ArcelorMittal reports second quarter 2017 and half year 2017 results
(Thomson Reuters ONE) -
ArcelorMittal S.A. /
ArcelorMittal reports second quarter 2017 and half year 2017 results
. Processed and transmitted by Nasdaq Corporate Solutions.
The issuer is solely responsible for the content of this announcement.
Luxembourg, July 27, 2017 - 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 month and six month periods ended June 30, 2017.
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|Highlights: |
| |
| * Health and safety: LTIF rate of 0.72x in 2Q 2017; 1H 2017 LTIF of 0.78x |
| stable YoY |
| * Operating income of $1.4 billion in 2Q 2017; 1H 2017 operating income of |
| $3.0 billion, 38.1% higher YoY |
| * EBITDA of $2.1 billion in 2Q 2017; 1H 2017 EBITDA of $4.3 billion, 61% |
| higher YoY |
| * Net income of $1.3 billion in 2Q 2017; 1H 2017 net income of $2.3 billion |
| as compared to $696 million in 1H 2016 |
| * Steel shipments of 21.5 Mt in 2Q 2017, up 2% vs. 1Q 2017; 1H 2017 steel |
| shipments of 42.5Mt, down 2.4% YoY. Steel shipments down 1.2% on a |
| comparable basis |
| * 2Q 2017 iron ore shipments of 15.2Mt (-0.9% YoY), of which 9.5 Mt shipped |
| at market prices (-1.2% YoY); 1H 2017 market price iron ore shipments at |
| 18.1Mt; up 4.3% YoY |
| * Net debt decreased to $11.9 billion as of June 30, 2017, as compared to |
| $12.1 billion as of March 31, 2017 due to positive free cash flow[2] |
| (+$0.6 billion) (despite investment in working capital) offset in part by |
| foreign exchange losses (-$0.4 billion) |
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|Key strategic developments: |
| |
| * Advancing our leadership position: |
| |
| * ArcelorMittal launched two new advanced high strength steel products |
| Usibor® 2000 and Ductibor® 1000 to the market, furthering our industry|
| leading offering to automotive customers; in addition, the new Jet |
| Vapor Deposition line at Liege highlights ArcelorMittal's technology |
| leadership |
| * Action 2020 progress ongoing: Transformation program in Europe |
| progressing well; we are now operating from a more efficient, resized |
| footprint and utilising enhanced digitalization of operations to drive|
| productivity improvements and support maintenance excellence |
| * Investing with focus and discipline: |
| |
| * ArcelorMittal selected to become the new owner of Ilva, a significant |
| opportunity to create value for our shareholders by leveraging |
| ArcelorMittal's strengths to realise Ilva's potential as a Tier 1 |
| supplier to European and Italian steel customers. Additionally, |
| ArcelorMittal Brasil S.A. announced the acquisition of Votorantim S.A.|
| long steel businesses in Brazil[3] to strengthen the Company's long |
| product capability and product leadership |
| * Strategic investments completed in line with the continuous shift towards |
| higher added value products: |
| |
| * Completed slab yard expansion project at Calvert (US), and Galvaline |
| investment at Dofasco (Canada), increasing our galvanised sheet |
| capability; and commissioned the ArcelorMittal Krakow (Poland) hot |
| rolling mill extension for increased HRC and HDG capacity |
| * Balance sheet progress: |
| |
| * Net debt was lower by $0.8 billion YoY despite a $2.8 billion |
| investment in working capital over the last 12 months reflecting |
| improved market conditions; |
| * S&P and Moody's credit rating upgrades reflecting ongoing progress |
| towards achieving our financial priority of an investment grade credit|
| rating |
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|Outlook: |
| |
|Looking to the outlook, current market conditions are improved compared to |
|twelve months ago with steel spreads currently at healthy levels. The demand |
|environment is positive, as evidenced by the highest readings from the |
|ArcelorMittal weighted PMI Index since April 2011, which suggests that steel |
|shipments in 2H 2017 will be higher than would normally be suggested by |
|seasonality alone. |
| |
|The Company now expects that the cash needs of the business (excluding working|
|capital and premiums paid to retire debt early of $0.2 billion (not included |
|in previous guidance)) in 2017 to be approximately $4.6 billion (as compared |
|to $5.0 billion previous guidance). Given the liability management exercise |
|and lower average debt, we now expect interest expense to decline to $0.8 |
|billion in 2017 (as compared to $0.9 billion from previous guidance and $1.1 |
|billion in FY 2016). While capex expectation for 2017 remains at $2.9 billion |
|(from $2.4 billion in 2016), the Company expects lower cash taxes and |
|contributions to fund pensions and other cash expenses to be lower than |
|previous guidance. |
| |
|Given the improved market conditions, the Company now expects a full year |
|2017 investment in working capital of approximately $1.5 billion (as compared |
|to previous guidance of approximately $1.0 billion). |
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Financial highlights (on the basis of IFRS(1)):
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
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Sales 17,244 16,086 14,743 33,330 28,142
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Operating income 1,390 1,576 1,873 2,966 2,148
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Net income attributable to equity holders 1,322 1,002 1,112 2,324 696
of the parent
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Basic earnings per share (US$)[4] 1.30 0.98 1.13 2.28 0.88
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Operating income/ tonne (US$/t) 65 75 85 70 49
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EBITDA 2,112 2,231 1,770 4,343 2,697
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EBITDA/ tonne (US$/t) 98 106 80 102 62
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Steel-only EBITDA/ tonne (US$/t) 83 83 73 83 56
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Crude steel production (Mt) 23.2 23.6 23.1 46.8 46.3
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Steel shipments (Mt) 21.5 21.1 22.1 42.5 43.6
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Own iron ore production (Mt) 14.7 14.0 13.5 28.7 27.6
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Iron ore shipped at market price (Mt) 9.5 8.7 9.6 18.1 17.4
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Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"We have materially improved our financial performance in the first half of
2017, and continue to make important progress on our Action 2020 plan. The
recently announced acquisition of Ilva represents a unique opportunity to create
value for our shareholders. Looking ahead demand remains strong in our core
markets supporting robust order books and healthy levels of steel spreads.
