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 six-month periods ended June 30, 2019.

  • Analysts slides – EN – PDF
  • Press release – EN – FR – PDF
  • Analysts Webcast – 15.30 CET – English
  • Earning Release analyst call - English
  • Q&A – EN – PDF
  • Health and safety: LTIF rate[2] of 1.26x in 2Q 2019 and 1.19x in 1H 2019
  • Operating loss of $0.2bn in 2Q 2019 including $0.9bn of impairments ($0.3bn related to the remedy asset sales for the ArcelorMittal Italia acquisition and $0.6bn impairment of the fixed assets of ArcelorMittal USA following a sharp decline in steel prices and high raw material costs); 1H 2019 operating income of $0.6bn including $1.1bn of impairments[3]
  • EBITDA of $1.6bn in 2Q 2019; 1H 2019 EBITDA of $3.2bn, -42.6% lower YoY reflecting a negative price-cost effect
  • Net loss of $0.4bn in 2Q 2019 (including $0.9bn of impairments[3]); 1H 2019 net loss of $33 million (including $1.1bn of impairments[3])
  • Steel shipments of 22.8Mt in 2Q 2019, up 4.3% vs. 1Q 2019 and up 4.8% vs. 2Q 2018; 1H 2019 steel shipments of 44.6Mt, up 3.5% YoY largely reflecting the impact of the ArcelorMittal Italia acquisition
  • 2Q 2019 iron ore shipments of 15.5Mt (+6.1% YoY), of which 9.9Mt shipped at market prices (-1.0% YoY); 1H 2019 iron ore shipments of 29.3Mt (+3.0% YoY), of which 19.1Mt shipped at market prices (-0.4% YoY)
  • Gross debt of $13.8bn as of June 30, 2019 as compared to $13.4bn as of March 31, 2019. Net debt decreased by $1.0bn during the quarter to $10.2bn as of June 30, 2019, due in part to M&A proceeds and working capital release ($0.4bn) (despite higher raw materials costs and higher steel shipments). Excluding IFRS 16 impact[4], net debt as of June 30, 2019 was $1.5bn lower YoY

Strategic Actions:

  • Given weak demand and high import levels in Europe, the Company has taken steps to align its European production levels to the current market demand. As a result of previously announced European production curtailments, approximately 4.2Mt of annualized production curtailment is scheduled for 2H 2019
  • Further temporary cost initiatives undertaken to navigate the current weak market backdrop
  • Excluding IFRS 16 impact, net debt at the end of June 30, 2019 was the lowest level achieved since the ArcelorMittal merger. Deleveraging remains the Group’s priority. • Cash needs of the business for 2019 have been reduced by $1.0bn to $5.4bn, due to lower expected capex and tax and others
  • To complement the expected deleveraging through FCF generation, the Company has identified opportunities to unlock up to $2bn of value from its asset portfolio over the next two years

Outlook:

  • The Company now expects global steel demand in 2019 to grow +0.5% to +1.5% (ex-China steel demand growth of +0.5% to +1.0%; US +0% to +1.0%; and Europe to contract by between -2.0% to -1.0%)
  • Against this backdrop and considering scope changes (ArcelorMittal Italia acquisition, remedy asset sales and European production curtailments) steel shipments are still expected to increase YoY, which should provide support for the Group's Action 2020 program

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

(USDm) unless otherwise shown 2Q 19 1Q 19 2Q 18 1H 19 1H 18
Sales 19,279 19,188 19,998 38,467 39,184
Operating (loss)/income (158) 769 2,361 611 3,930
Net (loss)/income attributable to equity holders of the parent (447) 414 1,865 (33) 3,057
Basic (loss)/earnings per common share (US $) (0.44) 0.41 1.84 (0.03) 3.01
           
Operating (loss)/income/tonne (US $/t) (7) 35 109 14 91
EBITDA 1,555 1,652 

3,073

3,207 5,585
EBITDA/tonne (US $/t) 68 76 141 72 130
Steel-only EBITDA/tonne (US $/t) 43 56 127 

50

114
           
Crude steel production (Mt) 23.8 24.1 23.2 

47.8

46.5
Steel shipments (Mt) 22.8 21.8 21.8 44.6 43.1
Own iron ore production (Mt) 14.6 14.1

14.5

28.7

29.1

Iron ore shipped at market price (Mt)

9.9 

9.2 10.0 

19.1

19.1

 

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

"After a strong 2018, market conditions in the first half of 2019 have been very tough, with the profitability of our steel segments suffering due to lower steel prices combined with higher raw material costs. This has been only partially offset by improved profitability from our mining segment, but I am pleased that we have generated healthy free cash flow demonstrating the improved robustness of the business thanks to our Action 2020 plan.

