1Q 2014 Results. Lakshmi N Mittal, Chairman and Chief Executive Officer Aditya Mittal, Chief Financial Officer. 9 May 2014

Transcription

1 1Q 2014 Results Lakshmi N Mittal, Chairman and Chief Executive Officer Aditya Mittal, Chief Financial Officer 9 May 2014

2 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. Forwardlooking 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, 2013 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

3 Agenda Results overview and recent developments Market outlook Results analysis Outlook and guidance 2

4 Continued improvement in safety Health & Safety Lost time injury frequency (LTIF) rate* Mining & steel, employees and contractors Health and safety performance Safety: LTIF rate of 0.85 in 1Q 14 vs 0.75 in 4Q 13 and 0.93 in 1Q 13 The Company s effort to improve the group s Health and Safety record will continue The Company is focused on further reducing the rate of severe injuries and fatality prevention In 2014, specific attention will be on contractor performance and on the main causes for fatal accidents Q 14 Our goal is to be the safest Metals & Mining company * LTIF = Lost time injury frequency defined as Lost Time Injuries per worked hours; based on own personnel and contractors 3

5 Improved YoY profitability 23% underlying improvement in EBITDA vs. 1Q 13* Steel shipments up 2.4% YoY Market-priced iron ore shipments up 28% YoY Net loss of $0.2bn in 1Q 14 vs. net loss of $0.3bn in 1Q 13 Net debt of $18.5bn at end of March 31, 2014 (USDm) unless otherwise shown 1Q'14 4Q'13 3Q'13 2Q'13 1Q'13 Iron ore shipments at market price (Mt) Steel Shipments (Mt) Sales 19,788 19,848 19,643 20,197 19,752 EBITDA 1,754 1,910 1,713 1,700 1,565 Net (loss) (205) (1,227) (193) (780) (345) 1Q 14 EBITDA 23% improvement in underlying performance YoY * EBITDA in 1Q 2013 of $1,565 million included the positive impact of a $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada and $92 million of DDH income. 4

6 Recap Steel margin expansion Steel only EBITDA/t increased $14/t vs. 1Q 13 on underlying basis NAFTA segment negatively impacted by severe weather and higher energy costs All other geographic segments delivered improved EBITDA vs. 1Q 13 Steel Segment EBITDA per tonne (US$) on underlying basis* NAFTA Brazil** Europe ACIS*** -25% +20% +56% > 300% Q 13 1Q 14 1Q 13 1Q 14 1Q 13 1Q 14 1Q 13 1Q 14 Profitability of the steel business is clearly improving *Underlying EBITDA in 1Q 2013 excludes positive impact of $47m of fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada (NAFTA) and $92m of DDH income (Europe); ** Brazil includes Brazil and neighbouring countries; *** ACIS: 1Q 13 was negatively impacted by a $67m loss resulting from afire at Vanderbijlpark (South Africa). Excluding this impact YoY improvement was 19% 5

7 Improvement Higher iron ore volumes Market priced iron ore shipment growth (million Mt) % % YoY improvement in market priced iron ore shipments AMMC: expansion from 16Mt to 24Mt complete 24Mt production rate achieved in Dec Q 13 2Q 13 3Q 13 4Q 13 1Q 14 Iron ore market priced shipment growth F (million Mt) % Unit costs benefiting from higher volumes 4.5Mt shipped in 1Q 14 vs. 3.3Mt in 1Q 13 Liberia: phase 1 5Mt DSO complete; phase 2 underway Phase 1: Shipments running at the ~5Mtpa run rate Phase 2: Project underway for 15Mtpa premium sinter feed to replace DSO by end of Mt shipped in 1Q 14 vs. 1.3Mt in 1Q F On track to achieve 15% market priced iron ore shipment growth in

8 Improvement Iron ore growth plan stretched Iron ore production capacity (million mt) Options identified to stretch iron ore production capacity beyond current plan 95 of 84Mt by end 2015 Additional 11Mt* through: AMMC: additional 6Mtpa potential from 24Mt to 30Mt Liberia: additional 5Mtpa potential from 15Mt to 20Mt Low capex intensity F Stretch Cost benefits from scale Opportunity to stretch iron ore capacity to 95Mt identified at low capex intensity *Stretch expansion subject to board approval 7

