1Q 2024 key highlights:
- Health and safety focus: Protecting employee health and wellbeing remains the overarching priority of the Company; the Company-wide audit of safety by dss+ is progressing and will support our pathway to zero serious injuries and fatalities; LTIF2 rate of 0.61x in 1Q 2024
- Recovering volumes and higher steel spreads supporting improved results: Scope adjusted steel shipments17 increased +5.0% in 1Q 2024 vs. 4Q 2023; 1Q 2024 EBITDA14 of $2.0bn (vs. $1.5bn in 4Q 2023) with EBITDA/t of $145/t in 1Q 2024 (vs. $110/t in 4Q 2023). Net income of $0.9bn in 1Q 2024 vs. net loss of $3.0bn (adjusted net income of $1.0bn8) in 4Q 2023
- Free cash flow impacted by seasonal working capital needs: a seasonal working capital investment ($1.7bn)22 together with capex ($1.2bn) in support of strategic growth projects19 led to a free cash outflow during the quarter of $1.4bn
- Financial strength: Net debt of $4.8bn at the end of the quarter (gross debt of $10.2bn and cash and cash equivalents of $5.4bn)12 compares to a net debt of $2.9bn at December 31, 2023. Over the past 12 months net debt has declined by $0.4bn despite strategic growth capex investments of $1.6bn and returns to shareholders totaling $1.7bn25. This highlights the strong underlying cash generating capacity of the business
Key developments towards strategic objectives:
- Organic growth: Capex in 1Q 2024 includes $0.4bn on strategic growth projects21, which are estimated to add approximately $1.8bn to the Company's EBITDA13 potential by the end of 2026; strategic projects to commence operations in 1H 2024 include Vega CMC (Brazil) and the 1GW renewables project in India; 2H 2024 projects include Calvert EAF (US), Serra Azul and Barra Mansa in Brazil, electrical steel in Europe and mine expansion in Liberia
- Asset portfolio: The Company has agreed to acquire a 28% stake in Vallourec for ~$1.1bn, increasing its exposure to the downstream value-added tubular market; targeting premium segments in the America's market, including a focus on energy transition solutions (CCS and hydrogen); transaction closing is subject to regulatory approvals and currently expected in 2H 2024
- Consistent shareholder returns: The Company has repurchased a further 22.5m shares10 in 1Q 2024, bringing the total reduction in diluted shares to 35% since September 30, 20207. This has contributed to an increase in the book value per share to $67/sh4 at the end of the quarter. The Company will continue to return a minimum 50% of post-dividend FCF to shareholders through its share buyback programs. The $0.50/sh base dividend for 2023 will be paid in 2 equal installments in June 2024 and December 2024