As from January 1, 2011, ArcelorMittal is reporting the results of its mining operations as a separate operating segment. The segment change has been undertaken in order to reflect changes in the Company's approach to managing its mining operations, as required by IFRS. Prior periods have been recast to reflect the new segmentation.

Commenting, Mr. Lakshmi N. Mittal, Chairman and CEO, ArcelorMittal, said:

"As anticipated, we have seen a stronger start to the year, with an increase in both shipments and selling prices. This is expected to further improve in the second quarter as the underlying demand recovery continues. We remain confident that 2011 will be a stronger year than 2010.

This quarter we have started to separate out the profit contribution from our mining operations, which has the added benefit of enabling us to maximise returns, optimize capital allocation and pursue our plans for growth in this area."

First quarter 2011 Earnings ANALYST Conference Call

Additionally, ArcelorMittal management will host a telephone conference call for members of the investment community to discuss the first quarter 2011 financial performance at:

Forward-Looking Statements

This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words "believe," "expect," "anticipate," "target" or similar expressions. Although ArcelorMittal's management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal's securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets ( Commission de Surveillance du Secteur Financier) and the United States Securities and Exchange Commission (the "SEC") made or to be made by ArcelorMittal, including ArcelorMittal's Annual Report on Form 20-F for the year ended December 31, 2010 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.

ArcelorMittal reports first quarter 2011 results

ArcelorMittal, the world's leading steel company, today announced results for the three months ended March 31, 2011.

Corporate social responsibility performance

Health and safety – Own personnel and contractors lost time injury frequency rate[2]

Health and safety performance improved to 1.4x for the first quarter of 2011 as compared to 1.6x in the fourth quarter of 2010, with improvement in the safety performance of all our reportable segments except for Distribution Solutions.

Analysis of results for the three months ended March 31, 2011 versus the three months ended December 31, 2010 and the three months ended March 31, 2010

ArcelorMittal's net income for the three months ended March 31, 2011 was $1.1 billion, or $0.69 per share, as compared with net loss of $0.8 billion, or $0.51 loss per share, for the three months ended December 31, 2010 and net income of $0.6 billion, or $0.42 per share, for the three months ended March 31, 2010.

Total steel shipments for the three months ended March 31, 2011 were 22.0 million metric tonnes as compared with 21.1 million metric tonnes for the three months ended December 31, 2010 and 21 million metric tonnes for the three months ended March 31, 2010.

Sales for the three months ended March 31, 2011 increased 7.2% to $22.2 billion as compared with $20.7 billion for the three months ended December 31, 2010, and were up 27.3% as compared with $17.4 billion for the three months ended March 31, 2010. Sales were higher during the first quarter of 2011 as compared to the fourth quarter of 2010 primarily due to higher shipment volumes (+4.0%) and average steel selling prices (+6.8%).

Depreciation expense of $1.1 billion for the three months ended March 31, 2011 was flat as compared to the three months ended December 31, 2010 and March 31, 2010, respectively.

Impairment losses for the three months ended March 31, 2011 were $18 million as compared to impairment losses for the three months ended December 31, 2010 of $381 million. The fourth quarter 2010 impairment losses included $186 million relating to the Company's coal mines in Russia, $113 million relating to certain subsidiaries in the Distribution Solutions segment (primarily reflecting construction market weakness) and $82 million primarily relating to idle downstream assets in the European business.

Operating income for the three months ended March 31, 2011 was $1.4 billion, as compared with operating income of $0.4 billion for the three months ended December 31, 2010 and operating income of $0.6 billion for the three months ended March 31, 2010.

