ArcelorMittal reports results for the first quarter 2016
ArcelorMittal Europe reports €328m Ebitda for first quarter of 2016
ArcelorMittal unveils new approach to sustainability reporting
May 6, 2016
- 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
for the three month period
ended March 31, 2016.
Outlook and guidance:
Financial highlights (on the basis of IFRS):
Lakshmi N. Mittal, ArcelorMittal chairman and CEO, said:
results for the first quarter reflect the very tough operating conditions in
the second half of 2015. Since that time we have seen a recovery in spreads in
our core markets to more sustainable levels, which is expected to result in
improved results in the coming quarters. This is a welcome development,
although given the levels of excess capacity in China the market remains
fragile and we must continue to be vigilant and active against the threat of
the successful completion of the $3.2 billion rights issue, the Company has a
sector-leading balance sheet. Our priority now is to improve the
structural earnings capability of the group through our five year strategic
plan, Action 2020, which will drive significant improvements in both EBITDA and
cash-flow over the longer-term.”
First quarter 2016 earnings
analyst conference call
ArcelorMittal management will host a conference
call for members of the investment community to discuss the three month period
ended March 31, 2016 on:
This document may contain forward-looking
information and statements about ArcelorMittal and its subsidiaries. These
statements include financial projections and estimates and their underlying
assumptions, statements regarding plans, objectives and expectations with
respect to future operations, products and services, and statements regarding
future performance. Forward-looking statements may be identified by the words
“believe,” “expect,” “anticipate,” “target” or similar expressions. Although
ArcelorMittal’s management believes that the expectations reflected in such
forward-looking statements are reasonable, investors and holders of
ArcelorMittal’s securities are cautioned that forward-looking information and
statements are subject to numerous risks and uncertainties, many of which are
difficult to predict and generally beyond the control of ArcelorMittal, that
could cause actual results and developments to differ materially and adversely
from those expressed in, or implied or projected by, the forward-looking
information and statements. These risks and uncertainties include those
discussed or identified in the filings with the Luxembourg Stock Market
Authority for the Financial Markets (
Commission de Surveillance du
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.
is the world's leading steel and mining company, with a presence in 60
countries and an industrial footprint in 19
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
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 2015, ArcelorMittal had revenues of $63.6 billion and crude
steel production of 92.5 million tonnes, while own iron ore production reached
62.8 million 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:
Corporate responsibility and
and safety - Own personnel and contractors lost time injury frequency rate
and safety performance, based on own personnel figures and contractors lost
time injury frequency (LTIF) rate, improved to 0.72x in the first quarter of
2016 (“1Q 2016”) as compared to 0.83x for the fourth quarter of 2015 (“4Q
2015”) and as compared to 0.88x for the first quarter of 2015 (“1Q 2015”).
Between 1Q 2016 and 4Q 2015, improvements in the health and safety performance
of the Brazil, Europe and NAFTA segments relative to 4Q 2015, were partially
offset by deterioration in the ACIS and Mining segments.
Company’s effort to improve the Group’s Health and Safety record continues and
remains focused on both further reducing the rate of severe injuries and
personnel and contractors - Frequency rate
corporate responsibility highlights for 1Q 2016:
ArcelorMittal’s 2015 annual review entitled “Structural
resilience” was released on April 28, 2016. This represents the Company’s
first step towards integrated reporting, by including the group’s
sustainability progress, and the value we create for society.
During the quarter, ArcelorMittal launched
new sustainability webpages which provide ongoing narrative online reporting on
ArcelorMittal’s actions in sustainability
continue to receive positive recognition from industry leaders:
ArcelorMittal Mining received significant recognition for its
Analysis of results for 1Q 2016
versus 4Q 2015 and 1Q 2015
Total steel shipments for 1Q 2016 were 8.8%
higher at 21.5 million metric tonnes
as compared with 19.7 million metric tonnes for 4Q 2015 (primarily due to
improved shipments in NAFTA +19.2%, Europe +10.3% and ACIS +7.7% offset in part
by lower shipments in Brazil -14.0%), and 0.6% lower as compared to 21.6
million metric tonnes for 1Q 2015 (primarily due to lower shipment volumes in Brazil
-8.7% offset in part by improved ACIS shipments +10.3%).
Sales for 1Q 2016 were $13.4 billion as
compared to $14.0 billion for 4Q 2015 and $17.1 billion for 1Q 2015. Sales in 1Q
2016, were 4.2% lower as compared to 4Q 2015 primarily due to lower average
steel selling prices (-8.7%) and lower market-priced iron ore shipments (-21.1%),
offset in part by higher steel shipments (+8.8%) and higher iron ore reference
prices (+3.5%). Sales in 1Q 2016 were 21.7% lower as compared to 1Q 2015
primarily due to lower average steel selling prices (-22.1%), lower market-priced
iron ore shipments (-16.8%) and lower iron ore reference prices (-22.7%).
was lower at $652 million for 1Q 2016 as compared to $807 million in 4Q 2015
2015, respectively. Depreciation was lower in 1Q 2016 as compared to 4Q 2015 primarily due
to asset impairments booked in 4Q 2015 as well as foreign exchange impact. FY 2016 depreciation
is expected to be approximately $2.8 billion (based on current exchange
rates) as compared to the previous $3.0 billion guidance.
