ArcelorMittal reports second quarter 2014 and half year 2014 results
ArcelorMittal Europe reports €245m operating profit for Q2 2014
ArcelorMittal announces the publication of sell-side analysts’ consensus figures for second quarter 2014
Luxembourg, August 1, 2014
(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 and six month periods ended June 30, 2014.
and guidance framework:
Financial highlights (on the basis of IFRS):
Commenting, Mr. Lakshmi N. Mittal,
ArcelorMittal Chairman and CEO, said:
second quarter and first half results reflect the anticipated improvement in
steel shipments and margins, supporting an underlying EBITDA improvement
compared with last year. The expansion of our iron ore business is also
on track, although increased
iron ore shipments were offset by the lower than anticipated iron ore price,
which has led us to revise our EBITDA guidance for the full year.
ahead, indicators in both Europe and the US, which together account for two
thirds of our shipments, continue to be positive and we have increased our
steel demand forecasts for both markets. ArcelorMittal continues to focus
on delivering on its strategy of reducing costs, investing in our franchise
businesses and reducing net debt.”
quarter 2014 earnings analyst conference call
management will host a conference call for members of the investment community
to discuss the second quarter period ended June 30, 2014 on:
conference call will include a brief question and answer session with senior
management. The presentation will be available via a live video webcast on http://corporate.arcelormittal.com
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 (
de Surveillance du Secteur Financier
) and the United States Securities and
Exchange Commission (the “SEC”) made or to be made by ArcelorMittal, including
ArcelorMittal’s Annual Report on Form 20-F for the year ended December 31, 2013
filed with the SEC. ArcelorMittal undertakes no obligation to publicly update
its forward-looking statements, whether as a result of new information, future
events, or otherwise.
is the world's leading steel and mining company, with a presence in more than
60 countries and an industrial footprint in over 20 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.
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.
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 we use in our everyday lives more energy-efficient.
are one of the world’s largest producers of iron ore and metallurgical coal and
our mining business is an essential part of our growth strategy. 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 2013, ArcelorMittal
had revenues of $79.4 billion and crude steel production of 91.2 million
tonnes, while own iron ore production reached 58.4 million tonnes.
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).
more information about ArcelorMittal please visit:
Corporate responsibility and safety performance
Health 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, increased to 0.87x in the second quarter of
2014 (“2Q 2014”) as compared to 0.85x for the first quarter of 2014 (“1Q 2014”)
and decreased as compared to 0.90x for the second quarter of 2013 (“2Q 2013”). During
2Q 2014, significant improvement in the Brazil segment performance relative to 1Q
2014 was offset by a deterioration in the Mining segment performance.
and safety performance was relatively flat at 0.86x in the first six months of
2014 (“1H 2014”) as compared to 0.85x for the first six months of 2013 (“1H
2013”), with improvements within the Mining, NAFTA and ACIS segments, offset by
deterioration in the Europe segment.
Company’s effort to improve the group’s Health and Safety record continues.
Whilst the LTIF target of 0.75x is maintained for 2014, the Company is focused
on both further reducing the rate of severe injuries and preventing fatalities.
Own personnel and contractors - Frequency
Key corporate responsibility
highlights for 2Q 2014
of results for the six months ended June 30, 2014 versus results for the six
months ended June 30, 2013
loss for 1H 2014 was $0.2 billion, or $0.09 loss per share, as compared to net loss
for 1H 2013 of $1.1 billion, or $0.65 loss per share.
Total steel shipments
for 1H 2014 were 2.5% higher at 42.4 million metric tonnes as compared with 41.4
million metric tonnes for 1H 2013.
Sales for 1H 2014 increased
by 1.4% to $40.5 billion as compared with $39.9 billion for 1H 2013, primarily
due to higher steel shipments (+2.5%) and marketable iron ore shipments (+28.4%),
offset in part by lower average steel selling prices (-1.6%) and lower seaborne
iron ore prices (-19%).
In recent years the
Company’s maintenance practices have enabled an increase in the useful lives of
plant and equipment. As a result of this development, the Company has
determined that it is appropriate to extend the useful lives resulting in a
lower charge to the income statement. The full detailed review of useful lives
of the assets was largely completed during 2Q 2014. Accordingly, depreciation
of $2.0 billion for 1H 2014 was lower as compared to $2.3 billion for 1H 2013.
The Company expects the full year 2014 depreciation charge to be approximately
$3.8-4.0 billion as compared to $4.7 billion in both 2012 and 2013.
Impairment charges for
1H 2014 were nil. Impairment charges for 1H 2013 were $39 million, primarily
relating to the closure of the organic coating and tin plate lines in Florange
charges for 1H 2014 were nil. Restructuring charges for 1H 2013 were $173 million,
including $137 million of cost incurred for the long term idling of the
Florange liquid phase (including voluntary separation scheme costs, site
rehabilitation/safeguarding costs, and take or pay obligations).
