ArcelorMittal reports third quarter 2016 results
(Thomson Reuters ONE) -
ArcelorMittal S.A. /
ArcelorMittal reports third quarter 2016 results
. Processed and transmitted by Nasdaq Corporate Solutions.
The issuer is solely responsible for the content of this announcement.
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 ~$0.5
billion), the Company expects cash flows from operating activities to exceed
capex in 2016
Financial highlights (on the basis of IFRS(1)):
(USDm) unless otherwise shown 3Q 16 2Q 16 3Q 15 9M 16 9M 15
Sales 14,523 14,743 15,589 42,665 49,597
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Operating income 1,204 1,873 20 3,352 1,170
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Net income/(loss) attributable to equity 680 1,112 (711) 1,376 (1,260)
holders of the parent
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Basic earnings/(loss) per share (US$)[3] 0.22 0.38 (0.31) 0.49 (0.54)
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Operating income/tonne (US$/t) 59 85 1 52 18
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EBITDA 1,897 1,770 1,351 4,594 4,128
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EBITDA/ tonne (US$/t) 93 80 64 72 64
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Steel-only EBITDA/ tonne (US$/t) 83 73 57 65 58
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Crude steel production (Mt) 22.6 23.1 23.1 69.0 70.8
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Steel shipments (Mt) 20.3 22.1 21.1 63.9 64.8
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Own iron ore production (Mt) 13.7 13.5 15.4 41.3 47.3
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Iron ore shipped at market price (Mt) 8.1 9.6 10.3 25.5 30.5
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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."
Third quarter 2016 earnings analyst conference call
ArcelorMittal management will host a conference call for members of the
investment community to discuss the third quarter period ended September
30, 2016 on:
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Date US Eastern time London CET
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Tuesday November 9.30am 2.30pm 3.30pm
8, 2016
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The dial in numbers:
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Location Toll free dial in Local dial in numbers Participant
numbers
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UK local: 0800 0515 931 +44 (0)203 364 5807 06718751#
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US local: 1 86 6719 2729 +1 24 0645 0345 06718751#
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US (New York) 1 86 6719 2729 + 1 64 6663 7901 06718751#
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France: 0800 914780 +33 1 7071 2916 06718751#
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Germany: 0800 965 6288 +49 692 7134 0801 06718751#
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Spain: 90 099 4930 +34 911 143436 06718751#
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Luxembourg: 800 26908 +352 27 86 05 07 06718751#
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A replay of the conference call will be available for one week by
dialing:
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Number Language Access code
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+49 (0) English 493108#
1805 2047 088
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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.
About ArcelorMittal
ArcelorMittal is the world's leading steel and mining company, with a presence
in 60 countries and an industrial footprint in 19 countries. Guided by a
philosophy to produce safe, sustainable steel, we are the leading supplier of
quality steel in the major global steel markets including automotive,
construction, household appliances and packaging, with world-class research and
development and outstanding distribution networks.
Through our core values of sustainability, quality and leadership, we operate
responsibly with respect to the health, safety and wellbeing of our employees,
contractors and the communities in which we operate.
For us, steel is the fabric of life, as it is at the heart of the modern world
from railways to cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of the products
and components people use in their everyday lives more energy efficient.
We are one of the world's five largest producers of iron ore and metallurgical
coal. With a geographically diversified portfolio of iron ore and coal assets,
we are strategically positioned to serve our network of steel plants and the
external global market. While our steel operations are important customers, our
supply to the external market is increasing as we grow.
In 2015, ArcelorMittal had revenues of $63.6 billion and crude steel production
of 92.5 million tonnes, while own iron ore production reached 62.8 million
tonnes.
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/
Enquiries
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ArcelorMittal Investor Relations
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Europe Tel: +352 4792 2652
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Americas Tel: +1 312 899 3985
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Retail Tel: +352 4792 3198
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SRI Tel: +44 207 543 1128
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Bonds/Credit Tel: +33 1 71 92 10 26
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ArcelorMittal Corporate E-mail: press(at)arcelormittal.com
Communications Tel: +44 0207 629 7988
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Sophie Evans Tel: +44 203 214 2882
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Paul Weigh Tel: +44 203 214 2419
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France Image 7 Tel: +33 153 70 94 17
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Corporate responsibility and safety performance
Health and safety - Own personnel and contractors lost time injury frequency
rate
Health and safety performance, based on own personnel figures and contractors
lost time injury frequency (LTIF) rate, deteriorated to 0.84x in the third
quarter of 2016 ("3Q 2016") as compared to 0.79x for the second quarter of 2016
("2Q 2016"), and 0.78x for the third quarter of 2015 ("3Q 2015"). Health and
safety performance was stable at 0.80x in the first nine months of 2016 ("9M
2016") as compared to the first nine months of 2015 ("9M 2015").
The Company's effort to improve the Group's Health and Safety record continues
and remains focused on both further reducing the rate of severe injuries and
preventing fatalities.