Impairment charges for 1Q 2016 and 1Q 2015
were nil. Impairment charges for 4Q 2015 were $4.7 billion
including $0.9 billion with respect to the Mining segment goodwill and $3.8
billion primarily related to fixed assets.
Exceptional charges for 1Q 2016 and 1Q 2015
were nil. Exceptional charges for 4Q 2015 were $0.9 billion, which primarily
included $0.8 billion inventory related charges following the rapid decline of
international steel prices and $0.1 billion of litigation and other costs in
Operating income for 1Q 2016 was $275 million
as compared to an operating loss of $5.3 billion for 4Q 2015 and operating
income of $571 million in 1Q 2015. Operating results for 4Q 2015 were impacted
by impairments and exceptional charges discussed above. Operating results for
1Q 2015 were negatively impacted by a $69 million provision primarily related
to onerous hot rolled and cold rolled contracts in the US.
from investments in associates, joint ventures and other investments for 1Q 2016
was $324 million as compared to a loss in 4Q 2015 of $655 million. Income for
1Q 2016 includes $329 million related to gain on disposal of Gestamp. The loss in 4Q 2015
was primarily due to write-downs
totalling $608 million primarily related to the Company’s investments in the Kalagadi
Manganese mining project in South Africa ($0.3 billion), Indian investee ($0.1
billion) due to downward revisions in projected cash flows and $0.1 billion
related to the decrease in market value of the investment in Erdemir.
interest expense in 1Q 2016 was $332 million as compared to $312 million in 4Q
2015 and $323 million in 1Q 2015. Net interest expense was higher in 1Q 2016 as
compared to 4Q 2015 primarily due to lower interest income.
Foreign exchange and other net financing gain
in 1Q 2016 was $9 million as compared to foreign exchange and other net
financing loss of $342 million for 4Q 2015 and $756 million for 1Q 2015. Foreign exchange and
other net financing gain for 1Q 2016 include a foreign exchange gain of $107
million as compared to a loss of $104 million for 4Q 2015 primarily on account
of USD depreciation of 4.6% against the Euro (versus 2.8% appreciation in 4Q
2015) and 9.7% depreciation against BRL (versus 1.7% depreciation in 4Q 2015).
This foreign exchange gain is largely non-cash and primarily relates to the gain
from the impact of the USD depreciation on Euro-denominated deferred tax
assets, partially offset by foreign exchange loss on Euro-denominated debt. Foreign
exchange and other net financing loss for 1Q 2015 include foreign exchange loss
of $538 million mainly on account of USD appreciation of 11.4% against the Euro
and 17.2% against BRL relative to the prior period.
recorded an income tax expense of $700 million for 1Q 2016 as compared to
income tax expense of $441 million for 4Q 2015, and income tax expense of $210
million for 1Q 2015. The tax expense in 1Q 2016 includes derecognition of
deferred tax assets (DTA) amounting to $0.7 billion in Luxembourg. This derecognition
(or impairment) is related to revised expectations of DTA recoverability in US
dollar terms, and is not related to a deterioration of expected future taxable
interest income for 1Q 2016 amounted to $8 million primarily related to losses
generated by ArcelorMittal South Africa. Non-controlling interest income for 4Q
2015 of $395 million primarily related to asset impairments in South Africa and
interest loss of $8 million for 1Q 2015 primarily related to minority
shareholders’ share of net income recorded in ArcelorMittal Mines Canada and
Belgo Bekaert Arames in Brazil.
net loss for 1Q 2016 of $416 million, or $0.23 loss per share (adjusted net
loss of $176 million), as compared to a net
loss of $6.7 billion, or $3.72 loss per share for 4Q 2015 (adjusted net loss of
and net loss of $728 million,
or $0.41 loss per share for 1Q 2015 (adjusted net loss of $36 million).
