53
Highly Restricted 0 1Q 2019 Financial Results May 9, 2019 Taranto steel plant 0
Highly Restricted 0
1Q 2019 Financial ResultsMay 9, 2019
Taranto steel plant
0
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, investorsand 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.
Non-GAAP/Alternative Performance MeasuresThis document includes supplemental financial measures that are or may be non-GAAP financial/alternative performance measures, as defined in the rules of the SEC or the guidelines of the European Securities and Market Authority (ESMA). They may exclude or include amounts that are included or excluded, as applicable, in the calculation of the most directly comparable financial measures calculated in accordance with IFRS. Accordingly, they should be considered in conjunction with ArcelorMittal's consolidated financial statements prepared in accordance with IFRS, including in its annual report on Form 20-F, its interim financial reports and earnings releases. Comparable IFRS measures and reconciliations of non-GAAP/alternative performance measures thereto are presented in such documents, in particular the earnings release to which this presentation relates.
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1
2
Focused on creating sustainable valueResponding to challenging market conditions
Challenging market conditions
Disciplined response
Balance sheet progress
Focussed on creating value
• Lacklustre demand reflecting lower PMI readings and weak automotive market
• Escalating imports in Europe
• Higher raw material costs not yet reflected in finished steel prices
• Temporary European flat steel capacity reduction of 3Mtpa
• Idle Krakow (Poland), reduce production at Asturias (Spain), slow down Taranto ramp-up
• FCF positive in 1Q’19 despite weak EBITDA
• Increase in net debt reflects impact of IFRS16 (underlying reduction of $1.2bn YoY)
• Maintaining deleveraging focus (net debt target adjusted to $7bn to reflect IFRS16)
• Supply reform must continue to address global excess capacity
• Focus is on Action2020 delivery, ensuring positive FCF and deleveraging progress
• Maintaining investment grade balance sheet is a priority, with intention to increase capital returns on achievement of net debt target
Market conditions in the first quarter of 2019 (1Q’19) have been challenging. Demand has generally been lacklustre, reflecting softness in manufacturing activity and continued weakness in automotive. The European flat steel market has been further negatively impacted by escalating imports, despite the permanent safeguard measure now in place.
Unlike in other regions such as China, this weaker supply/demand dynamics constrained the industry’s ability to pass through higher raw material costs - in particular iron ore (due to supply-side issues) - leading to a price-cost squeeze and a significant deterioration in results in our steel business. Contribution from our Mining segment improved, despite seasonally lower shipments, which highlights the benefits of ArcelorMittal’s vertical integration.
In response to the weak market backdrop ArcelorMittal announced that it will temporarily reduce flat production rate in Europe by 3Mt. This is a difficult decision but action is essential. We will be engaging with stakeholders to request that the safeguards are strengthened to prevent a further increase in imports as a result of continued global overcapacity and a weakening economy in neighbouring countries including Turkey. We will also continue to make our case for a green border adjustment to be introduced to ensure that imports into Europe face the same carbon costs as producers in Europe. The steel industry in Europe can have a strong future but there must be a level playing field to ensure that an unfair advantage is not given to competitors outside the region.
On a more positive note, we have seen this quarter a lower than normal seasonal investment in working capital which reflects our focus on a structural release of the excess working capital accumulated in 4Q’18. This will continue through the course of 2019.
Despite this investment and our investments in EBITDA-enhancing CAPEX, we achieved a marginally positive FCF in 1Q’19. The reason for the increase in net debt to $11.2bn is the impact of the new IFRS16 lease accounting standards. Excluding the IFRS 16 impact, net debt would have been $10.0bn as of March 31, 2019 as compared to $10.2bn as of December 31, 2018, and an underlying reduction of $1.2bn compared to March 31, 2018).
This new accounting treatment for operating leases was already captured by rating agency metrics. As such, we have adjusted our targeted net debt accordingly to $7bn (from $6bn previously) to reflect new accounting treatment.
We remain focussed on delivering against of our Action 2020 targets and integrating recently acquired assets to realise their full potential. I expect the business to be positive free cash flow this year and demonstrate progress in our efforts to further strengthen our balance sheet and improve shareholder returns.
2
Safety is our priority LTIF* rate
* LTIF = Lost time injury frequency defined as Lost Time Injuries per 1.000.000 worked hours; based on own personnel and contractors; A Lost Time Injury (LTI) is an incident that causes an injury that prevents the person from returning to his next scheduled shift or work period. ** ArcelorMittal Italia previously known as ILVA. LTIF excluding ArcelorMittal Italia of 0.66x in 1Q’19 vs. 0.70x in 4Q’18 and 0.62x in 1Q’18. From 1Q’19 onwards, the methodology and metrics used to calculate health and safety figures for ArcelorMittal Italia have been harmonized with those of ArcelorMittal.
0.85 0.85 0.81 0.82 0.780.69
2012
1.0
201620092007
1.8
2008 20132010 2011 2014 2015 2017 2018 1Q19
3.1
2.5
1.9
1.4
3
Health & Safety performance
• LTIF rate of 1.14x (including ArcelorMittal Italia)**
• The Company’s efforts to improve the Group’s Health and Safety record will continue
• The Company is focused on further reducing the rate of severe injuries and fatality prevention
ArcelorMittalIncl. ArcelorMittal Italia
ArcelorMittalExcl. ArcelorMittal
Italia
0.66
1.14
As always, we begin our presentation with our safety performance.
In 1Q’19, the Lost time injury frequency rate (LTIFR) including the recent acquisition of Arcelormittal Italia was 1.14x incidents per million hours worked. Excluding this acquisition, the LTIF rate for the Group was 0.66x as compared with 0.70x in 4Q’18 and 0.62x in 1Q’18.
During the quarter, we were recognized by the World Steel Association as a Sustainability Champion for our achievements in safety, water, lifecycle analysis and social and environmental reporting.
On April 25, 2019 ArcelorMittal held its 13th global health and safety day. This year’s Health and Safety Day, was themed, “We always choose the safest way”, reinforcing the critical importance of a safety-first approach at all times within the organization.
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.
We remain committed to the journey towards zero harm and ensure that all levels of the organization are focused on this primary objective.
3
Sustainable Development – key to our resilienceDriven by our vision to make steel the material of choice for the low carbon and circular economy
4
Board oversight
Customerreassurance
Carbon strategy
• Focus on continual energy efficiency improvements; technology innovation and policy
engagement to create the conditions enabling us to meet Paris agreement objectives.