Operating income for
1H 2014 was $1.5 billion as compared with operating income of $756 million for
1H 2013. Operating results for 1H 2014 were negatively impacted by a $90
million charge following the settlement of US antitrust litigation. Operating
results for 1H 2013 were positively impacted by a $47 million fair valuation
gain relating to the acquisition of an additional ownership interest in DJ
Galvanizing in Canada and $92 million related to “Dynamic Delta Hedge” (DDH)
income. The DDH income recorded in 1Q 2013 was the final instalment of such
income. This gain on the unwinding of a currency hedge related to raw materials
purchases was initially recorded in equity in 4Q 2008, and as of 1Q 2013 was fully
recorded in the income statement.
investments, associates, joint ventures and other investments in 1H 2014 was $154
million, as compared to a loss of $42 million in 1H 2013. Income in 1H 2014 includes
the annual dividend received from Erdemir, improved performance of Spanish investees
as well as the share of profits of Calvert operations. Losses incurred during 1H
2013 related primarily to the payment of contingent consideration related to
the Gonvarri Brasil acquisition in 2008 and weaker performance of European
associates during the year.
Net interest expense
(including interest expense and interest income) was lower at $809 million for
1H 2014, as compared to $949 million for 1H 2013, on account of savings
incurred following repayment of the EUR and USD bonds in June 2013 and the EUR
and USD convertibles in April and May of 2014. The Company expects full year
2014 net interest expense of approximately $1.6 billion.
exchange and other net financing costs
were $707 million for 1H 2014 as compared to costs of $685 million for 1H 2013.
Foreign exchange and other net financing costs for 1H 2014 include a payment
following the termination of the Senegal greenfield project
and non-cash gains and
losses on convertible bonds, and hedging instruments which matured during the
quarter. Foreign exchange and other net financing costs for 1H 2013 were
negatively affected by a 8% devaluation of Brazilian
Real versus USD which impacted loans
and payables denominated in foreign currency.
an income tax expense of $217 million for 1H 2014, as compared to an income tax
expense of $196 million for 1H 2013.
interests for 1H 2014 were a charge of $80 million, as compared to a charge of
$9 million for 1H 2013. Non-controlling interests charges for 1H 2014 primarily
relate to minority shareholders’ share of net income recorded in ArcelorMittal
Analysis of results for 2Q 2014 versus 1Q 2014 and 2Q 2013
recorded net income for 2Q 2014 of $52 million, or $0.03 earnings per share, as
compared to a net loss of $0.2 billion, or $0.12 loss per share for 1Q 2014,
and a net loss of $0.8 billion, or $0.44 loss per share for 2Q 2013.
Total steel shipments
for 2Q 2014 were 21.5 million metric tonnes, as compared with 21.0 million
metric tonnes for 1Q 2014 and 20.9 million metric tonnes for 2Q 2013.
Sales for 2Q 2014 were
$20.7 billion as compared to $19.8 billion in 1Q 2014 and $20.2 billion for 2Q
2013. The increase as compared to 1Q 2014 was due to improved steel shipments (+2.3%),
marginally higher average steel selling prices (+0.9%), and seasonally higher
market priced iron ore shipments (+12.5%), offset in part by lower iron ore reference
prices (-15%). Sales in 2Q 2014 was higher as compared to 2Q 2013 due to
improved steel shipments (+2.5%); and higher marketable iron ore shipments
(+28.8%), offset in part by lower average steel selling prices (-1.2%) and
lower iron ore references prices (-18.5%).
Following increases in
the useful lives of plant and equipment (as discussed above), depreciation was
lower at $931 million for 2Q 2014 as compared to $1,080 million for 1Q 2014 and
$1,136 million for 2Q 2013.
Impairment charges for 2Q 2014 and 1Q 2014 were
nil. Impairment charges for 2Q 2013 were $39 million, primarily relating to the
closure of the organic coating and tin plate lines in Florange (Europe).
for 2Q 2014 and 1Q 2014 were nil. Restructuring charges for 2Q 2013 were $173
million, including $137 million of costs incurred for the long term idling of
the Florange liquid phase (including voluntary separation scheme costs, site
rehabilitation/safeguarding costs, and take or pay obligations).
Operating income for 2Q
2014 was $832 million, as compared to operating income of $674 million for 1Q
2014 and operating income of $352 million for 2Q 2013. Operating results for 2Q
2014 included a $90 million charge following the settlement of US antitrust litigation.
investments, associates, joint ventures and other investments in 2Q 2014 was $118
million as compared to income in 1Q 2014 of $36 million, and a loss of $24
million in 2Q 2013. Income from investments, associates, joint ventures and
other investments in 2Q 2014 included annual dividend received from Erdemir,
improved performance from some European investees as well as the share of
profits of Calvert operations. Income in 1Q 2014 was primarily the result of improved
performance of Spanish entities. Losses incurred during 2Q 2013 related
primarily to the payment of contingent consideration from the Gonvarri Brasil
acquisition in 2008.
Net interest expense
(including interest expense and interest income) in 2Q 2014 was $383 million,
as compared to $426 million for 1Q 2014 and $471 million for 2Q
decrease in 2Q 2014 was due to savings incurred following the repayment of the EUR
and USD bonds in June 2013, and the convertibles upon their maturity in April
and May of 2014.
