Arcelor Mittal-q3 Performance
42
3Q 2013 Results 7 November 2013 Lakshmi N Mittal, Chairman and Chief Executive Officer Aditya Mittal, Chief Financial Officer
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Transcript of Arcelor Mittal-q3 Performance
3Q 2013 Results
7 November 2013 Lakshmi N Mittal, Chairman and Chief Executive Officer Aditya Mittal, Chief Financial Officer
1
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, 2012 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.
2
Agenda
• Results overview and recent developments
• Market outlook
• Results analysis
• Outlook and guidance
3
Continued improvement in safety
Health and safety performance improved with Lost Time Injury Frequency Rate of 1.0x in 1Q’13.
Improvements in performance in Flat Carbon Americas partially offset by deterioration in the Mining division. All other segment performance remained relatively constant quarter on quarter.
Quarterly Health & Safety frequency rate* for mining & steel
• Further safety improvement: LTIF rate improved to 0.8x in 3Q’13
• Leading the industry: Across the World Steel Association (WSA) members, 176 sites have a LTIF rate of <1;
…. 114 out of these sites belong to ArcelorMittal
• Sustainability remains a priority: ArcelorMittal maintained its membership in the Dow Jones Sustainability Index Europe
Our goal is to be the safest Metals & Mining company
* WSA: LTIF = Lost time injury frequency defined as Lost Time Injuries per 1.000.000 worked hours; based on own personnel and contractors
2013 Target
1.0
3Q 2013
0.8
2Q 2013
0.9
1Q 2013
0.9
2012
1.0
2011
1.4
2010
1.8
2009
1.9
2008
2.5
2007
3.1
4
3Q 2013 highlights • EBITDA 24% higher than underlying EBITDA in 3Q’12* • Steel shipments increased 6% vs. 3Q’12 • Own iron ore production 4.5% higher than 3Q’12 • Iron ore shipped at market price 32% higher than 3Q’12 • Net debt temporarily increased to $17.8bn at Sept 30, 2013, inline with
expectations • $4bn reduction in gross debt since early June 2013 leads to $62mn (13%) lower
net interest expense in 3Q’13 vs. 2Q’13 • $0.8bn annualized management gains achieved during 9M’13
24% improvement in underlying EBITDA 3Q’13 vs. 3Q’12 *Reported EBITDA in 3Q 2012 of $1,445 million included the positive impact from $131 million for DDH income offset by a $72 million charge related to a one-time signing bonus and post retirement benefit costs following entry into a new labor contract in the U.S. As a result underlying EBITDA for 3Q 2012 is $1,386 million.
(USDm) unless otherwise shown 3Q 2013 2Q 2013 3Q 2012 9M 2013 9M 2012
Iron ore shipments at market price (Mt) 9.4 8.2 7.1 24.9 22.1
Steel Shipments (Mt) 21.1 21.3 19.9 63.4 63.8
Sales 19,643 20,197 19,723 59,592 64,904
EBITDA 1,713 1,700 1,445 4,978 6,122
Net income / (loss) (193) (780) (652) (1,318) 456
• South Africa: Resolution of Kumba dispute; new “cost plus” iron ore supply agreement secured – New long-term agreement with Kumba to supply AMSA with 6.25mt of iron ore per annum – Ensures competitively priced iron ore for AMSA and significant cost benefits relative to the interim
supply arrangement in place since March 2010 and the excessive costs at Thabazimbi – All outstanding disputes between AMSA and Kumba now resolved – AMSA will no longer have an economic interest in the high-cost Thabazimbi iron ore mine; while
AMSA will take Thabazimbi production if it meets the required specifications, AMSA will however no longer face the risk associated with high costs and low volumes and general operational inefficiencies
• Annaba (Algeria): ownership diluted, paving the way for major capacity expansion – Investment plan to more than double the plant’s production capacity from 1mt to 2.2mtpa by 2017 – In return for the Group’s ownership dilution (from 70% to 49%), the Government of Algeria offered
various incentives, including low-cost local bank financing – ArcelorMittal will continue to operate Annaba and will benefit from the capacity expansion through
remaining 49% stake
• Selective steel investments restarted – Projects restarted to support development of franchise steel businesses – Capex discipline maintained: 2014 overall capex expected to be similar to 2013 levels
Key recent developments
5
Progress made on a series of initiatives during 3Q 2013
Franchise steel development • Dofasco (NAFTA auto)