Capital expenditure projects
The following tables
summarize the Company’s principal growth and optimization projects involving
significant capital expenditures.
projects in most recent quarters
a) Though the Monlevade
wire rod expansion project and Juiz de Fora rebar expansion were completed in
2015, and Juiz de Fora meltshop is expected to be completed in 2017, the
Company does not expect to increase shipments until domestic demand improves.
b) First production in
Baffinland was in 4Q 2014, with first shipments taking place during 3Q 2015
following the completion of shiploader and port infrastructure.
c) On July 7, 2015,
ArcelorMittal Poland announced it will restart preparations for the relining of
blast furnace No. 5 in Krakow, which is coming to the end of its lifecycle in
mid-2016. Total investments in the primary operations in the Krakow plant will amount
to PLN 200 million (more than €40 million), which also includes modernization
of the basic oxygen furnace No. 3. Additional projects in the downstream
operations will also be implemented. These include the extension of the hot
rolling mill capacity by 0.9 million tons per annum and increasing the hot dip
galvanizing capacity by 0.4 million tons per annum. The capex value of those
two projects exceeds PLN 300 million (€90 million) in total. In total, the
group will invest more than PLN 500 million (more than €130 million) in its
operations in Krakow, including both upstream and downstream installations.
d) ArcelorMittal remains
committed to Liberia where it operates a full value chain of mine, rail and
port. It has been operating the mine on a direct shipped ores (DSO) basis since
2011 and produced 4.3Mt in 2015. In the current initial DSO phase, significant
cost reduction and restructuring have continued to ensure competitiveness at
current prices. Drilling for DSO resource extension has recommenced, and in 2016 the operation has been right sized to 3Mtpa
to focus on its ‘natural’ Atlantic markets. This repositioning for size and
competitiveness also extends the life of the DSO phase as ArcelorMittal considers
the appropriate next phase of development.
previously announced a Phase 2 project that envisaged the construction of 15
million tonnes of concentrate sinter fines capacity and associated
infrastructure. The phase 2 project was initially delayed due to the
declaration of force majeure by contractors in August 2014 due to the Ebola
virus outbreak in West Africa. Whilst rapid price declines over the period
since force majeure have led to a reassessment of the project, ArcelorMittal is
considering transitioning production to a higher grade sinter fines product but
now in a phased approach as opposed to a major step up to 15Mtpa as originally envisaged in phase 2. Extensive
tonnage of concentrator feed material is already exposed in readiness for
concentrated sinter fines, and ArcelorMittal also has options in its concession
to mine higher grade, lower gangue DSO. Work continues in 2016 to define the
best business option.
of segment operations
NAFTA segment crude steel production
increased 9.9% to 5.6 million tonnes in 1Q 2016 as compared to 5.1 million
tonnes for 4Q 2015.
Steel shipments in 1Q 2016 increased 19.2% to
5.5 million tonnes as compared to 4.6 million tonnes in 4Q 2015, primarily
driven by a 20.8% increase in flat product steel shipments (mainly US) and 11.7% increase
in long product shipment volumes (in both Canada and Mexico).
Sales in 1Q 2016 increased by 6.2% to $3.8
billion as compared to 4Q 2015, primarily due to higher steel shipment volumes
as discussed above, offset in part by lower average steel selling prices
EBITDA in 1Q 2016 increased 24.2% to $339
million as compared to $273 million in 4Q 2015 primarily due to higher steel volumes,
lower costs and improved performance at Calvert. Operating performance in 4Q 2015 was
impacted by impairments totalling $507 million with respect to the intended sale of
Long Carbon facilities in the US (ArcelorMittal LaPlace, Steelton and Vinton totalling
$0.2 billion), and following planned asset optimization at Indiana Harbor East
and West in the US ($0.3 billion). In addition, operating performance in 4Q
2015 was impacted by exceptional
inventory related charges of $353 million following the rapid decline of steel
EBITDA in 1Q 2016 improved significantly as compared
to $53 million in 1Q 2015 which was negatively impacted by a $69 million
provision primarily related to onerous hot rolled and cold rolled contracts in
the US. Excluding this negative impact, EBITDA in 1Q 2016 was 178.5% higher as
compared to 1Q 2015 primarily due to improved performance of Calvert and
improved cost performance, offset in part by lower average steel selling prices
Brazil segment crude steel
production decreased 6.4% to 2.7 million tonnes in 1Q 2016 as compared to 2.9
million tonnes in 4Q 2015.
shipments in 1Q 2016 decreased by 14.0% to 2.5 million tonnes as compared to 4Q
2015, primarily due to a 17.3% decrease in flat steel shipments and 7% decrease
in long product shipments due to weak demand.
Sales in 1Q 2016 decreased by 40.0% to $1.3
billion as compared to 4Q 2015, due to lower average steel selling prices (-16.1%), lower
steel shipments discussed above, as well as tubular operations in Venezuela impacted by
EBITDA in 1Q 2016 declined by 19.8% to $145
million as compared to $181 million in 4Q 2015 on account of lower average steel
selling prices (primarily long steel products -9.2%), lower steel shipment
volumes as well as tubular operations in Venezuela impacted by currency
performance in 4Q 2015 was impacted by the $176 million impairment related to Point Lisas (Trinidad
been indefinitely idled,
and exceptional charges of $52 million
relating to inventory write down in Point Lisas.
