting further
government support for the property market and
lower interest rates and bank reserve requirements to
stimulate the economy
The outlook for Brazil continues to weaken, with PMI
clearly indicating contraction as the economy reenters recession exacerbated by government cuts
and fallout from the Petrobas investigation.
(latest data point: Mar’15: 51.7)
Aggregate global demand indicator remains in positive territory
Source: *Markit. ArcelorMittal estimates; ArcelorMittal PMIs (weighted by ArcelorMittal steel deliveries)
8
2015 outlook
Global apparent steel consumption (ASC) 2015 v 2014*
US
~50% of shipment
increase follows
Newcastle BF reline and
full year impact of the
restart of BF#3 in
Tubarao, Brazil
ArcelorMittal steel shipments (Mt)
-2% to -3%
+3-5%
EU28
85.1
+1.5% to +2.5%
+3%
China
+0.5% to +1.5%
Brazil
-5% to -7%
CIS
-5% to -7%
Global
21.6
21.0
+0.5% to +1.5%
1Q’14
1Q’15
FY’14
FY’15F
Global ASC growth of circa +0.5% to +1.5% forecast in 2015
* ArcelorMittal estimates
9
Financial results
EBITDA bridge from 4Q’14 to 1Q’15
($ million)
165
1,815
(3)
1,812
(365)
(9)
Steel impact
(31)
Mining impact
(125)
1,447
(69)
4Q’14
EBITDA
NonUnderlying Volume &
recurring*
4Q’14 Mix - Steel
EBITDA
Price /
Cost Steel
Volume
& Mix Mining
Price /
Cost Mining
1,378
Forex and Underlying
Non1Q’15
others**
1Q’15 recurring*** EBITDA
EBITDA
Underlying EBITDA declined 20.1% in 1Q’15 vs. 4Q’14
* Includes a $76m provision related to onerous annual tin plate contracts at Weirton in the US offset by the $79m gain on disposal of Kuzbass coal mines in Russia ** Includes translation losses on
foreign exchange *** Includes the negative impact a $69m provision related to onerous hot rolled and cold rolled contracts in the US.
11
EBITDA to net results
1Q 2015
($ million)
Includes $538m forex
losses – largely on
European deferred tax
assets due to $/Eur
Lower depreciation
primarily due to forex
Weighted Avg No of shares: 1,793
EPS = ($ 0.41)/share
(807)
1,378
0
(2)
571
(323)
(756)
(510)
(728)
(218)
EBITDA
D&A
Impairment
Operating
Income
Loss from
equity
Net interest
expense
Forex
and other
Fin. Cost
Pre-tax (loss)
($ million)
Taxes and
noncontrolling
interest
Net (loss)
Weighted Avg No of shares: 1,793
4Q 2014
EPS = ($ 0.53)/share
Includes $621m impairment
loss at China Oriental partially
offset by $193m gain from
disposal of Gallatin
(982)
1,815
(264)
569
Includes $114m primarily related to idling
Indiana Harbor Long, in US; $63m write-down
of Volcan iron ore mine, Mexico; and $57m
closure of mill C in Rodange, Luxembourg
Includes $316m forex losses –
largely on European deferred tax
assets due to $/Eur
(380)
(322)
(549)
(682)
(955)
(273)
1Q’15 net loss driven by lower profitability and FX impacts
12
EBITDA to free cash flow
1Q 2015 free cash flow waterfall ($ million)
1,378
(1,206)
Change in
working
capital
Net financial cost,
tax expense, and
others*
(1,087)
(915)
Capex
(1,660)
(745)
EBITDA
cash flow from
operations
free cash flow
Negative free cash flow during 1Q’15 due in part to investment in working capital
* Includes pension expense, non cash items etc.
