Luxembourg, November 8, 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 nine month periods ended September 30, 2016.
Highlights:
- Health and safety: LTIF rate of 0.84x in 3Q 2016 as compared to 0.79x in 2Q 2016 and 0.78x in 3Q 2015
- Operating income of $1.2 billion in 3Q 2016 lower as compared to $1.9 billion in 2Q 2016 (which included one-time $0.8 billion gain from employee benefits at ArcelorMittal USA[2])
- EBITDA of $1.9 billion in 3Q 2016, 7.1% higher as compared to $1.8 billion in 2Q 2016; 40.4% higher YoY
- Net income of $0.7 billion in 3Q 2016 as compared to net income of $1.1 billion in 2Q 2016 (which included one-time $0.8 billion gain from employee benefits at ArcelorMittal USA) and net loss of $0.7 billion in 3Q 2015
- Steel shipments of 20.3Mt in 3Q 2016, a seasonal decline of 8.1% as compared to 2Q 2016; steel shipments of 63.9Mt in 9M 2016, down 1.5% YoY
- Net debt decreased to $12.2 billion as of September 30, 2016, as compared to $12.7 billion at June 30, 2016; net debt lower by $4.6 billion as compared to $16.8 billion as of September 30, 2015
Outlook and guidance:
- Lower steel prices in the US, together with the impact of rapidly rising metallurgical coal prices on steel spreads in other geographies, is expected to lead to a decline in profitability in 4Q 2016 as compared to 3Q 2016
- Taking into account an expected full year investment in operating working capital of approximately $1 billion (versus previous estimate of ~$0.5 billion), the Company expects cash flows from operating activities to exceed capex in 2016
Financial highlights (on the basis of IFRS[1]):
| (USDm) unless otherwise shown | 3Q 16 | 2Q 16 | 3Q 15 | 9M 16 | 9M 15 |
|---|---|---|---|---|---|
| Sales | 14,523 | 14,743 | 15,589 | 42,665 | 49,597 |
| Operating income | 1,204 | 1,873 | 20 | 3,352 | 1,170 |
| Net income/(loss) attributable to equity holders of the parent | 680 | 1,112 | (711) | 1,376 | (1,260) |
| Basic earnings/(loss) per share (US$)[3] | 0.22 | 0.38 | (0.31) | 0.49 | (0.54) |
| Operating income/tonne (US$/t) | 59 | 85 | 1 | 52 | 18 |
| EBITDA | 1,897 | 1,770 | 1,351 | 4,594 | 4,128 |
| EBITDA/ tonne (US$/t) | 93 | 80 | 64 | 72 | 64 |
| Steel-only EBITDA/ tonne (US$/t) | 83 | 73 | 57 | 65 | 58 |
| Crude steel production (Mt) | 22.6 | 23.1 | 23.1 | 69.0 | 70.8 |
| Steel shipments (Mt) | 20.3 | 22.1 | 21.1 | 63.9 | 64.8 |
| Own iron ore production (Mt) | 13.7 | 13.5 | 15.4 | 41.3 | 47.3 |
| Iron ore shipped at market price (Mt) | 8.1 | 9.6 | 10.3 | 25.5 | 30.5 |
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
“Our third quarter results reflect the progress the Company is making to improve the underlying performance of the business, as well as improved market conditions since the start of the year. Despite seasonally lower shipments, EBITDA improved compared with both the second quarter and the same period of 2015.
Looking ahead, while real demand remains stable, we will be impacted by the unexpected significant increase in the price of coal. While expectations are for steel prices to align with the increased costs, in the interim the higher coal price will impact steel spreads and fourth quarter performance.
Overcapacity remains a concern, reinforcing the importance of a comprehensive trade response to minimise the impact of unfair trade across all product categories. But overall we remain pleased with the progress we have made this year. We are supported by a strong balance sheet, we have seen positive price momentum in our main markets and the organisation is fully aligned to successfully implement our five year strategic plan, Action 2020.”
[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 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 and free cash flow, and EBITDA/tonne, which are non-GAAP financial measures and defined in appendix 7, as additional measurements 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 as an additional measurement to enhance the understanding of its financial position. 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.
[3]Following the Company’s equity offering in April 2016, the earnings (loss) per share for prior periods has been recasted in accordance with IFRS in the current quarter for the three months and the nine months ended September 30, 2015, to include the bonus element derived from the 35% discount to
he theoretical ex-right price included in the subscription price.