EBITDA in 1Q 2016 was 61.5% lower as compared
to 1Q 2015 primarily due to lower average steel selling prices (-33.5%) and
lower steel shipments
well as tubular operations in Venezuela impacted by currency devaluation.
Europe segment crude steel production increased
by 11.8% to 11.2 million tonnes in 1Q 2016, as compared to 4Q 2015.
Steel shipments in 1Q 2016 increased by 10.3%
to 10.4 million tonnes as compared to 4Q 2015, primarily due to a 13.7% increase
in flat product shipment volumes.
Sales in 1Q 2016 increased 1.1% to $7.2
billion as compared to 4Q 2015, primarily due to higher steel shipments as
discussed above, offset in part by lower average steel selling prices impacted
by the lagged effect of weak steel prices. Average steel selling prices
declined by 6.7% during 1Q 2016, as flat and long products declined 7.1% and 6.7%,
EBITDA in 1Q 2016 decreased by 33.3% to $363 million
as compared to $544 million in 4Q 2015, mainly driven by lower average steel
selling prices offset in part by higher steel shipment volumes. Operating
performance in 4Q 2015 was impacted by impairments of $398 million primarily in
connection with the idling for an indefinite time of the ArcelorMittal Sestao
plant in Spain and exceptional charges of $345 million, relating to the
write-down of inventories following the rapid decline of steel prices.
EBITDA in 1Q 2016 declined by 41.0% as compared to 1Q 2015 primarily on
account of lower average steel selling prices (-16.2%) and lower steel
shipments (-2.0%), offset in part by lower costs and efficiency improvements.
ACIS segment crude steel production in 1Q 2016
was stable at 3.7 million tonnes as compared to 4Q 2015.
Steel shipments in 1Q 2016 increased by 7.7%
to 3.3 million tonnes as compared to 4Q 2015 primarily due to increased
shipments in South Africa due to seasonality.
Sales in 1Q 2016 decreased by 4.7% to $1.2 billion
as compared to 4Q 2015, primarily due to lower average steel selling prices (-10.2%)
offset in part by higher steel shipments as discussed above.
EBITDA in 1Q 2016 of $61 million was stable compared
to 4Q 2015, primarily
due to lower average steel selling prices offset in part by higher steel
shipments and improved costs. Operating
performance in 4Q 2015 was impacted by impairments of $267 million primarily with respect to the
Saldanha plant in South Africa due to its revised competitive outlook, and exceptional
charges of $159 million primarily relating to a deferred stripping prepayment,
a provision in relation to competition cases in South Africa and the write-down of inventories following the rapid decline of steel prices.
EBITDA in 1Q 2016 of $61 million was lower as compared to $133
million in 1Q 2015, primarily due to lower average steel selling prices (-36.9%)
offset in part by higher steel shipments (+10.3%) and improved costs.
Own iron ore and coal production not including strategic long-term contracts.
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 (not including
supplies under strategic long-term contracts) in 1Q 2016 decreased by 8.9% to
14.1 million metric tonnes as compared to 4Q 2015 primarily due to lower seasonal
production in ArcelorMittal Mines Canada. Own iron
ore production (not including supplies under strategic long-term contracts) in
1Q 2016 was lower by 9.1% as compared to 1Q 2015. With ongoing focus on our
most competitive iron ore operations: production declined in Liberia (reduced scale
to 3 million tonnes per annum to improve competitiveness) and Mexico (primarily
due to suspension of operations in October 2015 of the Volcan Mine due to end
of mine life, with an estimated annual impact of two million tonnes) and Kazakhstan
offset in part by increased ArcelorMittal Mines Canada production.
ArcelorMittal Mines Canada production in 1Q 2016 of 6.0 million metric tonnes increased
7.2% as compared to 1Q 2015.
iron ore shipments in 1Q 2016 decreased by 21.1% to 7.8 million metric tonnes
as compared to 4Q 2015 primarily driven by lower seasonal shipments from
ArcelorMittal Mines Canada, Volcan mine in Mexico and ArcelorMittal Serra Azul
in Brazil. (Despite seasonally lower market priced iron ore shipments in 1Q
2016, ArcelorMittal Mines Canada remains on track for FY 2016 shipment growth
of greater than 26 million metric tonnes). Market-priced iron ore shipments in
1Q 2016 decreased by 16.8% as compared to 1Q 2015 driven by decreased shipments
primarily in Mexico and Liberia. As discussed above, market-priced iron ore
shipments are expected to decline by approximately 10% versus 2015.
Own coal production (not including supplies
under strategic long-term contracts) in 1Q 2016 was stable at 1.4 million
metric tonnes as compared to 4Q 2015. Own coal production (not including
supplies under strategic long-term contracts) in 1Q 2016 decreased 8.7% as
compared to 1Q 2015, due to lower production at our Kazakhstan operations.
