Luxembourg, November 10, 2017 - ArcelorMittal (referred
to as "ArcelorMittal" or the "Company") (MT (New York, Amsterdam,
Paris, Luxembourg), MTS (Madrid)), the world's leading integrated
steel and mining company, today announced results[1] for the three
month and nine month periods ended September 30, 2017.
Highlights:
- Health and safety: LTIF rate of 0.67x in 3Q 2017 as compared to
0.72x in 2Q 2017 and 0.84x in 3Q 2016
- Operating income of $1.2 billion in 3Q 2017 as compared to $1.4
billion in 2Q 2017; 2.5% higher YoY
- EBITDA of $1.9 billion in 3Q 2017 as compared to $2.1 billion
in 2Q 2017; 1.5% higher YoY
- Net income of $1.2 billion in 3Q 2017 lower as compared to $1.3
billion in 2Q 2017 and higher as compared to $0.7 billion in 3Q
2016
- Steel shipments of 21.7Mt in 3Q 2017, an increase of 1.0% as
compared to 2Q 2017; +6.8% YoY; steel shipments of 64.2Mt in 9M
2017, up 0.6% YoY
- 3Q 2017 iron ore shipments of 15Mt (+8.1% YoY), of which 9.1Mt
shipped at market prices (+12.3% YoY); 9M 2017 market price iron
ore shipments at 27.2Mt, up 6.8% YoY
- Net debt of $12.0 billion as of September 30, 2017, as compared
to $11.9 billion as of June 30, 2017, primarily due to a negative
foreign exchange impact ($0.2 billion)
Outlook and guidance:Market conditions
are favorable. The demand environment remains positive (as
evidenced by the continued high readings from the ArcelorMittal
weighted PMI) and steel spreads remain healthy.
The Company continues to expect cash needs of
the business (capex ($2.9 billion), interest ($0.8 billion), cash
taxes, pensions and other cash costs (totalling $0.9 billion) but
excluding working capital investment and premiums paid to retire
debt early) to be approximately $4.6 billion in 2017.
Given the improved market conditions, the
Company now expects a full year 2017 investment in working capital
of approximately $2.0 billion (as compared to previous guidance of
approximately $1.5 billion).
Financial highlights (on the basis of IFRS1):
(USDm)
unless otherwise shown |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Sales |
17,639 |
17,244 |
14,523 |
50,969 |
42,665 |
Operating
income |
1,234 |
1,390 |
1,204 |
4,200 |
3,352 |
Net
income attributable to equity holders of the parent |
1,205 |
1,322 |
680 |
3,529 |
1,376 |
Basic
earnings per share (US$)[2] |
1.18 |
1.30 |
0.67 |
3.46 |
1.48 |
|
|
|
|
|
|
Operating
income/ tonne (US$/t) |
57 |
65 |
59 |
65 |
52 |
EBITDA |
1,924 |
2,112 |
1,897 |
6,267 |
4,594 |
EBITDA/
tonne (US$/t) |
89 |
98 |
93 |
98 |
72 |
Steel-only EBITDA/ tonne (US$/t) |
73 |
83 |
83 |
80 |
65 |
|
|
|
|
|
|
Crude
steel production (Mt) |
23.6 |
23.2 |
22.6 |
70.4 |
69.0 |
Steel
shipments (Mt) |
21.7 |
21.5 |
20.3 |
64.2 |
63.9 |
Own iron
ore production (Mt) |
14.2 |
14.7 |
13.7 |
42.9 |
41.3 |
Iron ore
shipped at market price (Mt) |
9.1 |
9.5 |
8.1 |
27.2 |
25.5 |
Commenting, Mr. Lakshmi N. Mittal,
ArcelorMittal Chairman and CEO, said:
"Favorable market conditions have supported another solid
quarterly performance, with EBITDA for the first nine months
considerably improved year-on-year. Operating conditions
continue to improve, with key indicators including the
ArcelorMittal weighted PMI implying a positive outlook for
2018. While pleased with the progress that we are making, we
operate in a competitive global environment which is characterized
by overcapacity and high levels of imports. The
implementation of our strategic plan Action 2020 remains a clear
priority and we are making good progress in this regard."
Corporate responsibility and safety
performance
Health and safety - Own personnel and
contractors lost time injury frequency rate
Health and safety performance, based on own personnel figures
and contractors lost time injury frequency (LTIF) rate was 0.67x in
the third quarter of 2017 ("3Q 2017") as compared to 0.72x for the
second quarter of 2017 ("2Q 2017") and 0.84x for the third quarter
of 2016 ("3Q 2016"). Health and safety performance improved to
0.74x in the nine months of 2017 ("9M 2017") as compared to 0.80x
for the first nine months of 2016 ("9M 2016").
The Company's efforts to improve its Health and Safety record
remains focused on both further reducing the rate of severe
injuries and preventing fatalities.
Own personnel and contractors - Frequency
rate
Lost time injury frequency rate |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Mining |
1.05 |
0.58 |
1.08 |
0.75 |
0.93 |
NAFTA |
0.57 |
0.51 |
0.89 |
0.69 |
0.95 |
Brazil |
0.45 |
0.37 |
0.20 |
0.42 |
0.32 |
Europe |
0.79 |
1.08 |
1.17 |
1.05 |
1.03 |
ACIS |
0.42 |
0.62 |
0.55 |
0.49 |
0.58 |
Total
Steel |
0.60 |
0.75 |
0.80 |
0.74 |
0.78 |
Total
(Steel and Mining) |
0.67 |
0.72 |
0.84 |
0.74 |
0.80 |
Key corporate responsibility highlights for
3Q 2017:
Update on the Group's 10 sustainable development outcomes:
- Outcome 2: Products that accelerate more sustainable
lifestyles: ArcelorMittal will invest €67 million in a new
production line for automotive steel in Florange, eastern
France, part of the Company's strategy to have a centre of
excellence for automotive steel production in the Lorraine
region.
- Outcome 4: ArcelorMittal Brazil won the Steelie Award for
Excellence in Sustainability for its social value programme created
through its application of REVSOL®, a steel slag by-product used in
the construction of roads, car parks and storage yards. Using
REVSOL® to build local road networks has generated improved trade,
communications and essential services for local communities whilst
also replacing the use of non-renewable sources and reduces the
costs of road and vehicle maintenance. The Steelie Awards, in
their 8th year, are organised by the World Steel Association.
- Outcome 6: The Company engaged with a number of stakeholders on
carbon pricing schemes in order to explore effective ways to
leverage value for global climate change mitigation efforts from
the steel industry and avoid systems that will not.
Analysis of results for the nine months ended
September 30, 2017 versus results for the nine months ended
September 30, 2016
Total steel shipments for 9M 2017 were 64.2Mt as compared to
63.9Mt for 9M 2016. On a comparable basis, excluding shipments from
assets sold during the comparable period (i.e. sale of long steel
producing subsidiaries in the US (LaPlace and Vinton) and Zaragoza
in Spain), and excluding the impact of the optimization at
Zumarraga in Spain (Europe segment) total steel shipments in 9M
2017 increased 1.6% as compared to 9M 2016.
Sales for 9M 2017 increased by 19.5% to $51.0 billion as
compared with $42.7 billion for 9M 2016, primarily due to higher
average steel selling prices (+20.4%), marginally higher steel
volumes, higher seaborne iron ore reference prices (+35%) and
higher marketable iron ore shipments (+6.8%).
Depreciation of $2.0 billion for 9M 2017 was stable as compared
to 9M 2016. FY 2017 depreciation is expected to be approximately
$2.8 billion.
Impairment charges for 9M 2017 were $46 million related to a
downward revision of cash flow projections in South Africa as
compared to impairment charges for 9M 2016 of $49 million related
to the sale of ArcelorMittal Zaragoza in Spain[3].
Exceptional income for 9M 2017 was nil. Exceptional income for
9M 2016 was $832 million relating to a one-time gain on employee
benefits following the signing of the new US labour
contract[4].
Operating income for 9M 2017 was $4.2 billion as compared to
$3.4 billion for 9M 2016. Operating results for 9M 2016 were
positively impacted by exceptional income as discussed above.
