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 results1 for the three-month and twelve-month periods ended December 31, 2020.

  • Earnings Release - EN - PDF
  • Analysts slides – EN – PDF
  • Analyst slides appendix - EN - PDF
  • Web Q&A – EN– PDF
  • Analyst model - XLS
  • Analysts Webcast – 15.30 CET – Link

2020 Key Highlights:

  • Health and safety performance: Protecting the health and wellbeing of employees remains the Company’s overarching priority; LTIF rate of 0.61x in 2020 vs. 0.75x in FY 20192
  • Despite the challenging market environment that saw steel shipments decline in 2020 by 18.2% and a net loss of $0.7bn, the Company delivered $1.5bn of free cash flow (“FCF”, net cash provided by operating activities of $4.1bn less capex of $2.4bn less dividends paid to minorities of $0.2bn)
  • FY 2020 operating income of $2.1bn4,5 $0.6bn operating loss4,5 in FY 2019. FY 2020 EBITDA of $4.3bn with 4Q'20 EBITDA of $1.7bn (almost double 4Q'19 level) reflecting recovering fundamentals and providing good momentum into 2021; 4Q 2020 adjusted net income18 of $0.2bn vs. adjusted net loss of $0.2bn in 3Q 2020
  • The Company ended 2020 with gross debt of $12.3 billion and net debt of $6.4 billion, the lowest level since the 2006 merger, allowing the Company to transition to a new capital allocation policy prioritizing returns to shareholders
  • Repositioned its North American footprint through the completed sale of ArcelorMittal USA to Cleveland Cliffs, unlocking value and significantly reducing liabilities
  • Reinforced its European footprint through the agreed investment by the Italian government in ArcelorMittal Italia (expected to be deconsolidated in 1Q 2021)
  • ArcelorMittal sold its first certified green steel products9 to customers in December 2020, reflecting its leadership position in technology and innovation and commitments to decarbonize

Priorities & Outlook:

  • Global climate change leadership: Whilst policy support remains crucial to the development of decarbonization in the steel industry, the Company is focused on progressing towards its 2050 net zero group carbon emissions target. A range of innovative technology options are advancing, including the Group’s first Smart Carbon projects (Carbalyst) to start production in Ghent, Belgium (in 2022) and first Hydrogen reduction project in Hamburg to start production (estimated 2023-2025)
  • Cost advantage - New $1.0bn fixed cost reduction program in progress to ensure that a significant portion of fixed cost savings achieved during the COVID-19 crisis is sustained; expected completion by the end of 2022 (savings from a FY 2019 base)
  • Strategic growth: The Company is focused on organic growth, cost improvement, product portfolio and margin enhancing projects in emerging growth markets, including: Mexico HSM project (completion expected in 2021); Brazil cold rolling mill complex project (recommenced, with startup targeted 2023); and Liberia phase II expansion (first concentrate targeted in 4Q 2023)
  • Consistent returns to shareholders: The Company initiated its capital return to shareholders with a $500m share buyback10 in 2H 2020 following the announced agreement to sell AM USA to Cleveland Cliffs. This process continues with a further $650m to be returned via a share buyback19 following the partial sell-down of the Company’s equity stake in Cleveland Cliffs announced on February 9, 2021. In addition, and in accordance with the new capital return policy, the Board proposes to restart the base dividend to shareholders at $0.30/sh (to be paid in June 2021, subject to the approval of shareholders at the AGM in May 2021), and return $570m of capital to shareholders through a further share buyback program in 2021
  • Recovery in steel shipments: Recovery in apparent steel demand (growth of +4.5% to +5.5% is currently forecast in 2021 vs. 2020); steel shipments are expected to increase YoY (on a scope adjusted basis i.e. excluding the impacts of the ArcelorMittal USA sale and the deconsolidation of ArcelorMittal Italia12 (expected in 1Q 2021))

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

Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Executive Chairman, said:

“2020 was a year of enormous challenge as countries, societies and businesses across the world grappled with the disruption caused by the COVID-19 pandemic. The impact on the steel industry was significant, but I am very proud of the resilience and enterprise shown by our people across the business which enabled ArcelorMittal to deliver a solid operating performance in times of adversity. We have fantastic teams across our operations.

Indeed, 2020 was a milestone year for the Company. Achieving our $7 billion net debt target marked the end of a long-term deleveraging program, and the start of a new phase which will allow the Company to focus on delivering sustainable shareholder returns as we continue to transform for the future. This process will be supported by changes we made to our portfolio, increasing the quality of its earnings potential, and by the investments we are making in high-growth projects and markets, such as those in India, Mexico, Brazil and Liberia.

Initiatives are also underway to ensure that we take the lessons from our swift and comprehensive COVID-19 response actions and embed these across the business, with a target of delivering more than $1 billion of sustained savings by 2022. This effort is currently supported by an improvement in market conditions which supported a significantly improved performance in the fourth quarter.

The combination of our stronger balance sheet, targeted growth profile and competitive cost positioning underpin our commitment to delivering more consistent returns across the cycle. They also position the Company favorably to lead the industry’s transition to low-emissions steelmaking as part of our 2050 net zero commitment.

2020 was a year in which we saw further acceleration in the drive to decarbonize the global economy. We have identified two main routes to achieve net zero target by 2050, both leveraging one or more clean energy infrastructures – one that utilizes biomass/bioenergy with carbon capture utilization and storage and the other which harnesses green electricity to power a hydrogen-based direct reduced iron process. We will continue to trial and pilot both routes while simultaneously promoting the policies that are a crucial component of success if these technologies are to be scaled up and commercially viable in the long-term. Ahead of COP26 an increasing number of countries have now made net zero commitments – it is imperative these commitments are now accompanied by policy to enable success.