– Restarted project to expand and upgrade galvanizing capacity by 2015 – New line #6 (660ktpy capacity) to serve growing NAFTA automotive market – Older and smaller galvanizing line #2 (400ktpy capacity) will be closed – Increased shipment of galvanized sheet (260ktpy), improved mix and cost
• Acindar (Argentina long products) – Project to optimize and expand downstream capacity by 2016 – Installation of a new rolling mill with capacity of 400ktpy bars – Improved productivity and lower costs
• Monlevade*/Juiz de Fora (Brazil long products) restart approved in 2Q 2013; completion expected in 2015
– Expansion of downstream facilities with a new wire rod mill in Monlevade (additional capacity of 1,050ktpy of coils)
– Juiz de Fora rebar capacity increase from 50 to 400ktpy (replacing some wire rod production capacity) and meltshop capacity increase by 200ktpy
• VAMA (China automotive steel JV) proceeding well – Phase 1: capacity to supply 1.5mt for automotive applications in China – State-of-the-art pickling tandem CRM, continuous annealing line and HDG – Project is proceeding well; first coil now targeted in 2H’14
6
Dofasco: #6 Galvanize Line foundations
Dofasco: tension reel for new #6 line
* Investment decision on Phase 2 of Monelvade project to focus on the upstream facilities (sinter plant, blast furnace and melt shop with additional crude steel capacity of 1.2mtpa) will be taken in the future
Restart of some steel investment in franchise businesses
VAMA: S2 mill housing construction
Mining growth plans on track • AMMC: expansion to 24mt on track
– Ramp-up proceeding well – 18.5mt production forecast in 2013 vs. 15mt in 2012 – 24mt production rate to be achieved by year-end 2013 – Unit costs benefiting from higher volumes
• Liberia: phase 1 shipments ahead of expectations in 2013; phase 2 underway
– Phase 1: New production record in 3Q’13; 3.7mt shipped 9M’13 (+89% vs. 9M’12)
– Phase 2: Project underway for 15mtpa premium sinter feed to replace 4mtpa DSO by 2015
– All environmental permits for phase 2 received – Major equipment procurement ongoing – Civil works commenced at the mine and concentrator sites
• Baffinland: early revenue phase underway – 3.5mtpa of DSO trucked to Milne Inlet for export during open-
water season by 2015 – $700m project capex in 50:50 JV – Summer season open-water sea lift of construction materials
and fuel completed in Q3 ahead of plan
7
AMMC: Port Cartier
Liberia: Offshore transshipment
Baffinland: construction camp
On track to achieve 84mt own iron ore capacity in 2015
Deleveraging remains a priority
Year end FY13 net debt expected to be ~$17bn medium term target of $15bn
Net debt progression $billion
25
20
15
10
5
0
-7.1
Medium term
target
15.0
4Q’13F 3Q’13
17.8
2Q’13
16.2
1Q’13
18.0
4Q’12
21.8
3Q’11
24.9
•Ratio of Net debt/LTM EBITDA is based on last twelve months reported EBITDA. Figures based on recast EBITDA as per new accounting standards adopted. •Note: 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). At September 30, 2013 cash included $42 million and debt included $202 million held at Annaba, which has since been classified as asset/liabilities held for sale.
Net debt/LTM EBITDA* 2.8x 2.5x
8
2.3x 2.6x 2.7x
~17
Asset Optimization delivering
• Including “residual costs”, the targeted run-rate savings of $1bn has been exceeded
• Residual costs should disappear from the system by 2014
• Savings are tangible and apparent in improved reported results
9
Asset Optimization savings achieved ($ million)
Essential components have been announced: 1.200
1.000
200
400
0
800
600
3Q’1
3
2Q’1
3
1Q’1
3
4Q’1
2
3Q’1
2
2Q’1
2
1Q’1
2
4Q’1
1
Run Rate-Savings Residual Costs
EBITDA showing clear benefits from Asset Optimization
4Q 2011: Extended idling of EAF in Madrid; Restructuring costs at other Spanish, Czech Republic & AMDS operations 1Q 2012: Extended idling of EAF & continuous caster at Schifflange; further optimization in Poland and Spain
4Q 2012: Closure of 2 BF, sinter plant, steel shop and continuous casters in Liege, Belgium decided; long term idling of liquid phase at the Florange site
1Q 2013: Announced intention to permanently close the coke plant & six finishing lines, in Liege; mothballing Florange 3Q 2013: Industrial phase now complete and mothballing of facilities underway. Now proceeding to the social plan negotiations
Gap analysis completed in 2012 defined the priorities for 2013-2015 plan
Gap Analysis for Cost Savings by Process
34%
25%
20%
10%
11% Sinter & BF
Steel shop
Hot strip mill
Cold rolling mill & HDG