• Towards low-emissions steelmaking with circular carbon, carbon capture, hydrogen and
electrolysis technologies
• Completed independent pre-audit against ResponsibleSteel - a multistakeholder standard
due to be launched at the end of 2019
• Providing customers new levels of complete mine-to-metal reassurance
• Board oversight of Sustainable Development via ARCGS*
* ARCGS refers to appointments, remuneration, corporate governance and sustainability committee.
Driven by our vision to make steel the material of choice for the low carbon, circular economy, we continue to work in pursuit of the ten sustainable development outcomes we launched in 2015. These describe the business we need to become if we are to bring optimal long-term value to all stakeholders. Integrating sustainability into the business is therefore one of our strategic priorities. Our Board of Directors has direct oversight of the company’s strategic approach to sustainable development, through the quarterly meetings of its Appointments, Remuneration Corporate Governance and Sustainability Committee.
One of the key developments for us over the past year has been to strengthen our strategic approach to reducing our carbon emissions in line with the Paris Agreement. This has meant advancing our breakthrough technology strategy to ensure that we can pursue any of the potential pathways to low carbon steelmaking. One potential pathway is the use of hydrogen or electrolysis using clean power. Another pathway utilises our Lanzatech and Torero technologies to capture waste carbon and recycle it, as we are doing at Gent in a project to make bio-ethanol. The pathway where the use of fossil fuels continues, will necessitate carbon capture, transport and storage. While we are making progress on the technology solutions it is important to recognise that we cannot achieve the true potential of low carbon steel making on our own. So we have also been assessing the policies we need to support us to significantly reduce our carbon footprint, and engaging with others to explore these further. We will be sharing the results of this work in a forthcoming Climate action report.
Another area of progress has been the work we have done to drive the development of credible environmental and social certification schemes for both
4
mining and steel production. Our aim is to give our customers new levels of reassurance all the way from mine to metal. “ResponsibleSteel” will be launched later this year. Many of our sites have been pre-audited against the draft ResponsibleSteel standard and so we believe we are in a good position to gain some of the first site-level certifications by the end of 2019.
4
Prices in core markets not yet reflective of global trends
5
Southern Europe vs China FOB export differential ($/t)*
China HRC domestic (incl. VAT) spread over China domestic (excl. VAT) RM basket ($/t)
• Challenging steel backdrop in 1Q’19
– Lower average selling prices, reflecting lagged impact of price declines experienced in 4Q’18
– Higher raw material basket prices
� Negative price cost effect
• Prices in core markets not yet reflecting global trends
– China domestic/export prices rising to reflect higher raw material inputs
– US prices have drifted lower
– Europe prices now out of line with international prices � Europe-China price differential unusually low
532600
181219
50
100
150
200
250
300
200
300
400
500
600
700
2Q
16
3Q
15
1Q
15
2Q
15
4Q
15
3Q
16
1Q
16
4Q
16
1Q
17
2Q
17
14
-Jan
3Q
17
4-M
ar
4Q
17
2Q
18
1Q
18
3Q
18
1-A
pr
1Q
19
1-J
an
21
-Jan
7-J
an
28
-Jan
4-F
eb
11
-Feb
18
-Feb
25
-Feb
11
-Mar
18
-Mar
25
-Mar
8-A
pr
15
-Ap
r2
2-A
pr
29
-Ap
r
4Q
18
China price $/t (LHS)
China steel spread (RHS)
-60
0
60
120
180
240
2Q
14
3Q
10
1Q
09
4Q
06
3Q
08
3Q
06
2Q
06
1Q
07
2Q
16
1Q
16
2Q
07
3Q
07
4Q
07
1Q
08
2Q
15
2Q
08
4Q
08
4Q
14
3Q
11
2Q
09
4Q
11
3Q
09
1Q
19
4Q
09
1Q
10
2Q
11
2Q
10
2Q
18
4Q
10
4Q
18
4Q
16
3Q
15
1Q
11
1Q
12
4Q
15
2Q
12
3Q
18
4Q
12
3Q
12
1Q
18
1Q
06
2Q
13
3Q
13
4Q
13
1Q
14
3Q
14
1Q
15
1Q
13
1Q
17
2Q
17
3Q
17
4Q
17
Ap
r-1
9M
ay-
19
3Q
16
* Updated to May 3, 2019
As already highlighted, our results reflect the difficult market conditions experienced in our core markets during the first quarter.
We have seen lower average steel selling prices, which reflect the price declines we saw during the final quarter of 2018. In addition, the industry has been facing rising raw material prices, particularly iron ore, due to supply-side developments in Brazil. As a result, profitability compressed due to this negative price cost effect.
While the economic outlook in some key markets remains uncertain, we are encouraged by the firmer pricing environment in China which, after significant declines in 2H’18, has responded to higher raw material costs.
Prices in our core markets have not yet responded to higher raw material prices. In particular, we note that the differential between Europe and China HRC price levels is unusually low. As you can see from the chart, typically such unusually low differentials have not persisted for extended periods.
5
Responding to weak European flat marketLacklustre demand and increased imports negatively impacting market
6
Elevated imports in to Europe – annualized HRC imports, Mt
4.14.8 5.2
7.88.6
7.08.3 8.6
12.0
8.39.0
201720162012 20142013 2015 2018 2019 quota*
Jan-19
Feb-19
Mar-19**
Basis for Safeguards
• HRC imports in to Europe are running higher YoY
• HRC safeguards not effective given lack of country-specific measurement
* Quota period from 1.7.2019 to 30.6.2020; ** March 2019 data preliminary
ArcelorMittal Flat Europe cutting production
by 3Mt annualized rate
– Idling Krakow (Poland)
– Reducing production at Asturias (Spain)
– Slowing down ramp-up at Taranto (Italy)
Excess global steel capacity continues to impact our business. In Europe, the safeguards are insufficiently protecting the industry, as evidenced by the surge in imports. This is particularly challenging at a time when European demand is under pressure from weaker manufacturing activity, particularly the important automotive end market, as can be see in the deteriorating PMI readings for the region.
The 2019 safeguard quota for HRC is not country specific. We have seen a surge of Turkish exports to Europe in 1Q’19 due to its recession, compounded by shifting of volumes from US market.
ArcelorMittal has been left with no alternative but to respond to the market challenges by taking 3Mt of flat steel production out of the market. The reduction will happen by idling the primary plant in Krakow (BF and steel plant), reducing the production in the plant in Asturias and slowing down the planned ramp up of ArcelorMittal Italia. All those measures are temporary and we hope to be able to produce again as and when markets improve.