Foreign exchange and
other net financing costs were $327 million for 2Q 2014 as compared to $380 million
for 1Q 2014 and $530 million for 2Q 2013. Foreign exchange and other net
financing costs for 2Q 2014 include non-cash gains and losses on convertible
bonds, and hedging instruments which matured during the quarter. Foreign
exchange and other net financing costs for 1Q 2014 included a provision in relation
to the termination of the Senegal greenfield project. Foreign exchange and
other net financing costs for 2Q 2013 were negatively affected by a 9%
devaluation of Brazilian Real versus USD
which impacted loans and payables denominated in foreign
an income tax expense of $156 million for 2Q 2014, as compared to an income tax
expense of $61 million and $99 million for 1Q 2014 and 2Q 2013, respectively.
interests for 2Q 2014 were a charge of $32 million, as compared to a charge of
$48 million for 1Q 2014 and a charge of $8 million for 2Q 2013. Non-controlling
interests charges for 2Q 2014 primarily related to minority shareholders’ share
of net income recorded in ArcelorMittal Mines Canada, partially offset by
losses generated in ArcelorMittal South Africa.
Capital expenditure projects
following tables summarize the Company’s principal growth and optimization
projects involving significant capital expenditures.
Completed projects in most recent
a) Final capex for the
AMMC expansion project was $1.6 billion. The ramp-up of expanded capacity at
AMMC hit a run-rate of 24mt by year end 2013. Stretch opportunity to 30mtpa
concentrate through debottlenecking of existing operations has been identified
but remains subject to board approval.
projects refer to projects for which construction has begun (excluding various
projects that are under development), or have been placed on hold pending
improved operating conditions.
c) The Phase 2
expansion of the Liberia project to a production capacity of 15 million tonnes
per annum sinter feed is underway. The first sinter feed production is expected
at the end of 2015. Stretch opportunity to 20mtpa including 5mtpa DSO has been
identified but remains subject to board approval. Phase 2 is expected to
require capex of $1.7 billion.
Company’s Board of Directors has approved the Early Revenue Phase (“ERP”) at
Baffinland, which requires less capital investment than the full project as
originally proposed. Implementation of the ERP is now underway and
environmental approvals are in place. The goal is to reach a 3.5mt per annum
production rate during the open water shipping season by the end of
2015. The budget for the ERP is approximately $730 million and requires
upgrading of the road that connects the port in Milne Inlet to the mine site.
e) During 3Q 2013, the
Company restarted the construction of a heavy gauge galvanizing line #6
(capacity 660ktpy) at Dofasco. On completion of this project in 2015, the
older and smaller galvanizing line #2 (capacity 400ktpy) will be closed.
The project is expected to benefit EBITDA through increased shipments of galvanized
product (260ktpy), improved mix and optimized costs. The line #6 will also
incorporate Advanced High Strength Steel (AHSS) capability and is the key
element in a broader program to improve Dofasco’s ability to serve customers in
the automotive, construction, and industrial markets.
f) During 2Q 2013, the
Company restarted its Monlevade expansion project in Brazil. The project is
expected to be completed in two phases with the first phase (investment in
which has now been approved) focused mainly on downstream facilities and
consisting of a new wire rod mill in Monlevade with additional capacity of
1,050 ktpy of coils with capex estimated at a total of $280 million; and Juiz
de Fora rebar capacity increase from 50 to 400ktpy (replacing some wire rod
production capacity) and meltshop capacity increase by 200ktpy. This part of
the overall investment is expected to be finished in 2015. A decision whether
to invest in Phase 2 of the project, focusing on the upstream facilities in
Monlevade (sinter plant, blast furnace and meltshop), will be taken at a later
g) During 3Q 2013,
Acindar Industria Argentina de Aceros S.A. (Acindar) announced its intention to
invest $100 million in a new rolling mill (with production capacity of 400ktpy
of rebars from 6 to 32mm) in Santa Fe province, Argentina devoted to the
manufacturing of civil construction products. The new rolling mill will also
enable ArcelorMittal Acindar to optimize production at its special bar quality
(SBQ) rolling mill in Villa Constitución, which in the future will only
manufacture products for the automotive and mining industries. The project is
expected to take up to 24 months to build, with operations expected to start in
h) Valin ArcelorMittal
Automotive Steel (“VAMA”), a downstream automotive steel joint venture between
ArcelorMittal and Valin Group, of which the Company owns 49%, will produce
steel for high-end applications in the automobile industry and supply
international automakers and first-tier Chinese car manufacturers as well as
their supplier networks for the rapidly growing Chinese market. The project
involves the construction of state of the art pickling line tandem CRM (1.5mt),
continuous annealing line (0.9mt) and hot dipped galvanised line (0.5mt). Total
capital investment is $832 million (100% basis) with the first automotive coil
to be produced in 2H 2014.
