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[1] for the three-month and twelve-month periods ended December 31, 2018.

  • Analysts slides – EN – PDF
  • Press release – EN – FR – PDF
  • Analysts Webcast – 15.30 CET – English
  • Q&A – EN – PDF

2018 highlights:

  • Health and safety performance improved in FY 2018 with annual LTIF rate of 0.69x vs. 0.78x in FY 2017
  • FY 2018 operating income of $6.5bn (+20.3% YoY); operating income of $1.0bn in 4Q 2018 (-15.6% YoY)
  • FY 2018 EBITDA of $10.3bn (+22.1% YoY); EBITDA of $2.0bn in 4Q 2018 (-8.9% YoY)
  • FY 2018 net income of $5.1bn, +12.7% higher as compared to $4.6bn for FY 2017
  • FY 2018 steel shipments of 83.9Mt (-1.6% YoY); 4Q 2018 steel shipments of 20.2Mt (-3.6% YoY)
  • FY 2018 crude steel production of 92.5Mt (-0.6% YoY); 4Q 2018 crude steel production of 22.8Mt (stable YoY)
  • FY 2018 iron ore shipments of 58.3Mt (+0.7% YoY), of which 37.6Mt shipped at market prices (+5.5% YoY); 4Q 2018 iron ore shipments of 15.7Mt (+9.8% YoY), of which 10.0Mt shipped at market prices (+18.2% YoY)
  • Gross debt of $12.6bn as of December 31, 2018. Net debt of $10.2bn as of December 31, 2018, lower as compared to $10.5bn as of September 30, 2018 and broadly stable as compared to $10.1bn as of December 31, 2017
  • FY 2018 cash flow from operating activities of $4.2bn less capex of $3.3bn for free cash flow (FCF) of $0.9bn despite working capital investment of $4.4bn, premium to repay bonds ($0.1bn) and litigation fines ($0.1bn)[3]

Strategic progress in 2018:

  • Improved asset portfolio through the completed acquisitions of Votorantim in Brazil and Ilva in Italy, as well as being selected as the successful bidder for Essar Steel India Limited (ESIL) in partnership with Nippon Steel & Sumitomo Metal Corporation Group (NSSMC), which subject to completion, would provide improvement potential and growth optionality
  • Continued progress as the leader in innovation including the LanzaTech carbon capture and conversion project at Gent, Steligence® and new products and solutions to address the automotive platforms of the future
  • Improvement in leverage ratio: FY 2018 net debt/EBITDA of 1.0x vs.1.2x in FY 2017
  • Cash needs of the business in 2018 were limited to $5.0bn, below the guidance of $5.8bn provided in mid-year. Capex of $3.3bn was below our guidance of $3.7bn due to timing of payments which will therefore be carried over to 2019. Net interest of $0.6bn was in line with our guidance. “Taxes, pension and others” came in at $1.1bn, below our guidance of $1.5bn, due to the combined effects of: certain cash tax settlements being deferred from 2018 to 2019; higher than anticipated dividends received from our investments in associates; and net gains on other accounts
  • Achieved the primary financial objective of an investment grade rating with all 3 credit rating agencies
  • Limited Action 2020 progress in 2018, with ongoing cost/mix gains (+$0.4bn) offset in part by volumes losses (-$0.3bn) following operational disruptions during the year. As a result, cumulative savings 2016-2018 of $1.6bn achieved; ongoing focus and execution to deliver target of $3bn savings by 2020

Capital allocation: Continued focus on deleveraging and investment in high return projects

  • An investment grade credit rating remains ArcelorMittal’s financial priority, with a target to reduce net debt to below $6bn, to support solid investment grade metrics at all points of the cycle
  • The Company is capitalizing on opportunities to invest which will enhance future returns, including Ilva (asset revitalization), Mexico hot strip mill (mix improvement) and Vega HAV (Brazil mix improvement)
  • ArcelorMittal intends to progressively increase the base dividend paid to its shareholders, and, on attainment of the net debt target, return a percentage of free cash flow annually. Accordingly, the Board proposes an increase in the base dividend for 2019 (paid from 2018 earnings) to $0.20 per share which will be proposed to the shareholders at the AGM in May 2019

Outlook and guidance:

  • ArcelorMittal expects global steel demand to slightly expand in FY 2019 as compared to FY 2018
  • Steel shipments are expected to increase, supported by improved operational performance
  • The Company expects certain cash needs of the business (including capex, interest, cash taxes, pensions and certain other cash costs but excluding working capital changes) to increase in 2019 to approximately $6.4bn. Capex is expected to increase to $4.3bn (versus $3.3bn in FY 2018) including $0.4bn carried over from 2018, the impact of Ilva ($0.4bn) and the continued investment in high returns projects in Mexico and Brazil. Interest is expected to be stable at $0.6bn while cash taxes, pensions and other cash costs are expected to increase by $0.4bn primarily on account of certain cash tax settlements deferred from 2018 and non-recurrence of certain gains on other accounts

Financial highlights (on the basis of IFRS[1]):