Own personnel and contractors - Frequency rate
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Lost time injury frequency rate 3Q 16 2Q 16 3Q 15 9M 16 9M 15
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Mining 1.08 0.84 0.99 0.93 0.73
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NAFTA 0.89 0.62 0.99 0.95 1.02
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Brazil 0.20 0.46 0.57 0.32 0.58
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Europe 1.17 1.11 0.88 1.03 0.99
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ACIS 0.55 0.53 0.52 0.58 0.52
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Total Steel 0.80 0.78 0.75 0.78 0.81
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Total (Steel and Mining) 0.84 0.79 0.78 0.80 0.80
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Key corporate responsibility highlights for 3Q 2016:
* On August 1, 2016, ArcelorMittal marked the 10-year anniversary of the
merger between Arcelor and Mittal Steel. In this time, lost time injury
frequency rate has reduced from 3.1x to 0.84x as reported this
quarter. ArcelorMittal also highlights a total research and development
spend since 2006 of $2.5 billion, supporting the invention of more than 250
new types of steel.
* Continuing its commitment to innovation and research and development,
highlights during this quarter include:
* ArcelorMittal featured in the Climate Disclosure Project steel sector
report, scoring top of the league table for low carbon technology
development and emissions and energy management.
* For the third year running, ArcelorMittal ran its Paint Supplier
Innovation Awards to encourage suppliers that have helped ArcelorMittal
identify avenues for product innovation and environmental improvements.
* At the London Design Festival in September 2016, ArcelorMittal's steel
featured in the construction of a building prototype designed to be
entirely reused, remanufactured or recycled.
Analysis of results for the nine months ended September 30, 2016 versus results
for the nine months ended September 30, 2015
Total steel shipments for 9M 2016 decreased 1.5% at 63.9 million metric tonnes
as compared with 64.8 million metric tonnes for 9M 2015, primarily due to lower
shipments in Brazil -8.7%, NAFTA -2.7% and Europe -1.6% offset by higher
shipments in ACIS +8.2%. On a comparable basis (considering the sale of long
steel producing subsidiaries in the US (LaPlace and Vinton) in 2Q 2016 and
Zaragoza in Spain during 3Q 2016), total steel shipments for 9M 2016 were 1.1%
lower as compared with 64.1 million metric tonnes for 9M 2015.
Sales for 9M 2016 decreased by 14.0% to $42.7 billion as compared with $49.6
billion for 9M 2015, primarily due to lower average steel selling prices (-
12.4%), lower steel shipments (-1.5%), lower seaborne iron ore reference prices
(-7.6%), and lower marketable iron ore shipments (-16.3%).
Depreciation of $2.0 billion for 9M 2016 was lower as compared to $2.4 billion
for 9M 2015, primarily on account of foreign exchange impact following the
appreciation of the US dollar against major currencies and savings from reduced
asset base following impairments recorded at the end of 2015. FY 2016
depreciation is expected to be approximately $2.7 billion (based on current
exchange rates) reduced from previous $2.8 billion guidance in 2Q 2016.
Impairment charges for 9M 2016 were $49 million related to the sale of
ArcelorMittal Zaragoza in Spain, as compared to impairment charges of $46
million for 9M 2015 primarily related to closure of the Vereeniging meltshop in
South Africa ($27 million) and the closure of the Georgetown facility in the US
($19 million).
Exceptional income for 9M 2016 was $832 million relating to a one-time gain on
employee benefits following the signing of the new US labour contract.
Exceptional charges of $527 million for 9M 2015 included $0.5 billion related to
the write-down of inventory following the rapid decline of international steel
prices and also included $27 million of retrenchment costs in South Africa.
Operating income for 9M 2016 was $3.4 billion as compared to operating income of
$1.2 billion in 9M 2015. Operating results for 9M 2016 were positively impacted
by exceptional income as discussed above. Operating results for 9M 2015 were
negatively impacted by a $69 million provision primarily related to onerous hot
rolled and cold rolled contracts in the US (NAFTA) and exceptional charges
discussed above.
Income from investments in associates, joint ventures and other investments in
9M 2016 was higher at $601 million as compared to income in 9M 2015 of $153
million, primarily due to the gain on disposal of stakes in Gestamp[4] ($329
million) and Hunan Valin[5] ($74 million) as well as improved performance of the
Calvert joint venture and Chinese investees. Income from investments in
associates, joint ventures and other investments in 9M 2015 includes $55 million
income generated from the share swap with respect to Gerdau[6].
Net interest expense (including interest expense and interest income) was lower
at $893 million in 9M 2016, as compared to $966 million in 9M 2015, driven by
savings from early bond repayments in 9M 2016 (see recent developments for
details on bonds repaid in 3Q 2016) and repayment at maturity on June 3, 2016 of
the ?1 billion 9.375% bond. The Company continues to expect full year 2016 net
interest expense of approximately $1.1 billion.
Foreign exchange and other net financing costs were $664 million for 9M 2016 as
compared to foreign exchange and other net financing costs of $1,238 million for
9M 2015. Foreign exchange gains/losses primarily relate to the impact of the USD
movements on Euro denominated deferred tax assets and Euro denominated debt. For
the 9M 2016 foreign exchange gain of $124 million was recorded (as compared to a
loss of $593 million for 9M 2015), mainly on account of USD depreciation of
2.5% against the Euro (versus 7.7% appreciation in 9M 2015), 20.3% depreciation
against BRL (versus 33.1% appreciation in 9M 2015) and 32.6% appreciation
against the tenge currency in Kazakhstan[7] in 9M 2015. Foreign exchange and
other net financing costs for 9M 2016 also includes $0.4 billion premium
incurred on the early redemption of bonds.