Global overcapacity remains a clear challenge. We have reduced capacity in Europe in response to the current weak demand environment, which has also impacted the turnaround of the ex-Ilva facilities in Italy. Further action needs to be taken to address the increasing level of imports entering the continent due to ineffective safeguard measures and we continue to engage with the European Commission to create a level playing field for the sector. A supportive regulatory and funding environment is also crucial to our ambition to significantly reduce our emissions as announced in our recent Climate Action report.

We are taking further actions to adapt and strengthen the Company, ensuring we make continued progress towards our net debt target and increase returns to shareholders. Despite the current challenges, the Company is well positioned to benefit from any improvement in market conditions and the current very low spread environment".

Second quarter 2019 earnings analyst conference call

ArcelorMittal will hold a conference call hosted by Mr. Lakshmi Mittal, Chairman and CEO and Aditya Mittal, President and CFO to discuss the three month and six-month period ended June 30, 2019 on: Thursday August 1, 2019 at 9.30am US Eastern time; 14.30pm London time and 15.30pm CET.

The dial in numbers are:

Location Toll free dial in numbers Local dial in numbers Participant
UK local: 0800 0515 931 +44 (0)203 364 5807

81958122#

US local: 1 86 6719 2729 +1 24 0645 0345 81958122#
France:

0800 914780

+33 1 7071 2916 81958122#
Germany: 0800 965 6288 +49 692 7134 0801 81958122#
Spain: 90 099 4930 +34 911 143436 81958122#
Luxembourg: 800 26908 +352 27 86 05 07 81958122#
A replay of the conference call will be available for one week by dialling: +49 (0) 1805 2047 088; Access code 2524123#      

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. 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/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 also presents the ratio of net debt to EBITDA for the twelve months ended December 31, 2018, which investors may find useful in understanding the company's ability to service its debt. 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. Such non-GAAP/alternative performance measures may not be comparable to similarly titled measures applied by other companies.

[2] Health and safety performance inclusive of ArcelorMittal Italia and related facilities (“ArcelorMittal Italia”) (consolidated as from November 1, 2018) was 1.26x for 2Q 2019 and 1.14x for 1Q 2019. Health and safety figures excluding ArcelorMittal Italia were 0.68x for 2Q 2019 as compared to 0.66x for 1Q 2019. From 1Q 2019 onwards, the methodology and metrics used to calculate health and safety figures for ArcelorMittal Italia have been harmonized with those of ArcelorMittal.

[3] Management performed its quarterly analysis of impairment indicators, and a downward revision of cash flow projections for ArcelorMittal USA resulted from the weaker than anticipated operating environment in the US, including lower than expected steel prices, lower ASC and high raw material costs. Impairment charges for 2Q 2019 were $947 million related to the remedy asset sales for the ArcelorMittal Italia acquisition ($347 million) and impairment of the fixed assets of ArcelorMittal USA ($600 million) following a sharp decline in steel prices and high raw material costs. Impairment charges for 1H 2019 were $1.1 billion related to the remedy asset sales for the ArcelorMittal Italia acquisition ($0.5 billion) and impairment of the fixed assets of ArcelorMittal USA ($0.6 billion) following a sharp decline in steel prices and high raw material costs.

[4] ArcelorMittal has applied IFRS 16 Leases as of January 1, 2019. Due to the transition option selected, the prior-period data has not been restated. IFRS 16 Leases provides a single lessee accounting model requiring lessees to recognize right-of-use assets and lease liabilities for all non-cancellable leases except for short-term leases and low value assets. The right-of-use assets are recognized as property, plant and equipment and measured on January 1, 2019 at an amount equal to the lease liability recognized as debt (short term $0.3 billion and long term $0.9 billion impact as of January 1, 2019) and measured on the basis of the net present value of remaining lease payments. On January 1, 2019 net debt increased accordingly by $1.2 billion following the adoption of IFRS 16 lease standard. The recognition of the lease expense in EBITDA for leases previously accounted for as operating leases is replaced by a depreciation expense related to the right-of-use assets and an interest expense reflecting the amortization of the lease liability. In addition, cash payments relating to the repayment of the principal amount of the lease liability are presented in the consolidated statements of cash flows as outflows from financing activities while lease payments for operating leases were previously recognized as outflows from operating activities.

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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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