Others
10
Gap Analysis for Cost Savings per Main Drivers
Yield
Productivity
Others
Energy
29%
22% 21%
28%
2015F
3.0
3.0
2014F
2.0
2.0
2013F
1.0
0.8
0.2
New $3bn management gains program ($ billion) Annualized savings
9M’13 achieved Savings targets
• Bottom up plan across the group • 2/3 variable cost and 1/3 fixed cost focussed • Improvements in reliability, fuel rate, yield, productivity etc • Business units plans rolled out and key personnel
accountable for delivery • Leveraging extensive benchmarking opportunities within
the group
Cost improvement underway
11
Global apparent steel consumption (ASC) growth forecast in 2013** (v 2012)
Global ASC expected to grow by ~ +3.5% in 2013 Source: * Markit. Purchasing managers indices for over 40 countries weighted by share of ArcelorMittal finished steel deliveries. ** ArcelorMittal estimates
ArcelorMittal weighted global manufacturing PMI*
Demand indicators have improved
+6.5% to +7.5%
Global
CIS
Brazil
China
EU27
US
~ +3.5%
+2.5% to +3.5%
+3% to +4%
-1.0% to 0%
-1.5% to -2.5%
12
Financial results
13 * Others primarily represents forex
EBITDA bridge from 2Q’13 to 3Q’13
($million)
3Q’13 EBITDA
1,713 -6
Non-steel EBITDA
Others*
-56
-202
2Q’13 EBITDA Price / Cost - Mining
Volume & Mix - Steel
30
Volume & Mix - Mining
70
Price / Cost - Steel
177
1,700 Steel impact
Mining impact
Improved mining results supported 3Q’13 EBITDA
($ million)
14
EBITDA to net results 3Q
201
3
Depreciation: (1,135)
Impairment (101)
Current tax: (11)
Deferred tax: 16
Non-controlling: (50)
Weighted Avg No of shares: 1,788
EPS = $ (0.12)/share
($ million) Interest: (409)
Forex and other: (269)
Net Ioss
(193)
Taxes and non-
controlling Interest
(45)
Pre-tax loss
(148)
Finance Cost
(678)
Income from Equity
53
Operating Income
477
Depreciation impairment
and restructuring
charges
(1,236)
EBITDA
1,713
3Q’13 net loss of $0.2 billion
2Q 2
013
Depreciation: (1,136)
Impairment (39)
Restructuring (173) Current tax: (149)
Deferred tax: 50
Non-controlling: (8)
Weighted Avg No of shares: 1,788
EPS = $ (0.44)/share
Interest: (471)
Forex and other: (530)
(780) (107)
(673) (1,001)
(24) 352
(1,348) 1,700
15
EBITDA to free cash flow
3Q 2013 free cashflow waterfall ($ million)
-1,254
Free cashflow
-806
Cashflow from operations
-448
-806
EBITDA
1,713
-1,355
Change in working capital
Net financial cost, tax
expense, and others*
Capex
Working capital investment main driver of $1.2bn negative free cashflow * Includes pension expense, non cash items etc.
16
Net debt bridge
3Q 2013 net debt analysis ($ million)
-166
Free cashflow
1,254
Net debt at 2Q’13
16,165
+1,628
Net debt at 3Q’13
17,793
Forex & others
176
Dividends
364
M&A*
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). At September 30, 2013 cash included $42 million and debt included $202 million held at Annaba, which has since been classified as asset/liabilities held for sale. *M&A includes $216 million from ENOVOS disposal offset by the payment of the 5th instalment of the acquisition price of an additional 11% stake in Ostrava acquired in 2009.
Temporary increase in net debt due to working capital and dividend payout
17
Outlook and guidance framework
– In line with our guidance framework, underlying profitability is still expected to improve in 2013, driven by three factors:
a) a 1-2% increase in steel shipments; b) an approximate 20% increase in marketable iron ore shipments; and c) the benefits realized from Asset Optimization and Management Gains initiatives
– The Company still expects 2013 EBITDA to be greater than $6.5 billion
– Due to improved operating cash flows and proceeds from already announced
disposals, net debt is expected to decrease in 4Q 2013 to approximately $17 billion; the $15 billion medium term net debt target is unchanged
– 2013 capital expenditure is still expected to be approximately $3.7 billion
The Company still expects FY 2013 EBITDA to be greater than $6.5 billion
Appendix
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 with $140m remaining;
– 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
19 19
Selective steel projects: Monlevade (LCA)
Expansion supported by strong market for long products in Brazil
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
20 20
Selective steel projects: Acindar (LCA)
Expansion supported by strong construction market in Argentina and exports
Selective steel projects: Dofasco (FCA)