ArcelorMittal recorded an income tax expense of $1.0 billion for 9M 2016 as
compared to an income tax expense of $461 million for 9M 2015. The tax expense
in 9M 2016 includes derecognition of deferred tax assets (DTA) amounting to $0.7
billion in Luxembourg. This derecognition (or impairment) is related to revised
expectations of DTA recoverability in US dollar terms, and is not related to a
deterioration of expected future taxable income.
Non-controlling interests for 9M 2016 were a charge of $21 million as compared
to income of $82 million for 9M 2015. Non-controlling interests for 9M 2016
represents a charge primarily related to minority shareholders' share of net
income recorded in ArcelorMittal Mines Canada and Belgo Bekaert Arames in Brazil
partially offset by losses generated by ArcelorMittal South Africa. Non-
controlling interests for 9M 2015 include income primarily related to losses
generated by ArcelorMittal South Africa.
ArcelorMittal's net income for 9M 2016 was $1,376 million, or $0.49 earnings per
share, as compared to a net loss for 9M 2015 of $1,260 billion, or $0.54 loss
per share.
Analysis of results for 3Q 2016 versus 2Q 2016 and 3Q 2015
Total steel shipments for 3Q 2016 were 8.1% lower at 20.3 million metric tonnes
as compared with 22.1 million metric tonnes for 2Q 2016 primarily due to a
seasonal slowdown in Europe (-13.8%) and declines in NAFTA (-1.4%) and ACIS (-
1.3%) offset in part by 2.3% improvement in Brazil.
Steel shipments for 3Q 2016 were 3.6% lower as compared to 21.1 million metric
tonnes for 3Q 2015. On a comparable basis (considering the sale of long steel
producing subsidiaries in the US (LaPlace and Vinton) in 2Q 2016 and Zaragoza in
Spain during 3Q 2016), total steel shipments for 3Q 2016 were 3.0% lower as
compared with 20.8 million metric tonnes for 3Q 2015.
Sales for 3Q 2016 were $14.5 billion as compared to $14.7 billion for 2Q 2016
and $15.6 billion for 3Q 2015. Sales in 3Q 2016 were 1.5% lower as compared to
2Q 2016, primarily due to seasonally lower steel shipments (-8.1%), lower
market-priced iron ore shipments (-15.5%), offset in part by higher average
steel selling prices (+7.4%) and higher iron ore reference prices (+5.3%). Sales
in 3Q 2016 were 6.8% lower as compared to 3Q 2015 primarily due to lower steel
shipment volumes (-3.6%), lower average steel selling prices (-2.0%), lower
market-priced iron ore shipments (-21.4%), offset in part by higher iron ore
reference prices (+6.7%).
Depreciation was $693 million for 3Q 2016 as compared to $680 million in
2Q 2016. Depreciation was lower in 3Q 2016 as compared to $777 million for
3Q 2015 primarily due to decreased asset base following impairments recorded at
the end of 2015 and foreign exchange impacts.
Impairment charges for 3Q 2016 were nil. Impairment charges for 2Q 2016 were $49
million related to the sale of ArcelorMittal Zaragoza facility in Spain.
Impairment charges for 3Q 2015 were $27 million relating to the closure of the
Vereeniging meltshop in South Africa.
Exceptional items for 3Q 2016 were nil. Exceptional income for 2Q 2016 was $832
million relating to a one-time gain on employee benefits following the signing
of the new US labour contract. Exceptional charges for 3Q 2015 were $527
million, including $0.5 billion related to the write-down of inventory following
the rapid decline of international steel prices and also included $27 million of
retrenchment costs in South Africa.
Operating income for 3Q 2016 was $1.2 billion as compared to $1.9 billion in
2Q 2016 and $20 million in 3Q 2015. Operating results for 2Q 2016 and 3Q 2015
were impacted by exceptional income and charges as discussed above.
Income from investments in associates, joint ventures and other investments for
3Q 2016 was lower at $109 million as compared to $168 million for 2Q 2016
primarily due to weaker performance of the Calvert joint venture, Spanish and
Chinese investees offset in part by the gain on disposal of ArcelorMittal's
stake in Hunan Valin ($74 million). Income from investments in associates, joint
ventures and other investments for 2Q 2016 included an annual dividend received
from Erdemir ($44 million). Income from investments in associates, joint
ventures and other investments in 3Q 2015 was $30 million primarily due to
weaker performance from Chinese investees offset in part by income generated
from the share swap in Gerdau.
Net interest expense in 3Q 2016 was $255 million as compared to $306 million in
2Q 2016 and $318 million in 3Q 2015. Net interest expense was lower in 3Q 2016
as compared to 2Q 2016 and 3Q 2015 primarily due to savings from early bond
repayments via debt tenders in 2Q 2016, early redemption of a bond in 2Q 2016
and repayment at maturity on June 3, 2016, of a ?1 billion 9.375% bond.