13
Cash flow performance and liquidity
Net debt* progress ($bn)
Strong liquidity ($bn)
-10%
8.8
Cash
2.8
18.5
Bank lines
6.0
1Q 14
At March 31, 2015
• $6bn lines of credit refinanced and extended in April;
two tranches:
• $2.5bn matures April 2018
• $3.5bn matures April 2020
• Covenant of Net Debt / LTM** EBITDA of 4.25x
• Average debt maturity  6.4 Yrs
•
•
•
16.6
15.0
1Q 15
Medium
term target
Seasonal net debt increase in 1Q’15 due to investment
in working capital
Net debt $1.9bn lower than 12 months ago
Net debt benefiting from lower interest expenses, capex
reductions and working capital focus
Recovering the investment grade credit rating remains a strategic priority
* Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale);
** LTM: refers to last twelve months.
14
Outlook and guidance
• 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.
The Company now expects 2015 EBITDA within the range of $6.0 - $7.0 billion
15
Appendix
Selective steel projects:
VAMA-JV with Hunan Valin
• VAMA: JV between ArcelorMittal and Hunan Valin which will
produce steel for high-end applications in the automobile industry,
supplying international automakers and first-tier Chinese car
manufacturers as well as their supplier networks for rapidly growing
Chinese market
• Construction of automotive facility, the main components are:
– State of the art pickling tandem CRM (1.5Mt)
– Continuous annealing line (0.9Mt), and
– Hot dip galvanizing line (0.5Mt)
• Capital expenditure of ~$832 million (100% basis)
• First automotive coils produced during 1Q 2015
Robust Chinese automotive market: > 50% growth to 25 million vehicles by 2018
17
17
Selective steel projects:
AM/NS Calvert JV
•
Project completed 1Q 2015: Investment in the existing
No.4 continuous coating line:
–
–
–
Increases ArcelorMittal’s North American capacity
to produce press hardenable steels,  one of the
strongest steels used in automotive
applications, Usibor®, a type one aluminum-silicon
coated (Al Si) high strength steel
AM/NS Calvert will also be capable of
producing Ductibor®, an energy-absorbing high
strength steel grade designed specifically to
complement Usibor® and offer ductility benefits to
customers
The modifications have been completed by the end
of 2014 and the first commercial coil was produced
in January 2015
•
Slab yard expansion to increase Calvert’s slab staging
capacity and efficiency ($40m):
–
–
–
The current HSM consists of 3 bays with 335kt
capacity for incoming slabs (less than the staging
capacity required to achieve the 5.3Mt target)
Includes additional overhead cranes, foundation work
and structural steel erection, to increase the staging
and storage capacity in support of achieving full
capacity
Project completion expected in 2H 2016
Investment in Calvert to further enhance automotive capabilities
18
18
Selective steel projects:
Monlevade (Brazil segment)
Billet charging table
Monlevade expansion project in Brazil restarted:
Phase 1 (approved) focuses on downstream facilities and consists of:
– A new wire rod mill in Monlevade with additional capacity of 1,050ktpy of
coils with capex estimate of $280 million (expected completion 2015)
– Juiz de Fora rebar capacity increase from 50 to 400ktpy (replacing some
wire rod production capacity) Completed 1Q 2015
– Juiz de Fora meltshop capacity increase by 200ktpy (expected
completion 2016)
Intermediate mill
Phase 2 (pending): A decision to invest in the upstream facilities in Monlevade
(sinter plant, blast furnace and meltshop), will be taken at a later date
Hangar of the rolling mill # 3
Vertical stands
Wire rod mill
Expansion supported by improved market for long products in Brazil
19
Selective steel projects:
Dofasco (NAFTA)
Cost optimization, mix improvement and increase of shipments of galvanized products:
• Phase 1: New heavy gauge galvanize line (#6 Galvanize Line):
– Restart construction of heavy gauge galvanizing line #6 (cap. 660ktpy) and closure of line #2 (cap. 400ktpy) 
increased shipments of galvanized sheet by 260ktpy, along with improved mix and optimized cost
– Line #6 will incorporate AHSS capability part of program to improve Dofasco’s ability to serve customers in
the automotive, construction, and industrial markets
– The first commercial coil produced in April 2015
•
Phase 2: Approved Galvanized line conversion:
–
–
Restart conversion of #4 galvanize line to dual pot line (capacity 160ktpy of galvalume and 128ktpy of
galvanize products) and closure of line #1 galvanize line (cap.170ktpy of galvalume)  increased shipments of
galvanized sheet by 128ktpy, along with improved mix and optimized cost.