6
1,652
1,951
2,512
1Q’194Q’181Q’18
-15.3%
$76/t $96/t
Operating results for 1Q’19Weaker operating results but still FCF positive reflecting improved working capital management
EBITDA ($bn, $/t)
7
• EBITDA: $1.7bn down 15.3% QoQ; 34.2% lower YoY
• Steel performance: primarily impacted by negative price-cost impact offset in part by higher steel shipments (+7.9% QoQ)
• Mining performance: improvement primarily driven by higher seaborne iron ore reference prices (+15.2% QoQ)
• Net income: $0.4bn in 1Q’19
• Working capital: $0.6bn investment in 1Q’19 (largely on account of higher steel shipment volumes)
• Net Debt: $11.2bn as of March 31, 2019 (including $1.2bn from impact of IFRS 16). Excluding IFRS 16 net debt of $10.0bn as of March 31, 2019 vs. $10.2bn as of December 31, 2018 vs. $11.1bn as of March 31, 2018
$118/t
Note: YoY refers to 1Q’19 vs.1Q’18; QoQ refers to 1Q’19 v 4Q’18
Turning to the financial performance, ArcelorMittal reported EBITDA of $1.7 billion for 1Q’19. This is a decline from 4Q’18 performance (-15.3%).
EBITDA/t has declined from $96/t to $76/t reflecting the challenging operating environment the industry has faced in recent months, characterized by rising raw material costs (reflecting supply-side developments in Brazil) and weaker pricing levels in most markets with the exception of Brazil. Furthermore, Europe has faced subdued economic activity and escalating HRC imports.
Our 1Q’19 steel performance primarily was impacted by a negative price-cost effect (“squeeze”) offset in part by higher steel shipments volumes which increased +7.9% QoQ.
Our Mining segment EBITDA improved in 1Q’19 largely due to higher seaborne iron ore reference prices - which increased +15.2% QoQ - offset in part by seasonally lower market priced iron ore shipment volumes (-8.2%) as compared to 4Q’18.
We reported net income of $0.4bn in 1Q’19. This includes the impact of $150m impairment charges related to the remedy asset sales for the ArcelorMittal Italia acquisition.
In terms of cashflow performance, the Group invested $0.6 billion in working capital during 1Q’19. This follows the normal seasonal pattern of the business, but the investment this quarter is less pronounced than in prior years given our focus on eliminating the excess working capital accumulated
7
in 4Q’18.
Following the adoption of the new IFRS 16 Leases standard effective from January 1, 2019, net debt increased by $1.2bn to $11.2bn as of March 31, 2019 as compared to $10.2bn as of December 31, 2018. Excluding the impact of IFRS 16, net debt was $10.0bn as of March 31, 2019, lower as compared to December 31, 2018 of $10.2bn and $1.2bn lower compared to March 31, 2018.
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• Steel-only EBITDA down -23.4% QoQ to $1.2bn primarily due to negative price-cost effect (PCE) offset by higher steel shipments
• 1Q’19 steel-only EBITDA/t decreased to $56/t from $79/t at 4Q’18 and $101/t at 1Q’18
1Q’19 vs 4Q’18 highlights
• Europe: EBITDA down -37.3% � Negative price-cost effect offset in part by higher steel shipments
• NAFTA: EBITDA down -29.6% � Negative price-cost effect offset in part by higher steel shipment
• ACIS: EBITDA down -26.9% � Negative price-cost effect
• Brazil: EBITDA up 10.6% � Positive price-cost effect
2974
4Q’18
1,608-147
NAFTA
-279
Europe
-53
ACIS Brazil Others
1,232
1Q’19
2,163
1,6081,232
1Q’191Q’18 4Q’18
-23.4%
$56/t $79/t $101/t
Steel performance for 1Q’19Weaker steel performance due to price-cost effect offset in part by higher steel shipments
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Steel only EBITDA ($mn) and EBITDA/t ($/t)
4Q’18 to 1Q’19 steel only EBITDA ($mn)
8
Overall, our steel-only EBITDA decline by -23.4% to $1.2bn for 1Q’19 as compared to $1.6bn in 4Q’18 primarily driven by a negative price-cost effect offset in part by an +7.9% increase in steel shipments.
On a per tonne basis, steel-only EBITDA/t decreased this quarter to +$56/t and compares unfavourably with both 4Q’18 and 1Q’18.
On a per tonne basis, the sharpest deterioration was in our Europe segment which was impacted by a negative price-cost effect offset in part by a 9% comparable increase in steel shipment volumes (including the impact of ArcelorMittal Italia, steel shipments increased by 14.4%.)
In NAFTA, EBITDA declined primarily due to a negative price-cost effect, as well as the impact of a power outage at Burns Harbour that negatively impacted results by $32m, and offset in part by higher steel shipments.
Our ACIS segment performance declined during 1Q’19 primarily due to a negative price-cost effect.
Finally, performance in Brazil improved due to a positive price-cost effect.
ArcelorMittal Italia improvement turnaround plan underway:
• Capture identified synergies (€310m)
• Key focus on executing the environmental remediation
measures and regaining the 'license to operate'
• Focus on improved quality and service
• Ramp-up to 6Mt run-rate (previously expected by 2H’19) has been slowed down due to weak market conditions
EC approved sale of ArcelorMittal Italia remedy assets to Liberty House Group
• Divestment package includes Ostrava, Galati, Skopje, Piombino, Dudelange and several finishing lines at Liège
• Transaction closing expected 1H’19
• Majority of proceeds expected to be received on closing
ArcelorMittal ItaliaRemedy asset sale approval obtained and turnaround underway
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Taranto raw material mineral yard
The integration of ArcelorMittal Italia has been ongoing since closing on the transaction in November 2018.
Our top priority is to quickly and effectively improve the health and safety performance in Taranto. We have already made improvements in a short period of time, however ArcelorMittal Italia’s LTIFR is still considerably behind Group average, so more improvement is still necessary.
We have begun our investment program which is intended to revitalise the business and ensure that ArcelorMittal Italia is among the top-performers on environmental standards in European steelmaking.
On the environmental side, coverage of the raw materials stockyards is progressing in-line with the accelerated timetable with expected completion of the iron ore yard by December 2019. Our investment will be a clear demonstration to our local stakeholders of our intent to deliver value for the benefit of all.
Operationally, we have seen some improvement in production and shipments during the 1Q’19. However, financial results for 1Q’19 deteriorated due to the weaker price environment and the impact of higher raw material costs.
As a result of the weak market conditions and as previously communicated, the planned ramp-up at ArcelorMittal Italia to a 6Mt annual run-rate has been slowed down. The focus for the team is on quality and service improvements
9
rather than additional volumes until market conditions improve. We continue to have confidence in our long term vision for the turnaround and potential of ArcelorMittal Italia.