Operating performance for the three months ended March 31, 2011 was positively impacted by a non-cash gain of $336 million related to the reversal of provisions for inventory write-downs, triggered by improved market conditions, and reversal of provisions for litigations. In addition, operating performance for the three months ended March 31, 2011 included a non-cash gain of $119 million relating to unwinding of hedges on raw material purchases as compared to an $88 million and $89 million gain recorded in the three months ended December 31, 2010 and March 31, 2010 respectively. Fourth quarter 2010 operating performance was positively impacted by a net gain of $140 million from the sale of carbon dioxide credits that ArcelorMittal will fully re-invest in energy savings projects within the Flat Carbon Europe perimeter.

Income from equity method investments and other income for the three months ended March 31, 2011 was $148 million, as compared to $74 million and $93 million for the three months ended December 31, 2010 and March 31, 2010, respectively.

Net interest expense (including interest expense and interest income) increased to $459 million for the three months ended March 31, 2011 from $413 million for the three months ended December 31, 2010, primarily due to the impact of exchange rate fluctuations and higher interest on account of new bonds issued. Net interest expense for the three months ended March 31, 2010 was $352 million.

As a result of hedging transactions undertaken by the Company in December 2010, there were no mark-to-market gains or losses during the quarter ended March 31, 2011 with respect to the embedded derivatives in ArcelorMittal's convertible bonds. The Company had recorded a non-cash loss of $293 million for the three months ended December 31, 2010, and a non-cash gain of $141 million for the three months ended March 31, 2010, as a result of these mark-to-market adjustments.

Foreign exchange and other net financing costs were $667 million for the three months ended March 31, 2011 as compared to $494 million for the three months ended December 31, 2010. During the three months ended March 31, 2011 a 6.3% depreciation of the USD resulted in a foreign exchange loss of $466 million compared to a $280 million foreign exchange loss in the three months ended December 31, 2010, when the USD depreciated by 2.09%. The foreign exchange loss was primarily related to higher costs on the Company's euro-denominated debt. Foreign exchange and other net financing costs for the three months ended March 31, 2010 had amounted to $192 million.

ArcelorMittal recorded an income tax benefit of $166 million for the three months ended March 31, 2011, as compared to an income tax benefit of $450 million for the three months ended December 31, 2010. The income tax benefit for the three months ended March 31, 2010 was $361 million.

Gain attributable to non-controlling interests for the three months ended March 31, 2011 was $11 million as compared with losses of $46 million and gain of $40 million for the three months ended December 31, 2010 and March 31, 2010, respectively.

Discontinued operations for the three months ended on March 31, 2011 amounted to a gain of $461 million, including $42 million of the post-tax net results contributed by the stainless steel operations prior to the spin-off of the stainless steel business into Aperam which was completed on January 25, 2011. The balance of $419 million represents a one-time non-cash gain from the recognition through the income statement of gains/losses relating to the demerged assets previously held in equity.

Capital expenditure projects

The following tables summarize the Company's principal growth and optimization projects involving significant capital expenditures.

Analysis of segment operations for the three months ended March 31, 2011 as compared to the three months ended December 31, 2010

As from January 1, 2011 the Company's mining operations are reported as a separate operating segment. This change in segmentation reflects the changes in ArcelorMittal's approach to managing its mining operations i.e. a dedicated mining management team. These changes now allow the Company to maximize returns and optimize capital allocation. Accordingly, as required by IFRS, prior periods have been recast to reflect this new segmentation.

All raw materials consumed from ArcelorMittal mines that could practically be sold outside the Group are now reported at market prices. Production from "captive" mines (limited by logistics or quality) continues to be reported at cost-plus to the steel facilities. The principal impact of this change has been to increase the costs of raw materials consumed by FCA and AACIS segments.

Flat Carbon Americas crude steel production amounted to 6.1 million tonnes for the three months ended March 31, 2011, an increase of 7.6% as compared to 5.6 million tonnes for the three months ended December 31, 2010. Capacity utilization has increased from 68% in the fourth quarter of 2010 to 73% in the first quarter of 2011. Production increased in all operating units in anticipation of higher demand, except in the Company's South American operations where production remained constrained due to disruptions in the local coal handling port.