Expected completion in 2016
Temper mill
Expansion supported by strong market for galvanized products
20
Selective steel projects:
Acindar (Brazil segment)
New rolling mill at Acindar (Argentina):
•
New rolling mill (Huatian) in Santa Fe province to increase rebar
capacity by 0.4mt/year for civil construction market:
– New rolling mill will also enable Acindar to optimize production at
its special bar quality (SBQ) rolling mill in Villa Constitución,
which in future will only manufacture products for the automotive
and mining industries
•
Estimated capital expenditure of ~$100m
•
Estimated completion in 2016
New building
Plant overview
Plant overview
Expansion supported by improved construction market in Argentina
21
21
Continued growth in developed markets
Global apparent steel consumption (ASC)*
(million tonnes per month)
US and European apparent steel consumption (ASC)**
(million tonnes per month)
65
19
Developing ex China
China
Developed
55
EU28
17
USA
15
13
45
11
35
9
7
25
5
(latest data point:Mar‘15)
•
•
•
•
Global ASC +0.3% in 1Q’15 vs. 4Q’14
Global ASC -1.4% in 1Q’15 vs. 1Q’14
China ASC +1.2% in 1Q’15 vs. 4Q’14
China ASC -4.8% in 1Q’15 vs. 1Q’14
(latest data point: Mar’15)
3
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
15
•
•
•
•
US ASC -6.1% in 1Q’15 vs. 4Q’14
US ASC +2.1% in 1Q’15 vs. 1Q’14
EU28 ASC +12.3% in 1Q’15 vs. 4Q’14
EU28 ASC -1.3% in 1Q’15 vs. 1Q’14
1Q’15 growth still positive YoY in US, largely stable in EU28 and declining in China
* ArcelorMittal estimates; ** AISI, Eurofer and ArcelorMittal estimates
22
US construction growth continues;
Europe picking up but growth remains weak
US residential and non-residential construction indicators
(SAAR) $bn*
750
700
650
600
550
500
450
400
350
300
250
200
(latest data point: Jan’15)
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
65
Expansion
In the United States:
– Architecture Billings Index (ABI) at 51.7
continues to indicate growth in Nonresidential investment.
– However, the low oil price has negatively
impacted energy related investment.
•
In Europe:
– Construction output began to grow in 2014
after declining strongly in both 2012 and
2013.
Residential
Non-residential
Eurozone and US construction indicators**
60
Eurozone construction PMI
USA Architectural Billings Index
55
–
50
45
Despite relatively weak confidence, we
expect growth to gradually improve through
2015.
40
35
30
(latest data point: Mar’15)
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Contraction
•
Construction gradually improving
* Source: US Census Bureau; ** Source: Markit and The American Institute of Architects
23
Chinese industrial growth slows
China infrastructure investment 3mma* (Y-o-Y)
•
The economy decelerated further in Q1 and with property
prices still falling, the real estate correction will continue
to dampen activity over the coming months.
•
The Manufacturing PMI remains below 50, illustrating the
weakness of industrial production in China with growth
slowing to only 5.6% y-o-y in March’15 .
•
Passenger car sales continue to grow strongly (+9% y-oy) but overall vehicle production is up only 5% y-o-y due
to the decline in commercial vehicle sales.
•
While weak property market indicators have led to
measures to support housing demand, any pick-up in
construction is likely to be delayed until 2016.
•
In 2015, the weak real estate sector is leading to the first
decline in real demand since 1995. But the absence of a
significant inventory drawdown should support ASC
growth of ~1%. Risks remain to the downside, with Q1’15
ASC down -5% y-o-y.
•
Stocks at warehouses are down y-o-y in April, while mill
inventories remain stable y-o-y, we expect only marginal
destocking this year.
•
Although steel exports are up over 40% y-o-y in Q1’15,
they have begun to decline from 120mt annualised in
January to only 90mt in March (2014: 94mt). 2015
exports expected to be down slightly y-o-y.
