Luxembourg, August 1, 2014 – 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 and six month periods ended June 30, 2014.
Highlights:
- Health and safety: LTIF rate[2] of 0.87x in 2Q 2014 as compared to 0.90x in 2Q 2013
- EBITDA[3] of $1.8 billion (including a $0.1 billion US litigation charge[4] ) in 2Q 2014, a 9% improvement as compared to 2Q 2013 on an underlying basis[5] ; with notable improvements in Europe (EBITDA +41% vs. 2Q 2013) and ACIS (EBITDA +23% vs. 2Q 2013)
- Net income of $0.1 billion in 2Q 2014 as compared to a net loss of $0.8 billion in 2Q 2013
- Steel shipments of 21.5Mt, an increase of 2.5% as compared to 2Q 2013
- 16.6 Mt own iron ore production as compared to 15.0 Mt in 2Q 2013; 10.5 Mt shipped and reported at market prices[6] as compared to 8.2 Mt in 2Q 2013
- Net debt[7] of $17.4 billion as of June 30, 2014 a decrease of $1.1 billion during the quarter due to release of working capital ($0.9 billion) and M&A proceeds ($0.2 billion)[8]
Key developments:
- Progress on ACIS turnaround evident in improved Kazakhstan and Ukraine performance
- Franchise steel business development: Cold mill complex at VAMA advanced automotive steel plant in China has been inaugurated
- Calvert plant currently running at 83% utilization; ArcelorMittal Tubarão blast furnace No.3 restarted in July 2014
- Agreement signed with BHP Billiton to acquire its stake in the Mount Nimba iron ore project in Guinea
Outlook and guidance framework:
- The previously announced 2014 guidance framework remains valid. The iron ore price has, however, been lower than anticipated and this underlying assumption has been adjusted to $105/t for the full year 2014 (from $120/t previously) implying a second-half average of $100/t. All other components of the framework remain unchanged
- As a result, the Company now expects 2014 EBITDA in excess of $7.0 billion, assuming:
a) Steel shipments increase by approximately 3% in 2014 as compared to 2013
b) Marketable iron ore shipments increase by approximately 15% in 2014 as compared to 2013
c) The iron ore price averages approximately $105/t (for 62% Fe CFR China) during 2014
d) An improvement in steel margins despite the weather related impacts on NAFTA segment’s first-half performance - Net interest expense is expected to be approximately $1.6 billion for 2014
- Capital expenditure is expected to be approximately $3.8-4.0 billion for 2014
- The Company maintains its medium term net debt target of $15 billion
Financial highlights (on the basis of IFRS[1]):
| (USDm) unless otherwise shown | 2Q 14 | 1Q 14 | 2Q 13 | 1H 14 | 1H 13 |
|---|---|---|---|---|---|
| Sales | 20,704 | 19,788 | 20,197 | 40,492 | 39,949 |
| EBITDA | 1,763 | 1,754 | 1,700 | 3,517 | 3,265 |
| Operating income | 832 | 674 | 352 | 1,506 | 756 |
| Net income / (loss) attributable to equity holders of the parent | 52 | (205) | (780) | (153) | (1,125) |
| Basic income / (loss) per share (USD) | 0.03 | (0.12) | (0.44) | (0.09) | (0.65) |
| Own iron ore production (Mt) | 16.6 | 14.8 | 15.0 | 31.4 | 28.1 |
| Iron ore shipments at market price (Mt) | 10.5 | 9.3 | 8.2 | 19.8 | 15.5 |
| Crude steel production (Mt) | 23.1 | 23.0 | 22.5 | 46.1 | 44.9 |
| Steel shipments (Mt) | 21.5 | 21.0 | 20.9 | 42.4 | 41.4 |
| EBITDA/tonne (USD/t)[9] | 82 | 84 | 81 | 83 | 79 |
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
“The second quarter and first half results reflect the anticipated improvement in steel shipments and margins, supporting an underlying EBITDA improvement compared with last year. The expansion of our iron ore business is also on track, although increased iron ore shipments were offset by the lower than anticipated iron ore price, which has led us to revise our EBITDA guidance for the full year.
Looking ahead, indicators in both Europe and the US, which together account for two thirds of our shipments, continue to be positive and we have increased our steel demand forecasts for both markets. ArcelorMittal continues to focus on delivering on its strategy of reducing costs, investing in our franchise businesses and reducing net debt.”
[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”). 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”. 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.
[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 restructuring charges / exceptional items.
[4]In June 2014, ArcelorMittal agreed to settle a lawsuit brought in the U.S. District Court for the Northern District of Illinois, alleging that ArcelorMittal and several large U.S. steel competitors restricted the output of steel products between 2005 and 2007. ArcelorMittal continues to strongly deny any liability or wrongdoing and believes the claims are without merit. In order to avoid further costs and distraction of management resources, as well as to mitigate further risk, ArcelorMittal agreed to a settlement of $90 million with the plaintiff class.
[5]EBITDA in 2Q 2014 of $1,763 million included the negative impact of $90 million following the settlement of US antitrust litigation.
[6]Market priced 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 and reported at the prevailing market price. Shipments of raw materials that do not constitute market-priced tonnes are transferred internally and reported on a cost-plus basis.
[7]Net debt refers to long-term debt, plus short-term debt, less cash and cash equivalents, restricted cash and short-term investments.
[8]Mergers and acquisition (M&A) proceeds primarily include inflow from the divestures of ATIC group and Steel cord business
[9]EBITDA/t is calculated as total Group EBITDA divided by total steel shipments.