However, it remains a matter of concern that we are not able to capture the full
benefits of this demand growth due to continued high levels of imports. We
continue to work towards achieving a comprehensive trade solution in response to
unfair imports."
Second quarter 2017 earnings analyst conference call
ArcelorMittal management (including CEO and CFO) will host a conference call for
members of the investment community to discuss the second quarter period ended
June 30, 2017 on:
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Date US Eastern time London CET
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Thursday July 9.30am 2.30pm 3.30pm
27, 2017
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The dial in numbers are:
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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 24379437#
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US local: 1 86 6719 2729 +1 24 0645 0345 24379437#
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US (New York): 1 86 6719 2729 + 1 64 6663 7901 24379437#
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France: 0800 914780 +33 1 7071 2916 24379437#
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Germany: 0800 965 6288 +49 692 7134 0801 24379437#
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Spain: 90 099 4930 +34 911 143436 24379437#
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Luxembourg: 800 26908 +352 27 86 05 07 24379437#
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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 511066#
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 18 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 2016, ArcelorMittal had revenues of $56.8 billion and crude steel production
of 90.8 million metric tonnes, while own iron ore production reached 55.2
million metric 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: +44 207 543 1128
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Americas Tel: +1 312 899 3985
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Retail Tel: +44 207 543 1156
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SRI Tel: +44 207 543 1156
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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 Tel:
Communications +44 0207 629 7988
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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 was 0.72x in the second quarter of 2017
("2Q 2017") as compared to 0.80x for the first quarter of 2017 ("1Q 2017") and
0.79x for the second quarter of 2016 ("2Q 2016").
Health and safety performance was stable at 0.78x in the first six months of
2017 ("1H 2017") as compared to the first six months of 2016 ("1H 2016").
The Company's effort to improve the 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 2Q 17 1Q 17 2Q 16 1H 17 1H 16
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Mining 0.58 0.58 0.84 0.58 0.83
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NAFTA 0.51 0.85 0.62 0.75 0.84
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Brazil 0.37 0.41 0.46 0.40 0.42
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Europe 1.08 1.20 1.11 1.15 0.97
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ACIS 0.62 0.45 0.53 0.52 0.61
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Total Steel 0.75 0.83 0.78 0.81 0.77
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Total (Steel and Mining) 0.72 0.80 0.79 0.78 0.78
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Key corporate responsibility highlights for 2Q 2017:
* Annual Review, Sustainable Progress, published in May 2017 as the group's
second step towards integrated reporting.
* Launched 2nd generation of our iCARe® electrical steels in June 2017. iCARe®
offers more power and driving range for electric motors.
* On top of the relining of blast furnace no. 5 and modernization of the basic
oxygen furnace already completed in Krakow, Poland, the capacity expansion
of the hot rolling mill and a new galvanizing line have been commissioned in
2Q 2017. Together, these investments exceed ?120 million and not only will
they extend the life of the blast furnace for the next 20 years, preserving
jobs in the Krakow unit and numerous related industries, but they will also
ensure the Krakow site complies with EU air emission regulations which come
into force in autumn 2018.
* On June 27, 2017, ArcelorMittal filed its 2016 report on Payments to
Governments in respect of Extractive Activities, which provides a
consolidated overview of payments made by the Company and its subsidiaries
in 2016 to governments regarding its mining operations. The report, which
complies with new reporting requirements under Luxembourg law, is available
for download from corporate.arcelormittal.com within the 'Investors'
section.
