ArcelorMittal reports third quarter 2017 results
(Thomson Reuters ONE) -
ArcelorMittal S.A. /
ArcelorMittal reports third quarter 2017 results
. Processed and transmitted by Nasdaq Corporate Solutions.
The issuer is solely responsible for the content of this announcement.
Luxembourg, November 10, 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 nine month periods ended September 30, 2017.
Highlights:
* Health and safety: LTIF rate of 0.67x in 3Q 2017 as compared to 0.72x in
2Q 2017 and 0.84x in 3Q 2016
* Operating income of $1.2 billion in 3Q 2017 as compared to $1.4 billion in
2Q 2017; 2.5% higher YoY
* EBITDA of $1.9 billion in 3Q 2017 as compared to $2.1 billion in
2Q 2017; 1.5% higher YoY
* Net income of $1.2 billion in 3Q 2017 lower as compared to $1.3 billion in
2Q 2017 and higher as compared to $0.7 billion in 3Q 2016
* Steel shipments of 21.7Mt in 3Q 2017, an increase of 1.0% as compared to
2Q 2017; +6.8% YoY; steel shipments of 64.2Mt in 9M 2017, up 0.6% YoY
* 3Q 2017 iron ore shipments of 15Mt (+8.1% YoY), of which 9.1Mt shipped at
market prices (+12.3% YoY); 9M 2017 market price iron ore shipments at
27.2Mt, up 6.8% YoY
* Net debt of $12.0 billion as of September 30, 2017, as compared to $11.9
billion as of June 30, 2017, primarily due to a negative foreign exchange
impact ($0.2 billion)
Outlook and guidance:
Market conditions are favorable. The demand environment remains positive (as
evidenced by the continued high readings from the ArcelorMittal weighted PMI)
and steel spreads remain healthy.
The Company continues to expect cash needs of the business (capex ($2.9
billion), interest ($0.8 billion), cash taxes, pensions and other cash costs
(totalling $0.9 billion) but excluding working capital investment and premiums
paid to retire debt early) to be approximately $4.6 billion in 2017.
Given the improved market conditions, the Company now expects a full year 2017
investment in working capital of approximately $2.0 billion (as compared to
previous guidance of approximately $1.5 billion).
Financial highlights (on the basis of IFRS(1)):
(USDm) unless otherwise shown 3Q 17 2Q 17 3Q 16 9M 17 9M 16
-------------------------------------------------------------------------------
Sales 17,639 17,244 14,523 50,969 42,665
-------------------------------------------------------------------------------
Operating income 1,234 1,390 1,204 4,200 3,352
-------------------------------------------------------------------------------
Net income attributable to equity holders 1,205 1,322 680 3,529 1,376
of the parent
-------------------------------------------------------------------------------
Basic earnings per share (US$)[2] 1.18 1.30 0.67 3.46 1.48
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Operating income/ tonne (US$/t) 57 65 59 65 52
-------------------------------------------------------------------------------
EBITDA 1,924 2,112 1,897 6,267 4,594
-------------------------------------------------------------------------------
EBITDA/ tonne (US$/t) 89 98 93 98 72
-------------------------------------------------------------------------------
Steel-only EBITDA/ tonne (US$/t) 73 83 83 80 65
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Crude steel production (Mt) 23.6 23.2 22.6 70.4 69.0
-------------------------------------------------------------------------------
Steel shipments (Mt) 21.7 21.5 20.3 64.2 63.9
-------------------------------------------------------------------------------
Own iron ore production (Mt) 14.2 14.7 13.7 42.9 41.3
-------------------------------------------------------------------------------
Iron ore shipped at market price (Mt) 9.1 9.5 8.1 27.2 25.5
-------------------------------------------------------------------------------
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"Favorable market conditions have supported another solid quarterly
performance, with EBITDA for the first nine months considerably improved year-
on-year. Operating conditions continue to improve, with key indicators
including the ArcelorMittal weighted PMI implying a positive outlook for 2018.
While pleased with the progress that we are making, we operate in a competitive
global environment which is characterized by overcapacity and high levels of
imports. The implementation of our strategic plan Action 2020 remains a clear
priority and we are making good progress in this regard."
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 0.67x in the third quarter of 2017
("3Q 2017") as compared to 0.72x for the second quarter of 2017 ("2Q 2017") and
0.84x for the third quarter of 2016 ("3Q 2016"). Health and safety performance
improved to 0.74x in the nine months of 2017 ("9M 2017") as compared to 0.80x
for the first nine months of 2016 ("9M 2016").
The Company's efforts to improve its Health and Safety record remains focused on
both further reducing the rate of severe injuries and preventing fatalities.