Analysis of segment operations
January 1, 2014, ArcelorMittal implemented changes to its organizational structure
to give it a greater geographical focus. The principal benefits of the
changes are to reduce organizational complexity and layers; simplification of
processes; regional synergies and taking advantage of the scale effect within
As a result, the analysis
of segment operations presented in this earnings release has been prepared
reflecting the new organizational structure. The changes are only
related to the allocation between the new reporting segments of NAFTA, Brazil
(Brazil and neighboring countries), Europe and ACIS. There are no changes to
the Group total or to the Mining segment.
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 Distribution
Solution (AMDS). The ACIS division is largely unchanged with the addition of
some Tubular operations. The Mining segment remains unchanged.
NAFTA crude steel
production decreased by 1.7% to 6.2 million tonnes in 2Q 2014 as compared to 1Q
2014 as a result of the planned blast furnace reline at Indiana Harbor No.7 and
unplanned maintenance downtime at Cleveland.
Steel shipments in 2Q
2014 were 5.8 million tonnes, an increase of 3.2% as compared to 1Q 2014,
primarily driven by a 3.8% increase in flat product steel shipment volumes,
reflecting improved demand following the severe weather disruption in the
United States in 1Q 2014, offset in part by 1.6% decline in long product
steel shipment volumes, primarily due to lower export business from Mexico.
Sales in NAFTA were
10.0% higher at $5.4 billion in 2Q 2014 as compared to 1Q 2014 due to higher
steel shipments as discussed above, and higher average steel selling prices
steel selling prices for flat products increased by 1.0% and for long products
EBITDA in 2Q 2014
decreased to $177 million as compared to $259 million in 1Q
2014. EBITDA in 2Q 2014 included a $90 million charge following the settlement
of antitrust litigation in the United States. Excluding this effect, EBITDA
would have been 3.3% higher than 1Q 2014. Operating results for 2Q 2014
continued to be negatively impacted by the residual costs recorded in 2Q 2014 resulting
from the severe weather disruption in United States during 1Q 2014 as well as costs
related to planned and unplanned maintenance downtime. Going forward, the
Company does not expect to see any further impact from the severe weather experienced
during 1H 2014 on NAFTA performance.
As compared to 2Q
2013, EBITDA decreased by 7.2%. Excluding the charge related to the settlement
of the US antitrust litigation, EBITDA would have been 40.0% higher on account
of higher steels shipments (+6.6%) and average steel selling prices (+1.7%).
segment crude steel production at 2.4 million tonnes in 2Q 2014 was comparable
to 1Q 2014.
shipments in 2Q 2014 were 2.3 million tonnes. Flat product steel shipment
volumes increased 5.4% in 2Q 2014 following operational issues during 1Q 2014
in the hot strip mill in Tubarão, offset by lower long products steel shipment
volumes (down 5.8%), with lower exports from our Point Lisas operating facility
Sales increased by
3.2% to $2.4 billion in 2Q 2014 as compared to 1Q 2014. Sales were higher
primarily on account of higher average steel selling prices (+4.4%). Average
steel selling price for long products were higher by 5.5% driven in part by
forex, while prices for flat products marginally declined by 0.1%.
EBITDA in 2Q 2014
decreased by 2.4% to $414 million as compared to $425 million in 1Q 2014, and
decreased by 22.3% as compared to $533 million in 2Q 2013. EBITDA in Q2 2014
was lower than 1Q 2014 primarily due to additional costs associated with the
preparation for the planned re-start of ArcelorMittal Tubarão blast furnace
No.3 in the third quarter of 2014. The long product business performance
remained relatively stable
EBITDA in 2Q 2014 was
lower compared to 2Q 2013 by 22.3%, primarily due to lower steel shipment volumes
(-7.0%) and additional costs incurred in 2Q 2014 following the re-start of ArcelorMittal
Tubarão blast furnace No.3 discussed above.
segment crude steel production in 2Q 2014 at 10.9 million tonnes remained flat
as compared to 1Q 2014.
Steel shipments in 2Q 2014
were 10.2 million tonnes, an increase of 1.8% as compared to 1Q 2014. Flat
product steel shipment volumes increased 0.7% and long product steel shipment
volumes increased by 4.2%, both benefiting from seasonality and improved
Sales increased by 1.9%
to $10.5 billion in 2Q 2014, as compared to $10.3 billion in 1Q 2014, primarily
due to higher steel shipment volumes discussed above, offset in part by lower
average steel selling prices (-1.1%). Average steel selling prices for flat
products decreased by 0.9% and for long products by 2.2%.
EBITDA in 2Q 2014
increased by 28.8%, to $689 million, as compared to $535 million in 1Q 2014,
mainly driven by higher shipments and positive price / cost effects. EBITDA in
2Q 2014 was 40.6% higher than 2Q 2013, primarily reflecting improved market
conditions and the realized benefits of cost optimization efforts.
The comparable operating performance for 2Q
2013 was impacted by restructuring charges of $164 million, primarily associated
with the long
term idling of the Florange liquid phase in France and impairment charges of
$24 million primarily related to the closure of the organic coating and tin
plate lines in Florange. There were no such impairment or
restructuring charges in 2Q 2014.