Market-priced coal shipments in 1Q 2016 were
11.9% higher at 0.9 million metric tonnes as compared to 4Q 2015 primarily due
to increased shipments at Princeton (US) offset in part by lower shipments in
Kazakhstan. Market-priced coal shipments in 1Q 2016 increased as compared to 1Q
2015, primarily due to increased shipments at Princeton (US) offset in part by
lower shipments in Kazakhstan.
EBITDA in 1Q 2016 increased 9.2% to $98
million as compared to $90 million in 4Q 2015 primarily due to improved cost
performance, and better seaborne iron ore price realizations offset in part by
lower market-priced iron ore shipment volumes (-21.1%). Operating performance
in 4Q 2015 was impacted by impairments of $3.4 billion including $0.9 billion
with respect to goodwill and $2.5 billion primarily related to fixed assets in
respect of iron ore mining operations at ArcelorMittal Liberia ($1.4 billion),
Las Truchas in Mexico ($0.2 billion), ArcelorMittal Serra Azul in Brazil ($0.2
billion) and coal mining operations at ArcelorMittal Princeton in the
United States ($0.7 billion) mainly due to a downward revision of cash flow
projections relating to the expected persistence of a lower raw material
EBITDA in 1Q 2016 was 14.0% lower as compared
to 1Q 2015, primarily due to lower seaborne iron ore market prices (-22.7%) and
lower market-priced iron ore shipments, partially offset by lower unit iron ore
and Capital Resources
For 1Q 2016, net cash used in operating
activities was $690 million as compared to net cash provided by operating
activities of $1,574 million in 4Q 2015, mainly driven by a seasonal investment
in operating working capital of $1.2 billion as compared to a $1.3 billion
release in operating working capital in 4Q 2015.
Net cash used in
investing activities during 1Q 2016 was $572 million as compared to $646
million in 4Q 2015 and $456 million in 1Q 2015. Capital expenditure decreased
to $586 million in 1Q 2016 as compared to $736 million in 4Q 2015 and $745
million in 1Q 2015. FY 2016 capital expenditure is expected to be approximately
Cash flow from other
investing activities in 1Q 2016 of $14 million primarily consisted of proceeds
from the partial disposal of the Company’s stake in Stalprodukt (second
tranche). Cash flow from other investing activities in 4Q 2015 of $90 million
primarily consisted of proceeds from the partial disposal of the Company’s stake
in Stalprodukt (first tranche) and disposal of tangible assets. Cash flow from
other investing activities in 1Q 2015 of $289 million primarily included a $108
million inflow from the exercise of the fourth put option on Hunan Valin shares, cash
received from the Kiswire divestment
and proceeds from the sale of tangible assets.
Net cash provided by financing
activities for 1Q 2016 was $140 million as compared to net cash used in financing
activities of $367 million in 4Q 2015 and net cash provided by financing
activities of $313 million for 1Q 2015.
Other financing activities in 1Q
2016 was $63 million cash inflow as compared to $7 million cash inflow in 4Q
2015 and $20 million outflow in 1Q 2015. Other financing activities in 1Q 2016
primarily included capital contributions from minority shareholders in South
Africa following the completion of its rights issue.
During 1Q 2016 and 4Q 2015, the
Company paid dividends primarily to minority shareholders in Brazil (Bekaert)
of $6 million and $11 million, respectively. During 1Q 2015, the Company paid
$53 million in dividends primarily to minority shareholders in ArcelorMittal
At March 31, 2016, the Company’s cash and
cash equivalents (including restricted cash and short-term investments)
amounted to $2.9 billion as compared to $4.1 billion at December 31, 2015.
Gross debt of $20.2 billion at March 31, 2016,
increased from $19.8 billion at December 31, 2015 and $19.4 billion at March 31,
As of March 31, 2016, net debt increased to
$17.3 billion as compared with $15.7 billion in December 31, 2015, and $16.6
billion as of March 31, 2015, largely on account of working capital consumption
($1.2 billion) and foreign exchange impacts ($0.5 billion).
The foreign exchange impact in 1Q 2016 is largely on account of the 4.6% Euro appreciation
against the US dollar and the effect of exchange rate changes on net debt in
Venezuela ($0.1 billion).