Own personnel and contractors - Frequency rate
--------------------------------------------------------------------------
Lost time injury frequency rate 3Q 17 2Q 17 3Q 16 9M 17 9M 16
--------------------------------------------------------------------------
Mining 1.05 0.58 1.08 0.75 0.93
--------------------------------------------------------------------------
NAFTA 0.57 0.51 0.89 0.69 0.95
--------------------------------------------------------------------------
Brazil 0.45 0.37 0.20 0.42 0.32
--------------------------------------------------------------------------
Europe 0.79 1.08 1.17 1.05 1.03
--------------------------------------------------------------------------
ACIS 0.42 0.62 0.55 0.49 0.58
--------------------------------------------------------------------------
Total Steel 0.60 0.75 0.80 0.74 0.78
--------------------------------------------------------------------------
Total (Steel and Mining) 0.67 0.72 0.84 0.74 0.80
--------------------------------------------------------------------------
Key corporate responsibility highlights for 3Q 2017:
Update on the Group's 10 sustainable development outcomes:
* Outcome 2: Products that accelerate more sustainable lifestyles:
ArcelorMittal will invest ?67 million in a new production line for
automotive steel in Florange, eastern France, part of the Company's strategy
to have a centre of excellence for automotive steel production in the
Lorraine region.
* Outcome 4: ArcelorMittal Brazil won the Steelie Award for Excellence in
Sustainability for its social value programme created through its
application of REVSOL®, a steel slag by-product used in the construction of
roads, car parks and storage yards. Using REVSOL® to build local road
networks has generated improved trade, communications and essential services
for local communities whilst also replacing the use of non-renewable sources
and reduces the costs of road and vehicle maintenance. The Steelie Awards,
in their 8th year, are organised by the World Steel Association.
* Outcome 6: The Company engaged with a number of stakeholders on carbon
pricing schemes in order to explore effective ways to leverage value for
global climate change mitigation efforts from the steel industry and avoid
systems that will not.
Analysis of results for the nine months ended September 30, 2017 versus results
for the nine months ended September 30, 2016
Total steel shipments for 9M 2017 were 64.2Mt as compared to 63.9Mt for
9M 2016. On a comparable basis, excluding shipments from assets sold during 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
9M 2017 increased 1.6% as compared to 9M 2016.
Sales for 9M 2017 increased by 19.5% to $51.0 billion as compared with $42.7
billion for 9M 2016, primarily due to higher average steel selling prices
(+20.4%), marginally higher steel volumes, higher seaborne iron ore reference
prices (+35%) and higher marketable iron ore shipments (+6.8%).
Depreciation of $2.0 billion for 9M 2017 was stable as compared to 9M 2016. FY
2017 depreciation is expected to be approximately $2.8 billion.
Impairment charges for 9M 2017 were $46 million related to a downward revision
of cash flow projections in South Africa as compared to impairment charges for
9M 2016 of $49 million related to the sale of ArcelorMittal Zaragoza in
Spain[3].
Exceptional income for 9M 2017 was nil. 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[4].
Operating income for 9M 2017 was $4.2 billion as compared to $3.4 billion for
9M 2016. Operating results for 9M 2016 were positively impacted by exceptional
income as discussed above.
Income from investments in associates, joint ventures and other investments in
9M 2017 was $323 million as compared to $601 million in 9M 2016. Income in
9M 2017 includes a gain from disposal of ArcelorMittal USA's 21% stake in the
Empire Iron Mining Partnership[5] ($133 million) and improved performance of
Calvert and Chinese investees, offset in part by a loss on dilution of the
Company's stake in China Oriental[6] and the recycling of cumulative foreign
exchange translation losses incurred following disposal of the 50% stake in
Kalagadi ($187 million)[7]. Income in 9M 2016 included gains on disposal of
Gestamp[8] ($329 million) and Hunan Valin[9] ($74 million).
Net interest expense was lower at $635 million in 9M 2017, as compared to $893
million in 9M 2016, driven by debt reduction including early bond repayments.
The Company expects full year 2017 net interest expense of approximately $0.8
billion.
Foreign exchange and other net financing gains were $209 million for 9M 2017 as
compared to losses of $664 million for 9M 2016. The foreign exchange gain in
9M 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 for 9M 2017 include foreign exchange gains of $463 million as
compared to $124 million in 9M 2016, mainly on account of USD depreciation of
12% against the Euro (versus USD depreciation of 2.5% in prior period). 9M 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 $0.6 billion in 9M 2017 as compared to $0.1 billion
in 9M 2016. Foreign exchange and other net financing gains/losses for 9M 2017
and 9M 2016 also includes $377 million and $395 million, respectively, for
premium expense on the early redemption of bonds.