Analysis of results for the six months ended June 30, 2017 versus results for
the six months ended June 30, 2016
Total steel shipments for 1H 2017 were 42.5 million metric tonnes. On a
comparable basis, excluding shipments from assets sold subsequent to the
comparable period (i.e. sale of long steel producing subsidiaries in the US
(LaPlace and Vinton) and Zaragoza in Spain), and excluding the impact of the
optimization at Zumarraga in Spain (Europe segment) total steel shipments in
1H 2017 declined 1.2% as compared to 1H 2016.
Sales for 1H 2017 increased by 18.4% to $33.3 billion as compared with $28.1
billion for 1H 2016, primarily due to higher average steel selling prices
(+23.1%), and higher seaborne iron ore reference prices (+43%).
Depreciation of $1.3 billion for 1H 2017 was stable as compared to 1H 2016. FY
2017 depreciation is expected to be approximately $2.8 billion.
Impairment charges for 1H 2017 were $46 million related to a downward revision
of cash flow projections in South Africa as compared to impairment charges for
1H 2016 of $49 million related to the sale of ArcelorMittal Zaragoza in Spain.
Exceptional income for 1H 2016 was $832 million relating to a one-time gain on
employee benefits following the signing of the US labour contract[5].
Operating income for 1H 2017 was $3.0 billion as compared to $2.1 billion in
1H 2016. Operating results for 1H 2016 were positively impacted by exceptional
income as discussed above.
Income from investments in associates, joint ventures and other investments in
1H 2017 was $206 million as compared to $492 million in 1H 2016. Income from
investments in associates, joint ventures and other investments in 1H 2017
included improved performance of Calvert and Chinese investees, offset in part
by a loss on dilution of the Company's stake in China Oriental[6]. Income from
investments in associates, joint ventures and other investments for 1H 2016
included $329 million related to gain on disposal of Gestamp[7]. Income from
investments in associates, joint ventures and other investments in 1H 2016 and
1H 2017 includes the annual dividend received from Erdemir of $44 million, and
$45 million, respectively.
Net interest expense (including interest expense and interest income) was lower
at $430 million in 1H 2017, as compared to $638 million in 1H 2016, driven by
debt reduction including early bond repayments and repayment at maturity on
bonds. The Company now expects full year 2017 net interest expense of
approximately $0.8 billion (reduced from previous guidance of $0.9 billion).
Foreign exchange and other net financing gains were $77 million for 1H 2017 as
compared to foreign exchange and other net financing costs of $441 million for
1H 2016. Foreign exchange and other net financing gains for 1H 2017 include
foreign exchange gains of $282 million as compared to a foreign exchange gain of
$60 million in 1H 2016, mainly on account of USD depreciation of 8.3% against
the Euro (versus 2% depreciation in prior period). 1H 2017 includes non-cash
mark-to-market gains on derivatives (primarily mandatory convertible bonds call
options following the market price increase in the underlying shares) totalling
$0.3 billion in 1H 2017 as compared to $0.1 billion in 1H 2016. The foreign
exchange gain in 1H 2017 is largely non-cash and primarily relates to the gain
from the impact of the USD movements on Euro denominated deferred tax assets,
partially offset by foreign exchange losses on euro denominated debt. Foreign
exchange and other net financing gains/costs for 1H 2017 and 1H 2016 also
includes $159 million and $237 million premium expense on the early redemption
of bonds.
ArcelorMittal recorded an income tax expense of $480 million for 1H 2017 as
compared to an income tax expense of $853 million for 1H 2016. The tax expense
in 1H 2016 includes derecognition of deferred tax assets (DTA) amounting to $0.7
billion in Luxembourg. This derecognition is related to revised expectations of
DTA recoverability in US dollar terms, and is not related to a deterioration of
expected future taxable income.
ArcelorMittal's net income for 1H 2017 was $2.3 billion, or $2.28 earnings per
share(4), as compared to net income in 1H 2016 of $0.7 billion, or $0.88
earnings per share(4).
Analysis of results for 2Q 2017 versus 1Q 2017 and 2Q 2016
Total steel shipments in 2Q 2017 were 2% higher at 21.5 million metric tonnes as
compared with 21.1 million metric tonnes for 1Q 2017 primarily due to improved
shipments in Brazil (+17.8%), Europe (+2.5%), ACIS (+1.1%), offset in part by
lower shipments in NAFTA (-3.4%).
On a comparable basis, excluding shipments from assets sold subsequent to the
comparable period (i.e. considering the sale of Zaragoza in Spain), and
excluding the impact of the optimization at Zumarraga in Spain (Europe segment)
total steel shipments for 2Q 2017 were 2.0% lower as compared to 2Q 2016,
primarily due to lower shipment volumes in Brazil (-2.5% due to weak
construction market), Europe (down 0.2Mt or -2.2% due to weaker long products)
and ACIS (down 0.2Mt or -5.7% due to weak South Africa market and lower
shipments in Ukraine).