The Company had liquidity of $8.9 billion at
March 31, 2016, consisting of cash and cash equivalents (including restricted
cash and short-term investments) of $2.9 billion and $6.0 billion of available
credit lines. The $6 billion credit facility contains a financial covenant of
4.25x Net debt / EBITDA. On March 31, 2016, the average debt maturity was 5.9
Key recent developments
Outlook and guidance
on the current economic outlook, ArcelorMittal expects global apparent steel
consumption (“ASC”) to grow slightly in 2016 as compared to 2015. By region: In
the US, continued growth in underlying steel demand and the expected absence of
a further destock in 2016, is expected to lead to ASC growth of +3% to +4%. In
Europe, the pick-up in underlying demand is expected to continue supported by
the strength of automotive, but apparent demand is expected to be modest at +0%
to +1% in 2016 (versus a growth of +3.4% in 2015). In Brazil, ASC is expected
to decline further by between -10% to -12% in 2016 as the economy remains mired
in recession. With the ongoing recession in Russia impacted by weak oil prices,
CIS demand is expected to decline -5% to -6% (versus a decline of -8.0% in
2015). In China, our view of demand has marginally improved, but while we still
expect real demand to decline due to weakness in the real estate sector ASC is
expected to stabilise at around 2015 levels supported by an end to destocking (-4.3%
decline in 2015). While there remain risks to the global demand picture,
given ArcelorMittal’s specific geographical and end market exposures, the
Company expects its steel shipments to remain stable in 2016 as compared to
The Company expects FY 2016 EBITDA to be in excess of $4.5
billion. The impact of the improving steel spread environment is expected to be
fully reflected in the results of the second half of the year.
The Company's cash requirements in 2016 are expected to total $4.5
billion, a greater than $1 billion reduction as compared to 2015. The
components of this reduction are: lower capex spend (FY 2016 capex is expected
to be approximately $2.4 billion as compared to $2.7 billion in FY 2015), lower
interest expenses (FY 2016 net interest is expected to be approximately $1.1
billion as compared to $1.3 billion in FY 2015); no dividend in respect of the
2015 financial year; and lower cash taxes.
The improving market conditions are likely to consume working
capital in 2016 (current estimate ~$0.5 billion); the Company nevertheless continues
to expect to be free cash flow positive in 2016.
ArcelorMittal Condensed Consolidated Statements of Financial
ArcelorMittal Condensed Consolidated Statement of Operations
ArcelorMittal Condensed Consolidated Statements of Cash flows
Appendix 1: Product shipments by region
Others and eliminations line are not presented in the table
Appendix 2: Capital expenditures
Note: Others and eliminations line are not
presented in the table
Appendix 3: Debt repayment schedule as of March 31, 2016
*Debt repayment schedule as shown above and
reported as of March 31, 2016, excludes the recent debt repayments post the
Appendix 4: Credit lines available as of March 31, 2016
Appendix 5: Reconciliation of net loss to adjusted net (loss)/
Appendix 6: Terms and definitions
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:
Lost time injury
frequency rate equals lost time injuries per 1,000,000 worked hours, based on
own personnel and contractors.
plus depreciation, impairment expenses and exceptional items.
Free cash flow:
net cash provided by operating activities
less purchases of property, plant and equipment and intangibles.
long-term debt, plus short term debt, less
cash and cash equivalents, restricted cash and short-term investments
(including those held as part of assets/liabilities held for sale).
: long-term debt, plus short term debt,
plus cash and cash equivalents, restricted cash and short-term investments
(including those held as part of assets/liabilities held for sale).
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.
exchange and other net financing costs:
include foreign currency swaps, bank
fees, interest on pensions, impairments of financial instruments and
revaluation of derivative instruments, and other charges that cannot be directly
linked to operating results.
steel selling prices:
calculated as steel sales divided by steel shipments.
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).
working capital: trade accounts
receivable plus inventories less trade and other accounts payable
includes the acquisition of intangible
assets (such as concessions for mining and IT support) and includes payments
to fixed asset suppliers.
eaborne iron ore reference prices:
refers to iron ore
prices for 62% Fe CFR China.
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).
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
EBITDA divided by total steel shipments.
EBITDA less Mining segment EBITDA.
steel-only EBITDA divided by total steel shipments.
Iron ore unit cash cost:
average pellet and concentrate cost of goods sold across all mines.
includes back-up lines for the commercial
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 Distribution
Solutions (renamed Downstream Solutions from January 1, 2016) are excluded.
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, Trinidad and Tobago and Venezuela. The
Europe segment comprises the Flat, Long and Tubular operations of the
European business, as well as Downstream Solutions. The ACIS division
includes the Flat, Long and Tubular operations of Kazakhstan, Ukraine and
: Refers to year-on-year
information in this press release has been prepared consistently with
International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”). 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 Standards 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.
See appendix 5:
Reconciliation of net loss to adjusted net (loss)/ income for details of
exceptional items and impairments.
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. The transaction is unconditional and payment is expected to be
made to ArcelorMittal within six months. In addition to the cash consideration,
ArcelorMittal is expected to receive in 2Q 2016 a payment of $11 million as a
2015 dividend. ArcelorMittal will continue its supply relationship with Gestamp
through its 35% shareholding in Gonvarri, a sister company of Gestamp.
ArcelorMittal sells coils to Gonvarri for processing before they pass to
Gestamp and other customers. Further, ArcelorMittal will continue to have a
board presence in Gestamp, collaborate in automotive R&D and remain its
major steel supplier.
from Gestamp sale $1.0 billion; Rights issue $3.2 billion and premium paid on
early repayment of debt subsequent to rights issue of $0.1 billion.