ArcelorMittal recorded an income tax expense of $0.6 billion for 9M 2017 as
compared to an income tax expense of $1.0 billion for 9M 2016. The tax expense
in 9M 2016 includes derecognition of deferred tax assets (DTA) amounting to $0.7
billion in Luxembourg (related to revised expectations of DTA recoverability in
US dollar terms).
ArcelorMittal's net income for 9M 2017 was $3.5 billion, or $3.46 earnings per
share, as compared to net income in 9M 2016 of $1.4 billion, or $1.48 earnings
per share.
Analysis of results for 3Q 2017 versus 2Q 2017 and 3Q 2016
Total steel shipments in 3Q 2017 were 1.0% higher at 21.7Mt as compared with
21.5Mt for 2Q 2017 primarily due to higher steel shipments in Brazil (+12.1%),
NAFTA (+4.3%) and ACIS (+3.2%), offset in part by decline in Europe (-3.3%).
On a comparable basis, excluding shipments from assets sold during 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 3Q 2017 were 7.5% higher as compared to 3Q 2016,
primarily due to higher steel shipment volumes in NAFTA (+5.4%), Brazil (+6.9%)
and Europe (+9.2%) offset by weaker steel shipment volumes in ACIS (down -1.3%
due to weak South Africa market and lower shipments in Ukraine).
Sales for 3Q 2017 were $17.6 billion as compared to $17.2 billion for 2Q 2017
and $14.5 billion for 3Q 2016. Sales in 3Q 2017 were 2.3% higher as compared to
2Q 2017, primarily due to higher steel shipments (+1.0%), higher average steel
selling prices (+1.5%), higher iron ore reference prices (+12.7%) offset in part
by lower market-priced iron ore shipments (-3.9%). Sales in 3Q 2017 were 21.5%
higher as compared to 3Q 2016 primarily due to higher steel shipments (+6.8%),
higher average steel selling prices (+14.8%), higher seaborne iron ore reference
prices (21%) and higher market-priced iron ore shipments (+12.3%).
Depreciation for 3Q 2017 was higher at $690 million as compared to $676 million
for 2Q 2017 and stable as compared to $693 million in 3Q 2016. Depreciation
increased in 3Q 2017 as compared to 2Q 2017, primarily on account of foreign
exchange differences following the depreciation of USD vs major currencies.
Impairment charges for 3Q 2017 and 3Q 2016 were nil. Impairment charges for
2Q 2017 were $46 million related to a downward revision of cash flow
projections in South Africa.
Operating income for 3Q 2017 was lower at $1.2 billion as compared to $1.4
billion in 2Q 2017, and stable as compared to 3Q 2016.
Income from associates, joint ventures and other investments for 3Q 2017 was
$117 million as compared to $120 million for 2Q 2017 and $109 million in
3Q 2016. Income from associates, joint ventures and other investments for
3Q 2017 includes the recycling of the cumulative foreign exchange translation
losses following the disposal of 50% stake in Kalagadi ($187 million) offset by
a gain on disposal of ArcelorMittal USA's 21% stake in the Empire Iron Mining
Partnership ($133 million) and improved performance of Chinese investees.
Net interest expense in 3Q 2017 was $205 million as compared to $207 million in
2Q 2017 and $255 million in 3Q 2016. Net interest expense was lower in 3Q 2017
as compared to 3Q 2016 primarily due to debt reduction including early bond
repayment via debt tenders.
Foreign exchange and other net financing gains in 3Q 2017 were $132 million as
compared to $210 million for 2Q 2017 and losses of $223 million in 3Q 2016. For
3Q 2017 a foreign exchange gain of $181 million was recorded (as compared to a
gain of $247 million for 2Q 2017) mainly on account of a 3.5% depreciation of
the USD against the Euro (versus 6.7% depreciation in 2Q 2017). Both 3Q 2017 and
2Q 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 $327 million and $150 million, respectively. 3Q 2017
includes $218 million on premium expenses accrued in connection with the early
repayment of bonds (settled in October 2017). Foreign exchange and other net
financing costs in 3Q 2016 was $223 million and included a foreign exchange gain
of $65 million mainly on account of USD depreciation of 0.5% against the Euro.
3Q 2016 also includes $158 million on premium expenses accrued on the bond
repayments via debt tenders.
ArcelorMittal recorded an income tax expense of $71 million for 3Q 2017 as
compared to $197 million for 2Q 2017 and $146 million in 3Q 2016.
ArcelorMittal recorded net income for 3Q 2017 of $1,205 million, or $1.18
earnings per share, as compared to net income for 2Q 2017 of $1,322 million, or
$1.30 earnings per share, and a net income for 3Q 2016 of $680 million, or $0.67
earnings per share.