(USDm) unless otherwise shown 4Q 18 3Q 18 4Q 17 12M 18 12M 17
Sales 18,327 18,522 17,710 76,033 68,679
Operating income 1,042 1,567 1,234 6,539 5,434
Net income attributable to equity holders of the parent 1,193 899 1,039 5,149 4,568
Basic earnings per share (US$)[2 1.18 0.89 1.02 5.07 4.48
           
Operating income/ tonne (US$/t) 51 76 59 78 64
EBITDA 1,951 2,729 2,141 10,265 8,408
EBITDA/ tonne (US$/t) 96 133 102 122 99
Steel-only EBITDA/ tonne (US$/t) 79 119 89 107 82
           
Crude steel production (Mt) 22.8 23.3 22.7 92.5 93.1
Steel shipments (Mt) 20.2 20.5 21.0 83.9 85.2
Own iron ore production (Mt) 14.9 14.5 14.4 58.5 57.4
Iron ore shipped at market price (Mt) 10.0 8.5 8.4 37.6 35.7

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

“2018 was a year of positive momentum for ArcelorMittal characterized by important strategic and financial progress. Operating in a healthy market environment, the Company enjoyed a strong financial performance, delivering substantial profitability improvement. Having considerably strengthened our balance sheet in recent years, we also regained our investment grade credit rating.

With an established leadership position in many regions, ArcelorMittal targets specific growth opportunities to complement our existing global presence. The acquisitions of Votorantim and Ilva, both completed in 2018, provide us with enhanced leadership positions in key markets. Meanwhile our bid for Essar can provide us with a quality, scalable presence in the rapidly expanding India steel market.

Delivery against our Action 2020 targets is an important focus for the Group in 2019. We did not perform at an optimum level operationally in 2018 and will seek to minimize operational disruption this year to ensure we meet our volume targets.

Although the issue of global overcapacity persists and there are well publicised macro-economic risks, we expect further, moderate global steel demand growth this year. Having considerably strengthened the Company in recent years, we are in a strong position to generate healthy levels of free cash and prosper through the cycle.”

Fourth quarter 2018 earnings analyst conference call

ArcelorMittal management (including CEO and CFO) will host a conference call for members of the investment community to discuss the fourth quarter period ended December 31, 2018 on: Thursday February 7, 2019 at 9.30am US Eastern time; 2.30pm London time and 3.30pm CET.

The dial in numbers are:

Location Toll free dial in numbers Local dial in numbers  Participant
UK local: 0800 0515 931 +44(0)2033645807 12722991#
US local: 1 86 6719 2729 +12406450345 12722991#
US (New York): 1 86 6719 2729 +16466637901 12722991#
France: 0800 914780 +33170712916 12722991#
Germany: 0800 965 6288 +4969271340801 12722991#
Spain: 90 099 4930 +34911143436 12722991#
Luxembourg: 800 26908 +35227860507 12722991#

A replay of the conference call will be available for one week by dialing: +49 (0) 1805 2047 088; Access code 2523083#

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 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.

Footnotes

[1] The financial information in this press release has been prepared consistently with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and as adopted by the European Union. 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 Standard 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. ArcelorMittal presents EBITDA, and EBITDA/tonne, which are non-GAAP financial measures and defined in the Condensed Consolidated Statement of Operations, as additional measures to enhance the understanding of operating performance. ArcelorMittal believes such indicators are relevant to describe trends relating to cash generating activity and provides management and investors with additional information for comparison of the Company’s operating results to the operating results of other companies. ArcelorMittal also presents net debt and change in working capital as additional measures to enhance the understanding of its financial position, changes to its capital structure and its credit assessment. ArcelorMittal also presents free cash flow (FCF), which is a non-GAAP financial measure defined in the Condensed Consolidated Statement of Cash flows, because it believes it is a useful supplemental measure for evaluating the strength of its cash generating capacity. The Company also presents the ratio of net debt to EBITDA for the last twelve months to show trends that investors may find useful in understanding the company's ability to service its debt. Non-GAAP financial measures should be read in conjunction with, and not as an alternative for, ArcelorMittal's financial information prepared in accordance with IFRS. Such non-GAAP measures may not be comparable to similarly titled measures applied by other companies.

[2] At the Extraordinary General Meeting held on May 10, 2017, the shareholders approved a share consolidation based on a ratio 1:3, whereby every three shares were consolidated into one share (with a change in the number of shares outstanding and the accounting par value per share).

[3] In July 2018, as a result of a settlement process, the Company and the German Federal Cartel Office agreed to a €118 million ($146 million) fine to be paid by ArcelorMittal Commercial Long Deutschland GmbH ending an investigation that began in the first half of 2016 into antitrust violations concerning the ArcelorMittal entities that were under investigation. The payment was made in August 2018.

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About ArcelorMittal

ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and primary steelmaking facilities in 18 countries. In 2019, ArcelorMittal had revenues of $70.6 billion and crude steel production of 89.8 million metric tonnes, while iron ore production reached 57.1 million metric tonnes. Our goal is to help build a better world with smarter steels. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for electric vehicles and renewable energy infrastructure that will support societies as they transform through this century. With steel at our core, our inventive people and an entrepreneurial culture at heart, we will support the world in making that change. This is what we believe it takes to be the steel company of the future. 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: http://corporate.arcelormittal.com/

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