75%
(latest data point: Dec’14)
60%
45%
30%
15%
0%
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
-15%
Crude steel finished production and inventory (mmt)
80
70
Steel inventory at warehouses (RHS)
Finished steel production (LHS)
Steel inventory at mills (RHS)
60 (latest data point: Feb/Mar’15)
21
18
15
50
12
40
9
30
6
10
3
0
0
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
20
Slowing economic growth as steel demand negatively impacted by real estate
*Mma refer to months moving average. Source: NBS, CISA, WSA, Mysteel, ArcelorMittal Strategy estimates
24
2,500 (latest data point: Mar’15)
2,000
1,400 (latest data point:Mar’15)
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
Source: WSA, Mysteel, ArcelorMittal Strategy estimates
Germany Flat Stocks
Months Supply (RHS)
5.0
4.0
1,500
3.0
1,000
2.0
500
1.0
0
0.0
Brazil service centre inventories (000 Mt)
Flat stocks at service centres
Months of supply (RHS)
5.0
4.5
3.0
1.5
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
German inventories (000 Mt)
14,000
22
20
18
4.0
16
3.5
14
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Regional inventories
US service centre total steel Inventories (000 Mt)
(latest data point: Mar’15)
USA (MSCI)
12,000
Months Supply
10,000
8,000
6,000
(latest data point: Mar’15)
Flat and Long
% of ASC (RHS)
12
10
3.6
3.4
3.2
3.0
2.8
4,000
2.6
2.4
2,000
2.2
0
2.0
China service centre inventories* (Mt/mth) with ASC%
45%
40%
35%
30%
25%
20%
2.5
8
2.0
6
10%
4
5%
2
0%
15%
Slight downtick in US inventories
25
Raw material costs stabilised at low levels
Spot iron ore, coking coal and scrap price
(index IH 2008=100)*
Regional steel price HRC ($/t)
1300
130
Spot Iron Ore
Coking Coal
Scrap
120
110
China domestic Shanghai (Inc 17% VAT)
1200
1100
N.America FOB Midwest
N.Europe domestic ex-works
100
1000
90
80
900
70
800
60
700
50
600
40
500
(latest data point: Apr’15)
Jan 08
Apr 08
Jul 08
Oct 08
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
Jan-15
Apr-15
20
400
(latest data point: Apr’15)
Jan 08
Apr 08
Jul 08
Oct 08
Jan 09
Apr 09
Jul 09
Oct 09
Jan 10
Apr 10
Jul 10
Oct 10
Jan 11
Apr 11
Jul 11
Oct 11
Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
Jan-15
30
Iron ore and coking coal declined; scrap slightly picked up
* Source data: ArcelorMittal estimates; Platts
26
Balance sheet  structurally improved
Average maturity (years)
Net debt ($ billion)
32.5
6.4
16.6
2.6
3Q 2008
1Q 2015
Liquidity ($ billion)
3Q 2008
1Q 2015
Bank debt as component of total debt (%)
12.0
84%
8.8
10%
3Q 2008
1Q 2015
3Q 2008
1Q 2015
Balance sheet fundamentals improved
Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities
held for sale).
27
Working capital
OWCR and rotation days* ($ billion and days)
28
120
24
90
20
16
54
60
12
8
30
4
Working capital ($ billion) - LHS
1Q 15
4Q 14
3Q 14
2Q 14
1Q 14
4Q 13
3Q 13
2Q 13
1Q 13
4Q 12
3Q 12
2Q 12
1Q 12
4Q 11
3Q 11
2Q 11
1Q 11
4Q 10
3Q 10
2Q 10
1Q 10
4Q 09
3Q 09
2Q 09
1Q 09
4Q 08
3Q 08
2Q 08
1Q 08
4Q 07
3Q 07
2Q 07
0
1Q 07
0
Rotation days - RHS
Business will invest in working capital as conditions necessitate
* Rotation days are defined as days of accounts receivable plus days of inventory minus days of accounts payable. Days of accounts payable and inventory are a function of cost of
goods sold of the quarter on an annualized basis. Days of accounts receivable are a function of sales of the quarter on an annualized basis.