Income from investments in associates, joint ventures and other
investments in 9M 2017 was $323 million as compared to $601 million
in 9M 2016. Income in 9M 2017 includes a gain from disposal of
ArcelorMittal USA's 21% stake in the Empire Iron Mining
Partnership[5] ($133 million) and improved performance of Calvert
and Chinese investees, offset in part by a loss on dilution of the
Company's stake in China Oriental[6] and the recycling of
cumulative foreign exchange translation losses incurred following
disposal of the 50% stake in Kalagadi ($187 million)[7]. Income in
9M 2016 included gains on disposal of Gestamp[8] ($329 million) and
Hunan Valin[9] ($74 million).
Net interest expense was lower at $635 million in 9M 2017, as
compared to $893 million in 9M 2016, driven by debt reduction
including early bond repayments. The Company expects full year 2017
net interest expense of approximately $0.8 billion.
Foreign exchange and other net financing gains were $209 million
for 9M 2017 as compared to losses of $664 million for 9M 2016. The
foreign exchange gain in 9M 2017 is largely non-cash and primarily
relates to the gain from the impact of the USD movements on Euro
denominated deferred tax assets, partially offset by foreign
exchange losses on Euro denominated debt. Foreign exchange and
other net financing gains for 9M 2017 include foreign exchange
gains of $463 million as compared to $124 million in 9M 2016,
mainly on account of USD depreciation of 12% against the Euro
(versus USD depreciation of 2.5% in prior period). 9M 2017 includes
non-cash mark-to-market gains on derivatives (primarily mandatory
convertible bonds call options following the market price increase
in the underlying shares) totalling $0.6 billion in 9M 2017 as
compared to $0.1 billion in 9M 2016. Foreign exchange and other net
financing gains/losses for 9M 2017 and 9M 2016 also includes $377
million and $395 million, respectively, for premium expense on the
early redemption of bonds.
ArcelorMittal recorded an income tax expense of $0.6 billion for
9M 2017 as compared to an income tax expense of $1.0 billion for 9M
2016. The tax expense in 9M 2016 includes derecognition of
deferred tax assets (DTA) amounting to $0.7 billion in Luxembourg
(related to revised expectations of DTA recoverability in US dollar
terms).
ArcelorMittal's net income for 9M 2017 was $3.5 billion, or
$3.46 earnings per share, as compared to net income in 9M 2016 of
$1.4 billion, or $1.48 earnings per share.
Analysis of results for 3Q 2017 versus 2Q
2017 and 3Q 2016
Total steel shipments in 3Q 2017 were 1.0% higher at 21.7Mt as
compared with 21.5Mt for 2Q 2017 primarily due to higher steel
shipments in Brazil (+12.1%), NAFTA (+4.3%) and ACIS (+3.2%),
offset in part by decline in Europe (-3.3%).
On a comparable basis, excluding shipments from assets sold
during the comparable period (i.e. considering the sale of Zaragoza
in Spain), and excluding the impact of the optimization at
Zumarraga in Spain (Europe segment), total steel shipments for 3Q
2017 were 7.5% higher as compared to 3Q 2016, primarily due to
higher steel shipment volumes in NAFTA (+5.4%), Brazil (+6.9%) and
Europe (+9.2%) offset by weaker steel shipment volumes in ACIS
(down -1.3% due to weak South Africa market and lower shipments in
Ukraine).
Sales for 3Q 2017 were $17.6 billion as compared to $17.2
billion for 2Q 2017 and $14.5 billion for 3Q 2016. Sales in 3Q 2017
were 2.3% higher as compared to 2Q 2017, primarily due to higher
steel shipments (+1.0%), higher average steel selling prices
(+1.5%), higher iron ore reference prices (+12.7%) offset in part
by lower market-priced iron ore shipments (-3.9%). Sales in 3Q 2017
were 21.5% higher as compared to 3Q 2016 primarily due to higher
steel shipments (+6.8%), higher average steel selling prices
(+14.8%), higher seaborne iron ore reference prices (21%) and
higher market-priced iron ore shipments (+12.3%).
Depreciation for 3Q 2017 was higher at $690 million as compared
to $676 million for 2Q 2017 and stable as compared to $693 million
in 3Q 2016. Depreciation increased in 3Q 2017 as compared to 2Q
2017, primarily on account of foreign exchange differences
following the depreciation of USD vs major currencies.
Impairment charges for 3Q 2017 and 3Q 2016 were nil. Impairment
charges for 2Q 2017 were $46 million related to a downward revision
of cash flow projections in South Africa.
Operating income for 3Q 2017 was lower at $1.2 billion as
compared to $1.4 billion in 2Q 2017, and stable as compared to 3Q
2016.
Income from associates, joint ventures and other investments for
3Q 2017 was $117 million as compared to $120 million for 2Q 2017
and $109 million in 3Q 2016. Income from associates, joint ventures
and other investments for 3Q 2017 includes the recycling of the
cumulative foreign exchange translation losses following the
disposal of 50% stake in Kalagadi ($187 million) offset by a gain
on disposal of ArcelorMittal USA's 21% stake in the Empire Iron
Mining Partnership ($133 million) and improved performance of
Chinese investees.
Net interest expense in 3Q 2017 was $205 million as compared to
$207 million in 2Q 2017 and $255 million in 3Q 2016. Net interest
expense was lower in 3Q 2017 as compared to 3Q 2016 primarily due
to debt reduction including early bond repayment via debt
tenders.
Foreign exchange and other net financing gains in 3Q 2017 were
$132 million as compared to $210 million for 2Q 2017 and losses of
$223 million in 3Q 2016. For 3Q 2017 a foreign exchange gain of
$181 million was recorded (as compared to a gain of $247 million
for 2Q 2017) mainly on account of a 3.5% depreciation of the USD
against the Euro (versus 6.7% depreciation in 2Q 2017). Both 3Q
2017 and 2Q 2017 include non-cash mark-to-market gains on
derivatives (primarily mandatory convertible bonds call options
following the market price increase in the underlying shares) of
$327 million and $150 million, respectively. 3Q 2017 includes $218
million on premium expenses accrued in connection with the early
repayment of bonds (settled in October 2017). Foreign exchange and
other net financing costs in 3Q 2016 was $223 million and included
a foreign exchange gain of $65 million mainly on account of USD
depreciation of 0.5% against the Euro. 3Q 2016 also includes $158
million on premium expenses accrued on the bond repayments via debt
tenders.
ArcelorMittal recorded an income tax expense of $71 million for
3Q 2017 as compared to $197 million for 2Q 2017 and $146 million in
3Q 2016.
ArcelorMittal recorded net income for 3Q 2017 of $1,205 million,
or $1.18 earnings per share, as compared to net income for 2Q 2017
of $1,322 million, or $1.30 earnings per share, and a net income
for 3Q 2016 of $680 million, or $0.67 earnings per share.
Analysis of segment operations
NAFTA
(USDm) unless otherwise
shown |
3Q
17 |
2Q
17 |
3Q
16 |
9M
17 |
9M
16 |
Sales |
4,636 |
4,607 |
4,269 |
13,701 |
12,011 |
Operating
income |
256 |
378 |
424 |
1,030 |
1,838 |
Depreciation |
(125) |
(128) |
(142) |
(381) |
(412) |
Exceptional income4 |
- |
- |
- |
- |
832 |
EBITDA |
381 |
506 |
566 |
1,411 |
1,418 |
Crude
steel production (kt) |
5,904 |
5,762 |
5,632 |
17,882 |
17,011 |
Steel
shipments (kt) |
5,655 |
5,419 |
5,364 |
16,684 |
16,270 |
Average
steel selling price (US$/t) |
741 |
760 |
715 |
740 |
670 |
NAFTA segment crude steel production increased by 2.5% to 5.9Mt
in 3Q 2017 as compared to 5.8Mt for 2Q 2017 (which was impacted by
planned maintenance).
Steel shipments in 3Q 2017 increased by 4.3% to 5.7Mt as
compared to 5.4Mt in 2Q 2017, driven primarily by an increase in
volumes in Mexico.
Sales in 3Q 2017 were stable at $4.6 billion as compared to 2Q
2017, primarily due to higher steel shipment volumes as discussed
above offset by lower average steel selling prices (-2.5%).
Compared to 2Q 2017, average steel selling prices for flat and long
products declined by -1.8% and -2.2%, respectively.