ACIS crude steel
production increased by 5.5% in 2Q 2014 to 3.6 million tonnes as compared to 1Q
2014, primarily due to higher production in Ukraine (1Q 2014 impacted by blast
furnace maintenance) and Kazakhstan, offset in part by lower production in South
Africa following the reline of the Newcastle blast furnace, which commenced
during the quarter.
Steel shipments in 2Q 2014
were 3.3 million tonnes, an increase of 3.7% as compared to 1Q 2014, primarily
due to an increase in Kazakhstan (+22.8%) and Ukraine (+2.4%), offset in part
by lower steel shipment volumes in South Africa (-6.8%).
Sales were $2.3 billion
in 2Q 2014, an increase of 14.6% as compared to 1Q 2014. Sales in 2Q 2014 were positively
impacted by improved volumes and higher average steel selling prices (+4.4%). Average
steel selling prices improved by 7.1% in Kazakhstan, by 2.6% in Ukraine and by
5.3% in South Africa.
EBITDA in 2Q 2014 increased
by 42.4% to $156 million, as compared to $109 million in 1Q 2014, due to improved
performance in the CIS countries, offset by weaker South African profitability
due to weak economic growth and associated domestic challenges, coupled with planned
maintenance noted above.
EBITDA in 2Q 2014
increased by 22.5% to $156 million, as compared to $127 million in 2Q 2013, due
to improved steel shipments (+7.1%) and forex benefit offset in part by lower
average steel selling prices (-5.8%).
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 2Q
2014 was 16.6 million metric tonnes, 11.7% higher than 14.8 million metric
tonnes for 1Q 2014, primarily due to higher production from our Canadian mining
operations following severe winter conditions in 1Q 2014. Own iron ore production
in 2Q 2014 was 10.7% above 2Q 2013.
at market price increased by 12.5% to 10.5 million tonnes in 2Q 2014 as
compared to 9.3 million tonnes in 1Q 2014, primarily driven by seasonally higher
shipments from our Canadian mining operations following the severe weather conditions
in 1Q 2014. Shipments at market price in 2Q 2014 were 28.8% higher than 2Q 2013
primarily due to increased shipments in Canada following successful commissioning
and ramp-up of the expanded concentrator during 2013.
Own coal production
(not including supplies under strategic long-term contracts) in 2Q 2014 was 1.8
million metric tonnes, flat as compared to 1Q 2014 and lower than 2.0 million
metric tonnes for 2Q 2013.
for 2Q 2014 was $388 million, 10.5% lower as compared to $433 million in 1Q 2014,
primarily due to lower seaborne iron ore market prices, partially offset by
seasonally higher volumes and improved costs.
for 2Q 2014 was lower at $388 million as compared to $432 million in 2Q 2013 due
to lower seaborne iron ore market prices, partially offset by higher market
Liquidity and Capital Resources
For 2Q 2014, net cash provided
by operating activities was $1,548 million, as compared to net cash used in operating
activities of $471 million in 1Q 2014.
Cash provided by operating
activities in 2Q 2014 included a $856 million release of operating working
capital as compared to a $906 million investment of operating working capital
in 1Q 2014. Rotation days
decreased during 2Q 2014 to 54 days from 61 days in 1Q 2014 due to improvement
in inventory, receivables and payables.
Net cash used by other
operating activities in 2Q 2014 was $384 million (including amongst others the
Senegal settlement payment, changes in other payables, such as employee
benefits and the adjustments of non-cash items such as income from associates
and forex gains partially offset by non-cash gains and losses on
convertible bonds, and hedging instruments which matured during the quarter), as
compared to net cash used by other operating activities in 1Q 2014 of $393
million (including adjustments of non-cash items such as income from associates
and forex and changes in other payables, such as employee benefits, payment of
provisions and VAT).
Net cash used in investing activities during 2Q
2014 was $607 million, as compared to $1,090 million in 1Q 2014. Capital
expenditure decreased to $774 million in 2Q 2014 as compared to $875 million in
1Q 2014. The Company continues to expect full year 2014 capital
expenditure to be approximately $3.8-4.0 billion.
Cash flow from other investing activities in
2Q 2014 of $167 million primarily included cash inflow from the divestures of
group and steel cord business.
Other investing activities in 1Q 2014 of $215 million primarily included $258
million associated with the AM/NS Calvert acquisition offset in part by
proceeds from the exercise of the second put option in Hunan Valin.
Net cash used in financing activities for 2Q 2014 was $1,675 million
as compared to net cash provided by financing activities of $557 million in 1Q
2014. Net cash used in financing activities for 2Q 2014 primarily included debt
repayment of $2.7 billion (primarily €1.25 billion for the 7.25% convertible
bonds due April 1, 2014 and $800 million for the 5.00% convertible bonds due
May 15, 2014), offset in part by a new bank loan of $1.0 billion.
provided by financing activities for 1Q 2014 included inflow of $1.3 billion
relating to the proceeds from the issuance of a €750 million 3.00% Notes
due March 25, 2019, under the Company’s €3 billion wholesale Euro Medium Term
Notes Programme and proceeds from a new 3-year $300 million financing provided
by EDC (Export Development Canada), offset in part by the early
redemption of perpetual securities of $657 million. During 1Q 2014, the Company
paid dividends of $57 million including dividends to minority shareholders in
ArcelorMittal Mines Canada and payments to perpetual securities holders.
used in financing activities for 2Q 2013 included debt repayment of $3.3
billion (primarily €1.5 billion for the 8.25% bond due 2013 and $1.2 billion
for the 5.375% bond due 2013) and $290 million cash received related to the
second and final instalment of the previously announced investment by a
consortium led by POSCO and China Steel Corporation (CSC) to acquire a joint
venture interest in ArcelorMittal’s Labrador Trough iron ore mining and
infrastructure assets in Quebec, Canada.