Steel shipments for the first quarter of 2011 were 5.6 million tonnes, an increase of 2.4% as compared to 5.4 million tonnes for the three months ended December 31, 2010. Shipments increased in all units reflecting increased demand, except in the Company's South American operations where slab exports were reduced due to constrained production.

Sales in the Flat Carbon Americas segment were $4.9 billion for the three months ended March 31, 2011, an increase of 8% as compared to $4.6 billion for the three months ended December 31, 2010. Sales increased primarily due to higher average steel selling prices (7.9%) and improved steel shipments (2.4%).

EBITDA in the first quarter of 2011 improved to $528 million as compared to $158 million in the fourth quarter of 2010, driven by higher steel selling prices and higher volumes and a more profitable product mix. EBITDA and operating results in the first quarter of 2011 were also positively impacted by a non-cash gain of $185 million primarily related to reversal of provisions for inventory write-downs, triggered by improved market conditions in North America.

Flat Carbon Europe crude steel production amounted to 7.6 million tonnes for the three months ended March 31, 2011, an increase of 8.9% as compared to 7.0 million tonnes for the three months ended December 31, 2010. Capacity utilization increased from 67% in the fourth quarter of 2010 to 73% in the first quarter of 2011. Production increased in all divisions reflecting improved demand.

Steel shipments for the three months ended March 31, 2011 were 7.4 million tonnes, an increase of 12% as compared to 6.6 million tonnes for the three months ended December 31, 2010. Steel shipments increased in all divisions driven by higher demand particularly in Northern Europe.

Sales in the Flat Carbon Europe segment were $7.8 billion for the three months ended March 31, 2011 an increase of 14.6% as compared to $6.8 billion for the three months ended December 31, 2010. Sales increased primarily due to higher average steel selling prices (2.3%) and higher steel shipments (12%).

EBITDA for the three months ended March 31, 2011 was $471 million, a 13.3% decrease as compared to $543 million for the three months ended December 31, 2010. EBITDA in the fourth quarter was positively impacted by a $140 million gain from the sale of carbon dioxide credits that ArcelorMittal will fully re-invest in energy savings projects within the Flat Carbon Europe perimeter. Excluding this gain, EBITDA in the first quarter 2011 was up 16.9% as compared to the fourth quarter 2010, primarily due to higher steel shipments.

Operating results in the first quarter of 2011 were also positively impacted by a $119 million non-cash gain relating to the unwinding of hedges on raw material purchases. Operating results in the fourth quarter of 2010 were positively impacted by an $88 million non-cash gain relating to the unwinding of hedges on raw material purchases.

Long Carbon Americas and Europe crude steel production reached 6.1 million tonnes for the three months ended March 31, 2011, an increase of 13.8% as compared to 5.3 million tonnes for the three months ended December 31, 2010. Capacity utilization increased from 69% in the fourth quarter of 2010 to 78% in the first quarter of 2011. Production was higher in both Europe and Americas reflecting rebuild of metal stock and the end of the seasonal slow-down in Brazil.

Steel shipments for the three months ended March 31, 2011 were 5.9 million tonnes, an improvement of 3.1% as compared to 5.7 million tonnes for the three months ended December 31, 2010.

Sales in the Long Carbon Americas and Europe segment were $5.9 billion for the three months ended March 31, 2011, an improvement of 5.8% as compared to $5.6 billion for the three months ended December 31, 2010. Sales increased primarily due to higher average steel selling prices (7.8%) and improved steel shipments (3.1%).

EBITDA for the three months ended March 31, 2011 was $480 million, a 52.4% increase as compared to $315 million for the three months ended December 31, 2010. The increase was primarily due to improved profitability driven by higher average selling prices and higher volume, partially offset by higher costs.