• 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
21 21
Expansion supported by strong market for galvanized products
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
22 22
Expansion supported by robust Chinese automotive market: > 50% growth to 25 million vehicles by 2018
23
3Q’13 return to growth in world ex-China demand
Global apparent steel consumption (ASC)* (million tonnes per month)
US and European apparent steel consumption (ASC)** (million tonnes per month)
* ArcelorMittal estimates ** AISI, Eurofer and ArcelorMittal estimates
• China ASC +0.1% in 3Q’13 vs. 2Q’13 • China ASC 7.7% in 3Q’13 vs. 3Q’12
• EU ASC -9.5% in 3Q’13 vs. 2Q’13 • EU ASC +1.4% in 3Q’13 vs. 3Q’12
• Global ASC -1.1% in 3Q’13 vs. 2Q’13 • Global ASC +4.4% in 3Q’13 vs. 3Q’12
• US ASC +3.8% in 3Q’13 vs. 2Q’13 • US ASC +4.6% in 3Q’13 vs. 3Q’12
Back to Y-o-Y growth in 3Q’13; growth expected to continue in 2014
3
5
7
9
11
13
15
17
Jan-
07M
ay-0
7S
ep-0
7Ja
n-08
May
-08
Sep
-08
Jan-
09M
ay-0
9S
ep-0
9Ja
n-10
May
-10
Sep
-10
Jan-
11M
ay-1
1S
ep-1
1Ja
n-12
May
-12
Sep
-12
Jan-
13M
ay-1
3S
ep-1
3
EU27
USA
15
20
25
30
35
40
45
50
55
60
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
Developing ex ChinaChinaDeveloped
24
• Global PMI indicates developed manufacturing growing above trend for the first time in two years
• US manufacturing grew q-o-q in 3Q’13 and up over 2.5% y-o-y. October PMI remained >50 near recent highs despite the impact of US government shutdown
• In Europe, manufacturing output still down y-o-y but in 3m to August is up over 3% annualised from previous 3m
• Eurozone PMI above 50 for four consecutive months. Strong readings for Czech Republic, Poland and UK PMI confirm EU27 PMI at highest since 1H’11
• Chinese industrial output growth has rebounded to 10.1% y-o-y in 3Q’13 the best quarter since 1Q’12 supported by strong auto and a pick-up in the PMI>50
Global indicators have improved
Global indicators signal continued growth in developed markets in 4Q’13, and confirm a rebound of Chinese growth since the summer
Source: *Markit. ArcelorMittal estimates
ArcelorMittal weighted global manufacturing PMI*
US construction improving; Europe stabilising
• USA non-residential beginning to pick-up
– US residential construction grows strongly, although growth rates beginning to slow (+20% y-o-y Jan-Aug’13). Home sales continue to improve, while permits stabilise
– Public non-residential output declining, but private slowly improving; Architectural Billings index (ABI) remains above 50 supporting expected pickup in 2014
• In Europe, construction still weak but no longer declining
– Eurozone construction PMI rebounded to almost 50 output still down y-o-y but up q-o-q
– German construction output is up y-o-y in 3Q’13, supported by strong labour market and increased purchasing activity
– Construction in Poland & UK seeing a rebound but markets in the South continue to be remain weak. However, 1H’13 seems to be the bottom with output up slightly in July and August
US residential and non-residential construction indicators (SAAR) $bn*
25 * Source: US Census Bureau
** Source: Markit and The American Institute of Architects
Eurozone and US construction indicators**
200250300350400450500550600650700750
Jan-
02Ju
l-02
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
ResidentialNon-residential
Expa
nsio
nCo
ntra
ctio
n
30
35
40
45
50
55
60
65
Jan-
06Ap
r-06
Jul-0
6O
ct-0
6Ja
n-07
Apr-0
7Ju
l-07
Oct
-07
Jan-
08Ap
r-08
Jul-0
8O
ct-0
8Ja
n-09
Apr-0
9Ju
l-09
Oct
-09
Jan -
10Ap
r-10
Jul-1
0O
ct-1
0Ja
n-11
Apr-1
1Ju
l-11
Oct
-11
Jan-
12Ap
r-12
Jul-1
2O
ct-1
2Ja
n-13
Apr-1
3Ju
l-13
Eurozone construction PMI
USA Architectural Billings Index
US residential construction improving, end to decline in Europe
Chinese industrial growth improving
• Industrial output has improved in the 3Q’13 up 10.1% y-o-y the best qtr since 1Q’12
• The turnaround is underpinned by strong growth in public investment, with Infrastructure growing by over 26% y-o-y in 3Q’13. We expect growth to slow but not significantly until mid-2014.
• Continued strong housing price rises and
transactions have supported demand for constructional steel, as housing starts rebound, up over 17% y-o-y in 3Q’13.
• Flat products demand continues to be supported by robust growth in automotive production, up 13% y-o-y in 3Q’13
• While steel production remained high in 3Q’13 (782mt annualized), steel inventory continued to fall as is seasonal.