At June 30,
2014, the Company’s cash and cash equivalents (including restricted cash) and
short-term investments amounted to $4.4 billion as compared to $5.1 billion at March
31, 2014. Gross debt of $21.8 billion at June 30, 2014, decreased $1.7 billion
as compared to March 31, 2014. As of June 30, 2014, net debt was $17.4 billion
as compared with $18.5 billion at March 31, 2014, primarily due to release in operating
working capital ($0.9 billion) and M&A proceeds ($0.2 billion).
billion at June 30, 2014, consisting of cash and cash
equivalents (including restricted cash and short-term investments) of $4.4 billion
and $6.0 billion of available credit lines. On June 30, 2014, the average debt
maturity was 6.2 years.
Outlook and guidance
2014 guidance framework remains valid. Reflecting the weaker than expected iron
ore price, this underlying assumption has been adjusted to $105/t (from $120/t
previously) implying a second-half average of $100/t. All other components of
the framework remain unchanged. As a result, the Company now expects 2014
EBITDA in excess of $7.0 billion. The key assumptions behind this framework are
on the current economic outlook, ArcelorMittal continues to expect global
apparent steel consumption (“ASC”) to increase by approximately 3-3.5% in 2014.
Steel demand growth has been strong in Europe and we have upgraded our ASC
growth in 2014 to 3-4%. Despite the impact of severe weather in the US on
demand in 1Q 2014, data for 2Q 2014 has been strong and US ASC growth in 2014
has also been upgraded to a forecast range of 5-6%. In China, we see signs of
stabilization due to the government’s targeted stimulus, and expect steel
demand in the range of 3-3.5%. While risks remain to steel demand in the CIS
and other emerging markets including Brazil, the stronger fundamentals in our
key developed world markets continue to support our expectation that steel
shipments should increase by approximately 3% in 2014 as compared to 2013.
the successful ramp up of expanded capacity at ArcelorMittal Mines Canada,
year-on-year increases in market priced iron ore shipments are expected. This
should underpin a 15% expansion of marketable iron ore volumes for the Company
in 2014 as compared to 2013.
working assumption behind the revised 2014 EBITDA guidance is an average iron
ore price of approximately $105/t (for 62% Fe CFR China).
to improved industry utilization rates, and the further contribution of the Company’s
Asset Optimization and Management Gains cost optimization programs, steel
margins are expected to improve in 2014. This improvement is forecasted despite
the negative weather related impact on NAFTA performance at the beginning of
the year, which resulted in increased costs of approximately $350 million in
the 1H 2014.
the Company expects net interest expense to be approximately $1.6 billion in
2014 as compared to $1.8 billion in 2013 due primarily to lower average debt.
expenditure is expected to be approximately $3.8-4.0 billion, a slight increase
over 2013, with some of the expected spending from last year rolling into 2014
as well as the continuation of the phase II Liberia project.
previously communicated, the Company does not intend to ramp-up any major
steel growth capex or increase dividends until the medium term $15 billion net
debt target has been achieved and market conditions improve.
ArcelorMittal Condensed Consolidated Statements of Financial
ArcelorMittal Condensed Consolidated Statement of Operations
ArcelorMittal Condensed Consolidated Statements of Cash flows
Appendix 1: Geographical shipments by products
Appendix 2: Capital expenditure
excludes others and eliminations.
Appendix 3: Debt repayment schedule as of June 30, 2014
Appendix 4: Credit lines available as of June 30, 2014
Appendix 5: EBITDA bridge from 1Q 2014 to 2Q 2014
a) The volume
variance indicates the sales value gain/loss through selling a higher/lower
volume compared to the reference period, valued at reference period
contribution (selling price–variable cost). The mix variance indicates sales
value gain/loss through selling different proportions of mix (product, choice,
customer, market including domestic/export), compared to the reference period
price-cost variance is a combination of the selling price and cost variance.
The selling price variance indicates the sales value gain/loss through selling
at a higher/lower price compared to the reference period after adjustment for
mix, valued with the current period volumes sold. The cost variance indicates
increase/decrease in cost (after adjustment for mix, one-time items, non-steel
cost and others) compared to the reference period cost. Cost variance includes
the gain/loss through consumptions of input materials at a higher price/lower
price, movement in fixed cost, changes in valuation of inventory due to
movement in capacity utilization etc.