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Mining performance:
• 1Q’19 EBITDA improved 22.5% QoQ primarily due to higher seaborne iron ore prices (+15.2%) offset by seasonally lower iron ore shipments (-8.2%)
• Growth: FY’19 market priced iron ore shipments expected to be stable YoY
• Focus on quality: ongoing commitment on quality, service and delivery
• Cost focus maintained: FCF breakeven remains $40/t CFR China
Liberia update:
• ArcelorMittal Liberia is completing the engineering phase of a feasibility study to identify the optimal concentration solution for utilising the resources at Tokadeh (and other deposits).
• Study expected to be completed by mid-2019
Serra Azul update:
• Movement of evacuated families to temporary rented houses is now largely complete
• Access to the evacuated area continues to be restricted and controlled according to guidance from local authorities
• Reassessment of the dam is progressing; development plan to eventually remove material from the dormant dam for reprocessing
• Mining operations restarted March 18, 2019
420343349
1Q’194Q’181Q’18
+22.5%
Mining performance for 1Q’19Benefitting from higher iron ore prices
Marketable iron ore shipments (Mt)
Mining EBITDA ($mn)
1Q’19
9.1
-8.2%
4Q’18
9.2
10.0
1Q’18
10Note: YoY refers to FY’19 vs. FY’18; QoQ refers to 1Q’19 v 4Q’18
Lower volumes due to seasonality in AMMC
Results in our Mining business improved during the quarter, with EBITDA increasing +22.5% to $420m from $343m in 4Q’18, driven by higher seaborne iron ore prices (+15.2%) offset in part by seasonally lower market priced iron ore shipments (-8.2%). We are fully focused on service, quality and cost to ensure our Mining business maintains a FCF breakeven level of $40/t CFR China 62% Fe.
For 2019 we expect iron ore volumes to remain stable as compared to 2018. Serra Azul has returned to normal operations following the precautionary evacuation of 115 families downstream of its dormant tailings dam on February 8, 2019. The reassessment of the dam is progressing with support of international and in-country specialists including the development of a plan to eventually remove the material from the dormant dam for reprocessing, which was due to commence in January 2019 as part of a longer-term plan to remove that dormant tailings facility.
In terms of volume development, ArcelorMittal Liberia is completing the engineering phase of a feasibility study to identify the optimal concentration solution for utilising the resources at Tokadeh and other nearby deposits. The results of the feasibility study are expected by mid-2019.
10
Working capital to support improved FCF“Excess” working capital to be released in 2019
11
Working capital investment $m
• 4Q’18 saw unplanned investment in working capital
due to weaker than expected apparent demand
conditions
• $1.0bn of “excess” working capital targeted for release
in 2019
• Seasonal investment in 1Q’19 reflecting increased
shipment volumes
• 1Q’19 working capital investment less pronounced
than previous years
• Focus on release of “excess” working capital will
continue through 2019
-1,691
-1,188
-2,181
-1,869
-553
1Q’191Q’15 1Q’16 1Q’17 1Q’18
5 year average -$1.5bn
In 2019 we are focussed on releasing the circa $1 billion of excess working capital accumulated during 4Q’18.
We have made some progress during 1Q’19. As you can see from the chart, the company invested $0.6bn in working capital (largely on account of higher steel shipment volumes) which is significantly less than the normal seasonal investments we typically make during this period.
We will continue to focus on structurally releasing the excess material in the system. Beyond this, the extent of any further changes in working capital in 2019 will be dictated by market conditions, particularly the price and volume environment in the final weeks of the year.
11
IFRS 16 LeasesNew IFRS 16 standard requires all operating leases to be recognised on balance sheet as debt
12
Net debt $m
1,193
1Q’193Q’18
9,966
10,478
11,159
10,516
1Q’18 2Q’18 4Q’18
11,133
10,196
IFRS 16 impact
Net debt excluding IFRS 16 impact
• Balance sheet:
– Total assets increased under property, plant and equipment by $1.2bn with corresponding liability shown as debt (short term $0.3bn and long term $0.9bn)
– Net debt increased by $1.2bn
– Net debt target under capital allocation policy restated to $7bn (from $6bn previously) to reflect this change
• Income statement:
– Positive EBITDA impact of $56m (majority in segment others) in 1Q 2019
– Net interest higher (new FY 2019 guidance of $0.65bn from $0.6bn previously)
– Higher depreciation (new FY 2019 guidance of $3.1bn)
• Cash flow statement:
– The repayments of the principal portion of operating leases are presented in financing activities (previously reported under operating activities)
• The cash needs of the business remain unchanged at $6.4bn for FY 2019
ArcelorMittal has applied IFRS 16 Leases as of January 1, 2019 with the following impacts:
On the balance sheet, total assets increased under property, plant and equipment by $1.2bn (primarily land leases and leased shipping vessels) with a corresponding liability shown as debt (short term $0.3bn and long term $0.9bn). Given the resultant net debt increase of $1.2bn, the Group’s targeted net debt level under its capital allocation policy (as first published in January 2018) has been restated to $7bn (from $6bn previously) to reflect this change.
In the income statement, the application of IFRS 16 has a positive EBITDA impact in 1Q 2019 of $56m. IFRS 16 leads to an increased net interest expense (now reflected in revised FY 2019 net interest guidance of $0.65bn from $0.6bn previously) and an increase in depreciation expense (reflected in FY 2019 depreciation guidance of $3.1bn).
For the cash flow statement, the repayments of the principal portion of operating leases are presented in financing activities whilst previously been reported under operating activities.
There is no change to the Group’s guidance on the cash needs of the business which remains at $6.4bn for FY 2019.
12
1Q 2019 EBITDA to net resultsPositive net income in 1Q 2019
1,652
769585
414
208
(733)
EBITDA Income from investments
Forex and other fin. result
Net interest expense
Operating income
Pre-tax income
Impairment charges
D&A
(150)(161)
Net income
(171)
(231)
Taxes and non-
controlling interests
BASIC EPS 1Q’19
Weighted Av. No. of shares (in millions) 1,014
Earnings per share $0.41
Related to the remedy asset sales for the
ArcelorMittal Italia acquisition
Includes Erdemirdividend declared
$93m and contribution from Chinese investees
and Calvert
13
($million)
Includes IFRS 16 impact
Includes IFRS 16 impact
In this slide, we highlight the key elements of our waterfall from EBITDA to net income for 1Q’19.
In 1Q’19, we reported $1.7bn EBITDA and depreciation of $733m which includes impact from IFRS 16.
We booked a further $150m impairment related to the remedy asset sales for ArcelorMittal Italia acquisition. This follows revisions to the offer from Liberty Group which is now approved by the EC.
Income from associates, joint ventures and other investments for 1Q’19 was $208m. This figure mainly reflects the performance of the Chinese and Calvert investees and includes the annual dividend from Erdemir ($93m).