28
Net debt analysis
1Q 2015 net debt analysis ($ million)
289
53
614
16,648
1,660
15,838
Net debt
at 4Q’14*
free cash flow
M&A**
Dividend
Forex and other
Net debt
at 1Q’15
Net debt increased due to working capital investment offset by M&A proceeds & forex
Net long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale);
* As at December 31, 2014, net debt includes $0.1 billion from distribution centers in Europe held for sale
**M&A includes net proceeds from Hunan Valin ($108m) , partial cash proceeds from Kiswire divestment and sale of tangible assets.
29
Net debt
Net Debt ($ billion) & Net Debt/LTM reported EBITDA* Ratio (x)
35
4.0
30
3.0
25
2.4
20
2.0
15
10
1.0
5
Net Debt ($ billion) - LHS
1Q 15
4Q 14
3Q 14
2Q 14
1Q 14
4Q 13
3Q 13
2Q 13
1Q 13
4Q 12
3Q 12
2Q 12
1Q 12
4Q 11
3Q 11
2Q 11
1Q 11
4Q 10
3Q 10
2Q 10
1Q 10
4Q 09
3Q 09
2Q 09
1Q 09
4Q 08
3Q 08
2Q 08
1Q 08
4Q 07
3Q 07
2Q 07
0.0
1Q 07
0
Net Debt / LTM EBITDA
1Q’15 net debt increased by $0.8bn due to WC investment offset by M&A proceeds and forex
* Based on last twelve months (LTM) reported EBITDA. Figures prior to 1Q’12 have not been recast on quarterly basis for adoption of new accounting standards implemented from 1.1.13
30
Liquidity and debt maturity profile
Liquidity at March 31, 2015 ($ billion)
8.8
Debt maturities ($ billion)
7.8
8
Commercial paper
Unused credit lines
6.0
7
Other
6
Bonds
5
4
3
Cash
2.8
Liquidity
at March
31, 2015
0.1
1.8
Commercial paper
1.0
Bonds
0.7
Other loans
Debt due
in 2015
Liquidity lines:
• In April 2015 the Company refinanced and
extended the $6bn lines of credit: two tranches
$2.5bn 3Yr and $3.5bn 5Yr
2
2.4
2.7
2.2
1.8
2.5
1
0
2015
2016
2017
2018
2019
>2019
Debt maturity:
Ratings
• Continued strong liquidity
• Average debt maturity  6.4 years
• S&P – BB, stable outlook
• Moody’s – Ba1, negative outlook
• Fitch – BB+, stable outlook
Continued strong liquidity position and average debt maturity of 6.4 years
31
Group Performance
Underlying EBITDA* ($ Millions) and EBITDA/t
$84/t
$86/t
$67/t
-20.1%
1,754
1Q’14
1,812
Analysis 1Q’15 v 4Q’14
•
Crude steel production up 2.4% to 23.7Mt
•
Steel shipments up 2.0%: Europe (+10.9%) offset in part by Brazil (6.5%), NAFTA (-5.9%) and ACIS (-3.4%)
•
Average steel selling prices (ASP) down 9.2% across all segments
due in part to negative forex impact: Europe (-12.2%), Brazil (-10.0%),
ACIS (-7.8%) and NAFTA (-3.5%)
•
EBITDA down 20.1% on underlying basis: 1Q‘15 negatively impacted
by a $69m provision related to onerous cold rolled and hot rolled
contracts in the US. 4Q‘14 negatively impacted by a $76m provision
related to onerous tin plate contracts at Weirton in the US, offset by
the positive impact from the $79m gain on disposal of Kuzbass coal
mines in Russia.
•
Impairment charges for 4Q’14 of $264m included $114m primarily
related to the idling of the steel shop and rolling facilities of Indiana
Harbor Long carbon operations in the US; $63m related to write-down
of the Volcan iron ore mine in Mexico; and $57m related to the closure
of mill C in Rodange, Luxembourg.