EBITDA variance primarily represents the gain/loss through the sale of
by-products and services.
primarily represents foreign exchange and in 2Q 2014 also includes a $90
million charge following the settlement of antitrust litigation in the United
information in this press release has been prepared consistently with
International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”). While the interim financial
information included in this announcement has been prepared in accordance with
IFRS applicable to interim periods, 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
Lost time injury
frequency rate equals lost time injuries per 1,000,000 worked hours, based on
own personnel and contractors.
EBITDA is defined as
operating income plus depreciation, impairment expenses and restructuring
charges / exceptional items.
In June 2014,
ArcelorMittal agreed to settle a lawsuit brought in the U.S. District Court for
the Northern District of Illinois, alleging that ArcelorMittal and several
large U.S. steel competitors restricted the output of steel products between
2005 and 2007. ArcelorMittal continues to strongly deny any liability or
wrongdoing and believes the claims are without merit. In order to avoid
further costs and distraction of management resources, as well as to mitigate
further risk, ArcelorMittal agreed to a settlement of $90 million with the
EBITDA in 2Q 2014 of
$1,763 million included the negative impact of $90 million following the
settlement of US antitrust litigation.
Market priced tonnes
represent amounts of iron ore and coal from ArcelorMittal mines that could be
sold to third parties on the open market. Market priced tonnes that are not
sold to third parties are transferred from the Mining segment to the Company’s
steel producing segments and reported at the prevailing market price. Shipments
of raw materials that do not constitute market-priced tonnes are transferred
internally and reported on a cost-plus basis.
Net debt refers to
long-term debt, plus short-term debt, less cash and cash equivalents,
restricted cash and short-term investments.
acquisition (M&A) proceeds primarily include inflow from the divestures of
ATIC group and Steel cord business
calculated as total Group EBITDA divided by total steel shipments.
On February 26, 2014,
ArcelorMittal, together with Nippon Steel & Sumitomo Metal Corporation
(“NSSMC”), announced that it has completed the acquisition of ThyssenKrupp
Steel USA (“TK Steel USA”), a steel processing plant in Calvert, Alabama,
having received all necessary regulatory approvals. The transaction – a 50/50 joint
venture with NSSMC – was completed for an agreed price of $1,550 million plus
working capital and net debt adjustment. ArcelorMittal paid $258 million cash
for the acquisition in 1Q 2014. The Calvert plant has a total capacity of 5.3
million tons including hot rolling, cold rolling, coating and finishing lines.
Foreign 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
confirm that a settlement has been reached with the State of Senegal in respect
of the arbitration that had been brought in connection with a 2007 agreement
relating to an integrated iron ore mining and related infrastructure project in
interest in the associate Hunan Valin Steel Tube and Wire Co. Ltd. (“Hunan
Valin”) decreased from 30% to 20% following the sale of a 10% stake to Hunan Valin
Iron & Steel Group Co, Ltd. (“Valin Group”) as a result of the exercise of
the first and second put options on February 6, 2013 and August 6, 2013,
respectively. The total consideration received for the sale for the first and
second option was $194 million, of which $169 million was reinvested into a
capital increase and the acquisition of an additional 16% interest in Valin
ArcelorMittal Automotive Steel (“VAMA”), a downstream automotive steel joint
venture between ArcelorMittal and Valin Group in which the Company increased
accordingly its stake from 33% to 49%. The Company’s interest in Hunan Valin
decreased from 20% to 15% 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
expects to exercise its fourth and last option in August 2014.
at Group level was previously based on a simple aggregation, eliminating
intra-segment shipments and excluding shipments of the Distribution Solutions
segment. The new presentation of shipments information eliminates both
inter- and intra–segment shipments which are primarily between Flat/Long plants
and Tubular plants and continues to exclude the shipments of Distribution
Average steel selling
prices are calculated as steel sales divided by steel shipments.
There are three
categories of sales: 1) “External sales”: mined product sold to third parties
at market price; 2) “Market-priced tonnes”: internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices; 3)
“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).
Rotation days are
defined as days of accounts receivable plus days of inventory minus days of
accounts payable. Days of accounts payable and inventory are a function of cost
of goods sold of the quarter on an annualized basis. Days of accounts
receivable are a function of sales of the quarter on an annualized basis.
On April 30, 2014,
ArcelorMittal and H.E.S. Beheer N.V. signed a sale and purchase agreement for
the sale of ArcelorMittal’s 78% stake in European port handling and logistics
company ATIC Services S.A. (“ATIC”) to HES Beheer for €155 million ($212
million). The net proceeds received are $144 million being $212 million cash
proceeds minus cash held by ATIC. Additionally, $17 million debt held by ATIC
has been transferred. The transaction is consistent with ArcelorMittal’s stated
strategy of selective divestment of non-core assets. The transaction was
completed on June 30, 2014.