Sales in 2Q 2017 were $17.2 billion as compared to $16.1 billion for 1Q 2017 and
$14.7 billion for 2Q 2016. Sales in 2Q 2017 were 7.2% higher as compared to
1Q 2017 primarily due to higher average steel selling prices (+4.8%), higher
steel shipments (+2%), higher market-priced iron ore shipments (+9.5%) offset in
part by lower seaborne iron ore reference prices (-26.6%). Sales in 2Q 2017 were
17% higher as compared to 2Q 2016 primarily due to higher average steel selling
prices (+21.5%) and higher seaborne iron ore reference prices (+13.0%) offset by
lower steel shipments (-2.8%) and lower market-priced iron ore shipments (-
1.2%).
Depreciation for 2Q 2017 was higher at $676 million as compared to $655 million
for 1Q 2017 and stable as compared to $680 million in 2Q 2016. Depreciation
increased in 2Q 2017 as compared to 1Q 2017, primarily on account of foreign
exchange differences following the depreciation of USD vs major currencies.
Impairment charges for 2Q 2017 were $46 million related to a downward revision
of cash flow projections in South Africa. Impairment charges for 2Q 2016 were
$49 million related to the sale of the ArcelorMittal Zaragoza facility in Spain.
Exceptional income for 2Q 2016 was $832 million relating to a one-time gain on
employee benefits following the signing of the US labour contract(5).
Operating income for 2Q 2017 was $1.4 billion as compared to $1.6 billion in
1Q 2017 and $1.9 billion in 2Q 2016. Operating results for 2Q 2017 were impacted
by impairment charges as discussed above. Operating results for 2Q 2016 were
impacted by exceptional income discussed above.
Income from associates, joint ventures and other investments for 2Q 2017 of $120
million was higher as compared to income for 1Q 2017 of $86 million and lower as
compared to $168 million for 2Q 2016. Income from associates, joint ventures and
other investments for 2Q 2017 increased on account of improved performance of
the Chinese investees. Income in 1Q 2017 included the annual dividend declared
by Erdemir ($45 million) offset by a loss on dilution of the Company's stake in
China Oriental(6). Income from associates, joint ventures and other investments
for 2Q 2016 included an annual dividend received from Erdemir ($44 million)
which in 2017 is included in 1Q 2017.
Net interest expense in 2Q 2017 was $207 million as compared to $223 million in
1Q 2017 and $306 million in 2Q 2016. Net interest expense was lower in 2Q 2017
as compared to 1Q 2017 and 2Q 2016 primarily due to debt reduction including
early bond repayment via debt tenders and repayment at maturity on bonds during
2016 and 2017.
Foreign exchange and other net financing gains in 2Q 2017 were $210 million as
compared to foreign exchange and other net financing costs of $133 million for
1Q 2017 and costs of $450 million in 2Q 2016. The foreign exchange gains/losses
are largely non-cash and primarily relate to the gains/losses from the impact of
the USD movements on euro-denominated deferred tax assets, partially offset by
foreign exchange gain/losses on euro-denominated debt. For 2Q 2017 a foreign
exchange gain of $247 million was recorded (as compared to a gain of $35 million
for 1Q 2017) mainly on account of a 6.7% depreciation of the USD against the
Euro (versus 1.4% depreciation in 1Q 2017). Both 2Q 2017 and 1Q 2017 include
non-cash mark-to-market gains on derivatives (primarily mandatory convertible
bonds call options following the market price increase in the underlying shares)
of $150 million and $158 million, respectively. 1Q 2017 includes $159 million on
premium expenses on an early repayment of bonds (settled in April 2017). Foreign
exchange and other net financing costs for 2Q 2016 include a foreign exchange
loss of $47 million mainly on account of USD appreciation of 2.5% against the
Euro and 10.9% depreciation against BRL. 2Q 2016 also includes $237 million
premium expense on the early redemption of bonds.
ArcelorMittal recorded an income tax expense of $197 million for 2Q 2017 as
compared to an income tax expense of $283 million for 1Q 2017 and an income tax
expense of $153 million for 2Q 2016.
ArcelorMittal recorded net income for 2Q 2017 of $1,322 million, or $1.30
earnings per share(4), as compared to net income for 1Q 2017 of $1,002 million,
or $0.98 earnings per share(4), and a net income for 2Q 2016 of $1,112 million,
or $1.13 earnings per share(4).