Based on exchange
rate (€/$ 1.1250).
for 4Q 2015 were $4.7 billion including $3.4 billion within the Mining segment
consisting of: $0.9 billion with respect to goodwill and $2.5 billion primarily
related to fixed assets mainly due to a downward revision of cash flow
projections relating to the expected persistence of a lower raw material price
outlook at: ArcelorMittal Liberia ($1.4 billion); Las Truchas in Mexico ($0.2
billion); ArcelorMittal Serra Azul in Brazil ($0.2 billion); ArcelorMittal
Princeton coal mining operations in the United States ($0.7 billion); and $1.4
billion within the Steel segments consisting of: fixed asset impairment charges
of $0.2 billion related to the intended sale of the Long Carbon facilities in
the US (ArcelorMittal LaPlace, Steelton and Vinton within the NAFTA segment),
$0.4 billion primarily in connection with the idling for an indefinite time of
the ArcelorMittal Sestao plant in Spain (Europe segment), and $0.8 billion
related to: NAFTA: Deployment of asset optimization programs at Indiana Harbor
East and West in the United States ($0.3 billion); Brazil: ArcelorMittal Point
Lisas in Trinidad and Tobago ($0.2 billion) which had been indefinitely idled;
and ACIS: Saldanha plant in South Africa as a result of its revised competitive
outlook ($0.3 billion).
Effective January 1,
2016, the Company discontinued the use of the SICAD rate (13.5VEF/$ as of
December 31, 2015), which was eliminated by the Venezuelan government, and
applied the DICOM rate (previously known as SIMADI) which was 273 VEF/$ at
March 31, 2016 to translate the financial statements of its Venezuelan
operations from VEF to USD.
Under the amended
agreement, between Sishen Iron Ore Company Pty) Ltd and ArcelorMittal South
Africa the latter will pay market price (EPP) for iron ore and will therefore
no longer contribute towards stripping costs. Accordingly at December 31, 2015,
the “deferred stripping pre-payment asset” was derecognised and written off
through profit and loss.
As reported in prior
periods, and dating back to 2007, the Competition Commission (“the Commission”)
has referred five cases to the Competition Tribunal and is formally
investigating one further complaint against ArcelorMittal South Africa. The
Company has since engaged with the Commission and has made significant progress
regarding a possible overall settlement and is in the process of finalizing a
detailed settlement agreement. Whilst the draft settlement agreement is still
subject to final approval by the Commission and the Competition Tribunal, a
provision of R1,245 million representing the present value of a proposed
administrative penalty of R1,500 million has been recognized. The Company has,
subject to certain conditions being agreed upon with the Commission, proposed
to pay the administrative penalty over a period of 5 years subject to
Following the sale of a 5% stake to Valin
Group as a result of the exercise of the third put option on February 8, 2014,
the Company’s interest in Hunan Valin decreased from 20% to 15%. On August 6,
2014, the Company exercised the fourth and final instalment, which subsequently
led to the decrease in its stake in Hunan Valin from 15% to 10%. The Company
received cash from the third and fourth instalment of $108 million both in the
fourth quarter of 2014 and first quarter of 2015, respectively.
On December 9, 2013, ArcelorMittal signed an
agreement with Kiswire Ltd. for the sale of its 50% stake in the joint venture
Kiswire ArcelorMittal Ltd in South Korea and certain other entities of its
steel cord business in the US, Europe and Asia for a total consideration of
$169 million. The net proceeds received in 2Q 2014 were $39 million being $55
million received in cash during the quarter minus cash held by steel cord
business. Additionally, $28 million of gross debt held by the steel cord
business had been transferred. During 1Q 2015, the Company received $45 million
and the final instalment of $47 million received in 2Q 2015.
On January 15, 2016, ArcelorMittal South
Africa completed a rights offer for ZAR 4.5 billion fully underwritten by
ArcelorMittal followed by an issuance of new shares on January 18, 2016. Out of
the 692,307,693 rights offer shares which were offered to shareholders, a total
of 471,604,240 new ArcelorMittal shares, being 68.1% of the rights offer, were
applied for in terms of the rights offer. ArcelorMittal subscribed for its
proportional entitlement of the rights offer of 342,133,922 shares amounting to
ZAR 2,223,870,495 and, pursuant to its underwriting obligation, subscribed for
a further 220,655,076 new ArcelorMittal South Africa shares, amounting to ZAR
1,434,257,994. As a result of this transaction, the shareholding interest of
ArcelorMittal in ArcelorMittal South Africa increased from 52.02% to 70.55%.