Net interest expense of $161m in 1Q’19 was higher than 4Q’18 reflecting in part the new bonds issued during the quarter and impact from IFRS 16.
Foreign exchange and other net financing result for 1Q’19 includes a foreign exchange loss of $48m as compared to a loss of $7m in 4Q’18.
Net income for the quarter was $0.4bn.
13
1Q 2019 EBITDA to free cashflowFCF marginally positive despite $0.6bn investment in working capital
1,652
971
Cash flow from operations
Free cash flow
(947)
EBITDA
(553)
24
(128)
* Change in working capital: cash movement in trade accounts receivable plus inventories less trade and other accounts payable
Change in working capital*
Net financial cost, tax and
others
Capex
14
($million)
Next, we highlight the waterfall from EBITDA to free cash flow.
During 1Q’19, the Company invested $0.6bn in operating working capital due mainly to higher steel shipments.
The third bar shows the combined impact of net financial cost, tax and other items totalling $0.1bn.
Cash flow from operations remains positive at $1.0bn and capex of $0.9bn resulted in a marginally positive free cash flow for the quarter.
14
Net debt analysisNet debt declined March 31, 2019 v December 31, 2018 excluding IFRS 16 impact
51
292
46
90 101
Minority dividends
Free cash flow
24
IFRS 16 impact
1,193
Forex and other
11,159
Net debt at Dec
31, 2018
Net debt at Mar
31, 2019
M&AArcelorMittal Italia lease payment
10,196
Share buy back
15
($million)
Dividends paid by AMMC to POSCO
Includes rollover of Indian rupee hedge
The main driver of the increase in net debt during the quarter was the $1.2bn impact of IFRS 16 accounting for operating leases. The impacts of the share buyback ($0.1bn), dividends paid to minority shareholders in ArcelorMittal Mines Canada ($46m), the quarterly lease payment to the Italian government ($51m) was more than offset by $0.3bn inflow from rollover of Indian rupee hedge and forex gain of $0.1bn.
Excluding the impact of IFRS 16, the combined result of these movements was a $0.2bn decrease in net debt to $10.0bn at the end of the quarter.
15
Liquidity lines
• $5.5bn lines of credit refinanced with 5 year maturity Dec 19, 2023
Debt Maturity:
• Continued strong liquidity
• Average debt maturity → 4.9 years
Ratings:
• S&P: BBB-, stable outlook
• Moody’s: Baa3, stable outlook
• Fitch: BBB-, stable outlook
5.5
2.2
Liquidity at Mar 31, 2019
Unused credit lines
Cash
7.7
1.51.8
1.3 1.5
0.6
3.3
1.1 0.5
0.6 0.3
0.3
0.6
20222019 2020 2021 2023 ≥2024
Other loans
Commercial paper
Bonds
Liquidity and debt maturityInvestment grade rated by all three rating agencies
Liquidity* at Mar 31, 2019 ($bn) Debt maturities at Mar 31, 2019 ($bn)
16* Liquidity is defined as cash and cash equivalents plus available credit lines excluding back-up lines for the commercial paper program.
16
At March 31, 2019, the Company had liquidity of $7.7bn, consisting of cash and cash equivalents of $2.2bn and $5.5bn of committed unused lines of credit. Lines of credit are with a group of core relationship banks and are committed for 5 years.
During the quarter we made $1bn repayment of amounts borrowed in connection with the purchase of the Uttam Galva and KSS Petron debts, $0.9bn repayment of the €750m 5-year, 3% bond at maturity offset in part by $1.6bn cash received from the issuance of two new bonds (€750m 2.25% notes due 2024 and $750m 4.55% notes due 2026) and $0.2bn commercial paper issuance.
We will continue to maintain a healthy liquidity position as well as a capital allocation policy that supports a strong balance sheet consistent with an investment grade credit profile.
Secure position in mature developed markets
(with growth exposure e.g. Mexico) with
emphasis on HAV leadership
High-growth, with attractive
market structure and gradual
evolution towards HAV
Access to
growth
markets
Position to Deliver ValueGlobal diversified industry leader focussed on maximising per-share value
ArcelorMittal
Investment Grade Balance Sheet
EU
RO
PE
BR
AZ
IL
AC
IS
IND
IA
Mining
(capturing the full value-in-use chain)
NA
FT
A
17
• Unique global portfolio
• Industry leader in product and
process innovation
• Action2020 plan to structurally
improve profitability
• Investing with focus and discipline
in high return opportunities
• Investment grade balance sheet
• Progressively returning cash
To conclude.
ArcelorMittal is in a stronger position to deliver value for our shareholders.
We own and operate a unique set of assets that offer scale, reach and diversification.
ArcelorMittal is recognised as the leader in the steel industry in terms of product innovation, providing cutting edge solutions for the most demanding applications.
We remain focussed on achieving our Action2020 improvement plans and targets to drive structural improvement in our EBITDA and cash generation.
Thanks to the progress made in recent years, we have used our platform to invest strategically to capture high return opportunities. Our focus now turns to realising the potential of these businesses (including Essar Steel in India, which we are soon to acquire with our JV partner Nippon Steel) and completing the organic mix improvement projects underway in Mexico and Brazil.
We have recovered our investment grade credit rating. This is a strategic asset for ArcelorMittal and will continue to focus on reducing our debt levels to improve our credit metrics further.
Generating positive free cash flow and demonstrating progress in our efforts to further strengthen our balance sheet and improve shareholder returns are the priority. At our AGM this week, shareholders approved an increase in the
17
base dividend to $0.20/share. On attainment of our debt target, this base dividend will be supplemented to reflect a portion of annual free cash flow.