Operating income in 3Q 2017 decreased to $256 million as
compared to operating income of $378 million in 2Q 2017 and
operating income of $424 million in 3Q 2016.
EBITDA in 3Q 2017 decreased by 24.7% to $381 million as compared
to $506 million in 2Q 2017 primarily due to a negative price-cost
effect, offset in part by higher steel shipment volumes (+4.3%).
EBITDA in 3Q 2017 declined by 32.7% as compared to $566 million in
3Q 2016.
Brazil
(USDm) unless otherwise
shown |
3Q
17 |
2Q
17 |
3Q
16 |
9M
17 |
9M
16 |
Sales |
2,059 |
1,834 |
1,729 |
5,503 |
4,472 |
Operating
income |
128 |
128 |
233 |
431 |
471 |
Depreciation |
(74) |
(73) |
(68) |
(218) |
(188) |
EBITDA |
202 |
201 |
301 |
649 |
659 |
Crude
steel production (kt) |
2,797 |
2,714 |
2,888 |
8,221 |
8,355 |
Steel
shipments (kt) |
2,940 |
2,622 |
2,751 |
7,788 |
7,912 |
Average
steel selling price (US$/t) |
651 |
655 |
582 |
660 |
525 |
Brazil segment crude steel production increased by 3% to 2.8Mt
in 3Q 2017 as compared to 2Q 2017 with improvement in flat
operations partially offset by lower long products production
following planned maintenance at Monlevade, Brazil, which was
completed during the quarter.
Steel shipments in 3Q 2017 increased by 12.1% to 2.9Mt as
compared to 2.6Mt in 2Q 2017, primarily due to a 4.9% increase in
flat product steel shipments and a 25% increase in long product
steel shipments. Both domestic and export steel shipments
increased.
Sales in 3Q 2017 increased by 12.3% to $2.1 billion as compared
to $1.8 billion in 2Q 2017, due to higher steel shipments offset in
part by lower average steel selling prices primarily due to lower
export prices.
Operating income in 3Q 2017 was stable at $128 million as
compared to 2Q 2017, and lower as compared to operating income of
$233 million in 3Q 2016.
EBITDA in 3Q 2017 was stable at $202 million as compared to $201
million in 2Q 2017 due to higher steel shipment volumes offset by
negative price-cost effect (largely due to lower export prices).
EBITDA in 3Q 2017 was 32.7% lower as compared to $301 million in 3Q
2016.
Europe
(USDm) unless otherwise
shown |
3Q
17 |
2Q
17 |
3Q
16 |
9M
17 |
9M
16 |
Sales |
9,196 |
9,180 |
7,172 |
26,598 |
22,133 |
Operating
income |
546 |
652 |
414 |
1,834 |
883 |
Depreciation |
(302) |
(290) |
(303) |
(865) |
(873) |
Impairment |
- |
- |
- |
- |
(49) |
EBITDA |
848 |
942 |
717 |
2,699 |
1,805 |
Crude
steel production (kt) |
11,248 |
10,997 |
10,571 |
33,457 |
32,462 |
Steel
shipments (kt) |
10,116 |
10,466 |
9,382 |
30,790 |
30,712 |
Average
steel selling price (US$/t) |
723 |
698 |
596 |
690 |
561 |
Europe segment crude steel production increased by 2.3% to
11.2Mt in 3Q 2017, as compared to 11.0Mt in 2Q 2017.
Steel shipments in 3Q 2017 decreased by 3.3% to 10.1Mt as
compared to 10.5Mt in 2Q 2017, primarily due to a 5.1% decrease in
flat product shipments offset in part by a 1.4% recovery in long
product shipments. The decline in shipments was notably less than
the typical seasonal effects, reflecting supportive market
conditions.
Sales in 3Q 2017 were $9.2 billion, stable as compared to 2Q
2017, with lower steel shipments being offset by higher US dollar
average steel selling prices (+3.5%). US dollar flat and long
product average steel selling prices increased (by +3.1% and +7.8%,
respectively), but this reflects currency impacts (euro
appreciation versus the US dollar) as average euro steel selling
prices for the Europe segment were lower than the previous
quarter.
Operating income in 3Q 2017 was $546 million as compared to $652
million in 2Q 2017 and $414 million in 3Q 2016.
EBITDA in 3Q 2017 decreased by 9.9% to $848 million as compared
to $942 million in 2Q 2017 primarily due to lower steel volumes and
a negative price-cost effect partially offset by foreign exchange
gains following the appreciation of the Euro. EBITDA in 3Q 2017
improved 18.3% as compared to 3Q 2016 primarily on account of
higher steel shipments (+7.8%) and higher average steel selling
prices (+21.4%).
ACIS
(USDm) unless otherwise
shown |
3Q
17 |
2Q
17 |
3Q
16 |
9M
17 |
9M
16 |
Sales |
1,941 |
1,834 |
1,586 |
5,582 |
4,359 |
Operating
income |
159 |
51 |
156 |
326 |
303 |
Depreciation |
(80) |
(77) |
(77) |
(232) |
(233) |
Impairment |
- |
(46) |
- |
(46) |
- |
EBITDA |
239 |
174 |
233 |
604 |
536 |
Crude
steel production (kt) |
3,669 |
3,685 |
3,552 |
10,846 |
11,146 |
Steel
shipments (kt) |
3,362 |
3,257 |
3,408 |
9,840 |
10,176 |
Average
steel selling price (US$/t) |
515 |
499 |
419 |
505 |
383 |
ACIS segment crude steel production in 3Q 2017 was stable at
3.7Mt as compared to 2Q 2017.
Steel shipments in 3Q 2017 increased by 3.2% to 3.4Mt as
compared to 3.3Mt in 2Q 2017 primarily due to higher steel
shipments in CIS.
Sales in 3Q 2017 increased by 5.8% to $1.9 billion as compared
to 2Q 2017, primarily due to higher steel shipments (+3.2%) and
higher average steel selling prices (+3.3%) primarily in
Ukraine.
Operating income in 3Q 2017 was $159 million as compared to $51
million in 2Q 2017 and $156 million in 3Q 2016. Operating
performance in 2Q 2017 was impacted by impairment charges of $46
million related to a downward revision of cash flow
projections in South Africa.
EBITDA in 3Q 2017 increased 37.5% to $239 million as compared to
$174 million in 2Q 2017, primarily due to improved performance in
CIS (positive price-cost effect) and increased shipment volumes.
EBITDA in 3Q 2017 was 2.7% higher as compared to $233 million in 3Q
2016, primarily due to a positive price-cost effect in CIS offset
in part by a negative price-cost effect in South Africa.
Mining
(USDm) unless otherwise
shown |
3Q
17 |
2Q
17 |
3Q
16 |
9M
17 |
9M
16 |
Sales |
1,029 |
1,015 |
809 |
3,074 |
2,218 |
Operating
income |
238 |
216 |
103 |
832 |
163 |
Depreciation |
(103) |
(103) |
(101) |
(308) |
(302) |
EBITDA |
341 |
319 |
204 |
1,140 |
465 |
|
|
|
|
|
|
Own iron
ore production (a) (Mt) |
14.2 |
14.7 |
13.7 |
42.9 |
41.3 |
Iron ore
shipped externally and internally at market price (b) (Mt) |
9.1 |
9.5 |
8.1 |
27.2 |
25.5 |
Iron ore
shipment - cost plus basis (Mt) |
5.9 |
5.8 |
5.8 |
16.4 |
16.9 |
Own coal
production(a) (Mt) |
1.5 |
1.6 |
1.6 |
4.8 |
4.5 |
Coal
shipped externally and internally at market price(b) (Mt) |
0.6 |
0.8 |
1.0 |
2.2 |
2.5 |
Coal
shipment - cost plus basis (Mt) |
0.9 |
0.9 |
0.9 |
2.7 |
2.5 |
(a) Own iron ore and coal production not including strategic
long-term contracts.(b) Iron ore and coal shipments of
market-priced based materials include the Company's own mines, and
share of production at other mines, and exclude supplies under
strategic long-term contracts.