Foreign exchange and other net financing costs in 3Q 2016 was $223 million as
compared to foreign exchange and other net financing costs of $450 million for
2Q 2016 and foreign exchange and other net financing costs of $409 million for
3Q 2015. Foreign exchange gains/losses primarily relate to the impact of the USD
movements on Euro denominated deferred tax assets and Euro denominated debt. For
3Q 2016 a foreign exchange gain of $65 million was recorded (as compared to a
loss of $47 million for 2Q 2016) mainly as a result of a 0.5% depreciation of
the USD against the Euro (versus 2.5% appreciation in 2Q 2016) and a 1.1%
appreciation against BRL (versus 10.9% depreciation in 2Q 2016). Foreign
exchange and other net financing costs for 3Q 2016 also include $158 million
premiums incurred on the bond repayments via debt tenders as compared to $237
million premiums incurred on the bond repayments via debt tenders and early
redemption of a bond during 2Q 2016. Foreign exchange and other net financing
costs for 3Q 2015 include a foreign exchange loss of $170 million mainly on
account of 21.9% appreciation of the USD against BRL and stable USD/Euro
relative to the prior period.
ArcelorMittal recorded an income tax expense of $146 million for 3Q 2016 as
compared $153 million for 2Q 2016 and $127 million for 3Q 2015.
Non-controlling interests for 3Q 2016 of $9 million represent a charge primarily
related to minority shareholders' share of net income recorded in ArcelorMittal
Mines Canada and Belgo Bekaert Arames in Brazil partially offset by losses
generated by ArcelorMittal South Africa. Non-controlling interests for 2Q 2016
of $20 million represent a charge primarily related to minority shareholders'
share of net income recorded in ArcelorMittal Mines Canada and Belgo Bekaert
Arames in Brazil. Non-controlling interests for 3Q 2015 amounted to an income of
$93 million primarily related to losses generated by ArcelorMittal South Africa
partially offset by share of net income recorded in ArcelorMittal Mines Canada
and Belgo Bekaert Arames in Brazil.
ArcelorMittal recorded net income for 3Q 2016 of $680 million, or $0.22 earnings
per share as compared to net income for 2Q 2016 of $1,112 million, or $0.38
earnings per share, and as compared to net loss of $711 million, or $0.31 loss
per share for 3Q 2015.
Capital expenditure projects
The following tables summarize the Company's principal growth and optimization
projects involving significant capital expenditures.
Completed projects in most recent quarters
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Region Site Project Capacity / Actual completion
particulars
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NAFTA AM/NS Calvert Phase 1: Slab yard Increase coil 1Q 2016
expansion - production level
Expansion of Bay up to 4.6Mt/year
4 and minor coils
installations for
Bay 5
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Brazil Acindar New rolling mill Increase in 1Q 2016
(Argentina) rolling capacity
by 0.4Mt/year for
bars for civil
construction
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Brazil Monlevade Wire rod Increase in 4Q 2015((a))
(Brazil) production capacity of
expansion finished products
by 1.1Mt/year
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Ongoing projects
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Region Site Project Capacity / Forecast
particulars completion
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NAFTA Indiana Harbor Indiana Harbor Restoration of 2018((b))
"footprint 80" HSM; new
optimization caster at No.3
project" Steelshop and
upgrades at
Indiana Harbor
finishing and
logistics
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NAFTA AM/NS Calvert Phase 2: Slab yard Increase coil 2017
expansion (Bay 5) production level
from 4.6Mt/year
to 5.3Mt/year
coils
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NAFTA ArcelorMittal Phase 2: Convert Allow the 2016
Dofasco (Canada) the current galvaline #4 to
galvanizing line #4 produce 160kt
to a Galvalume line galvalume and
128kt galvanize
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Europe ArcelorMittal HRM extension Increase HRC 2016((c))
Krakow (Poland) capacity by
0.9Mt/year
HDG increase Increasing HDG 2016((c))
capacity by
0.4Mt/year
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Europe Gent & Liège Gent: Upgrade HSM Increase ~400kt 2017
(Europe Flat and new furnace in Ultra High
Automotive UHSS Liège: Annealing Strength Steel
Program) line transformation capabilities
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Brazil ArcelorMittal Vega Expansion project Increase hot On hold
Do Sul (Brazil) dipped
galvanizing (HDG)
capacity by
0.6Mt/year and
cold rolling (CR)
capacity by
0.7Mt/year
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Brazil Juiz de Fora Meltshop expansion Increase in On hold((a))
(Brazil) meltshop
capacity by
0.2Mt/year
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Brazil Monlevade (Brazil) Sinter plant, blast Increase in On hold
furnace and liquid steel
meltshop capacity by
1.2Mt/year;
Sinter feed
capacity of
2.3Mt/year
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Mining Liberia Phase 2 expansion Increase On hold((d))
project production
capacity to
15Mt/year (high
grade sinter
feed)
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a. Though the Monlevade wire rod expansion project and Juiz de Fora rebar
expansion were completed in 2015, and Juiz de Fora meltshop is expected to
be completed in 2017, the Company does not expect to increase shipments
until domestic demand improves.