Analysis of segment operations
NAFTA
(USDm) unless otherwise shown 3Q 17 2Q 17 3Q 16 9M 17 9M 16
Sales 4,636 4,607 4,269 13,701 12,011
--------------------------------------------------------------------
Operating income 256 378 424 1,030 1,838
--------------------------------------------------------------------
Depreciation (125) (128) (142) (381) (412)
--------------------------------------------------------------------
Exceptional income(4) - - - - 832
--------------------------------------------------------------------
EBITDA 381 506 566 1,411 1,418
--------------------------------------------------------------------
Crude steel production (kt) 5,904 5,762 5,632 17,882 17,011
--------------------------------------------------------------------
Steel shipments (kt) 5,655 5,419 5,364 16,684 16,270
--------------------------------------------------------------------
Average steel selling price (US$/t) 741 760 715 740 670
--------------------------------------------------------------------
NAFTA segment crude steel production increased by 2.5% to 5.9Mt in 3Q 2017 as
compared to 5.8Mt for 2Q 2017 (which was impacted by planned maintenance).
Steel shipments in 3Q 2017 increased by 4.3% to 5.7Mt as compared to 5.4Mt in
2Q 2017, driven primarily by an increase in volumes in Mexico.
Sales in 3Q 2017 were stable at $4.6 billion as compared to 2Q 2017, primarily
due to higher steel shipment volumes as discussed above offset by lower average
steel selling prices (-2.5%). Compared to 2Q 2017, average steel selling prices
for flat and long products declined by -1.8% and -2.2%, respectively.
Operating income in 3Q 2017 decreased to $256 million as compared to operating
income of $378 million in 2Q 2017 and operating income of $424 million in
3Q 2016.
EBITDA in 3Q 2017 decreased by 24.7% to $381 million as compared to $506 million
in 2Q 2017 primarily due to a negative price-cost effect, offset in part by
higher steel shipment volumes (+4.3%). EBITDA in 3Q 2017 declined by 32.7% as
compared to $566 million in 3Q 2016.
Brazil
(USDm) unless otherwise shown 3Q 17 2Q 17 3Q 16 9M 17 9M 16
Sales 2,059 1,834 1,729 5,503 4,472
------------------------------------------------------------------------------
Operating income 128 128 233 431 471
------------------------------------------------------------------------------
Depreciation (74) (73) (68) (218) (188)
------------------------------------------------------------------------------
EBITDA 202 201 301 649 659
------------------------------------------------------------------------------
Crude steel production (kt) 2,797 2,714 2,888 8,221 8,355
------------------------------------------------------------------------------
Steel shipments (kt) 2,940 2,622 2,751 7,788 7,912
------------------------------------------------------------------------------
Average steel selling price (US$/t) 651 655 582 660 525
------------------------------------------------------------------------------
Brazil segment crude steel production increased by 3% to 2.8Mt in 3Q 2017 as
compared to 2Q 2017 with improvement in flat operations partially offset by
lower long products production following planned maintenance at Monlevade,
Brazil, which was completed during the quarter.
Steel shipments in 3Q 2017 increased by 12.1% to 2.9Mt as compared to 2.6Mt in
2Q 2017, primarily due to a 4.9% increase in flat product steel shipments and a
25% increase in long product steel shipments. Both domestic and export steel
shipments increased.
Sales in 3Q 2017 increased by 12.3% to $2.1 billion as compared to $1.8 billion
in 2Q 2017, due to higher steel shipments offset in part by lower average steel
selling prices primarily due to lower export prices.
Operating income in 3Q 2017 was stable at $128 million as compared to 2Q 2017,
and lower as compared to operating income of $233 million in 3Q 2016.
EBITDA in 3Q 2017 was stable at $202 million as compared to $201 million in
2Q 2017 due to higher steel shipment volumes offset by negative price-cost
effect (largely due to lower export prices). EBITDA in 3Q 2017 was 32.7% lower
as compared to $301 million in 3Q 2016.
Europe
(USDm) unless otherwise shown 3Q 17 2Q 17 3Q 16 9M 17 9M 16
Sales 9,196 9,180 7,172 26,598 22,133
-----------------------------------------------------------------------
Operating income 546 652 414 1,834 883
-----------------------------------------------------------------------
Depreciation (302) (290) (303) (865) (873)
-----------------------------------------------------------------------
Impairment - - - - (49)
-----------------------------------------------------------------------
EBITDA 848 942 717 2,699 1,805
-----------------------------------------------------------------------
Crude steel production (kt) 11,248 10,997 10,571 33,457 32,462
-----------------------------------------------------------------------
Steel shipments (kt) 10,116 10,466 9,382 30,790 30,712
-----------------------------------------------------------------------
Average steel selling price (US$/t) 723 698 596 690 561
-----------------------------------------------------------------------
Europe segment crude steel production increased by 2.3% to 11.2Mt in 3Q 2017, as
compared to 11.0Mt in 2Q 2017.