Own iron ore production in 3Q 2017 decreased by 3.1% to 14.2Mt
as compared to 14.7Mt in 2Q 2017 due to lower production in Canada
and Ukraine (on account of unplanned maintenance), offset in part
by increased production in USA. Own iron ore production in 3Q 2017
increased by 4.2% as compared to 3Q 2016 primarily due to increased
production in Mexico (following restart of Volcan mine in February
2017).
Market-priced iron ore shipments in 3Q 2017 decreased 3.9% to
9.1Mt as compared to 9.5Mt in 2Q 2017, primarily driven by lower
shipments in ArcelorMittal Mines Canada[10] and Ukraine.
Market-priced iron ore shipments in 3Q 2017 increased by 12.3% as
compared to 3Q 2016 driven by increased shipments in Mexico and
Liberia. FY 2017 market-priced iron ore shipments are expected to
increase by approximately 10% versus FY 2016.
Own coal production in 3Q 2017 decreased by 7.2% to 1.5Mt as
compared to 1.6Mt at 2Q 2017 due to lower production in both
Kazakhstan and Princeton (US) mines. Own coal production in 3Q 2017
decreased by 7.2% as compared to 3Q 2016 with lower production in
Kazakhstan offset in part by higher production at Princeton (US)
mines.
Market-priced coal shipments in 3Q 2017 decreased to 0.6Mt as
compared to 0.8Mt in 2Q 2017 primarily due to decreased shipments
at Kazakhstan. Market-priced coal shipments in 3Q 2017 decreased as
compared to 3Q 2016 primarily due to decreased shipments at
Princeton (US) and Kazakhstan.
Operating income in 3Q 2017 increased to $238 million as
compared to $216 million in 2Q 2017, and $103 million in 3Q 2016,
primarily for the reasons discussed below.
EBITDA in 3Q 2017 increased by 7.2% to $341 million as compared
to $319 million in 2Q 2017, primarily due to increased seaborne
iron ore reference prices (+12.7%), partially offset by lower
market-priced iron ore shipments (-3.9%) and lower coal shipments.
EBITDA in 3Q 2017 was significantly higher as compared to $204
million in 3Q 2016, primarily due to higher seaborne iron ore
reference prices (+21%) and higher market-priced iron ore shipment
volumes (+12.3%).
Liquidity and Capital Resources
For 3Q 2017, net cash provided by operating activities was $763
million as compared to $1,214 million in 2Q 2017 and $876 million
in 3Q 2016. The lower net cash provided by operating activities
during 3Q 2017 reflects in part a higher working capital investment
of $801 million, as compared to an investment of $548 million in 2Q
2017 and $565 million in 3Q 2016.
Net cash used in investing activities during 3Q 2017 was $563
million as compared to $738 million during 2Q 2017 and compared to
$300 million in 3Q 2016. Capital expenditure increased to $637
million in 3Q 2017 as compared to $566 million in 2Q 2017 and
compared to $535 million in 3Q 2016. FY 2017 capital expenditure is
expected to be $2.9 billion.
Cash provided by other investing activities in 3Q 2017 of $74
million primarily includes the first instalment of disposal
proceeds from ArcelorMittal USA's 21% stake in the Empire Iron
Mining Partnership ($44 million). Cash used in other investing
activities in 2Q 2017 of $172 million, includes $44 million cash
consideration (net of cash acquired of $14 million) for the
acquisition of a 55.5% stake in Bekaert Sumare (a tire cord
manufacturer in Brazil) and $110 million deposited in a restricted
cash account in ArcelorMittal South Africa in connection with
various environmental obligations and true sale of receivable
programs. Cash provided by other investing activities in 3Q 2016 of
$235 million primarily consisted of proceeds from the sale of
ArcelorMittal's stake in Hunan Valin ($165 million) and from the
sale of ArcelorMittal Zaragoza ($89 million)3.
Net cash provided by financing activities in 3Q 2017 was $514
million as compared to net cash used in financing activities for 2Q
2017 of $744 million and $741 million for 3Q 2016. Net cash
provided by financing activities in 3Q 2017 includes borrowings and
commercial paper, offset in part by a $0.5 billion repayment of
drawings under the asset-based revolving credit facility at
ArcelorMittal USA. Net cash used in financing activities for 2Q
2017 primarily included $851 million used to early redeem the 9.85%
Notes due June 1, 2019. On May 25, 2017, ArcelorMittal South Africa
signed a 4.5 billion South African Rand (approximately $350
million) revolving borrowing base finance facility maturing on May
25, 2020. As of September 30, 2017, $288 million was drawn under
this facility. Net cash used in financing activities for 3Q 2016
primarily includes payments relating to bond repurchases pursuant
to cash tender offers ($1.4 billion), offset by proceeds of $1.0
billion from drawings under other short-term facilities (including
$0.5 billion from the asset-based revolving credit facility at
ArcelorMittal USA which matures in 2021). During 3Q 2017, the
Company paid dividends of $80 million primarily to minority
shareholders in ArcelorMittal Mines Canada and in Bekaert
(Brazil).
As of September 30, 2017, the Company's cash and cash
equivalents amounted to $3.0 billion as compared to $2.3 billion at
June 30, 2017 and $2.3 billion at September 30, 2016. Gross debt
increased to $14.9 billion as of September 30, 2017, as compared to
$14.2 billion at June 30, 2017 and $14.4 billion at September 30,
2016. The amount as of September 30, 2017 does not reflect the
usage of cash to repurchase bonds on October 16, 2017.
As of September 30, 2017, net debt increased to $12.0 billion as
compared with $11.9 billion at June 30, 2017 primarily due to
negative foreign exchange impacts on Euro-denominated debt ($0.2
billion) offset in part by positive free cashflow $0.1 billion
(despite a $0.8 billion investment in working capital), and lower
than the net debt of $12.2 billion as of September 30, 2016 due to
positive free cash flow offsetting $0.3 billion foreign exchange
impacts.
As of September 30, 2017, the Company had liquidity of $8.5
billion, consisting of cash and cash equivalents of $3.0 billion
and $5.5 billion of available credit lines[11]. The $5.5 billion
credit facility contains a financial covenant of 4.25x Net debt /
EBITDA (as defined in the facility). On September 30, 2017, the
average debt maturity was 4.7 years.
Key recent developments
- On November 8, 2017, ArcelorMittal confirmed that the European
Commission had initiated a Phase II review of AM Investco Italy Srl
('AM Investco')'s proposed acquisition of Ilva S.p.A. ArcelorMittal
will continue to work closely and constructively with the European
Commission to explain the dynamics of the steel industry, the
rationale of the proposed acquisition and the benefits it will
bring to industry, customers, the environment and the local
economy. The Company looks forward to ongoing dialogue with the
Commission to secure approval for this transaction in a timely
manner. ArcelorMittal notified AM Investco's proposed acquisition
of Ilva S.p.A to the European Commission on September 21, 2017, and
submitted commitments on October 19, 2017. AM Investco reached a
binding agreement concerning the lease and obligation to purchase
Ilva S.p.A and its subsidiaries with the Italian Government in June
2017.
- On September 28, 2017, ArcelorMittal announced the launch of
its tender offers to purchase for cash, for a combined aggregate
purchase price of up to $1,250,000,000 (the "Maximum Tender Cap"),
its outstanding 6.250% notes due 2022, 7.000% notes due 2039 and
6.750% notes due 2041. On October 13, 2017, the Company announced
its decision to increase the Maximum Tender Cap to $1,410,627,664
so as to avoid proration of any series of validly tendered Notes:
the Company repurchased notes in such amount on October 16, 2017,
using $1.4 billion of cash and liquidity resources.
- On September 28, 2017, ArcelorMittal announced a major US$1
billion, three-year investment programme at its Mexican operations,
which is focussed on building ArcelorMittal Mexico's downstream
capabilities, sustaining the competitiveness of its mining
operations and modernising its existing asset base. The programme
is designed to enable ArcelorMittal Mexico to meet the anticipated
increased demand requirements from domestic customers, realise in
full ArcelorMittal Mexico's production capacity of 5.3 million
tonnes and significantly enhance the proportion of higher-value
added products in its product mix, in-line with the Company's
Action 2020 strategic plan. The main investment will be the
construction of a new hot strip mill. Construction will take
approximately three years and, upon completion, will enable
ArcelorMittal Mexico to produce c. 2.5 million tonnes of flat
rolled steel, long steel c. 1.8 million tonnes and the remainder
made up of semi-finished slabs. Coils from the new hot strip mill
will be supplied to domestic, non-auto, general industry customers.
