Luxembourg, July 29, 2016 – 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, 2016.
Highlights:
- Health and safety: LTIF rate of 0.79x in 2Q 2016 as compared to 0.72x in 1Q 2016 and 0.68x in 2Q 2015
- EBITDA of $1.8 billion in 2Q 2016, nearly double as compared to $0.9 billion in 1Q 2016; 26.5% higher YoY
- Operating income of $1.9 billion in 2Q 2016 higher as compared to $0.3 billion in 1Q 2016, primarily as a result of one-time gain from employee benefits at ArcelorMittal USA[2] ($0.8 billion) and higher sales driven by improved steel selling prices
- Net income of $1.1 billion in 2Q 2016 (including one-time $0.8 billion gain from employee benefits at ArcelorMittal USA) as compared to a net loss of $0.4 billion in 1Q 2016 and net income of $0.2 billion in 2Q 2015
- Steel shipments of 22.1Mt in 2Q 2016, an increase of 2.9% as compared to 1Q 2016; stable YoY
- Gross debt decreased to $15.1 billion at June 30, 2016, as compared to $20.2 billion at March 31, 2016
- Net debt decreased to $12.7 billion as of June 30, 2016, as compared to $17.3 billion at March 31, 2016 mainly due to proceeds from the rights issue ($3.1 billion), asset sales ($1.1 billion), working capital release ($0.2 billion) offset in part by $0.2 billion premium on early repayment of debt
Key developments:
- Action 2020: United Steelworkers (USW) union deal has been ratified by members and ArcelorMittal USA is now progressing with a “footprint optimization project” at its Indiana Harbor steelmaking complex in East Chicago, Indiana
- Automotive: ArcelorMittal announces its intention to further expand its portfolio of automotive steel by launching two new products in 2017, Usibor® 2000 and Ductibor® 1000
Outlook and guidance:
- Despite the steel spread recovery losing momentum in recent weeks, the impact of lagged prices will be an important support for operating results as we move into a period of seasonally slower steel demand
- Improved market conditions are likely to consume working capital in 2016 (current estimate of ~$0.5 billion); the Company nevertheless expects cash flows from operating activities to exceed capex in 2016
Financial highlights (on the basis of IFRS[1]):
| (USDm) unless otherwise shown | 2Q 16 | 1Q 16 | 2Q 15 | 1H 16 | 1H 15 |
|---|---|---|---|---|---|
| Sales | 14,743 | 13,399 | 16,890 | 28,142 | 34,008 |
| Operating income | 1,873 | 275 | 579 | 2,148 | 1,150 |
| Net income/(loss) attributable to equity holders of the parent | 1,112 | (416) | 179 | 696 | (549) |
| Basic earnings/(loss) per share (US$) | 0.38 | (0.23) | 0.10 | 0.29 | (0.31) |
| Operating income/tonne (US$/t) | 85 | 13 | 26 | 49 | 26 |
| EBITDA | 1,770 | 927 | 1,399 | 2,697 | 2,777 |
| EBITDA/ tonne (US$/t) | 80 | 43 | 63 | 62 | 63 |
| Steel-only EBITDA/ tonne (US$/t) | 73 | 39 | 58 | 56 | 58 |
| Crude steel production (Mt) | 23.1 | 23.2 | 24.0 | 46.3 | 47.8 |
| Steel shipments (Mt) | 22.1 | 21.5 | 22.2 | 43.6 | 43.8 |
| Own iron ore production (Mt) | 13.5 | 14.1 | 16.4 | 27.6 | 31.9 |
| Iron ore shipped at market price (Mt) | 9.6 | 7.8 | 10.8 | 17.4 | 20.1 |
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
“ArcelorMittal enjoyed a stronger second quarter due largely to a more supportive pricing environment in our leading markets. Sales and EBITDA increased in all segments, including mining. We also significantly strengthened our balance sheet with proceeds from the rights issue, the Gestamp sale and working capital release reducing net debt to $12.7 billion.
The company continues to focus on the implementation of our strategic initiatives, in particular Action 2020, to support profitability. Although the industry continues to face the challenges of structural overcapacity, we are seeing better market conditions compared with the second half of 2015 which lead us to be cautiously optimistic about the remainder of the year.”
[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”). 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 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. ArcelorMittal presents EBITDA, net debt, operating working capital, free cash flow, liquidity, and EBITDA/tonne, which are non-GAAP financial measures (as defined in appendix 6), as additional measurements to enhance the understanding of operating performance. 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]On June 23, 2016, following the ratification by the United Steelworkers (“USW”) of a new labor agreement which is valid until September 1, 2018, ArcelorMittal made changes mainly to healthcare post-retirement benefits in its subsidiary ArcelorMittal USA. The changes resulted in a gain of $832 million.