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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Segment Site Project Capacity / Actual completion
particulars
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NAFTA Indiana Harbor Indiana Harbor New caster at 4Q 2016((a))
"footprint No.3 Steelshop
optimization installed
project"
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NAFTA AM/NS Calvert Phase 2: Slab Increase coil 2Q 2017
yard expansion production
(Bay 5) level from
4.6Mt/year to
5.3Mt/year
coils
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NAFTA ArcelorMittal Phase 2: Convert Allow the 2Q 2017
Dofasco (Canada) the current galvaline #4 to
galvanizing line produce 160kt
#4 to a Galvalume galvalume and
line 128kt galvanize
and closure of
galvanize line
#1 (capacity
170kt of
galvalume)
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Europe ArcelorMittal Hot strip mill Increase hot Commissioned
Krakow (Poland) (HSM) extension rolled coil 2Q 2017((b))
(HRC) capacity
by 0.9Mt/year
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Europe ArcelorMittal Hot dipped Increasing HDG Commissioned
Krakow (Poland) galvanizing (HDG) capacity by 2Q 2017((b))
increase 0.4Mt/year
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Ongoing projects
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Segment Site Project Capacity / Forecast
particulars completion
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Europe Gent & Liège Gent: Upgrade HSM Increase ~400kt in 2017
(Europe Flat and new Ultra High Strength
Automotive UHSS furnaceLiège: Steel capabilities
Program) Annealing line
transformation
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Europe ArcelorMittal Modernisation of Revamp finishing to 1Q 2018
Differdange finishing of achieve full capacity
"Grey rolling of Grey mill at
mill" 850kt/y.
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NAFTA Indiana Harbor Indiana Harbor Restoration of 80" 2018((a))
"footprint HSM and upgrades at
optimization Indiana Harbor
project" finishing and
logistics
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ACIS ArcelorMittal New LF&CC 2&3 Facilities upgrade to 4Q 2018
Kryvyi Rih switch from ingot to
continuous caster
route. Additional
billets of 290kt over
ingot route through
yield increase.
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NAFTA Burns Harbor New Walking Beam Two new walking beam 2021
Furnaces reheat furnaces
bringing benefits on
productivity, quality
and operational cost
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Brazil ArcelorMittal Expansion project Increase hot dipped On hold
Vega Do Sul 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 Increase in meltshop On hold((c))
expansion capacity by
0.2Mt/year
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Brazil Monlevade Sinter plant, Increase in liquid On hold
blast furnace and steel capacity by
meltshop 1.2Mt/year;Sinter
feed capacity of
2.3Mt/year
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Mining Liberia Phase 2 expansion Increase production Under
project capacity to 15Mt/year review((d))
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a) 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 (idled in 2Q 2017) whilst making further planned investments
totalling ~$200 million including a new caster at No.3 steelshop (completed in
4Q 2016), restoration of the 80" hot strip mill, logistics and Indiana Harbor
finishing are ongoing. The full project scope is expected to be completed in
2018.
b) On July 7, 2015, ArcelorMittal Poland announced it was restarting
preparations for the relining of blast furnace No. 5 in Krakow, which was
commissioned in 3Q 2016. Total investments in the primary operations in the
Krakow plant will amount to 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 commissioned in
2Q 2017. In total, the Group has invested more than ?120 million in its
operations in Krakow, including both upstream and downstream installations.
c) Although the Monlevade wire rod expansion project and Juiz de Fora rebar
expansion were completed in 2015, the Juiz de Fora melt shop project is
currently on hold and is expected to be completed upon Brazil domestic market
recovery, and the Company does not expect to increase shipments until domestic
demand improves.
d) ArcelorMittal Liberia is 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 where planned ramp up will occur in 2H 2017. 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 focus on its "natural"
Atlantic markets. The nearby Gangra deposit is now the next development in a
staged approach as opposed to the originally planned phase 2 step up to 15Mtpa
of concentrate sinter fine ore product 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. The Gangra mine, haul road and related existing plant and
equipment upgrades are on track. 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. The Company believes that
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 concentration phase.
Analysis of segment operations
NAFTA
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
Sales 4,607 4,458 3,920 9,065 7,742
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Operating income 378 396 1,209 774 1,414
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Depreciation (128) (128) (136) (256) (270)
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Exceptional income(5) - - 832 - 832
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EBITDA 506 524 513 1,030 852
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Crude steel production (kt) 5,762 6,216 5,735 11,978 11,379
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Steel shipments (kt) 5,419 5,610 5,443 11,029 10,906
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Average steel selling price (US$/t) 760 719 660 739 647
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NAFTA segment crude steel production decreased 7.3% to 5.8 million metric tonnes
in 2Q 2017 as compared to 6.2 million metric tonnes for 1Q 2017 primarily due to
planned maintenance.
Steel shipments in 2Q 2017 decreased by 3.4% to 5.4 million metric tonnes as
compared to 5.6 million metric tonnes in 1Q 2017, primarily driven by a 3.9%
decrease in flat products volumes offset in part by 1.9% increase in long
products.