AACIS segment crude steel production was 3.7 million tonnes for the three months ended March 31, 2011, an increase of 2.6% as compared to 3.6 million tonnes for the three months ended December 31, 2010. Capacity utilization increased from 75% in the fourth quarter of 2010 to 77% in the first quarter of 2011. The increase was primarily due to higher production in the Company's South African operations partially offset by loss of production in the CIS countries due to operational issues in Ukraine (Kryviy Rih).

Steel shipments for the three months ended March 31, 2011 were 3.1 million tonnes, a decrease of 7.4% as compared to 3.4 million tonnes for the three months ended December 31, 2010 primarily due to the above-mentioned production constraints and a rebuilding of inventory.

Sales in the AACIS segment increased marginally to $2.6 billion for the three months ended March 31, 2011 as compared to $2.5 billion for the three months ended December 31, 2010. Sales increased primarily due to higher average steel selling prices (11.2%) partially offset by the lower shipments.

EBITDA for the three months ended March 31, 2011 was $254 million, 18.1% higher as compared to $215 million for the three months ended December 31, 2010. EBITDA during the first quarter of 2011 improved primarily due to a recovery in the Company's South African operations (reflecting an overall improvement of the domestic market), and higher average steel selling prices, which were partially offset by the lower steel shipments and higher cost of coal imported in Ukraine.

Steel shipments in the Distribution Solutions segment for the three months ended March 31, 2011 were 4.2 million tonnes, a decrease of 11.6% as compared to 4.8 million tonnes for the three months ended December 31, 2010. The decrease in steel shipments was primarily due to reduced availability of steel supply from the mills in the CIS countries.

Sales in the Distribution Solutions segment were flat at $4.3 billion for the three months ended March 31, 2011 and December 31, 2010, as higher average steel selling prices (12.6%) were offset by the decrease in steel shipments (11.6%).

EBITDA for the three months ended March 31, 2011 was $127 million, 46% higher as compared to $87 million for the three months ended December 31, 2010 due to higher selling prices and non-cash gains of $22 million related to the reversal of certain provisions. Operating results in the fourth quarter of 2010 had been negatively impacted by a $113 million charge relating to impairment on certain subsidiaries.

Mining segment

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 at prevailing market prices; 3) "Cost-plus tonnes" – Internal sales of mined product to ArcelorMittal facilities at cost-plus basis. The determinant of whether internal sales are transferred at market price or cost-plus is whether or not 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).

a) Own iron ore and coal production exclude strategic contracts
(b) Iron ore and coal shipments of both market-priced and cost-plus based materials include the Company's own mines, and share of production at other mines, and exclude supply under strategic long term contracts.

Own iron ore production (excluding supplies under strategic long-term contracts) was 11.8 million tonnes for the three months ended March 31, 2011, a decrease of 6.3% as compared to 12.6 million tonnes for the three months ended December 31, 2010, mainly due to lower concentrate production as a result of a fire at line number 5 at the concentrator plant in Canada; maintenance issues and grinding mills performance in Ukraine; and maintenance and weather impacts in Brazil.

Shipments of market-priced iron ore were 5.9 million tonnes for the three months ended March 31, 2011, a decrease of 12% as compared to 6.7 million tonnes for the three months ended December 31, 2010, due mainly to seasonal factors in Canada.

Iron ore shipped internally at cost-plus basis decreased to 3.7 million for the three months ended March 31, 2011 as compared to 5.8 million in the fourth quarter of 2010.

Own coal production was 1.9 million tonnes for the three months ended March 31, 2011, an increase of 8.2% as compared to 1.8 million tonnes for the three months ended December 31, 2010, mainly due to an increase in volumes at ArcelorMittal Princeton.

Shipment of market-priced coal was 1.1 million tonnes for the three months ended March 31, 2011, an increase of 37.5% as compared to 0.8 million tonnes for the three months ended December 31, 2010, due mainly to increases at Princeton and other mines.

Coal shipped internally at cost-plus was flat at 0.9 for the three months ended March 31, 2011 as compared to the fourth quarter of 2010.