Assets and liabilities held for sale, as of
March 31, 2016 and as of December 31, 2015, include the carrying value of
ArcelorMittal Algeria (investment stake of 49%), ArcelorMittal Tebessa (investment
stake of 49%), ArcelorMittal Pipes and Tubes Algeria (70% control), the USA
long product facilities at Steelton, Vinton and ArcelorMittal LaPlace and some
activities of ArcelorMittal downstream solutions in the Europe segment.
Exceptional charges for 4Q 2015, primarily
included $0.8 billion inventory related charges following the rapid decline of
international steel prices and $0.1 billion of litigation and other costs in
Effective 1Q 2016, changes in operating
working capital in the cashflow statement includes certain other amounts
payable that were previously classified as part of the other operating
activities line. Prior period figures have been recasted accordingly.
Contact information ArcelorMittal Investor Relations
Europe: +352 4792 3198
Americas: +1 312 899 3985
Retail: +352 4792 3198
SRI: +44 207 543 1156
Bonds/Credit: +33 1 71 92 10 26
Contact information ArcelorMittal Corporate Communications
Phone: +44 207 629 7988
ArcelorMittal Corporate Communications
Sophie Evans (Head of Media Relations) +44 203 214 2882
Paul Weigh +44 203 214 2419
Sylvie Dumaine / Anne-Charlotte Creach
+33 (1) 53 70 74 70
6 May 2016 – ArcelorMittal Europe has announced its results for the first quarter of 2016, reporting a 34% drop in Ebitda to €328m compared with Q4 2015, mainly due to a 7.2% decline in average steel selling prices for the first three months of 2016. Lower prices were however offset in part by higher steel shipment volumes and improved cost performance.
ArcelorMittal Europe reported an operating profit of €77m for the first three months of the year, compared with a €465m operating loss in the previous quarter. The fourth quarter 2015 performance was significantly impacted by impairments and inventory write-downs. Comparing year-on-year, ArcelorMittal Europe reported an operating profit of €281m for the first quarter of 2015.
The Europe segment’s crude steel production for Q1 2016 rose 11.9% to 11.2 million tonnes, compared with the previous three months. Sales also rose, by 0.6% to €6.5bn, driven by a 13.7% increase in demand for flat steel products and an overall 10.3% increase in steel shipments, compared with Q4 2015.
While steel spreads have improved since the start of 2016, price rises are not expected to be visible until the second quarter.
Commenting, Aditya Mittal, CEO ArcelorMittal Europe and CFO ArcelorMittal, said:
“Today we reported a 34% drop in Ebitda, which shows the impact of low steel prices on our business - although we were able to offset some of the effect of low prices thanks to our ongoing focus on cost performance.
Today’s results also reflect improved demand for steel in Europe. Our shipments rose by more than 10% to 10.4 million tonnes in Q1 2016, compared with the final quarter of 2015. This stronger demand has led to a welcome improvement in steel spreads, in recent months – resulting in a tight market, for flat products in particular. However, the market remains highly volatile; we must remain vigilant against steel dumping in Europe, in order to ensure that steel is traded in line with WTO regulations.”
Steel demand in Europe this year is expected to remain more than 21% below pre-2007 levels, compared with the Nafta region where demand is forecast to be 4.6% below 2007 levels (see chart, below).
In terms of the economic outlook, ArcelorMittal sees the modest European economic recovery is continuing, supported by ECB stimulus, low oil prices and rising employment. Real steel consumption (RSC) is expected to grow by almost 2% in 2016, but apparent steel consumption (ASC) in Europe is expected to rise by only 1% after high imports pushed ASC up by 3.5% in 2015. EU28 construction is picking-up this year, while car sales are growing to levels that are only 6-7% below the pre-crisis peak.
ArcelorMittal has today unveiled a new approach to sustainability reporting, providing stakeholders with a rolling series of updates on the company’s performance.
A detailed sustainability section on corporate.arcelormittal.com replaces the annual sustainability report, in line with best practice in reporting.
Readers can filter content to focus on specific areas of interest, for example how ArcelorMittal is helping to accelerate sustainable lifestyles through our products, or the progress the company is making in becoming a ‘trusted user of air, land and water’. Case studies, news stories and in-depth data are also available on the new webpages.
Today’s launch comes as part of a new, two-fold approach to sustainability reporting which includes:
Dr Alan Knight, general manager, corporate responsibility at ArcelorMittal said: “This is a big step forward for us in how we tell our stakeholders what we’re doing about our material issues. Our new approach to sustainability reporting means we’re making it easier for people to follow the progress on our 10 outcomes, by providing all our updates in one place. And with the launch of our new annual review later this week, we’ll be making the connection between our sustainable development performance and our operational performance, for the first time”.
Want to know more?
Visit our new sustainability pages
ArcelorMittal reports results for the first quarter 2016
ArcelorMittal Europe reports €328m Ebitda for first quarter of 2016
ArcelorMittal unveils new approach to sustainability reporting
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