9 Auto franchise developments Award winning Automotive solutions ArcelorMittal s R&D efforts continue to generate cost-competitive solutions for the automotive industry's light-weighting requirements Industry s first laser-welded, hot-stamped door ring provides exceptional passenger safety performance improvement with 4Kg saving in weight At the same time we are now promoting our solution for an all steel door that is very close to an aluminium door in weight; evaluation is currently underway at various OEMs. AM/NS Calvert acquisition complete Well placed to serve growth markets of SE US and Mexico State of the art plant capable of producing Advanced High strength Steels Integration process underway; Steel operations ~80% utilized; Calvert: Cold rolling mill AM/NS Calvert EBITDA positive in March, inline with expectation of EBITDA positive Yr1 and free cash flow positive in Yr2 VAMA China automotive steel JV: State-of-the art facility to serve the fast-growing China automotive industry; due to start production early in 2H 2014 Initial capacity of 1.5 million tons expandable up to 2.3 million tons should support ~10% share of the market Committed to producing innovative steel solutions for our automotive customers 8

10 Improving demand indicators ArcelorMittal weighted global manufacturing PMI* Global apparent steel consumption (ASC) growth forecast in 2014** (v 2013) US % EU % China % Brazil % (latest data point: Apr 14) CIS -2.0% to 0% Global % Outlook for core markets in 2014 continues to improve Source: * Markit. Purchasing managers indices for over 40 countries weighted by share of ArcelorMittal finished steel deliveries. ** ArcelorMittal estimates 9

11 Financial results

12 EBITDA bridge from 4Q 13 to 1Q 14 ($million) Steel impact Steel PCS impact would have been clearly positive were it not for the effects of the severe weather on our NAFTA operations (100) Mining impact 1,910 (49) 2,582 (100) 4 Q1'11 EBITDA Volume & Mix Sellin (31) 1,754 4Q 13 EBITDA Volume & Mix - Steel Price / Cost - Steel Volume & Mix - Mining Price / Cost - Mining Non-steel EBITDA Others* 1Q 14 EBITDA * Others primarily represents forex 8.2% decline in 1Q 14 EBITDA vs. 4Q 13 11

13 4Q Q 2014 EBITDA to net results ($ million) 1,754 (1,080) (426) (380) (96) Weighted Avg No of shares: 1,790 EPS = $ (0.12)/share (205) (109) EBITDA ($ million) D&A Impairment Restructuring Operating Income (Loss)/ income from equity Net interest expense Forex and other Fin. Cost Pre-tax loss Taxes and noncontrolling interest Net Ioss Weighted Avg No of shares: 1,790 1,910 (1,263) Thabazimbi: (181) Mauritania: (61) Kiswire*: (41) (304) China Oriental: (200) Kiswire*: (111) Coal of Africa: (111) Erdemir: (57) (379) (36) (453) Brazil tax amnesty**: (80) (419) (384) EPS = $ (0.69)/share Brazil tax amnesty**: (222) (1,292) (1,227) 65 1Q 14 net loss of $0.2 billion * Kiswire includes $41m booked in impairments and $111m in income from investment, associates and JV. ;** Amnesty Brazil : $80m corresponding to a contingent consideration in relation with the acquisition of AM Serra Azul in 2008 booked in foreign exchange and other financing costs, with $222m recorded in income tax expense 12

14 EBITDA to free cash flow 1Q 2014 free cash flow waterfall ($ million) 1,754 (906) Change in working capital Net financial cost, tax expense, and others* (1,319) (471) Capex (875) (1,346) EBITDA Cashflow from operations Free cashflow * Includes pension expense, non cash items etc. Negative free cash flow during 1Q 14 13

15 Net debt analysis 1Q 2014 net debt analysis ($ million) , ,346 16,079 Net debt at 4Q 13 Free cashflow M&A* Perpertual bond Forex & others** Net debt at 1Q 14 Net debt increased due to redemption of perpetual bond, M&A and OWC investment 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). *M&A primarily includes $258 million from the acquisition of 50/50 joint venture partnership with Nippon Steel & Sumitomo Metal Corporation ( NSSMC ) to acquire 100% of ThyssenKrupp Steel USA ( TK Steel USA ) offset by proceeds related to disposal of 4.97% stake in Hunan Valin. ** Forex and others primarily include dividends and foreign exchange losses ($130m) 14

16 Outlook and guidance framework Key 2014 guidance framework assumptions: Steel Mining - Steel shipments are expected to increase by approximately 3% in 2014 as compared to Marketable iron ore shipments are expected to increase by approximately 15% Pricing - Iron ore price assumption remains an average of ~120$/t (for 62% Fe CFR China) Margins - A moderate improvement in steel margins Capex capex is expected to be approximately $ bn Debt - Medium term net debt target of $15 billion maintained Company reiterates 2014 EBITDA of approximately $8.0bn 15