b. In support of the Company's Action 2020 program that was launched at its
fourth quarter and full-year 2015 earnings announcement, the footprint
optimization project at ArcelorMittal Indiana Harbor is now underway, which
has resulted in structural changes required to improve asset and cost
optimization. The plan involves idling redundant operations including the #1
aluminize line, 84" hot strip mill (HSM), and #5 continuous galvanizing line
(CGL) and No.2 steel shop (expected to be idled in 2017) whilst making
further planned investments totalling ~US$200 million including a new
caster at No.3 steelshop (expected to be completed in 4Q 2016), restoration
of the 80" hot strip mill and Indiana Harbor finishing and logistics. The
project is expected to be completed in 2018.
c. On July 7, 2015, ArcelorMittal Poland announced it was restarting
preparations for the relining of blast furnace No. 5 in Krakow, which has
now been completed during 3Q 2016. Total investments in the primary
operations in the Krakow plant will amount to PLN 200 million (more than ?40
million), which also includes modernization of the basic oxygen furnace No.
3. Additional projects in the downstream operations will also be
implemented. These include the extension of the hot rolling mill capacity by
0.9 million tons per annum and increasing the hot dip galvanizing capacity
by 0.4 million tons per annum. The capex value of those two projects exceeds
PLN 300 million (?90 million) in total. In total, the Group will invest more
than PLN 500 million (more than ?130 million) in its operations in Krakow,
including both upstream and downstream installations.
d. ArcelorMittal Liberia is considering moving ore extraction from its
depleting DSO (direct shipping ore) deposit at Tokadeh to the nearby, low
strip ratio and higher grade DSO Gangra deposit by 3Q 2017. In the current
initial DSO phase at Tokadeh, significant cost reduction and restructuring
continued to ensure the mine's competitiveness at current prices. Following
a period of exploration cessation caused by the onset of Ebola,
ArcelorMittal Liberia recommenced drilling for DSO resource extensions in
late 2015. During 2016 the operation at Tokadeh was right sized to 3Mtpa to
focus on its 'natural' Atlantic markets and this will continue in 2016 at a
rate of approximately 2Mtpa to maintain the life of the DSO phase as
ArcelorMittal finalises the transition to the appropriate next phase of
development. The nearby Gangra deposit is now the preferred next development
in a staged approach as opposed to the originally planned phase 2 step up to
15Mtpa of concentrated sinter fine ore that was delayed in August 2014 due
to the declaration of force majeure by contractors following the Ebola virus
outbreak, and then reassessed following rapid iron ore price declines over
the period since. Accordingly, definition drilling has begun in Gangra.
ArcelorMittal remains committed to Liberia where it operates a full value
chain of mine, rail and port and where it has been operating the mine on a
DSO basis since 2011. With 2 billion tonnes of iron ore resource in its
lease, ArcelorMittal Liberia presents a strong, competitive source of
product ore for the international market based on continuing DSO mining and
then moving to a long term sinter feed and concentration phase.
Analysis of segment operations
NAFTA
(USDm) unless otherwise shown 3Q 16 2Q 16 3Q 15 9M 16 9M 15
Sales 4,269 3,920 4,371 12,011 13,693
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Operating income 424 1,209 88 1,838 36
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Depreciation 142 136 151 412 462
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Impairment - - - - 19
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Exceptional (income)/charges - (832) 101 (832) 101
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EBITDA 566 513 340 1,418 618
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Crude steel production (kt) 5,632 5,735 5,976 17,011 17,659
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Steel shipments (kt) 5,364 5,443 5,620 16,270 16,725
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Average steel selling price (US$/t) 715 660 698 670 739
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NAFTA segment crude steel production decreased 1.8% to 5.6 million tonnes in
3Q 2016 as compared to 5.7 million tonnes for 2Q 2016.
Steel shipments in 3Q 2016 decreased by 1.4% to 5.4 million tonnes as compared
to 2Q 2016, primarily driven by a 14.0% decrease in long products volumes due to
weak demand, offset in part by a 1.2% increase in flat products mainly in
Mexico.
Sales in 3Q 2016 increased by 8.9% to $4.3 billion as compared to $3.9 billion
in 2Q 2016, primarily due to higher average steel selling prices (+8.3%)
reflecting in part the lagged effect of higher steel prices from prior quarters,
and offset by lower steel shipment volumes as discussed above. Average steel
selling price for flat products and long products improved +8.5% and +4.0%,
respectively.
Operating income in 3Q 2016 decreased to $424 million as compared to operating
income of $1.2 billion in 2Q 2016 and operating income of $88 million in
3Q 2015. Operating performance for 2Q 2016 was positively impacted by a one-time
gain of $832 million on employee benefits following the signing of the new US
labour contract. Operating performance in 3Q 2015 was impacted by exceptional
charges of $101 million relating to the write-down of inventories following the
rapid decline of steel prices.
EBITDA in 3Q 2016 increased 10.5% to $566 million as compared to $513 million in
2Q 2016 primarily due to higher average steel selling prices (+8.3%), offset in
part by higher costs (including higher slab costs at Calvert) and lower steel
shipment volumes (-1.4%). EBITDA in 3Q 2016 improved significantly as compared
to $340 million in 3Q 2015 due to improved selling prices (+2.3%), better
product mix and improved costs, offset in part by lower steel shipments volumes
(-4.5%).