• Inventories have stabilized through Sept/Oct and are now up y-o-y, supporting our expectation of a small q-o-q decline in steel production during Q3’13
26
Crude steel finished production and inventory (mmt)
* Mma refer to months moving average
China infrastructure investment 3mma* (Y-o-Y)
0
3
6
9
12
15
18
21
0102030405060708090
100
Jan-
07Ap
r-07
Jul-0
7O
ct-0
7Ja
n-08
Apr-0
8Ju
l-08
Oct
-08
Jan-
09Ap
r -09
Jul-0
9O
ct-0
9Ja
n-10
Apr-1
0Ju
l-10
Oct
-10
Jan-
11Ap
r-11
Jul-1
1O
ct-1
1Ja
n-12
Apr-1
2Ju
l-12
Oct
- 12
Jan-
13Ap
r-13
Jul-1
3
Steel inventory at warehouses (RHS)
Finished steel production (LHS)
Steel inventory at mills (RHS)
Underlying demand robust in China, led by rebound in property market
-15%
0%
15%
30%
45%
60%
75%
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
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
400500600700800900
1,0001,1001,2001,3001,400
Jan-
07Ap
r-07
Jul-0
7O
ct-0
7Ja
n-08
Apr-0
8Ju
l-08
Oct
-08
Jan-
09Ap
r-09
Jul-0
9O
ct-0
9Ja
n-10
Apr-1
0Ju
l-10
Oct
-10
Jan-
11Ap
r-11
Jul-1
1O
ct-1
1Ja
n-12
Apr-1
2Ju
l-12
Oct
-12
Jan-
13Ap
r-13
Jul-1
3
Flat stocks at service centres
Months of supply (RHS)
End to destocking in US and China in 3Q’13
German inventories (000 MT)*
27
China service centre inventories (Mt/mth) with ASC%
* German inventory data available on quarterly basis since 2007
Brazil service centre inventories (000 MT)
End to Inventory drawdown in US and China during 3Q’13
US service centre total steel Inventories (000 MT)
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Jan-0
7A
pr-
07
Jul-07
Oct-
07
Jan-0
8A
pr-
08
Jul-08
Oct-
08
Jan-0
9A
pr-
09
Jul-09
Oct-
09
Jan-1
0A
pr-
10
Jul-10
Oct-
10
Jan-1
1A
pr-
11
Jul -11
Oct-
11
Jan-1
2A
pr-
12
Jul-12
Oct-
12
Jan-1
3A
pr-
13
Jul-13
USA (MSCI)Months Supply
0%5%10%15%20%25%30%35%40%45%50%
2468
10121416182022
Jan-
07A
pr-0
7Ju
l-07
Oct
-07
Jan-
08A
pr-0
8Ju
l-08
Oct
-08
Jan-
09A
pr-0
9Ju
l-09
Oct
-09
Jan-
10A
pr-1
0Ju
l-10
Oct
-10
Jan-
11A
pr-1
1Ju
l-11
Oct
-11
Jan-
12A
pr-1
2Ju
l-12
Oct
-12
Jan-
13A
pr-1
3Ju
l-13
Flat and Long
% of ASC (RHS)
28
Global apparent steel consumption China
NAFTA
EU27
Rest of World
700
600
500
400
300
200
100
0 2010 2009 2008 2007
+2%
+6.5% to +7.5% +55%
2013F 2012 2011
ArcelorMittal estimates
200 180
60
160
40
100
140
80
120
-9% -1.5% to -2.5%
-30%
2013F 2012 2011 2010 2009 2008 2007
160
140
120
100
80
60
40
+7% -1% -8%
2013F 2012 2011 2010 2009 2008 2007
550 500 450 400 350 300 250 200 150 100 50
+4% +2% +9%
2013F 2012 2011 2010 2009 2008 2007
Estimated 2013 ASC growth of ~ +3.5%
Raw material prices remained stable Spot iron ore, coking coal and scrap price (index IH 2008=100)*
Regional steel price HRC ($/t)
29
Raw material prices have started to rebound from end 2Q’13 lows
400
500
600
700
800
900
1000
1100
1200
1300
Jan
08A
pr 0
8Ju
l 08
Oct
08
Jan
09A
pr 0
9Ju
l 09
Oct
09
Jan
10A
pr 1
0Ju
l 10
Oct
10
Jan
11A
pr 1
1Ju
l 11
Oct
11
Jan
12A
pr 1
2Ju
l 12
Oct
12
Jan
13A
pr 1
3Ju
l 13
China domestic Shanghai (Inc 17% VAT) N.America FOB MidwestN.Europe domestic ex-works
30
40
50
60
70
80
90
100
110
120
130
Jan
08A
pr 0
8Ju
l 08
Oct
08
Jan
09A
pr 0
9Ju
l 09
Oct
09
Jan
10A
pr 1
0Ju
l 10
Oct
10
Jan
11A
pr 1
1Ju
l 11
Oct
11
Jan
12A
pr 1
2Ju
l 12
Oct
12
Jan
13A
pr 1
3Ju
l 13
Spot Iron OreCoaking CoalScrap
30
Segment highlights • FCA: EBITDA +67.8% y-o-y; $95 EBITDA/t
– ASP -$27/t compared to 2Q’13
– Shipments +7.6% higher than 3Q’12
• FCE: EBITDA +1.0% y-o-y; $29 EBITDA/t
– ASP -27$/t compared to 2Q’13
– Shipments +12.7% higher than 3Q’12
• Long: EBITDA +36.2% y-o-y; $83 EBITDA/t
– ASP -28$/t compared to 2Q’13
– Shipments +1.7% higher than 3Q’12
• AACIS: EBITDA +45.8% y-o-y; $33 EBITDA/t