- On August 25, 2017, ArcelorMittal completed the sale (per a
sales agreement entered into in October 2016) of its 50%
shareholding in Kalagadi Manganese (Proprietary) Limited to
Kgalagadi Alloys (Proprietary) Limited for consideration to be paid
during the life of the mine, which is contingent on the financial
performance of the mine and cash flow availability.
- On August 7, 2017, ArcelorMittal USA and Cliffs Natural
Resources ("Cliffs") agreed that Cliffs would acquire ArcelorMittal
USA's 21% ownership interest in the Empire Iron Mining Partnership
for $133 million plus assumptions of all partnership liabilities.
The payment of $133 million will be made in 3 equal installments
with the first payment of $44 million received in August 2017, and
two subsequent payments to be received in August 2018 and
2019.
Outlook and guidance
The Company's forecasts for global apparent steel consumption
("ASC") remain as presented at the time of 2Q 2017 results with the
balance of risks now to the upside.
ArcelorMittal expects 2017 global ASC to grow by approximately
+2.5% to +3.0%. By region: ASC in the US (excluding Pipe &
Tube) is expected to grow +2.0% to +3.0% reflecting higher
machinery and construction demand offset by lower automotive
production. In Europe, ArcelorMittal expects the pick-up in
underlying demand to continue, driven primarily by the strength of
the construction and machinery markets, and apparent demand is
expected at +0.5% to +1.5% in 2017 on top of around 3% growth in
2016. In Brazil, ASC is expected to grow by +2.0% to +3.0% in
2017 as the continued weakness in construction is partially offset
by mild improvement in consumer confidence and automotive
demand. In the CIS, ASC is expected to grow +2.0% to +2.5%
reflecting stronger economic growth in Russia. In China, ASC growth
of +2.5% to +3.5% is expected in 2017, primarily due to strength in
automotive and machinery.
Market conditions are favourable. The demand environment remains
positive (as evidenced by the continued high readings from the
ArcelorMittal weighted PMI), and steel spreads remain healthy.
The Company continues to expect cash needs of the business
(capex, interest expense, cash taxes, pensions and other cash costs
but excludes working capital investment and premiums paid to retire
debt early) to be approximately $4.6 billion in 2017.
Given the improved market conditions, the Company now expects a
full year 2017 investment in working capital of approximately $2.0
billion (as compared to previous guidance of approximately $1.5
billion).
ArcelorMittal Condensed Consolidated Statement of Financial
Position1
|
|
|
Sep
30, |
Jun
30, |
Dec
31, |
In
millions of U.S. dollars |
|
|
2017 |
2017 |
2016 |
ASSETS |
|
|
|
|
|
Cash and cash equivalents (C) |
|
|
2,978 |
2,272 |
2,615 |
Trade accounts receivable and other |
|
|
4,443 |
4,263 |
2,974 |
Inventories |
|
|
17,780 |
17,458 |
14,734 |
Prepaid expenses and other current assets |
|
|
2,719 |
2,286 |
1,665 |
Assets held for sale[12] |
|
|
127 |
127 |
259 |
Total Current Assets |
|
|
28,047 |
26,406 |
22,247 |
|
|
|
|
|
|
Goodwill and intangible assets |
|
|
5,856 |
5,769 |
5,651 |
Property, plant and equipment |
|
|
36,471 |
35,765 |
34,831 |
Investments in associates and joint ventures |
|
|
4,943 |
4,679 |
4,297 |
Deferred tax assets |
|
|
6,697 |
6,470 |
5,837 |
Other assets |
|
|
2,498 |
2,371 |
2,279 |
Total Assets |
|
|
84,512 |
81,460 |
75,142 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Short-term debt and current portion of long-term debt
(B) |
|
|
5,764 |
3,936 |
1,885 |
Trade accounts payable and other |
|
|
12,074 |
12,555 |
11,633 |
Accrued expenses and other current liabilities |
|
|
5,229 |
4,930 |
4,502 |
Liabilities held for sale12 |
|
|
40 |
39 |
95 |
Total Current Liabilities |
|
|
23,107 |
21,460 |
18,115 |
|
|
|
|
|
|
Long-term debt, net of current portion (A) |
|
|
9,185 |
10,220 |
11,789 |
Deferred tax liabilities |
|
|
2,713 |
2,690 |
2,529 |
Other long-term liabilities |
|
|
10,966 |
10,838 |
10,384 |
Total Liabilities |
|
|
45,971 |
45,208 |
42,817 |
|
|
|
|
|
|
Equity attributable to the equity holders of the
parent |
|
|
36,374 |
34,027 |
30,135 |
Non-controlling interests |
|
|
2,167 |
2,225 |
2,190 |
Total Equity |
|
|
38,541 |
36,252 |
32,325 |
Total Liabilities and Shareholders' Equity |
|
|
84,512 |
81,460 |
75,142 |
|
|
|
|
|
|
Net Debt (D=A+B-C) |
|
|
11,971 |
11,884 |
11,059 |
ArcelorMittal Condensed Consolidated Statement of
Operations1
|
Three months ended |
Nine months ended |
In
millions of U.S. dollars unless otherwise shown |
Sept 30, 2017 |
Jun 30, 2017 |
Sept 30, 2016 |
Sept 30, 2017 |
Sept 30, 2016 |
Sales |
17,639 |
17,244 |
14,523 |
50,969 |
42,665 |
Depreciation (B) |
(690) |
(676) |
(693) |
(2,021) |
(2,025) |
Impairment (B) |
- |
(46) |
- |
(46) |
(49) |
Exceptional income4 (B) |
- |
- |
- |
- |
832 |
Operating income (A) |
1,234 |
1,390 |
1,204 |
4,200 |
3,352 |
Operating
margin % |
7.0% |
8.1% |
8.3% |
8.2% |
7.9% |
|
|
|
|
|
|
Income
from associates, joint ventures and other investments |
117 |
120 |
109 |
323 |
601 |
Net
interest expense |
(205) |
(207) |
(255) |
(635) |
(893) |
Foreign
exchange and other net financing gain/(loss) |
132 |
210 |
(223) |
209 |
(664) |
Income
before taxes and non-controlling interests |
1,278 |
1,513 |
835 |
4,097 |
2,396 |
Current tax expense |
(116) |
(126) |
(67) |
(449) |
(174) |
Deferred tax benefit / (expense) |
45 |
(71) |
(79) |
(102) |
(825) |
Income
tax expense |
(71) |
(197) |
(146) |
(551) |
(999) |
Income
including non-controlling interests |
1,207 |
1,316 |
689 |
3,546 |
1,397 |
Non-controlling interests (income) / loss |
(2) |
6 |
(9) |
(17) |
(21) |
Net
income attributable to equity holders of the parent |
1,205 |
1,322 |
680 |
3,529 |
1,376 |
|
|
|
|
|
|
Basic
earnings per common share ($)2 |
1.18 |
1.30 |
0.67 |
3.46 |
1.48 |
Diluted
earnings per common share ($)2 |
1.18 |
1.29 |
0.67 |
3.45 |
1.48 |
|
|
|
|
|
|
Weighted average common shares outstanding (in millions)2 |
1,020 |
1,020 |
1,020 |
1,020 |
931 |
Diluted
weighted average common shares outstanding (in millions)2 |
1,023 |
1,023 |
1,021 |
1,023 |
932 |
|
|
|
|
|
|
OTHER
INFORMATION |
|
|
|
|
|
EBITDA (C
= A-B) |
1,924 |
2,112 |
1,897 |
6,267 |
4,594 |
EBITDA
Margin % |
10.9% |
12.2% |
13.1% |
12.3% |
10.8% |
|
|
|
|
|
|
Own iron
ore production (Mt) |
14.2 |
14.7 |
13.7 |
42.9 |
41.3 |
Crude
steel production (Mt) |
23.6 |
23.2 |
22.6 |
70.4 |
69.0 |
Total
shipments of steel products (Mt) |
21.7 |
21.5 |
20.3 |
64.2 |
63.9 |
ArcelorMittal Condensed Consolidated Statement of Cash
flows1
|
Three months ended |
Nine months ended |
In
millions of U.S. dollars |
Sept 30, 2017 |
Jun 30, 2017 |
Sept 30, 2016 |
Sept 30, 2017 |
Sept 30, 2016 |
Operating activities: |
|
|
|
|
|
Income
attributable to equity holders of the parent |
1,205 |
1,322 |
680 |
3,529 |
1,376 |
Adjustments to reconcile net income to net cash (used in) /
provided by operations: |
|
|
|
|
|
Non-controlling interest's income / (loss) |
2 |
(6) |
9 |