17
APPENDIX
18
18
• SECTION 1 | Cash needs.……………………………………………………. 20
• SECTION 2 | Trade.………………………………………………………....... 22
• SECTION 3 | Capital allocation..…………………………………………….. 26
• SECTION 4 | Steel investments……………………………………………… 34
• SECTION 5 | Macro highlights……………………………………………….. 39
• SECTION 6 | Industry leadership…………………………………………….. 44
Appendix
19
19
CASH NEEDS
20
20
Cash needsCash needs* to increase in 2019 largely due to increased capex spend on high return opportunities
3.3
4.3
0.6
1.1
1.5
2019F2018
6.4
5.0
Taxes**, pension and other0.65
Capex
Net interest
* Cash needs of the business consisting of capex, cash paid for interest and other cash payments primarily for taxes and excluding for these purposes working capital investment** Estimates for cash taxes in 2019 largely reflect the taxable profits of 2018
21
Below-EBITDA cash needs ($ billions) • Cash needs to increase to $6.4bn in
2019
• The $1.4bn increase Vs. 2018 reflects:
1) $1bn increase in capex (including
$0.4bn carryover from 2018)
2) Cash taxes deferred from 2018
3) Non recurrence of certain cash
gains in 2018
• Unplanned working capital investment in
2018 is expected to be released in 2019
• As a result, Company should achieve
more significant net debt progress in
2019
21
TRADE
22
22
Trade cases (Flat steel):
• All key flat rolled steel products Anti-dumping and countervailing duty cases have been implemented
• Monitoring for unfairly traded imports ongoing
Safeguard duties:
• On January 17, 2019, EU Member states approved the European Commission’s (EC’s) final safeguard measures
on steel with implementation to begin February 4, 2019
• Final measures include immediate “relaxation”, increasing quota by 5% (calculated on base years of 2015-2017),
with further 5% relaxation in July 2019 and another 5% in July 2020 � Quota relaxation can still be
challenged/discussed with EC both by industry/users
• Current quota levels are below 2018 levels; 5% quota relaxation in July 2019 and July 2020
• Final measure give country-specific quotas to main steel exporters to EU; remaining residual quote for other
countries to be quarterly, however countries with own quota can consume residual quote once they have used up
their own
• Certain 'developing' countries with a share of imports of <3% are exempt
EU tradeComprehensive solution for unfairly trade imports required
23
23
Level playing field to avoid “carbon leakage”Discussions on Carbon Inclusion Mechanism ongoing
• ETS (Emission Trade System) growing restriction to CO2 allocations access significantly increasing price and affecting companies’ costs
• European steel players cannot pass-on their cost as it would cause lack of competitiveness vs. Non-EU players which are not subject to ETS rules
• With higher costs, European players will increase acquisition of slabs only relocating the CO2 generation to countries not subject to ETS, i.e., causing carbon leakage with no significant impact to World’s CO2 emissions
• To level the playing field among European players and foreign players selling in Europe, CO2 costs should also be applied to imports
• For Europe’s climate policy to be both effective and credible, a carbon neutral policy must avoid circumvention (“Carbon Leakage”).
• Realistic benchmarks based on verified emissions should be applied.
• To levy steel imports in to Europe with a CO2 cost in line with that incurred by domestic producers would equalise the conditions for local players and those exporting to Europe.
Rationale The proposal
24
24
Trade cases:
• All key flat rolled steel products AD/CVD cases have been implemented. • Anti-circumvention investigations initiated by DOC for CRC and CORE imports from China (through Vietnam); final affirmative
determination received May 17, 2018• On June 12, 2018, the US industry filed anti-circumvention petitions with DOC for CRC and CORE imported from Korea and Taiwan
(through Vietnam).
Section 232 US:
• March 23, 2018: 25% tariffs imposed on all steel product categories began for most countries
• June 1, 2018: 25% tariffs imposed on steel products in Europe, Canada & Mexico (no change despite signing of USMCA trade agreement) with the following exceptions:
• South Korea: Quota of 70% of 2015-2017 av. export volumes into US
• Brazil: Quota of 2015-2017 average export volumes into US - 70% for finished products; 100% for semi-finished products
• Argentina: Quota of 135% of 2015-2017 average exports
• Australia: completely exempt from tariffs and quotas
• August 30, 2018: Trump issued a proclamation whereby there is now a product exclusion request process in place for countries where there is a quota, i.e. S. Korea, Argentina and Brazil
• Turkey: duties doubled to 50% from 25% due to currency devaluation
Canada and Mexico response to Section 232:
• Canada: 25% retaliatory tariffs on US imports for most steel products, Provisional safeguard measures announced on October 11, 2018 on 7 steel products (hot rolled, prepaint, rebar, wire rod, energy tubulars, plate and stainless wire)
• Mexico: 15-25% retaliatory tariffs on US imports for most steel products; Safeguard duties of 15% already in place for countries with no free trade agreement
US tradeComprehensive solution for unfairly trade imports required
25
25
CAPITAL ALLOCATION
26
26
Whilst investing in high-return opportunities with focus and strict
discipline
Targeting $7bn net debt*– a level of debt that should support positive FCF** and IG
credit metrics at all points of the cycle
Capital allocation to support strategic goalsBuilding strong foundations for future returns
27
Building the strongest platform for consistent capital returns to shareholders
Robust balance sheet
Invest in strengths
Returns to shareholders
Progressively increase base dividend with a commitment to returning a percentage
of FCF on attainment of debt target
Resilient platform
To grow FCF potential
Consistently return cash
* Previous target of $6bn adjusted to reflect impact of IFRS 16 ** Free cash flow refers to cash flow from operations less capex
27
Investment plan focussed on high-return projectsAdditional capex planned in 2019 to fund AM Italia as well as mix & cost improvement projects
Move MIX to most attractive end markets
Increase COMPETITIVENESS
UNIQUE opportunities in CORE markets
Committed to high-return projects (capex, $bn)
28
3.3
4.3
0.5
0.4 0.1
2018 2019FArcelorMittal Italia
Brazil & Mexico
Other Strategic Projects
Incremental budget approved including carry-over
28
US$1.0bn 3Yr investment commitment �Construction of a new 2.5Mt hot strip mill
Mexico: HSM project High return mix improvement with future optionality
Project summary:
• HSM project to optimize capacity and improve mix
� $1bn project initiated in 4Q’17; expected completion in 2020
� New 2.5Mt hot strip mill to increase share of domestic market (domestic
HRC spreads are significantly higher vs. slab exports)
� Includes investments to sustain the competitiveness of mining operations
and modernizing its existing asset base
• ArcelorMittal Mexico highly competitive � low cost domestic slab
• Growth market, with high import share
� Mexico is a net importer of steel (50% flat rolled products import share)
� ASC estimated to grow 2.0% CAGR 2015-25; growth in non-auto +2.2%,
supported by industrial production and public infrastructure investment
• Potential to add $250 million in EBITDA on completion
Project status:
• Deep foundations complete; structural fabrication progressing on plan
• Main and auxiliary equipment arriving on site
• Installation of reheat furnace commenced / civil work continues, recovery
plan ongoing including second shift and additional workforce
John Deere India
29
0
20
5
10
15
(Mt)
15.717.2
52%
2015
50%
2016
54%
2017
50%
2018
16.2 16.6
Share captured by Imports
ASC (Million tonnes; flat products)
29
Brazil: Vega high added value capacity expansionHigh return mix improvement in one of the most promising developing markets
Project summary:
• HAV expansion project to improve mix
� Completion expected 2021 with total capex spend of ~$0.3bn
� Increase Galv/CRC capacity through construction of 700kt continuous
annealing and continuous galvanising combiline
� Optimization of current facilities to maximize site capacity and
competitiveness; utilizing comprehensive digital/automation technology
� To enhance 3rd generation AHSS capabilities and support our growth in
automotive market and value added products to construction
• AM Vega highly competitive on quality and cost, with strategic location and
synergies with AM Tubarão
• Investment to sustain ArcelorMittal Brazil growth strategy in cold rolled and
coated flat products to serve domestic and broader Latin American markets
• Strengthening ArcelorMittal’s position in key markets as automotive and
construction through value added products
• Potential to add >$100mn to EBITDA
John Deere India
3Yr investment to expand rolling capacity → increase Coated / CRC capacity and
construction of a new 700kt continuous annealing line (CAL) and continuous galvanising
combiline (CGL)
30
30
Votorantim consolidates our position in Brazil longsMulti-year acquisition project concluded in April 2018
31
• Culmination of a multi-year process that began in 2014
• Consolidating the Brazil long products market
• ArcelorMittal now the #1 long products producer with
annual crude steel capacity of 5.1Mt.