1,447
4Q’14
1Q’15
Average steel selling price $/t
-9.2%
791
735
668
1Q’14
4Q’14
1Q’15
Steel shipments (000’t)
+2.0%
20,968
21,177
21,605
1Q’14
4Q’14
1Q’15
Group profitability declined 1Q’15 v 4Q’14
* EBITDA for 1Q 2015 was negatively impacted by a $69 million provision primarily related to onerous hot rolled and cold rolled contracts in the US. EBITDA for 4Q 2014 was negatively
impacted by a $76 million provision related to onerous annual tin plate contract at Weirton, in the US offset by the $79m gain on disposal of Kuzbass coal mines in Russia
32
NAFTA
Underlying EBITDA* ($ Millions) and EBITDA/t
$46/t
$72/t
$22/t
-70.8%
259
1Q’14
Analysis 1Q’15 v 4Q’14
Crude steel production declined by 3.8% to 5.9Mt primarily to align to
weaker demand.
Steel shipments declined by 5.9% primarily driven by a 7.9% decline in flat
product steel shipment volumes due to weaker demand.
417
122
4Q’14
1Q’15
Average steel selling price $/t
-3.5%
840
824
796
1Q’14
4Q’14
1Q’15
Steel shipments (000’t)
Sales declined 7.5%, due to lower steel shipments and lower ASP (-3.5%)
primarily due lower domestic prices impacted by weak demand and import
pressures. ASP for flat and long products declined -3.1% and -8.0%,
respectively.
EBITDA decreased to $53m versus $341m in 4Q’14. 1Q’15 EBITDA was
negatively impacted by a $69m provision primarily related to onerous hot
rolled and cold rolled contracts in the US. 4Q’14 EBITDA was negatively
impacted by a $76m provision related to onerous annual tin plate contract
at Weirton, in the US.
EBITDA in 1Q 2015 was lower as compared to 4Q 14 due to lower
average steel selling prices and steel shipment volumes as discussed
above.
-5.9%
5,613
5,805
5,463
1Q’14
4Q’14
1Q’15
Operating income for 4Q’14 was also impacted by impairment charges of
$114m primarily related to the idling of the steel shop and rolling facilities
of Indiana Harbor Long carbon operations in the US.
NAFTA profitability declined 1Q’15 v 4Q’14
* EBITDA for 1Q 2015 was negatively impacted by a $69 million provision primarily related to onerous hot rolled and cold rolled contracts in the US. EBITDA for 4Q 2014 was negatively
impacted by a $76 million provision related to onerous annual tin plate contract at Weirton, in the US.
33
Brazil
Analysis 1Q’15 v 4Q’14
EBITDA ($ Millions) and EBITDA/t
$183/t
$189/t
$139/t
Crude steel production increased by 4.3% to 2.9Mt.
-30.9%
425
546
1Q’14
4Q’14
377
1Q’15
Average steel selling price $/t
-10.0%
895
792
713
1Q’14
4Q’14
1Q’15
Steel shipments decreased by 6.5%, 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.
Sales decreased by 16.6% to $2.1bn, due to lower steel shipments and
ASP (-10%). ASP for flat and long products decreased by 11.2% and
5.2%, respectively, negatively impacted by a weaker Brazilian real and a
decline in international slab prices.
EBITDA in 1Q’15 decreased by 30.9% primarily on account of lower steel
shipment volumes and ASP, as well as lower profitability in our tubular
operations.
Steel shipments (000’t)
-6.5%
2,325
2,895
2,707
1Q’14
4Q’14
1Q’15
Brazil profitability declined 1Q’15 v 4Q’14
34
Europe
Analysis 1Q’15 v 4Q’14
EBITDA ($ Millions) and EBITDA/t
$53/t
$58/t
$58/t
+10.6%
535
557
616
1Q’14
4Q’14
1Q’15
Average steel selling price $/t
-12.2%
808
721
633
1Q’14
4Q’14
1Q’15
Steel shipments (000’t)
Crude steel production increased by 5.6% to 11.3Mt.
Steel shipments increased by 10.9%. Flat product shipment volumes
increased by 12.9% and long product shipment volumes increased by
6.4%, both benefiting from seasonality and improved demand.
Sales decreased by 4.7% to $8.6bn, primarily due to lower ASP (-12.2%),
partially offset by higher steel shipments. ASP for flat and long products
decreased by 11.8% and 13.0%, respectively, largely due to exchange
rate effects. Local average steel prices declined marginally, partially
reflecting lower raw material costs.
EBITDA in 1Q’15 increased by 10.6% to $616m versus $557m in 4Q’14,
reflecting improved market conditions offset in part by negative translation
impacts.