Brazil
(USDm) unless otherwise shown 3Q 16 2Q 16 3Q 15 9M 16 9M 15
Sales 1,729 1,488 2,125 4,472 6,411
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Operating income 233 149 196 471 762
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Depreciation 68 64 78 188 249
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Exceptional charges - - 39 - 39
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EBITDA 301 213 313 659 1,050
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Crude steel production (kt) 2,888 2,800 2,953 8,355 8,762
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Steel shipments (kt) 2,751 2,689 3,125 7,912 8,667
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Average steel selling price (US$/t) 582 515 622 525 674
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Brazil segment crude steel production increased 3.2% to 2.9 million tonnes in
3Q 2016 as compared to 2.8 million tonnes in 2Q 2016.
Steel shipments in 3Q 2016 increased by 2.3% to 2.8 million tonnes as compared
to 2.7 million tonnes in 2Q 2016, primarily due to a 6.3% increase in flat steel
shipments (primarily exports) offset in part by a 3.7% decrease in long product
shipments.
Sales in 3Q 2016 increased by 16.2% to $1.7 billion as compared to $1.5 billion
in 2Q 2016, due to an increase of 12.9% (flat steel prices up +22%; long steel
prices up +7.1%) in average steel selling prices (including currency impact) and
higher steel shipments as discussed above.
Operating income in 3Q 2016 increased to $233 million as compared to an
operating income of $149 million in 2Q 2016 and operating income of $196 million
in 3Q 2015. Operating performance in 3Q 2015 was impacted by exceptional charges
of $39 million relating to the write-down of inventories following the rapid
decline of steel prices.
EBITDA in 3Q 2016 increased by 41.3% to $301 million as compared to $213 million
in 2Q 2016 primarily on account of higher average steel selling prices.
EBITDA in 3Q 2016 was 4% lower as compared to 3Q 2015 due to lower steel
shipments (-12%) due to weaker demand as well as tubular operations in Venezuela
impacted by currency devaluation[8] partially offset by higher average steel
selling prices in flat products.
Europe
(USDm) unless otherwise shown 3Q 16 2Q 16 3Q 15 9M 16 9M 15
Sales 7,172 7,810 7,671 22,133 24,818
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Operating income/ (loss) 414 383 (27) 883 677
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Depreciation 303 293 293 873 885
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Impairment - 49 - 49 -
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Exceptional charges - - 287 - 287
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EBITDA 717 725 553 1,805 1,849
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Crude steel production (kt) 10,571 10,720 10,880 32,462 33,865
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Steel shipments (kt) 9,382 10,886 9,646 30,712 31,203
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Average steel selling price (US$/t) 596 562 614 561 622
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Europe segment crude steel production decreased by 1.4% to 10.6 million tonnes
in 3Q 2016, as compared to 10.7 million tonnes in 2Q 2016 following production
outages in the Fos plant (France) and disposal of ArcelorMittal Zaragoza (Spain)
during 3Q 2016.
Steel shipments in 3Q 2016 decreased by 13.8% to 9.4 million tonnes as compared
to 10.9 million tonnes in 2Q 2016, primarily due to a decrease in flat and long
product shipments impacted both by seasonally lower demand as well as production
outages in Fos plant and disposal of ArcelorMittal Zaragoza.
Sales in 3Q 2016 decreased 8.2% to $7.2 billion as compared to $7.8 billion in
2Q 2016, primarily due to lower steel shipments as discussed above, offset in
part by higher average steel selling prices (+6.0%), primarily driven by +7.7%
increase in flat product (reflecting in part the lagged effect of higher steel
prices from prior quarters) and +2.9% increase in long product prices.
Operating income in 3Q 2016 increased to $414 million as compared to an
operating income of $383 million in 2Q 2016 and an operating loss of $27 million
in 3Q 2015. Operating performance in 2Q 2016 was negatively impacted by $49
million of impairment related to the sale of ArcelorMittal Zaragoza facility in
Spain. Operating performance in 3Q 2015 was impacted by exceptional charges of
$287 million relating to the write-down of inventories following the rapid
decline of steel prices.
EBITDA in 3Q 2016 decreased by 1.2% to $717 million as compared to $725 million
in 2Q 2016, mainly driven by lower steel shipment volumes offset in part by
higher average steel selling prices. EBITDA in 3Q 2016 improved by 29.6% as
compared to 3Q 2015 primarily on account of lower costs and efficiency
improvements offset in part by lower average steel selling prices (-2.9%) and
lower steel volumes (-2.7%).
ACIS
(USDm) unless otherwise shown 3Q 16 2Q 16 3Q 15 9M 16 9M 15
Sales 1,586 1,581 1,508 4,359 4,878
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Operating income/ (loss) 156 162 (176) 303 (169)
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Depreciation 77 80 104 233 318
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Impairment - - 27 - 27
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Exceptional charges - - 80 - 80
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EBITDA 233 242 35 536 256
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Crude steel production (kt) 3,552 3,926 3,257 11,146 10,556
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Steel shipments (kt) 3,408 3,453 3,196 10,176 9,407
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Average steel selling price (US$/t) 419 409 416 383 456
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ACIS segment crude steel production in 3Q 2016 decreased by 9.5% to 3.6 million
tonnes as compared to 3.9 million tonnes 2Q 2016 mainly due to a planned mini
reline at the Saldhana plant and operational issues at the Vanderbijlpark in
South Africa as well as production outages at Kryvyi Rih in Ukraine.