17 |
21 |
Depreciation and impairment |
690 |
722 |
693 |
2,067 |
2,074 |
Exceptional income4 |
- |
- |
- |
- |
(832) |
Income
from associates, joint ventures and other investments |
(117) |
(120) |
(109) |
(323) |
(601) |
Deferred
tax (benefit)/ expense |
(45) |
71 |
79 |
102 |
825 |
Change in
working capital |
(801) |
(548) |
(565) |
(3,530) |
(1,518) |
Other
operating activities (net) |
(171) |
(227) |
89 |
(184) |
(290) |
Net
cash provided by operating activities (A) |
763 |
1,214 |
876 |
1,678 |
1,055 |
Investing activities: |
|
|
|
|
|
Purchase
of property, plant and equipment and intangibles (B) |
(637) |
(566) |
(535) |
(1,783) |
(1,642) |
Other
investing activities (net) |
74 |
(172) |
235 |
(116) |
1,308 |
Net
cash used in investing activities |
(563) |
(738) |
(300) |
(1,899) |
(334) |
Financing activities: |
|
|
|
|
|
Net
proceeds / (payments) relating to payable to banks and long-term
debt |
587 |
(726) |
(717) |
604 |
(5,557) |
Dividends
paid |
(80) |
- |
(7) |
(120) |
(54) |
Equity
offering |
- |
- |
- |
- |
3,115 |
Other
financing activities (net) |
7 |
(18) |
(17) |
(48) |
38 |
Net
cash provided by / (used in) financing activities |
514 |
(744) |
(741) |
436 |
(2,458) |
Net
decrease in cash and cash equivalents |
714 |
(268) |
(165) |
215 |
(1,737) |
Cash and
cash equivalents transferred from assets held for sale |
- |
- |
- |
13 |
- |
Effect of
exchange rate changes on cash |
9 |
30 |
29 |
42 |
(112) |
Change
in cash and cash equivalents |
723 |
(238) |
(136) |
270 |
(1,849) |
|
|
|
|
|
|
Free
cashflow (C=A+B) |
126 |
648 |
341 |
(105) |
(587) |
Appendix 1: Product shipments by region
(000'kt) |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
Flat |
4,820 |
4,748 |
4,698 |
14,512 |
13,906 |
Long |
984 |
845 |
829 |
2,658 |
2,830 |
NAFTA |
5,655 |
5,419 |
5,364 |
16,684 |
16,270 |
Flat |
1,766 |
1,682 |
1,730 |
4,812 |
4,812 |
Long |
1,181 |
945 |
1,026 |
2,992 |
3,100 |
Brazil |
2,940 |
2,622 |
2,751 |
7,788 |
7,912 |
Flat |
7,098 |
7,482 |
6,562 |
21,957 |
21,430 |
Long |
2,954 |
2,913 |
2,767 |
8,673 |
9,147 |
Europe |
10,116 |
10,466 |
9,382 |
30,790 |
30,712 |
CIS |
2,297 |
2,212 |
2,459 |
6,628 |
6,983 |
Africa |
1,065 |
1,045 |
950 |
3,212 |
3,192 |
ACIS |
3,362 |
3,257 |
3,408 |
9,840 |
10,176 |
Note: "Others and eliminations" lines are not presented in the
table
Appendix 2a: Capital expenditures
(USDm) |
3Q 17 |
2Q 17 |
3Q 16 |
9M 17 |
9M 16 |
NAFTA |
95 |
90 |
98 |
282 |
307 |
Brazil |
79 |
55 |
44 |
191 |
156 |
Europe |
213 |
248 |
171 |
713 |
638 |
ACIS |
114 |
75 |
105 |
262 |
269 |
Mining |
132 |
94 |
113 |
316 |
255 |
Total |
637 |
566 |
535 |
1,783 |
1,642 |
Note: "Others and eliminations" are not
presented in the table
Appendix 2b: Capital expenditure projects
The following tables summarize the Company's principal growth
and optimization projects involving significant capital
expenditures.
Completed projects in most recent
quarters
Segment |
Site / unit |
Project |
Capacity / details |
Actual completion |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
New caster at No.3 Steelshop installed |
4Q
2016(a) |
NAFTA |
AM/NS Calvert |
Phase 2: Slab yard expansion (Bay 5) |
Increase coil production level from 4.6Mt/year to 5.3Mt/year
coils |
2Q
2017 |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Phase 2: Convert the current galvanizing line #4 to a Galvalume
line |
Allow the galvaline #4 to produce 160kt galvalume and 128kt
galvanize and closure of galvanize line #1 (capacity 170kt of
galvalume) |
2Q
2017 |
Europe |
ArcelorMittal Krakow (Poland) |
Hot strip mill (HSM) extension |
Increase hot rolled coil (HRC) capacity by 0.9Mt/year |
2Q
2017 |
Europe |
ArcelorMittal Krakow (Poland) |
Hot dipped galvanizing (HDG) increase |
Increasing HDG capacity by 0.4Mt/year |
2Q
2017 |
Ongoing projects
Segment |
Site / unit |
Project |
Capacity / details |
Forecast completion |
Europe |
Gent & Liège (Europe Flat Automotive UHSS Program) |
Gent: Upgrade HSM and new furnaceLiège: Annealing line
transformation |
Increase ~400kt in Ultra High Strength Steel capabilities |
1Q
2018 |
Europe |
ArcelorMittal Differdange |
Modernisation of finishing of "Grey rolling mill" |
Revamp finishing to achieve full capacity of Grey mill at
850kt/y |
1Q
2018 |
ACIS |
ArcelorMittal Kryvyi Rih |
New LF&CC 2&3 |
Facilities upgrade to switch from ingot to continuous caster route.
Additional billets of 290kt over ingot route through yield
increase |
4Q
2018 |
NAFTA |
Indiana Harbor |
Indiana Harbor "footprint optimization project" |
Restoration of 80" HSM and upgrades at Indiana Harbor finishing and
logistics |
2018(a) |
Europe |
Sosnowiec (Poland) |
Modernization of Wire Rod Mill |
Upgrade rolling technology improving the mix of HAV products and
increase volume by 90kt |
2019 |
NAFTA |
Mexico |
Build new HSM |
Production capacity of 2.5Mt/year |
2020(b) |
NAFTA |
Burns Harbor |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped galvanizing (HDG) capacity by 0.6Mt/year and
cold rolling (CR) capacity by 0.7Mt/year |
On
hold |
Brazil |
Juiz de Fora |
Meltshop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On
hold(c) |
Brazil |
Monlevade |
Sinter plant, blast furnace and meltshop |
Increase in liquid steel capacity by 1.2Mt/year;Sinter feed
capacity of 2.3Mt/year |
On
hold |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(d) |
a) In support of
the Company's Action 2020 program that was launched at its fourth
quarter and full-year 2015 earnings announcement, the footprint
optimization project at ArcelorMittal Indiana Harbor is now
underway, which has resulted in structural changes required to
improve asset and cost optimization. The plan involves idling
redundant operations including the #1 aluminize line, 84" hot strip
mill (HSM), and #5 continuous galvanizing line (CGL) and No.2 steel
shop (idled in 2Q 2017) whilst making further planned investments
totalling ~$200 million including a new caster at No.3 steelshop
(completed in 4Q 2016), restoration of the 80" hot strip mill,
logistics and Indiana Harbor finishing are ongoing. The full
project scope is expected to be completed in 2018.
b) On September
28, 2017, ArcelorMittal announced a major US$1 billion, three-year
investment programme at its Mexican operations, which is focussed
on building ArcelorMittal Mexico's downstream capabilities,
sustaining the competitiveness of its mining operations and
modernising its existing asset base. The programme is designed to
enable ArcelorMittal Mexico to meet the anticipated increased
demand requirements from domestic customers, realise in full
ArcelorMittal Mexico's production capacity of 5.3 million tonnes
and significantly enhance the proportion of higher-value added
products in its product mix, in-line with the Company's Action 2020
strategic plan. The main investment will be the construction of a
new hot strip mill. Construction will take approximately three
years and, upon completion, will enable ArcelorMittal Mexico to
produce c. 2.5 million tonnes of flat rolled steel, long steel c.