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 are
$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 has been transferred. The remaining $102 million from
the sale proceeds is expected to be received by 2Q 2015. The transaction is
subject to final working capital adjustments.
lines for the commercial paper program.
liabilities subject to disposal primarily relate to Circuit Foil. Pursuant to a
sale and purchase agreement entered into on July 10, 2014 with Doosan (a South
Korean conglomerate), ArcelorMittal will sell all of the shares of Circuit Foil
Luxembourg Sarl (CFL), together with some of its subsidiaries, for cash
consideration of $50 million. Accordingly, all the related assets and
liabilities have been considered as held for sale as of June 30, 2014.
Total of all finished
production of fines, concentrate, pellets, lumps and coal (excludes share of
production and strategic long-term contracts).
capital is defined as trade accounts receivable plus inventories less trade
Capex includes the
acquisition of intangible assets (such as concessions for mining and IT
support) and includes payments to fixed asset suppliers.
Commercial paper is
expected to continue to be rolled over in the normal course of business.
During the 1H 2014,
ArcelorMittal entered into short-term committed bilateral credit facilities totaling
approximately $0.9 billion. As of June 30, 2014 the facilities remain fully
Contact information ArcelorMittal Investor Relations
Europe: +352 4792 2484
Americas: +1 312 899 3985
Retail: +352 4792 2434
SRI: +44 203 214 2854
Bonds/Credit: +33 1 71 92 10 26
Contact information ArcelorMittal Corporate Communications
Phone: +352 4792 5000
ArcelorMittal Corporate Communications
Sophie Evans (Head of Media Relations) +44 203 214 2882
Laura Nutt +44 207 543 1125
Martin Leeburn +44 20 7379 5151
Sylvie Dumaine / Anne-Charlotte Creach
+33 (1) 53 70 74 70
1 August 2014 – ArcelorMittal Europe today announced its results for the second quarter of 2014.
The segment recorded an operating profit of €245 million for the Q2 2014. This compares with an operating profit of €58 million in Q1 2014 and an operating loss of €143 million for Q2 2013, when results were impacted by restructuring and impairment charges totalling €125m. There were no such impairment or restructuring charges in Q2 2014.
Ebitda for the second quarter of 2014 also rose, by 29%, to €503m, compared with €390m in the first quarter of this year. This improvement has been mainly driven by higher shipments and cost optimisation efforts.
ArcelorMittal Europe crude steel production remained flat at 10.9 million tonnes, the same as in Q1 2014.
Steel shipments in Q2 2014 were 10.2 million tonnes, an increase of 1.8% compared with the previous quarter. Flat product shipment volumes increased by 0.7% and long product shipment volumes increased by 4.2%, both benefitting from higher, seasonal demand and improved underlying demand.
Sales in the ArcelorMittal Europe segment also increased by 1.7% to €7.7bn, compared with €7.5bn in the first quarter. This was primarily due to higher steel shipments, offset in part by lower average steel selling prices.
Commenting, Aditya Mittal, CEO ArcelorMittal Europe, said:
“Today’s results show the second consecutive quarter of improvements in ArcelorMittal Europe, underpinned by the benefits of cost optimisation and improved volumes. Growth in Europe remains uneven but with manufacturing output in the key steel demand sectors continuing to grow at a moderate pace, we have upgraded our growth forecast to 3-4%, up from 2-3%”.
GDP growth for the Eurozone has been weaker in Q2 than at the beginning of the year, but is expected to pick up in the second half of 2014.
The consensus figures are based on analyst estimates recorded on an external web-based tool provided and managed by an independent company called Vuma Financial Services Limited (trade name: Vuma Consensus).
To arrive at the consensus figures below, VUMA have aggregated the expectations of sell-side analysts who, to the best of our knowledge, cover ArcelorMittal on a continuous basis. This is a group of around 30 brokers currently. The listed analysts follow ArcelorMittal on their own initiative and ArcelorMittal is not responsible for their views.
On this page we provide you with the analyst estimates compiled by Vuma Consensus. ArcelorMittal is neither involved in the collection of the information nor in the compilation of the estimates.
Ebitda consensus estimates
Number of sell-side
Ebitda consensus average $ million
The consensus data is based on projections made by sell-side analysts. The sell-side analysts who cover ArcelorMittal and whose estimates are included in the group consensus outlined above are the following:
The consensus estimate is based on estimates, forecasts and predictions made by third party financial analysts. It is not prepared based on information provided or checked by ArcelorMittal and can only be seen as a consensus view on ArcelorMittal's results from an outside perspective. ArcelorMittal has not provided input on these forecasts, except by referring to past publicly disclosed information. ArcelorMittal does not accept any responsibility for the quality or accuracy of any individual forecast or estimate. This web page may contain forward-looking statements based on current assumptions and forecasts made by ArcelorMittal or third parties. Various known and unknown risks, uncertainties and other factors could lead to material differences between ArcelorMittal's actual future results, financial situation, development or performance, and the estimates given here. These factors include those discussed in ArcelorMittal's periodic reports available on corporate.arcelormittal.com
ArcelorMittal reports second quarter 2014 and half year 2014 results
ArcelorMittal Europe reports €245m operating profit for Q2 2014
ArcelorMittal announces the publication of sell-side analysts’ consensus figures for second quarter 2014
Head of media relations
+44 203 214 2882
+44 207 543 1125