Steel shipments in 3Q 2016 decreased by 1.3% to 3.4 million tonnes as compared
to 3.5 million tonnes in 2Q 2016 primarily due to lower shipments in South
Africa due to weak demand offset in part by increased shipments in the CIS (both
Kazakhstan and Ukraine reaching record levels).
Sales in 3Q 2016 remained stable at $1.6 billion as compared to 2Q 2016,
primarily due to higher average steel selling prices +2.5% (including the
benefit of currency impact in South Africa) offset by lower steel shipments (-
1.3%).
Operating income in 3Q 2016 decreased to $156 million as compared to an
operating income of $162 million in 2Q 2016 and increased as compared to
operating loss of $176 million in 3Q 2015. Operating performance in 3Q 2015 was
impacted by exceptional charges of $80 million relating to the write-down of
inventories following the rapid decline of steel prices and to retrenchment
costs in Thabazimbi and Tshikondeni in South Africa for $27 million. Impairment
charges of $27 million in 3Q 2015 was related to the closure of Vereeniging
meltshop in South Africa.
EBITDA in 3Q 2016 of $233 million was lower as compared to $242 million in
2Q 2016, primarily due to lower volumes.
EBITDA in 3Q 2016 was higher as compared to $35 million in 3Q 2015, primarily
due to higher average selling prices in local currencies, higher steel shipments
(+6.6%) and lower costs primarily in Kazakhstan following currency depreciation.
EBITDA improved across all businesses.
Mining
(USDm) unless otherwise shown 3Q 16 2Q 16 3Q 15 9M 16 9M 15
Sales 809 809 908 2,218 2,630
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Operating income/ (loss) 103 62 (2) 163 (80)
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Depreciation 101 101 145 302 452
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EBITDA 204 163 143 465 372
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Own iron ore production ((a) )(Mt) 13.7 13.5 15.4 41.3 47.3
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Iron ore shipped externally and internally at 8.1 9.6 10.3 25.5 30.5
market price ((b) )(Mt)
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Iron ore shipment - cost plus basis (Mt) 5.8 5.8 5.9 16.9 16.3
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Own coal production((a) )(Mt) 1.6 1.4 1.6 4.5 4.7
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Coal shipped externally and internally at 1.0 0.7 0.8 2.5 2.0
market price((b) )(Mt)
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Coal shipment - cost plus basis (Mt) 0.9 0.8 0.7 2.5 2.4
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(a) Own iron ore and coal production not including strategic long-term
contracts.
(b) Iron ore and coal shipments of market-priced based materials include the
Company's own mines, and share of production at other mines, and exclude
supplies under strategic long-term contracts.
Own iron ore production in 3Q 2016 increased by 1.4% to 13.7 million metric
tonnes as compared to 13.5 million metric tonnes in 2Q 2016 due to higher
production at Kazakhstan, Canada and USA, offset in part by lower production in
Ukraine and Liberia.
Own iron ore production in 3Q 2016 was lower by 11.1% as compared to 3Q 2015
primarily due to lower production in Mexico, Liberia and Ukraine. With ongoing
focus on our most competitive iron ore operations: Liberia production is
currently being maintained at approximately 2 million metric tonnes per annum
and the Volcan mine in Mexico was suspended in October 2015 (2 million metric
tonnes annual impact). Iron ore production in Ukraine has decreased to reflect a
revised mine plan following a delay in accessing new tailings disposal land.
Market-priced iron ore shipments in 3Q 2016 decreased by 15.5% to 8.1 million
metric tonnes as compared to 9.6 million metric tonnes in 2Q 2016 primarily
driven by lower shipments in ArcelorMittal Mines Canada, Ukraine (revised mine
plan), Liberia shipments (in line with revised scope of operations) and Brazil.
ArcelorMittal Mines Canada had shipments of 6.6 million tonnes during 3Q 2016,
and remains on track for FY 2016 shipments of greater than 26 million metric
tonnes.
Market-priced iron ore shipments in 3Q 2016 decreased by 21.4% as compared to
3Q 2015 driven by decreased shipments primarily in Ukraine, Mexico and Liberia.
Market-priced iron ore shipments for FY 2016 are expected to decline by
approximately 15% versus FY 2015 (revised from previous 10% guidance to reflect
a revised mine plan in Ukraine as discussed above).
Own coal production in 3Q 2016 increased 11.4% to 1.6 million metric tonnes as
compared 1.4 million metric tonnes in 2Q 2016. Own coal production in 3Q 2016
decreased 0.8% as compared to 3Q 2015.
Market-priced coal shipments in 3Q 2016 were 39.7% higher at 1.0 million metric
tonnes as compared to 0.7 million metric tonnes in 2Q 2016 primarily due to
increased shipments at both Princeton (US) and Kazakhstan. Market-priced coal
shipments in 3Q 2016 increased 27.0% as compared to 3Q 2015 primarily due to
increased shipments at Princeton (US).