17 Appendix

18 Selective steel projects: Monlevade (Brazil segment) 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 capital expenditure of $280m; Juiz de Fora rebar capacity increase from 50 to 400ktpy (replacing some wire rod production capacity) and meltshop capacity increase by 200ktpy Expected completion in 2015 A decision whether to invest in Phase 2 of the project, focusing on the upstream facilities in Monlevade (sinter plant, blast furnace and meltshop), will be taken at a later date Hangar of the rolling mill # 3 Installation area of the rolling mill # 3 Expansion supported by strong market for long products in Brazil 17 17

19 Selective steel projects: Acindar (Brazil segment) New rolling mill at Acindar (Argentina) New rolling mill (Huatian) in Santa Fe province to increase capacity by 0.4mt/year of rebars from 6 to 32mm for civil construction: 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 ~$100 million Expected completion in 2016 Expansion supported by strong construction market in Argentina and exports 18 18

20 Selective steel projects: Dofasco (NAFTA) Optimize cost and increase shipment of galvanized products by 0.3mt / year Restart construction of heavy gauge galvanizing line #6 (capacity 660ktpy) and closure of line #2 (capacity 400ktpy) increased shipments of galvanized sheet by 260ktpy, along with improved mix and optimized cost Line #6 will incorporate AHSS capability and is the key element in a broader program to improve Dofasco s ability to serve customers in the automotive, construction, and industrial markets Expected completion in 2015 Expansion supported by strong market for galvanized products 19 19

21 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 which are: State of the art pickling tandem CRM (1.5mt) Continuous annealing line (0.9mt), and Hot dip galvanizing line (0.5mt) Estimated capital expenditure of ~$850 million (100% basis) First coil to be produced in 2H 2014 Robust Chinese automotive market: > 50% growth to 25 million vehicles by

22 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) (latest data point: Mar 14) (latest data point: Feb 14) Global ASC 4.4% in 1Q 14 vs. 4Q 13 Global ASC +3.1% in 1Q 14 vs. 1Q 13 China ASC +4.8% in 1Q 14 vs. 4Q 13 China ASC +2.8% in 1Q 14 vs. 1Q 13 US ASC +4.0% in 1Q 14 vs. 4Q 13 US ASC 4.4% in 1Q 14 vs. 1Q 13 EU ASC +11.3% in 1Q 14 vs. 4Q 13 EU ASC +6.0% in 1Q 14 vs. 1Q 13 ArcelorMittal core market growth support continued growth in 2014 * ArcelorMittal estimates; ** AISI, Eurofer and ArcelorMittal estimates 21

23 Global indicators remain positive Global PMI indicates continuing strengthening in developed manufacturing Despite severe weather impacting US Jan production, manufacturing still up 2.2% in 1Q 14. Apr PMI remained >50 near recent highs Eurozone PMI, especially Germany, has continued to strengthen to its highest level since 1H 11. Czech Republic, Poland and UK PMIs remain strong In Eu28, manufacturing output has grown over the last year, now up 3.7% y-o-y Chinese industrial output growth has weakened to 8.7% y-o-y in 1Q 14; still supported by robust albeit slowing auto demand growth Global indicators signal continued growth in developed markets in 2Q 14 Source: *Markit. ArcelorMittal estimates 22

24 US construction growth continues; Europe improving US residential and non-residential construction indicators (SAAR) $bn* (latest data point: Mar 14) USA non-residential stable in 1Q 14 Non residential output stable in early 2014, impacted by severe weather, however, output up 6% yoy compared to weak 1Q 13. Despite the Architectural Billings index (ABI) falling back below 50, we expect a gradual pick up through 2014 and into 2015 US residential construction growth slowing to a more sustainable pace, as new home sales weaken due to higher prices Eurozone and US construction indicators** European construction outlook gradually improving Eurozone construction PMI weakened to 46.2 in March, despite continued strength in German and in particular UK However construction output in EU28 is up >5% (Jan/Feb yoy), supported by mild weather and weak yoy comparatives (latest data point: Mar 14) Overall we expect output in 2014 to be higher than 2013, led by growth in Germany, Poland and the UK. Construction in Southern Europe remains weak despite a pick up from low levels in Spain. Construction gradually improving * Source: US Census Bureau ; ** Source: Markit and The American Institute of Architects 23