Steel shipments in 3Q 2017 decreased by 3.3% to 10.1Mt as compared to 10.5Mt in
2Q 2017, primarily due to a 5.1% decrease in flat product shipments offset in
part by a 1.4% recovery in long product shipments. The decline in shipments was
notably less than the typical seasonal effects, reflecting supportive market
conditions.
Sales in 3Q 2017 were $9.2 billion, stable as compared to 2Q 2017, with lower
steel shipments being offset by higher US dollar average steel selling prices
(+3.5%). US dollar flat and long product average steel selling prices increased
(by +3.1% and +7.8%, respectively), but this reflects currency impacts (euro
appreciation versus the US dollar) as average euro steel selling prices for the
Europe segment were lower than the previous quarter.
Operating income in 3Q 2017 was $546 million as compared to $652 million in
2Q 2017 and $414 million in 3Q 2016.
EBITDA in 3Q 2017 decreased by 9.9% to $848 million as compared to $942 million
in 2Q 2017 primarily due to lower steel volumes and a negative price-cost effect
partially offset by foreign exchange gains following the appreciation of the
Euro. EBITDA in 3Q 2017 improved 18.3% as compared to 3Q 2016 primarily on
account of higher steel shipments (+7.8%) and higher average steel selling
prices (+21.4%).
ACIS
(USDm) unless otherwise shown 3Q 17 2Q 17 3Q 16 9M 17 9M 16
Sales 1,941 1,834 1,586 5,582 4,359
--------------------------------------------------------------------
Operating income 159 51 156 326 303
--------------------------------------------------------------------
Depreciation (80) (77) (77) (232) (233)
--------------------------------------------------------------------
Impairment - (46) - (46) -
--------------------------------------------------------------------
EBITDA 239 174 233 604 536
--------------------------------------------------------------------
Crude steel production (kt) 3,669 3,685 3,552 10,846 11,146
--------------------------------------------------------------------
Steel shipments (kt) 3,362 3,257 3,408 9,840 10,176
--------------------------------------------------------------------
Average steel selling price (US$/t) 515 499 419 505 383
--------------------------------------------------------------------
ACIS segment crude steel production in 3Q 2017 was stable at 3.7Mt as compared
to 2Q 2017.
Steel shipments in 3Q 2017 increased by 3.2% to 3.4Mt as compared to 3.3Mt in
2Q 2017 primarily due to higher steel shipments in CIS.
Sales in 3Q 2017 increased by 5.8% to $1.9 billion as compared to 2Q 2017,
primarily due to higher steel shipments (+3.2%) and higher average steel selling
prices (+3.3%) primarily in Ukraine.
Operating income in 3Q 2017 was $159 million as compared to $51 million in
2Q 2017 and $156 million in 3Q 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 3Q 2017 increased 37.5% to $239 million as compared to $174 million in
2Q 2017, primarily due to improved performance in CIS (positive price-cost
effect) and increased shipment volumes. EBITDA in 3Q 2017 was 2.7% higher as
compared to $233 million in 3Q 2016, primarily due to a positive price-cost
effect in CIS offset in part by a negative price-cost effect in South Africa.
Mining
(USDm) unless otherwise shown 3Q 17 2Q 17 3Q 16 9M 17 9M 16
Sales 1,029 1,015 809 3,074 2,218
-------------------------------------------------------------------------------
Operating income 238 216 103 832 163
-------------------------------------------------------------------------------
Depreciation (103) (103) (101) (308) (302)
-------------------------------------------------------------------------------
EBITDA 341 319 204 1,140 465
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Own iron ore production ((a) )(Mt) 14.2 14.7 13.7 42.9 41.3
-------------------------------------------------------------------------------
Iron ore shipped externally and internally at 9.1 9.5 8.1 27.2 25.5
market price ((b) )(Mt)
-------------------------------------------------------------------------------
Iron ore shipment - cost plus basis (Mt) 5.9 5.8 5.8 16.4 16.9
-------------------------------------------------------------------------------
Own coal production((a) )(Mt) 1.5 1.6 1.6 4.8 4.5
-------------------------------------------------------------------------------
Coal shipped externally and internally at market 0.6 0.8 1.0 2.2 2.5
price((b) )(Mt)
-------------------------------------------------------------------------------
Coal shipment - cost plus basis (Mt) 0.9 0.9 0.9 2.7 2.5
-------------------------------------------------------------------------------
(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 2017 decreased by 3.1% to 14.2Mt as compared to
14.7Mt in 2Q 2017 due to lower production in Canada and Ukraine (on account of
unplanned maintenance), offset in part by increased production in USA. Own iron
ore production in 3Q 2017 increased by 4.2% as compared to 3Q 2016 primarily due
to increased production in Mexico (following restart of Volcan mine in February
2017).