1.8 million tonnes and the remainder made up of semi-finished
slabs. Coils from the new hot strip mill will be supplied to
domestic, non-auto, general industry customers.
c) Although the
Monlevade wire rod expansion project and Juiz de Fora rebar
expansion were completed in 2015, the Juiz de Fora melt shop
project is currently on hold and is expected to be completed
upon Brazil domestic market recovery, and the Company does not
expect to increase shipments until domestic demand improves.
d) ArcelorMittal
Liberia is moving ore extraction from its depleting DSO (direct
shipping ore) deposit at Tokadeh to the nearby, low strip ratio and
higher-grade DSO Gangra deposit where planned ramp up is underway.
Following a period of exploration cessation caused by the onset of
Ebola, ArcelorMittal Liberia recommenced drilling for DSO resource
extensions in late 2015. During 2016, the operation at Tokadeh was
right-sized to focus on its "natural" Atlantic markets. The nearby
Gangra deposit is now the next development in a staged approach as
opposed to the originally planned phase 2 step up to 15Mtpa of
concentrate sinter fine ore product that was delayed in August 2014
due to the declaration of force majeure by contractors following
the Ebola virus outbreak, and then reassessed following rapid iron
ore price declines over the period since. The Gangra mine, haul
road and related existing plant and equipment upgrades are nearing
completion. ArcelorMittal remains committed to Liberia where it
operates a full value chain of mine, rail and port and where
it has been operating the mine on a DSO basis since 2011.
The Company believes that ArcelorMittal Liberia presents a strong,
competitive source of product ore for the international market
based on continuing DSO mining and then moving to a long-term
sinter feed concentration phase.
Appendix 3: Debt repayment schedule as of September
30, 2017
Debt repayment schedule (USD billion) |
2017 |
2018 |
2019 |
2020 |
2021 |
>2021 |
Total |
Bonds* |
1.8 |
1.5 |
0.9 |
1.9 |
1.3 |
3.7 |
11.1 |
Commercial paper |
0.7 |
0.4 |
- |
- |
- |
- |
1.1 |
Other
loans |
1.0 |
0.4 |
0.3 |
0.2 |
0.2 |
0.6 |
2.7 |
Total
gross debt |
3.5 |
2.3 |
1.2 |
2.1 |
1.5 |
4.3 |
14.9 |
*The 2017 maturities include $1.2 billion of bonds originally
maturing in 2022, 2039 and 2041 that were repurchased on October
16, 2017.
Appendix 4: Terms and definitions
Unless indicated otherwise, or the context otherwise requires,
references in this earnings release report to the following terms
have the meanings set out next to them below:
Average steel selling prices: calculated as steel sales
divided by steel shipments.Cash and cash equivalents:
represents cash and cash equivalents, restricted cash and
short-term investments.Capex: includes the acquisition of
tangible and intangible assets. EBITDA: operating income
plus depreciation, impairment expenses and exceptional
income/(charges).EBITDA/tonne: calculated as EBITDA divided
by total steel shipments.Exceptional income / (charges):
relate to transactions that are significant, infrequent or unusual
and are not representative of the normal course of business such as
restructuring costs or asset disposals.Foreign exchange and
other net financing (loss) / gain: include foreign currency
exchange impact, bank fees, interest on pensions, impairments of
financial instruments, revaluation of derivative instruments and
other charges that cannot be directly linked to operating results.
Free cash flow: Refers to net cash provided by (used in)
operating activities less capex. Gross debt: long-term debt,
plus short-term debt (including those held as part of liabilities
held for sale).Iron ore unit cash cost: includes weighted
average pellet and concentrate cost of goods sold across all
mines.Liquidity: Cash and cash equivalents plus available
credit lines excluding back-up lines for the commercial paper
program.LTIF: lost time injury frequency rate equals lost
time injuries per 1,000,000 worked hours, based on own personnel
and contractors.MT: Refers to million metric
tonnesMarket-priced tonnes: represent amounts of iron ore
and coal from ArcelorMittal mines that could be sold to third
parties on the open market. Market-priced tonnes that are not sold
to third parties are transferred from the Mining segment to the
Company's steel producing segments and reported at the prevailing
market price. Shipments of raw materials that do not constitute
market-priced tonnes are transferred internally and reported on a
cost-plus basis.Mining segment sales: i) "External sales":
mined product sold to third parties at market price; ii)
"Market-priced tonnes": internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) "Cost-plus tonnes" - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market). Net debt: long-term debt, plus
short-term debt less cash and cash equivalents.Net
debt/EBITDA: Refers to Net debt divided by last twelve months
EBITDA calculation.Net interest: includes interest expense
and interest incomeOn-going projects: Refer to projects for
which construction has begun (excluding various projects that are
under development), even if such projects have been placed on hold
pending improved operating conditions.Operating results:
Refers to operating income/(loss).Operating segments: The
NAFTA segment includes the Flat, Long and Tubular operations of
USA, Canada and Mexico. The Brazil segment includes the Flat
operations of Brazil, and the Long and Tubular operations of Brazil
and its neighboring countries including Argentina, Costa Rica and
Venezuela. The Europe segment comprises the Flat, Long and Tubular
operations of the European business, as well as Downstream
Solutions. The ACIS segment includes the Flat, Long and Tubular
operations of Kazakhstan, Ukraine and South Africa. Own iron ore
production: Includes total of all finished production of fines,
concentrate, pellets and lumps (excludes share of production and
strategic long-term contracts).PMI: Refers to purchasing
managers index (based on ArcelorMittal estimates)Seaborne
iron ore reference prices: refers to iron ore prices for 62% Fe
CFR China.Shipments: information at segment and group level
eliminates intra-segment shipments (which are primarily between
Flat/Long plants and Tubular plants) and inter-segment shipments
respectively. Shipments of Downstream Solutions are
excluded.Steel-only EBITDA: calculated as EBITDA less Mining
segment EBITDA. Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.Working
capital: trade accounts receivable plus inventories less trade
and other accounts payable.YoY: Refers to year-on-year.
[1] The financial information in this press release has been
prepared consistently with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") and as adopted by the European Union. The
interim financial information included in this announcement has
been also prepared in accordance with IFRS applicable to interim
periods, however this announcement does not contain sufficient
information to constitute an interim financial report as defined in
International Accounting Standard 34, "Interim Financial
Reporting". The numbers in this press release have not been
audited. The financial information and certain other information
presented in a number of tables in this press release have been
rounded to the nearest whole number or the nearest decimal.
Therefore, the sum of the numbers in a column may not conform
exactly to the total figure given for that column. In addition,
certain percentages presented in the tables in this press release
reflect calculations based upon the underlying information prior to
rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. This press release also includes
certain non-GAAP financial measures. ArcelorMittal presents EBITDA,
and EBITDA/tonne, which are non-GAAP financial measures and defined
in the Condensed Consolidated Statement of Operations, as
additional measurements to enhance the understanding of operating
performance. ArcelorMittal believes such indicators are relevant to
describe trends relating to cash generating activity and provides
management and investors with additional information for comparison
of the Company's operating results to the operating results of
other companies. ArcelorMittal also presents net debt as an
additional measurement to enhance the understanding of its
financial position, changes to its capital structure and its credit
assessment. ArcelorMittal also presents free cash flow, which is a
non-GAAP financial measure defined in Condensed Consolidated
Statement of Cashflows, because it believes it is a useful
supplemental measure for evaluating the strength of its cash
generating capacity. Non-GAAP financial measures should be read in
conjunction with and not as an alternative for, ArcelorMittal's
financial information prepared in accordance with IFRS. Such
non-GAAP measures may not be comparable to similarly titled
measures applied by other companies.