25 Chinese industrial growth stable China infrastructure investment 3mma* (Y-o-Y) Crude steel finished production and inventory (mmt) Industrial output growth slowed in 1Q 14 up 8.7% y-o-y, from 10% in 4Q 13 Infrastructure investment continues to grow up almost 20% y-o-y in 1Q 14, defying expectations to slow. Outlook supported by recent government measures. Weakening residential transactions and prices and lack of available credit has caused housing starts to decline sharply, down over 25% y-o-y in 1Q 14. Housing starts were expected to weaken but has happened more quickly than anticipated. Flat products demand continues to be supported by relatively strong growth in auto production, up over 9% y-o-y in 1Q 14. Steel production has continued to grow in 1Q 14 (824mt annualized), up from 760mt in 4Q 14 helped by seasonality and rising exports. Inventories at warehouses declined by 3.5mt during Mar/Apr 14 as is seasonal and driven by lack of finance but inventory at mills remain up y-o-y. (latest data point: Apr 14) Chinese steel demand growth continues, but impacted by reduced housing starts *Mma refer to months moving average Source: NBS, CISA, WSA, Mysteel, ArcelorMittal Strategy estimates 24

26 1Q 14 developed market stock levels rising German inventories (000 MT) (latest data point: Feb 14) US service centre total steel Inventories (000 MT) (latest data point: Mar 14) Brazil service centre inventories (000 MT) (latest data point: Apr 14) China service centre inventories* (Mt/mth) with ASC% (latest data point: Apr 14) Slow rebound in inventory is supporting demand growth in developed market Source: WSA, Mysteel, ArcelorMittal Strategy estimates 25

27 Global apparent steel consumption China +67% % % 200 EU28-30% % % F F NAFTA % % % 2014F Rest of World* % % +3% F 2013 ASC growth of +3.5%; Estimated 2014 ASC growth of % ArcelorMittal estimates; * World ex. China, NAFTA and EU28 26

28 Raw material prices declined Spot iron ore, coking coal and scrap price (index IH 2008=100)* (latest data point: Apr 14) Regional steel price HRC ($/t) (latest data point: Apr 14) Raw material prices have declined particularly iron ore and coking coal * Source data: ArcelorMittal estimates; Platts 27

29 Segment highlights Segmental EBITDA* (US$mn) +103% Iron ore (mt) Own iron ore prod Shipped at market price % -15% +31% -26% Shipped at cost plus NAFTA Brazil Europe ACIS Mining 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 12,000 Segmental shipments (kt) +6% 250 Segmental EBITDA/tonne (US$/t) 10,000 8,000 6,000 4,000 2,000-2% -1% +6% NAFTA Brazil Europe ACIS 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 NAFTA Brazil Europe ACIS Q1 14: seasonal pick up in ACIS/Europe offset by weaker NAFTA, Brazil & Mining * Segmental figures shown above include one time adjustments 28

30 Balance sheet structurally improved Net debt ($ billion) Average maturity (years) % 2.6 3Q Q Q Q 2014 Liquidity ($ billion) Bank debt as component of total debt** (%) % 10% 3Q Q Q Q 2014 Balance sheet fundamentals improved 29

31 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 Working capital OWCR and rotation days* ($ billion and days) Working capital ($ billion) - LHS 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. 30

32 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 Net debt Net Debt ($ billion) & Net Debt/LTM reported EBITDA* Ratio (x) Net Debt ($ billion) - LHS Net Debt / LTM EBITDA Net debt increased to $18.5bn due to WC, redemption of perpetual bond and M&A * 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

33 Liquidity and debt maturity profile Liquidity at March 31, 2014 ($ billion) Debt maturities ($ billion) Commerical Bonds Other Convertible Unused credit lines Cash 5.1 Liquidity at 31/3/ Debt due in 2Q 14 Commercial paper convertible Other loans >2018 Liquidity lines: $3.6bn syndicated credit facility matures 18/03/16 $2.4bn syndicated credit facility matures 06/11/18 Debt maturity: Continued strong liquidity Average debt maturity 5.9 years Ratings S&P BB+, negative outlook Moody s Ba1, negative outlook Fitch BB+, stable outlook Continued strong liquidity position and average debt maturity of 5.9 years 32

34 Contacts Daniel Fairclough Global Head Investor Relations Hetal Patel UK/European Investor Relations Thomas A McCue US Investor Relations thomas.mccue@arcelormittal.com Lisa Fortuna US Investor Relations lisa.fortuna@arcelormittal.com Valérie Mella European and Retail Investor Relations valerie.mella@arcelormittal.com Maureen Baker Fixed Income/Debt Investor Relations maureen.baker@arcelormittal.com