ArcelorMittal reports third quarter 2014 and nine months 2014 results

Luxembourg, November 7, 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 nine month periods ended September 30, 2014.

Highlights:

• Health and safety performance improved in 3Q 2014 to an LTIF rate[2] of 0.78x
• EBITDA[3] of $1.9 billion in 3Q 2014, an 11.2% improvement as compared to 3Q 2013 with notable improvements in Europe (+72.6%) and ACIS (+89.5%), offset by the negative impact of iron ore price on the Mining segment (-47.9%)
• Steel shipments of 21.5 Mt in 3Q 2014, an increase of 3.9% as compared to 3Q 2013
• 3Q 2014 own iron ore production of 15.8 Mt, up 6% YoY; 10.0 Mt shipped and reported at market prices[4], up 6.3% YoY
• Net debt[5] of $17.8 billion as of September 30, 2014 as compared to $17.4 billion as of June 30, 2014 due largely to working capital investment of $0.6 billion and dividends of $0.4 billion, partially offset by forex effects ($0.5 billion)

Key developments:

• Continued progress on ACIS turnaround evident through improved Kazakhstan and Ukraine performance
• ArcelorMittal Tubarão blast furnace No.3 restarted July 2014
• Sale of Gallatin 50/50 joint venture in US to Nucor completed for $770 million[6]; proceeds received in October 2014
• Mining: Liberia phase 1 expected production and shipment of 5Mt in 2014 unaffected by Ebola epidemic. Phase 2 currently progressing at a slower pace due to contractors declaring force majeure

Outlook and guidance framework:

• Operating conditions remain generally favorable. The impact of declining iron ore price on Mining segment profitability is being offset by improvement in the steel business. The Company reiterates its guidance for EBITDA in excess of $7.0 billion in 2014
• Net interest expense is now expected to be approximately $1.5 billion for 2014
• Capital expenditure is now expected to be approximately $3.8 billion for 2014
• The Company maintains its medium term net debt target of $15 billion

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

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

“This quarter’s results show the considerable improvement in our steel business which has more than offset the fall in the iron ore price. Europe has delivered another strong quarter, reflecting improved market conditions and the benefits of the optimisation efforts, the turnaround in ACIS is evident, and the NAFTA business has recovered after a disappointing first half. Based on today’s market conditions, I do not foresee a deterioration in our performance in the fourth quarter. As a result we are well placed to achieve full year EBITDA in excess of $7.0 billion.

[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]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.
[5]Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale). As at September 30, 2014 net debt included $0.1 billion relating to distribution centers in Europe held for sale.
[6]On October 8, 2014, ArcelorMittal and Gerdau jointly announced completion of the sale of their respective 50% interests in Gallatin Steel Company (“Gallatin”) to Nucor Corporation. The sale was completed for a total cash consideration of $770 million (of which $385 million cash due to ArcelorMittal and paid in 4Q 2014) and a gain on disposal of approximately $0.2 billion is expected to be recorded in  income from associates, joint ventures and other investments  in 4Q 2014.  Gallatin is a flat rolled mini-mill located in Gallatin County, Kentucky, USA that melts scrap, pig iron and hot briquetted iron from various sources, and processes the material to produce flat rolled steel. Gallatin’s high quality assets produce a wide range of steels from low to high carbon grades with an annual capacity of around 1.8 million tons.
[7]EBITDA/t is calculated as total Group EBITDA divided by total steel shipments.