Sales in 2Q 2017 increased by 3.3% to $4.6 billion as compared to $4.5 billion
in 1Q 2017, primarily due to higher average steel selling prices (+5.7%) offset
in part by lower steel shipment volumes as discussed above. Compared to
1Q 2017, average steel selling prices for flat products improved by +5.8% and
for long products improved by +4.3%.
Operating income in 2Q 2017 decreased to $378 million as compared to operating
income of $396 million in 1Q 2017 and operating income of $1,209 million in
2Q 2016. Operating performance for 2Q 2016 was positively impacted by a one-time
gain of $0.8 billion on employee benefits following the signing of the US labour
contract(5).
EBITDA in 2Q 2017 decreased by 3.3% to $506 million as compared to $524 million
in 1Q 2017 primarily due to lower steel shipment volumes (-3.4%) and higher
costs, including planned maintenance ($45 million), partially offset by higher
average steel selling prices. EBITDA in 2Q 2017 declined by 1.2% as compared to
$513 million in 2Q 2016.
Brazil
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
Sales 1,834 1,610 1,488 3,444 2,743
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Operating income 128 175 149 303 238
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Depreciation (73) (71) (64) (144) (120)
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EBITDA 201 246 213 447 358
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Crude steel production (kt) 2,714 2,710 2,800 5,424 5,467
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Steel shipments (kt) 2,622 2,226 2,689 4,848 5,161
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Average steel selling price (US$/t) 655 678 515 666 495
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Brazil segment crude steel production was stable at 2.7 million metric tonnes in
2Q 2017 as compared to 1Q 2017.
Steel shipments in 2Q 2017 increased by 17.8% to 2.6 million metric tonnes as
compared to 2.2 million metric tonnes in 1Q 2017, primarily due to a 23.4%
increase in flat product steel shipments (primarily export shipments and
temporary shipment delays in the prior quarter) and a 9% increase in long
product steel shipments.
Sales in 2Q 2017 increased by 13.9% to $1.8 billion as compared to $1.6 billion
in 1Q 2017, due to higher steel shipments offset in part by lower average steel
selling prices (-3.4%) driven in part by foreign exchange.
Operating income in 2Q 2017 decreased to $128 million as compared to an
operating income of $175 million in 1Q 2017 and operating income of $149 million
in 2Q 2016.
EBITDA in 2Q 2017 decreased by 18% to $201 million as compared to $246 million
in 1Q 2017 primarily due to a negative price cost impact and weaker product mix
offset in part by higher steel shipment volumes. EBITDA in 1Q 2017 included a
$21 million provision reversal. EBITDA in 2Q 2017 was 5.4% lower as compared to
$213 million in 2Q 2016.
Europe
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
Sales 9,180 8,222 7,810 17,402 14,961
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Operating income 652 636 383 1,288 469
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Depreciation (290) (273) (293) (563) (570)
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Impairment - - (49) - (49)
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EBITDA 942 909 725 1,851 1,088
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Crude steel production (kt) 10,997 11,212 10,720 22,209 21,891
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Steel shipments (kt) 10,466 10,208 10,886 20,674 21,330
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Average steel selling price (US$/t) 698 649 562 674 546
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Europe segment crude steel production decreased by 1.9% to 11.0 million metric
tonnes in 2Q 2017, as compared to 11.2 million metric tonnes in 1Q 2017.
Steel shipments in 2Q 2017 increased by 2.5% to 10.5 million metric tonnes as
compared to 10.2 million metric tonnes in 1Q 2017, primarily due to a 3.8%
increase in long product shipments and 1.4% increase in flat product steel
shipments.
Sales in 2Q 2017 increased 11.7% to $9.2 billion as compared to $8.2 billion in
1Q 2017, primarily due to higher steel shipments as discussed above and higher
average steel selling prices (+7.7%), with flat and long products average steel
selling prices increasing +8.4% and +5.7%, respectively.
Operating income in 2Q 2017 was $652 million as compared to $636 million in
1Q 2017 and $383 million in 2Q 2016. Operating performance in 2Q 2016 was
negatively impacted by $49 million of impairment related to the sale of
ArcelorMittal Zaragoza facility in Spain.
EBITDA in 2Q 2017 increased by 3.6% to $942 million as compared to $909 million
in 1Q 2017 primarily due to higher steel volumes partially offset by negative
price-cost impact. EBITDA in 2Q 2017 improved 29.8% as compared to 2Q 2016
primarily on account of positive price cost impact offset in part by lower steel
shipments.