Operating income in 3Q 2016 increased to $103 million as compared to an
operating income of $62 million in 2Q 2016, and an operating loss of $2 million
in 3Q 2015, primarily for the reasons discussed below.
EBITDA in 3Q 2016 increased 24.9% to $204 million as compared to $163 million in
2Q 2016, primarily due to higher seaborne iron ore market reference prices
(+5.3%) and lower costs offset in part by lower market-priced iron ore shipment
volumes (-15.5%). EBITDA in 3Q 2016 was 42% higher as compared to $143 million
in 3Q 2015, primarily due to higher seaborne iron ore market reference prices
(+6.7%) and lower unit iron ore cash costs (down 8% year-on-year), offset in
part by lower market-priced iron ore shipment volumes (-21.4%).
Liquidity and Capital Resources
For 3Q 2016, net cash provided by operating activities was $876 million as
compared to $869 million in 2Q 2016, including a seasonal investment in
operating working capital of $0.6 billion in 3Q 2016 as compared to a $0.2
billion release in operating working capital in 2Q 2016[9].
Net cash used in investing activities during 3Q 2016 was $300 million as
compared to net cash provided by investing activities of $538 million in
2Q 2016 and net cash used in investing activities of $649 million in 3Q 2015.
Capital expenditure increased to $535 million in 3Q 2016 as compared to $521
million in 2Q 2016, but decreased as compared to $684 million in 3Q 2015. FY
2016 capital expenditure is expected to be approximately $2.4 billion.
Cash flows from other investing activities in 3Q 2016 of $235 million primarily
consisted of proceeds from the sale of ArcelorMittal's stake in Hunan Valin
($165 million) and from the sale of ArcelorMittal Zaragoza ($89 million)[10].
Cash flow from other investing activities in 2Q 2016 of $1,059 million primarily
consisted of $1.0 billion proceeds from the sale of ArcelorMittal's stake in
Gestamp[11] and proceeds from the sale of long steel producing subsidiaries in
the US, LaPlace and Vinton ($0.1 billion). Cash flow from other investing
activities in 3Q 2015 of $35 million primarily includes proceeds from the Gerdau
share swap(6) and sale of tangible assets offset by a $39 million outflow
relating to the final instalment of the acquisition price of an additional 11%
stake in Ostrava acquired in 2009.
Net cash used in financing activities for 3Q 2016 was $741 million as compared
to $1.9 billion for 2Q 2016 and $835 million for 3Q 2015. Net cash used in
financing activities for 3Q 2016 primarily includes payments relating to bond
repurchases pursuant to cash tender offers ($1.4 billion), offset by proceeds of
$1.0 billion from the drawdown of other short term facilities (including $0.5
billion from the asset-based revolving credit facility at ArcelorMittal USA
which matures in 2021, initially drawn for a period of 3 months). Net cash used
in financing activities for 2Q 2016 primarily includes payments totalling $4.9
billion primarily relating to bond repurchases pursuant to cash tender offers
($2.1 billion); early redemption of the 4.5% Notes due February 25, 2017 ($1.4
billion) and ?1.0 billion in euro bond repayments at maturity, partially offset
by proceeds from the $3.1 billion rights issue. Net cash used in financing
activities for 3Q 2015 primarily included debt repayment of $1 billion
partially offset by issuance of CHF 225 million 2.50% Notes due July 3, 2020,
issued under ArcelorMittal's Euro Medium Term Notes Programme.
During 3Q 2016, 2Q 2016 and 3Q 2015, the Company paid dividends of $7 million,
$41 million and $21 million, respectively, primarily to minority shareholders in
ArcelorMittal Mines Canada and Belgo Bekaert Arames in Brazil.
At September 30, 2016, the Company's cash and cash equivalents (including
restricted cash and short-term investments) amounted to $2.3 billion as compared
to $2.4 billion at June 30, 2016. Gross debt decreased to $14.4 billion as at
September 30, 2016, as compared to $15.1 billion at June 30, 2016 and $20.4
billion at September 30, 2015. Gross debt was lower at September 30, 2016
primarily due to repurchases of bonds following cash tender offers ($1.4
billion), partially offset by the drawdown of other short term facilities ($1.0
billion).
As of September 30, 2016, net debt decreased to $12.2 billion as compared with
$12.7 billion at June 30, 2016, and $16.8 billion as of September 30, 2015,
largely funded through cash inflow from operations (which included a $0.6
billion investment in operating working capital and $0.2 billion of premiums
paid on early repayment of debt) and asset sale proceeds ($0.2 billion).
As of September 30, 2016 the Company had liquidity of $8.3 billion, consisting
of cash and cash equivalents (including restricted cash and short-term
investments) of $2.3 billion and $6.0 billion of available credit lines. The $6
billion credit facility contains a financial covenant of 4.25x Net debt /
EBITDA. On September 30, 2016, the average debt maturity was 6.8 years.
K
Unternehmensinformation / Kurzprofil:
Datum: 08.11.2016 - 07:00 Uhr
Sprache: Deutsch
News-ID 505483
Anzahl Zeichen: 65590
contact information:
Town:
London
Kategorie:
Business News
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Die Pressemitteilung mit dem Titel:
"ArcelorMittal reports third quarter 2016 results"
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