– ASP -$20/t compared to 2Q’13
– Shipments +0.3% higher than 3Q’12
• AMDS: 3Q’13 EBITDA $16m
– ASP -$29/t compared to 2Q’13
– Shipments -3.9% lower than 3Q’12
• Mining: EBITDA +34.6% y-o-y
– Sales +18.1% higher than 2Q’13
– Own iron ore production +4.5% higher than 3Q’12
– Own coal production -0.4% lower than 3Q’12
600 500 400 300 200 100
0 -100
700
Mining AMDS AACIS Long FCE FCA
3Q’13 2Q’13 1Q’13 4Q’12 3Q’12
Segmental EBITDA* (US$mn)
-20
100
80
60
40
20
0
3Q’13 2Q’13 1Q’13 4Q’12 3Q’12
AMDS AACIS Long FCE FCA
Segmental EBITDA/tonne (US$/t)
3Q’13 Group EBITDA flat q-o-q; Improved FCA and Mining performance offset primarily by seasonally weaker FCE performance
* Segmental figures shown above include one time adjustments
31
Flat Carbon Americas (FCA)
600
500
400
300
800
200
100
1,000
900
0
700
600
500
400
300
800
700
-3%
+87%
3Q13
804
547
2Q13
831
293
1Q13
819
443
4Q12
797
294
3Q12
850
326
5,800
5,700
5,600
5,500
5,400
0
2Q13
5,759
3Q13
5,559
4Q12
+7%
5,533
1Q13 3Q12
5,351 5,407
EBITDA* (US$mn, LHS) and ASP (US$/t, RHS)
Flat Carbon Americas steel shipments (000’t)
* EBITDA in 3Q’12 was negatively impacted by $72m related to one-time signing bonus and post retirement benefit costs following entry into the new US labor contract. EBITDA in 1Q 2013 was positively impacted by a $47 million fair valuation gain relating to the acquisition of an additional ownership interest DJ Galvanizing in Canada. The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards
FCA profitability improved in 3Q’13 vs. 2Q’13
• Crude steel production increased by 13.5% to 6.3mt in 3Q’13 vs. 5.6mt in 2Q’13, driven primarily by a significant improvement in Flat USA following resolution of labour issues at Burns Harbor and operational incidents at Indiana Harbor East and West that impacted output in 2Q’13.
• Steel shipments in 3Q’13 were 5.8mt, an increase of 6.5% vs. 5.4mt in 2Q’13, primarily driven by higher shipment volumes in North America.
• Sales in the Flat Carbon Americas segment were $4.9bn in 3Q’13, an increase of 2.8% vs. $4.8bn in 2Q’13. The increase in sales was due to higher shipments, offset in part by lower average steel selling prices (ASP) (-3.2%), in particular in Mexico and South America (impacted by forex).
• EBITDA in 3Q’13 increased 86.7% to $547m vs. $293m in 2Q ‘13.
2Q13 drop in Flat USA following labor issues at Burns Harbor and operational incidents at Indiana Harbor East and West
32
Flat Carbon Europe (FCE)
200
100
0
850
700
900
1,000
300
400
500
600
700
800
600
650
750
950
800
-3%
3Q13
803 831
1Q13
341
830
2Q13
193 191
856 -43%
3Q12
847
308
4Q12
300
7,200
7,000
6,800
6,600
6,400
6,200
6,000
0
+13% -7%
3Q13
6,579
7,065
1Q13
6,890
4Q12
5,957
2Q13
5,837
3Q12
EBITDA* (US$mn, LHS) and ASP (US$/t, RHS)
Flat Carbon Europe steel shipments (000’t)
* EBITDA in 4Q’12 included $210m related to a net gain recorded on the sale of CO2 credits, the proceeds of which will be reinvested in energy projects. EBITDA in 3Q’12, 4Q’12 and 1Q’13 included $131m, $141m and $92m of DDH income recognized during the quarter, respectively. The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards
FCE profitability declined in 3Q’13 vs. 2Q’13 due to seasonal slowdown
• Flat Carbon Europe crude steel production decreased by 0.6% to 7.4 million tonnes in 3Q’13 vs. 7.5 million tonnes in 2Q’13.
• Steel shipments in 3Q’13 were 6.6 million tonnes, a decrease of 6.9% vs. 7.1 million tonnes in 2Q’13 due primarily due to normal seasonal demand patterns.
• Sales in the Flat Carbon Europe segment decreased to $6.3 billion in 3Q’13 as compared to $6.9 billion in 2Q’13, due to lower steel shipment volumes and lower average steel selling prices (-3.3%).