ACIS
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
Sales 1,834 1,807 1,581 3,641 2,773
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Operating income 51 116 162 167 147
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Depreciation (77) (75) (80) (152) (156)
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Impairment (46) - - (46) -
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EBITDA 174 191 242 365 303
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Crude steel production (kt) 3,685 3,492 3,926 7,177 7,594
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Steel shipments (kt) 3,257 3,221 3,453 6,478 6,768
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Average steel selling price (US$/t) 499 502 409 500 365
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ACIS segment crude steel production in 2Q 2017 increased by 5.5% to 3.7 million
metric tonnes as compared to 3.5 million metric tonnes in 1Q 2017. The higher
production was largely due to increased output in Ukraine following the planned
maintenance of BF#9 in 1Q 2017.
Steel shipments in 2Q 2017 increased by 1.1% to 3.3 million metric tonnes as
compared to 3.2 million metric tonnes in 1Q 2017 primarily due to higher steel
shipments in Ukraine as the prior period had been impacted by the planned
maintenance as described above, offset in part by lower South Africa shipments
due to weak demand.
Sales in 2Q 2017 increased 1.5% to $1.8 billion as compared to 1Q 2017,
primarily due to higher steel shipments (+1.1%) offset in part by lower average
steel selling prices (-0.6%).
Operating income in 2Q 2017 was $51 million as compared to an operating income
of $116 million in 1Q 2017 and operating income of $162 million in 2Q 2016.
Operating performance in 2Q 2017 was impacted by impairment charges of $46
million related to a downward revision of cash flow projections in South Africa.
EBITDA in 2Q 2017 decreased 9.1% to $174 million as compared to $191 million in
1Q 2017, due to weaker performance in South Africa (impacted by lower volumes
and a negative price cost impact). EBITDA in 2Q 2017 was 28.2% lower as compared
to $242 million in 2Q 2016, primarily due to a negative price cost impact and
lower steel shipment volumes in South Africa.
Mining
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
Sales 1,015 1,030 809 2,045 1,409
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Operating income 216 378 62 594 60
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Depreciation (103) (102) (101) (205) (201)
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EBITDA 319 480 163 799 261
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Own iron ore production ((a) )(Mt) 14.7 14.0 13.5 28.7 27.6
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Iron ore shipped externally and internally at 9.5 8.7 9.6 18.1 17.4
market price ((b) )(Mt)
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Iron ore shipment - cost plus basis (Mt) 5.8 4.7 5.8 10.5 11.1
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Own coal production((a) )(Mt) 1.6 1.7 1.4 3.3 2.9
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Coal shipped externally and internally at market 0.8 0.8 0.7 1.6 1.6
price((b) )(Mt)
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Coal shipment - cost plus basis (Mt) 0.9 0.9 0.8 1.8 1.7
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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 2Q 2017 increased by 4.9% to 14.7 million metric
tonnes as compared to 14 million metric tonnes in 1Q 2017 due to seasonally
higher production in Canada and increased production in Mexico (Volcan mine
restarted February 2017). Own iron ore production in 2Q 2017 increased by 9.1%
as compared to 2Q 2016 primarily due to increased production in Canada and
Mexico.
Market-priced iron ore shipments in 2Q 2017 increased 9.5% to 9.5 million metric
tonnes as compared to 8.7 million metric tonnes in 1Q 2017, primarily driven by
higher shipments in ArcelorMittal Mines Canada[8] and Mexico. Market-priced iron
ore shipments in 2Q 2017 decreased 1.2% as compared to 2Q 2016 driven by
decreased shipments in Canada, Liberia and Brazil offset by higher shipments in
Mexico. FY 2017 market-priced iron ore shipments are still expected to increase
by approximately 10% versus FY 2016.
Own coal production in 2Q 2017 decreased by 5.8% to 1.6 million metric tonnes as
compared to 1.7 million metric tonnes at 1Q 2017 due to lower production in
Kazakhstan. Own coal production in 2Q 2017 increased 11.5% as compared to
2Q 2016 with increases at both Kazakhstan and Princeton (US) mines.
Market-priced coal shipments in 2Q 2017 increased 3% to 0.8 million metric
tonnes as compared to 1Q 2017 primarily due to increased shipments at Princeton
(US). Market-priced coal shipments in 2Q 2017 increased 17.2% as compared to
2Q 2016 primarily due to increased shipments at Princeton (US) and Kazakhstan.
Operating income in 2Q 2017 decreased to $216 million as compared to an
operating income of $378 million in 1Q 2017, and an operating income of $62
million in 2Q 2016, primarily for the reasons discussed below.
EBITDA in 2Q 2017 decreased 33.7% to $319 million as compared to $480 million in
1Q 2017, primarily due to decreased seaborne iron ore reference prices (-26.6%)
and lower coal prices, partially offset by higher market-priced iron ore
shipments. EBITDA in 2Q 2017 was significantly higher as compared to $163
million in 2Q 2016, primarily due to higher seaborne iron ore reference prices
(+13%) and higher coal prices offset in part by lower market-priced iron ore
shipment volumes (-1.2%).