Operating performance for 4Q’14 was impacted by impairment charges of
$57 million, related to the closure of mill C in Rodange, Luxembourg.
+10.9%
10,009
9,610
10,662
1Q’14
4Q’14
1Q’15
Europe profitability improved 1Q’15 v 4Q’14
35
ACIS
Analysis 1Q’15* v 4Q’14
EBITDA ($ Millions) and EBITDA/t
$34/t
$47/t
$44/t
-9.8%
109
1Q’14
147
133
4Q’14
1Q’15
Crude steel production increased by 2.4% to 3.6Mt following the ramp up
of the Newcastle blast furnace in South Africa post the completion in
December of the reline works.
Steel shipments decreased by 3.4%, primarily due to seasonally lower
steel shipments in our CIS operations offset in part by higher volumes in
South Africa.
Sales decreased by 12.5% to $1.7bn primarily due to lower steel shipment
volumes and lower ASP (-7.8%). ASP were lower in Ukraine (-13.7%) and
Kazakhstan (10%) impacted by weaker CIS prices, as well as lower prices
in South Africa following a 4.5% depreciation of South African Rand.
Average steel selling price $/t
-7.8%
567
550
507
1Q’14
4Q’14
1Q’15
EBITDA in 1Q’15 decreased to $133m versus $147m in 4Q’14, due to
lower ASP partially offset by the impact of currency devaluation in Ukraine
and by lower costs in South Africa.
Steel shipments (000’t)
-3.4%
3,187
3,111
3,006
1Q’14
4Q’14
1Q’15
ACIS profitability declined 1Q’15 v 4Q’14
* On January 1, 2015, the functional currency of Kryvyi Rih was changed to the Ukrainian Hryvnia due to changes in the regulatory and economic environment and transaction currencies of
the operations.
36
Mining
Analysis 1Q’15 v 4Q’14
Underlying EBITDA* ($ Millions)
-25.8%
433
1Q’14
Own iron ore production (not including supplies under strategic long-term
contracts) decreased by 7.0% to 15.6Mt reflecting seasonally weaker
performance in Canada, and Brazil offset in part by improved production in
Liberia.
153
114
4Q’14
1Q’15
Iron ore (Mt)
20
15
10
5
0
9.3
9.9
9.4
4.2
6.4
4.1
1Q 14
4Q 14
1Q 15
Coal (000’t)
Own production
Shipped at market price
Shipped at cost plus
2.0
1.5
1.0
0.8
0.8
0.9
0.8
1Q 14
4Q 14
1Q 15
1.0
0.5
0.6
0.0
Market price shipments decreased by 5.7% to 9.4mt, primarily driven by
seasonally lower shipments from our Mines Canada driven by weather
related issues.
Own coal production (not including supplies under strategic long-term
contracts) in 1Q’15 decreased 8.0% to 1.6Mt primarily due to seasonally
lower production at our US operations impacted by adverse weather.
EBITDA in 1Q’15 decreased to $114m versus $232m in 4Q’14. EBITDA
for 4Q’14 was positively impacted by $79m gain on disposal of Kuzbass
coal mines in Russia.
On an underlying basis, 1Q’15 EBITDA decreased by 25.8% primarily due
to lower seaborne iron ore market prices (-16%) and lower market price
shipment volumes, offset in part by improved cost performance.
Operating loss for 4Q’14 was impacted by a $63 million impairment charge
related to costs associated with the write-down of the Volcan iron ore mine
in Mexico.
Mining profitability declined 1Q’15 v 4Q’14
* EBITDA for 4Q 2014 was positively impacted by the $79m gain on disposal of Kuzbass coal mines in Russia
37
Contacts
Daniel Fairclough – Global Head Investor Relations
[email protected]
+44 207 543 1105
Hetal Patel – UK/European Investor Relations
[email protected]
+44 207 543 1128
Valérie Mella – European and Retail Investor Relations
[email protected]
+44 207 543 1156
Maureen Baker – Fixed Income/Debt Investor Relations
[email protected]
+33 1 71 92 10 26
Lisa Fortuna – US Investor Relations
[email protected]
+312 899 3985