• EBITDA in 3Q’13 decreased 43.4% to $193 million vs. $341 million in 2Q’13. Steel margins were negatively impacted in 3Q’13 by lower volumes and to a lesser extent a negative price-cost effect (mitigated by management and asset optimisation gains).
33
Long Carbon Americas & Europe (LCAE)
5,800
5,600 5,650 5,700 5,750
5,500
0
5,400 5,450
5,550
1Q13
5,508
3Q12
5,543
4Q12
5,394
5,772
2Q13
-3%
3Q13
5,599
EBITDA (US$mn, LHS); ASP (US$/t, RHS)
Long Carbon steel shipments (000’t)
1,000
800
600
400
200
0
800
600
400
200
0
820
463
-3%
-17%
3Q13 2Q13
848
556
1Q13
858
419
4Q12
857
422
3Q12
861
340
Long Carbon profitability declined in 3Q’13 vs. 2Q’13 primarily due to seasonal slowdown in Europe
The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards
• Long Carbon Americas and Europe crude steel production increased by 0.5% to 5.8 million tonnes in 3Q’13 vs. 5.7 million tonnes in 2Q ‘13.
• Steel shipments in 3Q ‘13 were 5.6 million tonnes, a decrease of 3.0% vs. 5.8 million tonnes in 2Q’13, primarily due to lower volumes in Europe (seasonal impact).
• Sales decreased 5.3% to $5.1 billion in 3Q’13 vs. $5.4 billion in 2Q’13. Sales were negatively impacted by lower volumes and lower average steel selling prices (-3.3%) particularly across the Long Carbon Americas (impacted by forex) and Tubular businesses.
• EBITDA in 3Q’13 was $463 million, a decline of 16.7% vs.$556 million in 2Q’13, primarily driven by lower seasonal volumes and lower ASP.
34
Asia, Africa and CIS (AACIS)
3,200
3,100
3,000
0
+4%
3Q13
3,187
2,978
4Q12
3,104
1Q13
3,062
3,178
3Q12 2Q13
EBITDA (US$mn, LHS) and ASP (US$/t, RHS)
AACIS steel shipments (000’t)
800
700
600
500
400
300
200
100
0
250
200
150
100
50
0
-3%
-13%
3Q13
620
19
4Q12
611
222
3Q12
658
72 105
2Q13
623
120
1Q13
603
* EBITDA in 4Q’12 includes the positive impact from the Paul Wurth asset divestment (a gain of $242 million). The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards
AACIS profitability declined in 3Q’13 vs. 2Q’13
• AACIS crude steel production was 3.7 million tonnes in 3Q ‘13 an increase of 0.8% as compared to 2Q’13.
• Steel shipments in 3Q’13 amounted to 3.2 million tonnes, an increase of 4.1% as compared to 2Q ‘13 primarily due to higher steel shipment volumes in South Africa.
• Sales in the AACIS segment were flat at $2.1 billion in 3Q’13 as compared to 2Q’13, as higher steel volumes were offset by lower ASP (-3.2%).
• EBITDA in 3Q’13 declined 12.5% to $105 million vs. $120 million in 2Q’13 due to a price/cost squeeze impact.
35
Distribution Solutions (AMDS)
4,500
4,400
0
4,300
4,000
4,100
4,200
-1%
3Q13
3,956
2Q13
4,008
1Q13
4,063
4Q12 3Q12
4,118
4,463
EBITDA (US$mn, LHS) and ASP (US$/t, RHS)
Distribution Solutions steel shipments (000’t)
0
1,000
800
600
400
200
0
40 1,200
-10
-20
-30
-40
30
20
10
-3%
3Q13
843
16
2Q13
872
29
1Q13
851
15
4Q12
834
-24
3Q12
869
11
* EBITDA in 2Q’12 includes $339m gain from Skyline divestment. The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards
AMDS profitability declined in 3Q’13 vs. 2Q’13
• Shipments in the Distribution Solutions segment in 3Q’13 were 4.0 million tonnes, a decrease of 1.3% as compared to 2Q’13.
• Sales in 3Q’13 were $3.4 billion, lower as compared to $3.6 billion for 2Q’13, due primarily to lower average steel selling prices (-3.3%) and lower steel shipment volumes.
• EBITDA in 3Q’13 was $16 million as compared to $29 million in 2Q’13, primarily driven by lower volumes
36
Mining • Own iron ore production (not including supplies under strategic long-
term contracts) in 3Q’13 was 14.9mt, essentially flat vs. 2Q’13. • Shipments at market price increased 15.3% to 9.4mt in 3Q’13 vs.
8.2mt in 2Q’13, primarily due to higher shipments from the Canadian operations. Shipments at market price in 3Q’13 were 32.0% higher than 3Q’12.
• EBITDA for 3Q 2013 was $533 million, 23% higher as compared to $432 million in 2Q 2013. EBITDA was positively impacted by higher volumes as well as higher seaborne market prices, partially offset by a portion of iron ore shipments from Canada & Mexico that reference quarter-lagged prices, which was lower in 3Q 2013 than 2Q 2013.