• Acquired production facilities are geographically
complementary, enabling higher service level to
customers, economies of scale, higher utilization and
efficiencies.
• ~$110m of identified synergies on track to be fully
captured in 2019
Current status:
• Reinforced positioning on construction sector,
increasing market share
• Synergies and saving from headcount reduction,
operational KPIs improvements and procurement
renegotiationResende Barra Mansa
Barra Mansa plant
Monelevade
Resende plant
Juiz de Fora
PiracicabaSao Paulo
Rio de Janeiro
Minas Gerais
Creating the new market leader in Brazil longs
31
ArcelorMittal Italia turnaround to restore tier-1 statusMulti-year acquisition project concluded in November 2018
• Improvement plan:
• Ramp-up to 6Mt run-rate (previously expected by 2H’19) has been
slowed down due to weak market conditions
• Focus on improved quality and service
• Capture identified synergies (€310m) and realise asset’s potential
Focus on:
• Health & safety:
• Completed audit on FPS in Taranto, Genova, Novi; implementing new
monitoring activities; developing H&S mindset across the plant
• LTIF rate still considerably behind group average, so improvement still
necessary
• Investment program underway:
• Met the April 30 deadline to complete the coverage of the first three
modules corresponding to 50% of the mineral park
• Environmental interventions are progressing in line with the accelerated
timetable
• Restarting of the first galvanizing line of the cold rolling mill after 12
months of stop
1.15
2.402.10
1.25
Total capexIndustrialEnviromental Net capex
0.30
Riva funds utilised
ArcelorMittal Italia capex commitment to 2024 (€ bn)
32
Industrial capex includes annual
maintenance
Progress at the raw material stock yard
Environmental capex includes: €0.3bn stock
pile coverage; €0.2bn at coke ovens; €0.2bn
waste water treatment; €0.3bn environmental
remediation*
*€0.3bn environmental remediation (clean-up) will be financed with funds seized from the Riva Group
32
• Essar provides ArcelorMittal an opportunity to buy a producing,
profitable, cash generating asset at below replacement costs
• ArcelorMittal received approval for acquisition of Essar*
• Upfront payment of $5.7bn** to ESIL creditors with a further
$1.1bn** capital injection into the business to kickstart
turnaround
• ArcelorMittal aims to increase shipments to 8.5Mt in medium
term, with long term target of 12-15Mt through additional
brownfield capacity expansion
• Iron ore pelletising integration in East India provides optionality:
14Mtpa pellet capacity → currently being expanded to 20Mtpa
• ArcelorMittal & NSSMC to finance their “India JV” through
combination of partnership equity (1/3) and debt (2/3)
• Investment in the “India JV” expected to be equity accounted
• Transaction closing expected 2Q 2019 / 3Q 2019
Essar: Adding a new high-growth pillarEssar brings scale, turnaround opportunity and growth optionality
High quality raw material Largest pellet capacity in India
One of the largest single location for flat steel in India
Complete basket of flat steel produtcs
Service centres in competitive locations Access to Port
Essar Steel main production facilities at Hazira, Gujarat; 10Mtpa nominal capacity (current production 6.5Mtpa)
* In-line with Essar Steel India Limited’s (ESIL) corporate insolvency process, the Company’s Resolution Plan must now be formally accepted by India’s National Company Law Tribunal (‘NCLT’) before completion **at 73.2 Indian rupees / $1 .
33
2 31 4 5
33
STEEL INVESTMENTS
34
34
Kryvyi Rih – New LF&CC 2&3Kryvyi Rih investments to ensure sustainability & improve productivity
• Facilities upgrade to switch from ingot to continuous casting
route; additional billets capacity of 290kt/y
• Industrial target:
• Step-by-step steel plant modernization with state-of-art
technology
• Product mix development
• Supportive target:
• Cost reduction
• Billet quality improvement for sustaining customers
• Better yield and productivity
• Project completion expected in 2019
35
Construction site of LF&CC
2&3 <->
35
ArcelorMittal Poland Sosnowiec Wire Rod Mill Long products strategy to grow HAV
• Sosnowiec is a double strand rolling mill located in Sosnowiec, Poland.
• The investment is introducing new and innovative techniques for the
production of high quality wire rod for high demanding applications
(automotive app., steel cords, welding wires, cold heading screws,
suspension springs, special ropes)
• Phase 1 modernization has been done during the Nov 2018 stoppage.
Then, the fine tuning has been done during the ramp up phase which is
today completed with a much better product quality capability (narrow
geometry dispersion and narrow mechanical properties dispersion)
• Phase 2 modernization expected in Oct 2019 with focus on volume
productivity (+10%) and reliability via intermediate stands and motors
controlled by new automation system.
• Project completion expected end of 2019
36
36
Dofasco - Hot strip mill modernizationInvestments to modernize strip cooling & coiling� flexibility to produce full range of target products
• Replace existing three end of life coilers with two state
of the art coilers and new runout tables
• Benefits of the project will be:
• Improved safety
• Increased product capability to produce higher
value products
• Cost savings through improvements to coil quality,
unplanned delay rates, yield and improved energy
efficiency
Current Status:
• Engineering and equipment manufacturing is complete.