[2] At the Extraordinary General Meeting held on May 10, 2017,
the ArcelorMittal Shareholders approved a share consolidation based
on a ratio 1:3, whereby every three current shares are consolidated
into one share (with a change in the number of shares outstanding
and the accounting par value per share). The figures presented for
the basic and diluted earnings per share reflect this change.
[3] On July 28, 2016, ArcelorMittal and Megasa Siderúgica S.L.
("Megasa") signed a shares sale and purchase agreement in respect
of ArcelorMittal's 100% interest in ArcelorMittal Zaragoza ("AM
Zaragoza"). The closing conditions were completed on September 30,
2016. As a result, ArcelorMittal transferred its shareholding in AM
Zaragoza to Megasa and simultaneously received the total cash
consideration of €80 million ($89 million). The cash consideration
has been calculated on a cash and debt free basis.
[4] On June 23, 2016, following the ratification by the United
Steelworkers of a new labor agreement which is valid until
September 1, 2018, ArcelorMittal made changes mainly to healthcare
post-retirement benefits in its subsidiary ArcelorMittal USA
(NAFTA). The changes resulted in a gain of $832 million recorded in
2Q 2016.
[5] On August 7, 2017, ArcelorMittal USA and Cliffs Natural
Resources ("Cliffs") agreed that Cliffs would acquire ArcelorMittal
USA's 21% ownership interest in the Empire Iron Mining Partnership
for $133 million plus assumptions of all partnership liabilities.
The payment of $133 million will be made in 3 equal installments
with the first payment of $44 million received in August 2017, and
two subsequent payments to be received in August 2018 and 2019.
[6] On January 27, 2017 China Oriental completed a share
placement to restore the minimum 25% free float as per HKEx listing
requirements. Following the share placement, ArcelorMittal's
interest in China Oriental decreased from 47% to 39%, as a result
of which ArcelorMittal recorded a net dilution loss of $44
million.
[7] On August 25, 2017, following a sales agreement signed on
October 21, 2016, ArcelorMittal completed the sale of its 50%
shareholding in Kalagadi Manganese (Proprietary) Limited to
Kgalagadi Alloys (Proprietary) Limited for consideration to be paid
during the life of the mine, which is contingent on the financial
performance of the mine and cash flow availability. The investment
classified as held for sale as of December 31, 2016 had a nil
carrying amount as it was fully impaired in 2015 but the Company
recycled upon disposal accumulated foreign exchange translation
losses of $187 million in income from associates, joint ventures
and other investments.
[8] On February 5, 2016 ArcelorMittal announced it had sold its
35% stake in Gestamp Automoción ("Gestamp") to the majority
shareholder, the Riberas family, for a total cash consideration of
€875 million ($971 million). In addition to the cash consideration,
ArcelorMittal received in 2Q 2016 a payment of $11 million as a
2015 dividend. ArcelorMittal continues its supply relationship with
Gestamp through its 35% shareholding in Gonvarri, a sister company
of Gestamp. ArcelorMittal sells coils to Gonvarri for processing
before being passed to Gestamp and other customers. Further,
ArcelorMittal continues to have a board presence in Gestamp,
collaborates in automotive R&D and remains its major steel
supplier.
[9] On August 2, 2016, the Company signed an agreement for the
sale of its 10.08% interest in Hunan Valin to a private equity
fund. On September 14, 2016, the Company transferred the Hunan
Valin shares and simultaneously received the full proceeds of $165
million (RMB1,103 million) from the buyer and recorded a gain of
$74 million.
[10] ArcelorMittal Mines Canada, otherwise known as
ArcelorMittal Mines and Infrastructure Canada.
[11] On December 21, 2016, ArcelorMittal signed an agreement for
a $5.5 billion revolving credit facility (the "Facility"). This
Facility amends and restates the $6 billion revolving credit
facility dated April 30, 2015. The amended agreement incorporates a
first tranche of $2.3 billion maturing on December 21, 2019, and a
second tranche of $3.2 billion maturing on December 21, 2021. The
Facility may be used for general corporate purposes. As of
September 30, 2017, the $5.5 billion revolving credit facility
remains fully available.
[12] Assets and liabilities held for sale, as of September 30,
2017, and as of June 30, 2017, primarily include the carrying value
of the USA long product facilities at Steelton ("Steelton"). Assets
and liabilities held for sale as of December 31, 2016, include the
carrying value of Steelton and some activities of ArcelorMittal
Downstream Solutions in the Europe segment and America's Tailored
Blanks.
Third quarter 2017 earnings analyst conference
callArcelorMittal will host a conference call hosted by Heads
of Finance and Investor Relations for members of the investment
community to discuss the three-month period ended September 30,
2017 on: Friday November 10, 2017 at 9.30am US Eastern time; 2.30pm
London time and 3.30pm CET.
The dial in numbers are: |
|
|
Location |
Toll free
dial in numbers |
Local
dial in numbers |
Participant |
UK
local: |
0800 0515
931 |
+44
(0)203 364 5807 |
75635458# |
US
local: |
1 86 6719
2729 |
+1 24
0645 0345 |
75635458# |
US (New
York): |
1 86 6719
2729 |
+ 1 64
6663 7901 |
75635458# |
France: |
0800
914780 |
+33 1
7071 2916 |
75635458# |
Germany: |
0800 965
6288 |
+49 692
7134 0801 |
75635458# |
Spain: |
90 099
4930 |
+34 911
143436 |
75635458# |
Luxembourg: |
800
26908 |
+352 27
86 05 07 |
75635458# |
A replay of
the conference call will be available for one week by dialing: +49
(0) 1805 2047 088; Access code 515139# |
Forward-Looking StatementsThis document may contain
forward-looking information and statements about ArcelorMittal and
its subsidiaries. These statements include financial projections
and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, products and services, and statements regarding future
performance. Forward-looking statements may be identified by the
words "believe", "expect", "anticipate", "target" or similar
expressions. Although ArcelorMittal's management believes that the
expectations reflected in such forward-looking statements are
reasonable, investors and holders of ArcelorMittal's securities are
cautioned that forward-looking information and statements are
subject to numerous risks and uncertainties, many of which are
difficult to predict and generally beyond the control of
ArcelorMittal, that could cause actual results and developments to
differ materially and adversely from those expressed in, or implied
or projected by, the forward-looking information and statements.
These risks and uncertainties include those discussed or identified
in the filings with the Luxembourg Stock Market Authority for the
Financial Markets (Commission de Surveillance du Secteur Financier)
and the United States Securities and Exchange Commission (the
"SEC") made or to be made by ArcelorMittal, including
ArcelorMittal's latest Annual Report on Form 20-F on file with the
SEC. ArcelorMittal undertakes no obligation to publicly update its
forward-looking statements, whether as a result of new information,
future events, or otherwise.
About ArcelorMittalArcelorMittal is the world's leading
steel and mining company, with a presence in 60 countries and an
industrial footprint in 18 countries. Guided by a philosophy to
produce safe, sustainable steel, we are the leading supplier of
quality steel in the major global steel markets including
automotive, construction, household appliances and packaging, with
world-class research and development and outstanding distribution
networks.
Through our core values of sustainability, quality and
leadership, we operate responsibly with respect to the health,
safety and wellbeing of our employees, contractors and the
communities in which we operate. For us, steel is the fabric of
life, as it is at the heart of the modern world from railways to
cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of
the products and components people use in their everyday lives more
energy efficient.
We are one of the world's five largest producers of iron ore and
metallurgical coal. With a geographically diversified portfolio of
iron ore and coal assets, we are strategically positioned to serve
our network of steel plants and the external global market. While
our steel operations are important customers, our supply to the
external market is increasing as we grow. In 2016, ArcelorMittal
had revenues of $56.8 billion and crude steel production of 90.8
million metric tonnes, while own iron ore production reached 55.2
million metric tonnes.
ArcelorMittal is listed on the stock exchanges of New York (MT),
Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish
stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
For more information about ArcelorMittal please visit:
http://corporate.arcelormittal.com/
EnquiriesArcelorMittal investor relations: Europe: +44
207 543 1128; Americas: +1 312 899 3985; Retail: +44 207 543 1156;
SRI: +44 207 543 1156 and Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988 Contact: Paul Weigh +44
203 214 2419; France (Image 7) Tel: +33 153 70 94 17
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