• Operating performance for 3Q’13 was impacted by $101 million impairment related to costs associated with the discontinued iron ore project in Senegal.
Definitions: “Market priced” tonnes represent amounts of iron ore or other raw materials from ArcelorMittal mines that could be sold to third parties on the open market. Market priced tonnes that are not sold to third parties are transferred from the Mining segment to the Company’s steel producing segments at the prevailing market price. Shipments of raw materials that do not constitute market price tonnes are transferred internally on a cost-plus basis. Own iron ore production and own coal production excludes supplies under strategic long-term contracts). The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards
550
500
450
400
350
0
+23%
3Q13
533
2Q13
432
1Q13
433
4Q12
327
3Q12
396
EBITDA ($ million)
5
15
5
15
20
10
0
10
0
3Q13
6.8
9.4
2Q13
6.5
8.2
1Q13
4.8
7.3
4Q12
6.8
6.6
3Q12
6.9
7.1
Shipped at cost plus Shipped at market price Own iron ore prod
Iron ore (million tonnes)
2.5
2.0
1.5
1.0
0.5
0.0
2.5
2.0
1.5
1.0
0.5
0.0
3Q13
0.7
1.3
2Q13
0.7
1.1
1Q13
0.7
1.3
4Q12
0.8
1.3
3Q12
0.8
1.2
Shipped at market price Own coal prod Shipped at cost plus
Coal (million tonnes)
EBITDA for 3Q’13 improved as compared to 2Q’13
37
Net debt ($ billion) Average maturity (years)
Liquidity ($ billion) Bank debt as component of total debt** (%)
Balance sheet structurally improved
17.8
-45%
3Q 2013* 3Q 2008
32.5
3Q 2013
6.4
3Q 2008
2.6
3Q 2013*
14.5
3Q 2008
12.0
* At September 30, 2013 cash included $42 million and debt included $202 million held at Annaba, which has since been classified as asset/liabilities held for sale. ** ArcelorMittal estimates
3Q 2013
10%
3Q 2008
84%
Balance sheet fundamentals improved
Working capital
38
OWCR and rotation days* ($ billion and days)
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.
0
4
120
90
60
30
0
28
24
20
16
12
8
3Q 1
0
2Q 1
0
1Q 1
0
3Q 0
9
2Q 0
9
1Q 0
9
4Q 0
8
3Q 1
2
2Q 0
8
1Q 0
8
4Q 0
7
2Q 1
3
3Q 0
8
1Q 1
3 4Q
12
2Q 1
2 1Q
12
4Q 1
1
3Q 1
1
2Q 1
1
1Q 1
1 4Q
10
4Q 0
9
3Q 0
7 2Q
07
1Q 0
7
3Q 1
3
62
Rotation days - RHS Working capital ($ billion) - LHS
39
Net debt
Net Debt ($ billion) & Net Debt/LTM reported EBITDA* Ratio (x)
* 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
35
30
25
20
15
10
5
0 0.0
4.0
3.0
2.0
1.0
2Q 1
2 1Q
12
4Q 1
1 3Q
11
2Q 1
1 1Q
11
4Q 1
0 3Q
10
2Q 1
0 1Q
10
4Q 0
9 3Q
09
2Q 0
9 1Q
09
4Q 0
8 3Q
08
2Q 0
8 1Q
08
2Q 1
3
3Q 0
7 2Q
07
1Q 0
7
3Q 1
3
4Q 0
7
1Q 1
3 4Q
12
3Q 1
2
2.7
Net Debt / LTM EBITDA Net Debt ($ billion) - LHS
Net debt increased $1.6bn to $17.8bn due to negative cashflow from operations (including working capital investment), offset in part by disposal proceeds
40
Liquidity and debt maturity profile Debt maturities ($ billion) Liquidity at September 30, 2013 ($ billion)
Liquidity lines: • $4bn syndicated credit facility matures 06/05/15 • $6bn syndicated credit facility matures 18/03/16
• Continued strong liquidity • Average debt maturity 6.4 years
Debt maturity: Ratings • S&P – BB+, negative outlook • Moody’s – Ba1, negative outlook • Fitch – BB+, stable outlook
12
10
8
6
4
2
0 >2017
10.3
2017
2.9
2016
2.4
2015
2.5
2014
3.7
2013
0.5
Bonds Convertibles Other Commercial Paper
Commercial paper Short term & others Cash
Unused credit lines
Debt due in 2013
0.5 0.1 0.4
Liquidity at 30/9/13
14.5
10.0
4.5
Continued strong liquidity position and average debt maturity of 6.4 years
41
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
Thomas A McCue – US Investor Relations [email protected] +312-899-3927 Lisa Fortuna – US Investor Relations [email protected] +312-899-3985