• Construction activities for coiler are on track
• Runout table installation works originally scheduled for April
2019, will be effectively carried out during April 2020 shut
down due to change in design and delay in manufacturing
� project completion will be now expected 2021
37
MARCH 2019 - COILER AND INSPECTION AREA
37
Burns Harbour – Walking beam furnacesExpands surface capability to provide sustained automotive footprint
• Install 2 latest generation walking beam furnaces,
including recuperators & stacks, building extension &
foundations for new units
• Benefits associated to the project:
• Hot rolling quality and productivity
• Sustaining market position
• Reducing energy consumption
• Project completion expected in 2021
38
38
MACRO HIGHLIGHTS
39
39
Regional inventoryInventory levels in key regions in line with historical averages
* German inventories seasonally adjusted **Source: WSA, Mysteel, ArcelorMittal Strategy estimates
German inventories (000 Mt)*
China service centre inventories** (Mt/mth) with ASC%Brazil service centre inventories (000 Mt)
US service centre total steel inventories (000 Mt)
40
0.0
1.0
2.0
3.0
4.0
5.0
400
600
800
1,000
1,200
1,400
Germany Stocks
Months supply (RHS)
(latest data point: Mar-2019)
0%
10%
20%
30%
40%
50%
0
5
10
15
20
25Flat and long% of ASC (RHS)
(latest data point: Mar-2019)
1.0
2.0
3.0
4.0
5.0
6.0
7.0
200
400
600
800
1,000
1,200
1,400Flat stocks at service centresMonths Supply (RHS) (latest data point: Mar-2019)
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
USA (MSCI)
Months Supply (RHS)
(latest data point: Mar-2019)
40
Chinese exportsChinese exports up YoY
• Apr’19 finished steel exports of 6.3Mt up stable MoM
• Apr’19 exports down 2% vs Apri’18 (6.5Mt)
• Jan–Apr 2019 YTD exports +8.0% above 2018 YTD
Source: ArcelorMittal Corporate Strategy team analysis 41
41
China focussed on capacity issuesGlobal overcapacity still a concern
• Chinese government committed to tackle overcapacity and environmental issues � Permanent and illegal capacity targets in 2018 met � though overcapacity still exists
• Steel replacement policy in favour of EAF v BF; no new capacity to be built � ratio 1:1 for EAF and 1:1.25 for BF-BOF*
• Stronger domestic fundamentals plus global trade restrictions �reduced incentive to export; current exports levels picking up
• 3yr Blue Sky Campaign (2018-2020) - stringent emissions standards
• Winter capacity constraints supporting fundamentals through seasonally weaker demand period; delayed start in 2018
2019
• Winter capacity constraints expected Oct/Nov’19 – Mar’20 - based on ‘one-mill-one-policy’ principle (less impactful as more steel mills achieve the ultra-low emission standard and become exempted)
Permanent and illegal capacity cuts achieved by
end of 2018 � overcapacity still exists
42* In the key regions (e.g. Jing-Jin-Ji, Fen-Wei area and Yangtze Delta Area, which take account 55% of overall crude steel capacity in China), 1:1 BF-BOF for non-key regions; ratio 1:1 for EAF no matter where the facilities are located
Constraints expected to restart Oct/Nov’19-Mar’20 on
one-mill-one policy; moderately less impactful
2019 steel exports picking up � Apr’19 YTD exports +8.0%
YoY
42
Global steel demand expected to grow in 2019ArcelorMittal and World Steel Association (WSA) forecast 2019 v 2018
43
US
ArcelorMittal
+0.5% to +1.5%
WSA
+1.3%
EU28
ArcelorMittal
-1.0% to 0.0%
WSA
+0.3%
China
ArcelorMittal
0.0% to +1.0%
WSA
+1.0%
Brazil
ArcelorMittal
+3.0% to +4.0%
WSA - Central & South America
+3.6%
CIS
ArcelorMittal
+1.0% to +2.0%
WSA
+1.4%
World ex-China
ArcelorMittal
+1.0% to +2.0%
WSA
+1.7%
World
ArcelorMittal
+1.0% to +1.5%
WSA
+1.3%
Source: ArcelorMittal Corporate Strategy estimates; World Steel association (WSA) Short range outlook, April 2019
43
INDUSTRY LEADERSHIP
44
44
Leadership through innovation continuesR&D strength to drive innovation and maintain industry leadership position
45
• Global 2018 R&D spend $0.3bn (Automotive ~1/3); 1,400 full time researchers; 10 research centres EU/Americas
• Majority EU/NAFTA OEMs rank ArcelorMittal #1 in Technology: Steel to remain material for body structure application
• Leader in AHSS in both EU & NAFTA with the broadest portfolio of AHSS grades
45
Industry Leadership: Steligence® A radical new concept for the use of steel in construction
12-15
• Steligence® is based on extensive scientific
research, independently peer-reviewed
• Makes the case for a holistic approach to
construction that breaks down barriers,
encouraging collaboration between construction
industry professionals
• Designed to resolve the competing demands of
creativity, flexibility, sustainability and economics
• Delivers efficiencies, benefits and cost savings to
architects, engineers, construction companies, real
estate developers, building owners, tenants and
urban planners
• Will facilitate the next generation of high
performance buildings and construction techniques,
and create a more sustainable life cycle for
buildings
• Our new Headquarters building is designed to
showcase the Steligence® concept
46
Launched in June 2018 by ArcelorMittal Europe,
Steligence® champions sustainable steel as the best in
class solution for building materials. It addresses the
key issues in the construction sector including the
competing demands of flexibility, aesthetics, efficiency
and sustainability.
Product portfolio
46
Industry Leadership: Transformation technologies Technology to potentially revolutionise the capture of BF carbon gas and convert it into bioethanol
12-15
• €150million project between ArcelorMittal & LanzaTech in Gent, Belgium, broke ground June 2018
• Technology to potentially revolutionise the capture of BF carbon gas and convert it into bioethanol
• Licensed by LanzaTech, a proprietary microbe feeds on carbon monoxide to produce bioethanol, to be used as
transport fuel or potentially in the production of plastics
• Annual production of bioethanol from this demonstration expected to reach around 80m litres, which will yield an
annual CO2 saving equivalent to 600 flights from London to New York
• The new installation will create up to 500 construction jobs over the next two years and 20 to 30 new permanent
direct jobs. Commissioning and first production is expected by mid-2020
47
47
ArcelorMittal IR Tools and Contacts
Team contacts
Daniel Fairclough – Global Head Investor Relations (London)[email protected] +44 207 543 1105
Hetal Patel – UK/European Investor Relations (London)[email protected] +44 207 543 1128
Donna Pugsley– Investor Relations Assistant (London)[email protected] +44 203 214 2893
ArcelorMittal investor relations app available free for download on IOS or android devices
2018 Factbook available to download online
Team contacts
Maureen Baker – Fixed Income/Debt IR (Paris)[email protected] +33 1 71 92 10 26
Lisa Fortuna – US Investor Relations (Chicago)[email protected] +1 312 899 3985
48