Although we must continue to navigate the COVID 19 challenge, I expect 2021 to be another year of progress for the company, and look forward to working closely with Aditya our new CEO."

Fourth quarter 2020 earnings analyst conference call

ArcelorMittal management (including Executive Chairman and CEO) will host a conference call for members of the investment community to present and comment on the three-month and twelve-month periods ended December 31, 2020 on: Thursday February 11, 2021 at 9.30 US Eastern time, 14.30 GMT and 15.30 CET.

The dial in numbers are:

To listen to the earnings release webcast live, please visit the results section on our website here

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 also 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/alternative performance measures. ArcelorMittal presents EBITDA, and EBITDA/tonne, which are non-GAAP financial/alternative performance measures and calculated as shown 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. Segment information presented in this press release are prior to inter-segment eliminations and certain adjustments made to operating result of the segments to reflect corporate costs, income from non-steel operations (e.g., logistics and shipping services) and the elimination of stock margins between the segments. 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 Adjusted net income / (loss) as it believes it is a useful measure for the underlying business performance excluding impairment items, exceptional items and derecognition of deferred tax assets on disposal of ArcelorMittal USA. ArcelorMittal also presents free cash flow (FCF), which is a non-GAAP financial/alternative performance measure calculated as shown 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 has revised the definition of free cash flow to include dividends paid to minority shareholders in order to reflect the measure it will use to determine dividends that will be paid under its new dividend policy. The Company also presents the ratio of net debt to EBITDA for the last twelve month period, which investors may find useful in understanding the Company's ability to service its debt. Such non-GAAP/alternative performance measures may not be comparable to similarly titled measures applied by other companies. Non-GAAP financial/alternative performance measures should be read in conjunction with, and not as an alternative for, ArcelorMittal's financial information prepared in accordance with IFRS.

[2] Figures presented exclude ArcelorMittal Italia. LTIF figures Including the impact of ArcelorMittal Italia, was 0.92x for FY 2020 vs. 1.21x for FY 2019; 0.93x for 4Q 2020 vs. 0.95x in 3Q 2020 and 1.25x in 4Q 2019.

[4] Net impairment gain for 12M 2020 amounted to $133 million included the partial reversal of impairment charges (recorded in 2019) following the sale of ArcelorMittal USA ($660 million), offset in part by impairment charges of $331 million related to revised future cashflows of plate assets in Europe, charges of $104 million following the permanent closure of a blast furnace and steel plant in Krakow (Poland) in 3Q 2020 and charges related to the permanent closure of the coke plant in Florange (France) in 1Q 2020 of $92 million. Impairment charges for 12M 2019 were $1.9 billion related to impairment of the fixed assets of ArcelorMittal USA ($1.3 billion), remedy asset sales for the ArcelorMittal Italia acquisition ($0.5 billion) and impairment charges in South Africa ($0.1 billion).

[5] Net exceptional items for 12M 2020 were gains of $636 million related to the gain on disposal of ArcelorMittal USA ($1.5 billion) partially offset by site restoration and termination charges following the permanent closure of a blast furnace and steel plant in Krakow (Poland) totaling $146 million and inventory related charges in NAFTA and Europe ($0.7 billion). Exceptional items for 12M 2019 primarily include inventory related charges in NAFTA and Europe. Exceptional $1.5 billion gain on AM USA disposal relates to the consideration of $2.2 billion following the increase of the Cleveland Cliff share price from $5.88/sh on September 25, 2020 to $13.04/sh on December 8, 2020 against a total carrying value of $0.7 billion of ArcelorMittal USA, AM Monessen and AM Princeton companies.

[9] The Company is offering green steel using a system of certificates. These will be issued by an independent auditor to certify tonnes of CO2 savings achieved through the Company’s investment in decarbonization technologies in Europe. Net-zero equivalence is determined by assigning CO2 savings certificates equivalent to CO2 per tonne of steel produced in 2018 as the reference. The certificates will relate to the tonnes of CO2 saved in total, as a direct result of the decarbonization projects being implemented across a number of its European sites.

[10] On September 28, 2020, in connection with the announced sale of 100% of the shares of ArcelorMittal USA, ArcelorMittal announced its intention to repurchase, between September 28, 2020 and March 31, 2021, shares for an aggregate maximum amount of $500 million. By market close on October 30, 2020, ArcelorMittal had repurchased 35,636,253 shares for a total value of $0.5 billion ($487 million paid in the fourth quarter) at an approximate average price per share of €11.92. All details are available on the Company’s website at: https://corporate.arcelormittal.com/investors/equity-investors/share-buyback-program.

[12] ArcelorMittal Italia crude steel production in 4Q 2020 of 0.9Mt (FY 2020 3.4Mt); 4Q 2020 steel shipments of 1.0Mt (FY 2020 3.3Mt). Capex of approximately $0.3 billion per annum has been invested in ArcelorMittal Italia in 2019 and 2020.

[18] See Appendix 5 for reconciliation of adjusted net income /(loss).

[19] Share buyback is expected to commence on February 15, 2021, and the significant shareholder has indicated that it intends to maintain its voting rights in ArcelorMittal issued shares.

About ArcelorMittal

ArcelorMittal is the world's leading steel and mining company, with a presence in 60 countries and primary steelmaking facilities in 17 countries. In 2020, ArcelorMittal had revenues of $53.3 billion and crude steel production of 71.5 million metric tonnes, while iron ore production reached 58.0 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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