EBITDA attributable to the mining segment for the three months ended March 31, 2011 was $607 million, 6.5% higher as compared to $570 million for the three months ended December 31, 2010, primarily due to higher selling prices partly offset by lower shipments. Operating results in the fourth quarter of 2010 had been negatively impacted by a $186 million charge relating to the impairment losses relating to the Company's coal mines in Russia.

Stainless Steel (Discontinued operations)[7]

The successful spin-off of the stainless steel business, now known as Aperam, took place following shareholders' approval on January 25, 2011. Accordingly, results of the stainless steel operations in Q1 2011 and prior periods have been presented as discontinued operations. The discontinued operations results for the three months ended on March 31, 2011 amounted to $461 million, including $42 million of the post tax net results contributed by the stainless steel business prior to the spin off. The balance of $419 million represents a one-time non-cash gain from the recognition through the income statement of gains/losses relating to the demerged assets previously held in equity.

Liquidity and Capital Resources

For the three months ended March 31, 2011, net cash used in operating activities was $1.3 billion, compared to a cash inflow of $3.6 billion for the three months ended December 31, 2010. The cash flow used in operating activities for the first quarter of 2011 included a $1.8 billion investment in operating working capital as compared to a $2.1 billion working capital release in the fourth quarter of 2010. With increased capacity utilization levels during the first quarter of 2011 requiring additional working capital, rotation days[8] increased to 66 days during the first quarter of 2011 from 57 days in the fourth quarter of 2010.

Net cash used in investing activities for the three months ended March 31, 2011 was $0.6 billion, as compared to $1.2 billion for the three months ended December 31, 2010. Capital expenditures decreased to $1.0 billion for the three months ended March 31, 2011 as compared to $1.4 billion for the three months ended December 31, 2010; however, full year capex in 2011 is still expected to reach $5.0 billion (as compared to $3.3 billion in 2010). Other investing activities in the first quarter of 2011 of $0.5 billion included an inflow of $0.9 billion from Aperam (due to repayment of a bridge loan), an inflow of $147 million from the sale of CO₂ credits, which were partially offset by an outflow of $0.5 billion relating to M&A expenditures (primarily the Baffinland Iron Mines Corporation acquisition). Other investing activities in the fourth quarter of 2010 had been $235 million and included an inflow of $171 million related to proceeds from the sale in Ukraine of bonds received from the local government in exchange for VAT receivables.

Net cash used in financing activities for the three months ended March 31, 2011 was $0.8 billion, as compared to cash provided by financing activities of $0.6 billion for the three months ended December 31, 2010.

During the first quarter of 2011, the Company paid dividends amounting to $294 million as compared to $335 million in the fourth quarter of 2010. Dividends paid during the first quarter of 2011 were all paid to the parent company shareholders.

At March 31, 2011, the Company's cash and cash equivalents (including restricted cash and short-term investments) amounted to $3.9 billion as compared to $6.3 billion at December 31, 2010. During the quarter, net debt increased by $2.9 billion to $22.6 billion as compared with $19.7 billion at December 31, 2010 due to the increase in cash used in operations, the increase in M&A related expenditures and $0.4 billion on account of foreign exchange losses, which was partially offset by the repayment of the bridge loan by Aperam.

The Company had liquidity of $14.5[9] billion at March 31, 2011, compared with liquidity of $17.6 billion at December 31, 2010, consisting of cash and cash equivalents (including restricted cash and short-term investments) of $3.9 billion and $10.6 billion of available credit lines.

Update on management gains, fixed cost reduction program and capacity utilization

At the end of the first quarter of 2011, the Company's annualized sustainable savings increased to $3.5 billion as compared to $3.1 billion at the end of December 31, 2010 (excluding Aperam). The Company maintains its target to reach management gains of $4.8 billion (revised plan excluding Aperam) of sustainable SG&A, fixed cost reductions and continuous improvement by end of 2012.