Market-priced iron ore shipments in 3Q 2017 decreased 3.9% to 9.1Mt as compared
to 9.5Mt in 2Q 2017, primarily driven by lower shipments in ArcelorMittal Mines
Canada[10] and Ukraine. Market-priced iron ore shipments in 3Q 2017 increased by
12.3% as compared to 3Q 2016 driven by increased shipments in Mexico and
Liberia. FY 2017 market-priced iron ore shipments are expected to increase by
approximately 10% versus FY 2016.
Own coal production in 3Q 2017 decreased by 7.2% to 1.5Mt as compared to 1.6Mt
at 2Q 2017 due to lower production in both Kazakhstan and Princeton (US) mines.
Own coal production in 3Q 2017 decreased by 7.2% as compared to 3Q 2016 with
lower production in Kazakhstan offset in part by higher production at Princeton
(US) mines.
Market-priced coal shipments in 3Q 2017 decreased to 0.6Mt as compared to 0.8Mt
in 2Q 2017 primarily due to decreased shipments at Kazakhstan. Market-priced
coal shipments in 3Q 2017 decreased as compared to 3Q 2016 primarily due to
decreased shipments at Princeton (US) and Kazakhstan.
Operating income in 3Q 2017 increased to $238 million as compared to $216
million in 2Q 2017, and $103 million in 3Q 2016, primarily for the reasons
discussed below.
EBITDA in 3Q 2017 increased by 7.2% to $341 million as compared to $319 million
in 2Q 2017, primarily due to increased seaborne iron ore reference prices
(+12.7%), partially offset by lower market-priced iron ore shipments (-3.9%) and
lower coal shipments. EBITDA in 3Q 2017 was significantly higher as compared to
$204 million in 3Q 2016, primarily due to higher seaborne iron ore reference
prices (+21%) and higher market-priced iron ore shipment volumes (+12.3%).
Liquidity and Capital Resources
For 3Q 2017, net cash provided by operating activities was $763 million as
compared to $1,214 million in 2Q 2017 and $876 million in 3Q 2016. The lower net
cash provided by operating activities during 3Q 2017 reflects in part a higher
working capital investment of $801 million, as compared to an investment of $548
million in 2Q 2017 and $565 million in 3Q 2016.
Net cash used in investing activities during 3Q 2017 was $563 million as
compared to $738 million during 2Q 2017 and compared to $300 million in
3Q 2016. Capital expenditure increased to $637 million in 3Q 2017 as compared to
$566 million in 2Q 2017 and compared to $535 million in 3Q 2016. FY 2017 capital
expenditure is expected to be $2.9 billion.
Cash provided by other investing activities in 3Q 2017 of $74 million primarily
includes the first instalment of disposal proceeds from ArcelorMittal USA's 21%
stake in the Empire Iron Mining Partnership ($44 million). Cash used in other
investing activities in 2Q 2017 of $172 million, includes $44 million cash
consideration (net of cash acquired of $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. Cash provided by 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)(3).
Net cash provided by financing activities in 3Q 2017 was $514 million as
compared to net cash used in financing activities for 2Q 2017 of $744 million
and $741 million for 3Q 2016. Net cash provided by financing activities in
3Q 2017 includes borrowings and commercial paper, offset in part by a $0.5
billion repayment of drawings under the asset-based revolving credit facility at
ArcelorMittal USA. Net cash used in financing activities for 2Q 2017 primarily
included $851 million used to early redeem the 9.85% Notes due June 1, 2019. On
May 25, 2017, ArcelorMittal South Africa signed a 4.5 billion South African Rand
(approximately $350 million) revolving borrowing base finance facility maturing
on May 25, 2020. As of September 30, 2017, $288 million was drawn under this
facility. 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 drawings under other short-
term facilities (including $0.5 billion from the asset-based revolving credit
facility at ArcelorMittal USA which matures in 2021). During 3Q 2017, the
Company paid dividends of $80 million primarily to minority shareholders in
ArcelorMittal Mines Canada and in Bekaert (Brazil).
As of September 30, 2017, the Company's cash and cash equivalents amounted to
$3.0 billion as compared to $2.3 billion at June 30, 2017 and $2.3 billion at
September 30, 2016. Gross debt increased to $14.9 billion as of September
30, 2017, as compared to $14.2 billion at June 30, 2017 and $14.4 billion at
September 30, 2016. The amount as of September 30, 2017 does not reflect the
usage of cash to repurchase bonds on October 16, 2017.