Liquidity and Capital Resources
For 2Q 2017, net cash provided by operating activities was $1,214 million as
compared to net cash used in operating activities of $299 million in 1Q 2017 and
net cash provided by operating activities of $869 million in 2Q 2016. The net
cash provided by operating activities during 2Q 2017 reflects in part a working
capital investment ($548 million) as a result of higher inventory, smaller as
compared to a working capital investment ($2,181 million) in 1Q 2017.
Net cash used in investing activities during 2Q 2017 was $738 million as
compared to net cash used in investing activities of $598 million in 1Q 2017 and
net cash provided by investing activities of $538 million in 2Q 2016. Capital
expenditure decreased to $566 million in 2Q 2017 as compared to $580 million in
1Q 2017 and $521 million in 2Q 2016. FY 2017 capital expenditure is expected to
be $2.9 billion. Investing activities in 2Q 2017 include $44 million cash
consideration (net of cash acquired for $14 million) for the acquisition of a
55.5% stake in Bekaert Sumare (a tire cord manufacturer in Brazil) and $110
million deposited in a restricted cash account in ArcelorMittal South Africa in
connection with various environmental obligations and true sale of receivable
programs.
Net cash used in financing activities for 2Q 2017 was $744 million as compared
to net cash provided by financing activities of $666 million for 1Q 2017 and net
cash used in financing activities of $1.9 billion for 2Q 2016. Net cash used in
financing activities for 2Q 2017 primarily includes $851 million used to early
redeem the 9.85% Notes due June 1, 2019. On May 25, 2017, ArcelorMittal South
Africa Limited, signed a 4.5 billion South African Rand (approximately $350
million) revolving borrowing base finance facility maturing on May 25, 2020. As
of June 30, 2017, $258 million was drawn. Net cash provided by financing
activities for 1Q 2017 primarily includes proceeds from the European Investment
Bank loan[9] of ?350 million ($373 million) and $0.3 billion of commercial paper
issuances. Net cash used in financing activities for 2Q 2016 primarily includes
payments totalling $4.9 billion 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 bond repayments at maturity,
partially offset by proceeds from a $3.1 billion rights issue.
During 1Q 2017, the Company paid dividends of $40 million primarily to minority
shareholders in ArcelorMittal Mines Canada(8). During 2Q 2016 the Company paid
dividends primarily to minority shareholders in ArcelorMittal Mines Canada(8)
and Brazil (Bekaert) of $41 million.
As of June 30, 2017, the Company's cash and cash equivalents amounted to $2.3
billion as compared to $2.4 billion at March 31, 2017 and $2.4 billion at June
30, 2016. Gross debt decreased to $14.2 billion as of June 30, 2017, as compared
to $14.5 billion at March 31, 2017 and $15.1 billion at June 30, 2016.
As of June 30, 2017, net debt decreased to $11.9 billion as compared with $12.1
billion at March 31, 2017 primarily due to positive free cashflow, despite
working capital investment, offset in part by forex ($0.4 billion), and was
lower than the net debt of $12.7 billion as of June 30, 2016.
As of June 30, 2017, the Company had liquidity of $7.8 billion, consisting of
cash and cash equivalents of $2.3 billion and $5.5 billion of available credit
lines[10]. The $5.5 billion credit facility contains a financial covenant of
4.25x Net debt / EBITDA. On June 30, 2017, the average debt maturity was 6.4
years.
Key recent developments
* On June 21, 2017, as a result of the extension of the partnership between
ArcelorMittal and Bekaert Group ("Bekaert") in the steel cord business in
Brazil, the Company completed the acquisition from Bekaert of a 55.5%
controlling interest in Bekaert Sumaré Ltda subsequently renamed
ArcelorMittal Bekaert Sumaré Ltda ("Sumaré"), a manufacturer of metal ropes
for automotive tires located in the municipality of Sumaré/SP, Brazil. The
Company agreed to pay a total cash consideration of ?56 million ($49 million
net of cash acquired of $14 million), of which ?52 million ($58 million) was
settled on closing date and ?4 million ($5 million) to be paid subsequently
upon conclusion of certain business restructuring measures by Bekaert.
* On June 16, 2017, ArcelorMittal and Marcegaglia announced that AM Investco
Italy Srl ('AM Investco') had concluded the exclusive negotiation phase and
reached a binding agreement concerning the lease and obligation to purchase
Ilva S.p.A and certain of its subsidiaries with the Italian Government. The
ancillary documentation was complet
Unternehmensinformation / Kurzprofil:
Datum: 27.07.2017 - 07:01 Uhr
Sprache: Deutsch
News-ID 554099
Anzahl Zeichen: 65600
contact information:
Town:
London
Kategorie:
Business News
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"ArcelorMittal reports second quarter 2017 and half year 2017 results"
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