Capacity utilization increased to approximately 75% in the first quarter of 2011, as compared to approximately 69% in the fourth quarter of 2010 due to improved market demand.

For further information about some of these recent developments, please refer to our website www.arcelormittal.com

Second quarter of 2011 outlook

Second quarter 2011 EBITDA is expected to be approximately $3.0 – $3.5 billion. Steel shipment volumes, average steel selling prices and EBITDA/tonne are expected to increase as compared to the first quarter of 2011, while capacity utilization levels are expected to improve to approximately 80%. Additionally, operating costs are expected to increase as compared to the first quarter of 2011 due to higher raw material prices.

The Company also expects mining production and profitability to improve in 2Q 2011 as compared to 1Q 2011.

The Company expects working capital requirements to increase in line with increased activity and prices, which is expected to result in a further increase in net debt in 2Q 2011. The Company expects its full year 2011 capex spend to reach $5 billion, of which $1.4 billion is estimated to be spent on mining.

Appendix 9 – End notes

[1]The financial information in this press release has been prepared in accordance 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". Unless otherwise noted the numbers in the 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.
[2]Lost time injury frequency rate equals lost time injuries per 1,000,000 worked hours, based on own personnel and contractors.
[3]EBITDA is defined as operating income plus depreciation, impairment expenses and exceptional items.
[4]Market price 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 at the prevailing market price. Shipments of raw materials that do not constitute market price tonnes are transferred internally on a cost-plus basis.
[5]Net debt refers to long-term debt, plus short-term debt, less cash and cash equivalents, restricted cash and short-term investments.
[6] As from January 1, 2010 the Steel Solutions and Services segment has been renamed ArcelorMittal Distribution Solutions (AMDS).
[7]The financial information presented for stainless steel operations in ArcelorMittal's books may differ from that in Aperam's books, as in ArcelorMittal the discontinued operations are presented on a contributive approach. As a result all inter-company transactions with Aperam continue to be fully eliminated and the portion reported as part of discontinued operations and assets/liabilities held for distribution include only the contribution of Aperam to ArcelorMittal after elimination of intersegment results. Additionally there are differences on account of impairment, goodwill and others.
[8]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. Days of accounts receivable are a function of sales.
[9]Includes back-up lines for the commercial paper program of approximately $2.8 billion (euro2 billion).
[10]Total of all finished production of fines, concentrate, pellets and lumps (excludes share of production and strategic long-term contracts).
[11]ArcelorMittal Distribution Solutions shipments are eliminated in consolidation as they primarily represent shipments originating from other ArcelorMittal operating subsidiaries.
[12]In accordance with IFRS the Company has adjusted the 2009 financial information retrospectively for the finalization in 2010 of the allocation of purchase price for certain business combinations carried out in 2009. The adjustments have been reflected in the Company's consolidated financial statements for the year ended December 31, 2009.
[13]Changes in operating working capital are defined as trade accounts receivable plus inventories less trade accounts payable.
[14]The change in cash and cash equivalents in the cash flow does not match the balance sheet movement of cash for an amount of $123 million which was included in assets held for distribution in December 31, 2010
[15]Capex includes the acquisition of intangible assets (such as concessions for mining and IT support).
[16]Average steel selling prices are calculated as steel sales divided by steel shipments.
[17]Total of all finished production of fines, concentrate, pellets and lumps (includes share of production and strategic long-term contracts).
[18]Shipments originating from a geographical location.
[19]Includes Tubular products business.
[20]Commercial paper is expected to continue to be rolled over in the normal course of business.
[21]As at December 31, 2010 $57 million ($68.2 million at December 31, 2009) of guarantees have been given in relation to debt of non-consolidated entities.
[22]Gearing is defined as (A) long-term debt, plus short-term debt, less cash and cash equivalents, restricted cash and short-term investments, divided by (B) total equity.