As of September 30, 2017, net debt increased to $12.0 billion as compared with
$11.9 billion at June 30, 2017 primarily due to negative foreign exchange
impacts on Euro-denominated debt ($0.2 billion) offset in part by positive free
cashflow $0.1 billion (despite a $0.8 billion investment in working capital),
and lower than the net debt of $12.2 billion as of September 30, 2016 due to
positive free cash flow offsetting $0.3 billion foreign exchange impacts.
As of September 30, 2017, the Company had liquidity of $8.5 billion, consisting
of cash and cash equivalents of $3.0 billion and $5.5 billion of available
credit lines[11]. The $5.5 billion credit facility contains a financial covenant
of 4.25x Net debt / EBITDA (as defined in the facility). On September 30, 2017,
the average debt maturity was 4.7 years.
Key recent developments
* On November 8, 2017, ArcelorMittal confirmed that the European Commission
had initiated a Phase II review of AM Investco Italy Srl ('AM Investco')'s
proposed acquisition of Ilva S.p.A. ArcelorMittal will continue to work
closely and constructively with the European Commission to explain the
dynamics of the steel industry, the rationale of the proposed acquisition
and the benefits it will bring to industry, customers, the environment and
the local economy. The Company looks forward to ongoing dialogue with the
Commission to secure approval for this transaction in a timely manner.
ArcelorMittal notified AM Investco's proposed acquisition of Ilva S.p.A to
the European Commission on September 21, 2017, and submitted commitments on
October 19, 2017. AM Investco reached a binding agreement concerning the
lease and obligation to purchase Ilva S.p.A and its subsidiaries with the
Italian Government in June 2017.
* On September 28, 2017, ArcelorMittal announced the launch of its tender
offers to purchase for cash, for a combined aggregate purchase price of up
to $1,250,000,000 (the "Maximum Tender Cap"), its outstanding 6.250% notes
due 2022, 7.000% notes due 2039 and 6.750% notes due 2041. On October
13, 2017, the Company announced its decision to increase the Maximum Tender
Cap to $1,410,627,664 so as to avoid proration of any series of validly
tendered Notes: the Company repurchased notes in such amount on October
16, 2017, using $1.4 billion of cash and liquidity resources.
* On September 28, 2017, ArcelorMittal announced a major US$1 billion, three-
year investment programme at its Mexican operations, which is focussed on
building ArcelorMittal Mexico's downstream capabilities, sustaining the
competitiveness of its mining operations and modernising its existing asset
base. The programme is designed to enable ArcelorMittal Mexico to meet the
anticipated increased demand requirements from domestic customers, realise
in full ArcelorMittal Mexico's production capacity of 5.3 million tonnes and
significantly enhance the proportion of higher-value added products in its
product mix, in-line with the Company's Action 2020 strategic plan. The main
investment will be the construction of a new hot strip mill. Construction
will take approximately three years and, upon completion, will enable
ArcelorMittal Mexico to produce c. 2.5 million tonnes of flat rolled steel,
long steel c. 1.8 million tonnes and the remainder made up of semi-finished
slabs. Coils from the new hot strip mill will be supplied to domestic, non-
auto, general industry customers.
* On August 25, 2017, ArcelorMittal completed the sale (per a sales agreement
entered into in October 2016) of its 50% shareholding in Kalagadi Manganese
(Proprietary) Limited to Kgalagadi Alloys (Proprietary) Limited for
consideration to be paid during the life of the mine, which is contingent on
the financial performance of the mine and cash flow availability.
* On August 7, 2017, ArcelorMittal USA and Cliffs Natural Resources ("Cliffs")
agreed that Cliffs would acquire ArcelorMittal USA's 21% ownership interest
in the Empire Iron Mining Partnership for $133 million plus assumptions of
all partnership liabilities. The payment of $133 million will be made in 3
equal installments with the first payment of $44 million received in August
2017, and two subsequent payments to be received in August 2018 and 2019.
Outlook and guidance
The Company's forecasts for global apparent steel consumption ("ASC") remain as
presented at the time of 2Q 2017 results with the balance of risks now to the
upside.
ArcelorMittal expects 2017 global ASC to grow by approximately +2.5% to +3.0%.
By region: ASC in the US (excluding Pipe & Tube) is expected to grow +2.0% to
+3.0% reflecting higher machinery and construction demand offset by lower
automotive production. In Europe, ArcelorMittal expects the pick-up in
underlying demand to continue, driven primarily by the strength of the
construction and machinery markets, and apparent demand is expected at +0.5% to
+1.5% in 2017 on top of around 3% growth in 2016. In Brazil, ASC is expected to
grow by +2.0% to +3.0% in 2017 as the continued weakness in construction is
partially offset by mild improvement in consumer confidence and automotive
demand. In the CIS, ASC is expected to grow +2.0% to +2.5% reflecting stronger
economic growth in Russia. In China, ASC growth of +2.5% to +3.5% is expected in
2017, primarily due to strength in automotive and machinery.
Market conditions are favourable. The demand environment remains positive (as
evidenced by the continued high readings from the ArcelorMittal weighted PMI),
and steel spreads remain healthy.
The Company continues to expect cash needs of the business (capex, interest
expense, cash taxes, pensions and other cash costs but excludes working capital
investment and premiums paid to retire debt early) to be approximately $4.6
billion in 2017.
Given the improved market conditions, the Company now expects a full year 2017
investment in working capital of approximately $2.0 billion (as compared to
previous guidance of approximately $1.5 billion).
ArcelorMittal Condensed Consolidated Statement of Financial Position(1)
Sep 30, Jun 30, Dec 31,
In millions of U.S. dollars 2017 2017 2016
-------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------
Cash and cash equivalents (C) 2,978 2,272 2,615
-------------------------------------------------------------------------------
Trade accounts receivable and other 4,443 4,263 2,974
-------------------------------------------------------------------------------
Inventories 17,780 17,458 14,734
-------------------------------------------------------------------------------
Prepaid expenses and other current assets 2,719 2,286 1,665
-------------------------------------------------------------------------------
Assets held for sale[12] 127 127 259
-------------------------------------------------------------------------------
Total Current Assets 28,047 26,406 22,247
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Goodwill and intangible assets 5,856 5,769 5,651
-------------------------------------------------------------------------------
Property, plant and equipment 36,471 35,765 34,831
-------------------------------------------------------------------------------
Investments in associates and joint ventures 4,943 4,679 4,297
-------------------------------------------------------------------------------
Deferred tax assets 6,697 6,470 5,837
-------------------------------------------------------------------------------
Other assets 2,498 2,371 2,279
-------------------------------------------------------------------------------
Total Assets 84,512 81,460 75,142
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------------
Short-term debt and current portion of long-term 5,764 3,936 1,885
debt (B)
-------------------------------------------------------------------------------
Trade accounts payable and other 12,074 12,555 11,633
-------------------------------------------------------------------------------
Accrued expenses and other current liabilities 5,229 4,930 4,502
-------------------------------------------------------------------------------
Liabilities held for sale(12) 40 39 95
-------------------------------------------------------------------------------
Total Current Liabilities 23,107 21,460 18,115
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Long-term debt, net of current portion (A) 9,185 10,220 11,789
-------------------------------------------------------------------------------
Deferred tax liabilities 2,713 2,690 2,529
-------------------------------------------------------------------------------
Other long-term liabilities 10,966 10,838 10,384
-------------------------------------------------------------------------------
Total Liabilities 45,971 45,208 42,817
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Equity attributable to the equity holders of the 36,374 34,027 30,135
parent
-------------------------------------------------------------------------------
Non-controlling interests 2,167 2,225 2,190
-------------------------------------------------------------------------------
Total Equity 38,541 36,252 32,325
-------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity 84,512 81,460 75,142
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net Debt (D=A+B-C) 11,971 11,884 11,059
-------------------------------------------------------------------------------
ArcelorMittal Condensed Consolidated Statement of Operations(1)
Three months ended Nine months ended
-------------------------------------------------------------------------------
In millions of U.S. dollars unless Sept 30, Jun 30, Sept 30, Sept 30, Sept 30,
otherwise shown 2017 2017 2016 2017 2016
-------------------------------------------------------------------------------
Sales 17,639 17,244 14,523 50,969 42,665
-------------------------------------------------------------------------------
Depreciation (B) (690) (676) (693) (2,021) (2,025)
-------------------------------------------------------------------------------
Impairment (B) - (46) - (46) (49)
-------------------------------------------------------------------------------
Exceptional income(4) (B) - - - - 832
-------------------------------------------------------------------------------
Operating income (A) 1,234 1,390 1,204 4,200 3,352
-------------------------------------------------------------------------------
Operating margin % 7.0% 8.1% 8.3% 8.2% 7.9%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Income from associates, joint 117 120 109 323 601
ventures and other investments
-------------------------------------------------------------------------------
Net interest expense (205) (207) (255) (635) (893)
-------------------------------------------------------------------------------
Foreign exchange and other net 132 210 (223) 209 (664)
financing gain/(loss)
-------------------------------------------------------------------------------
Income before taxes and non- 1,278 1,513 835 4,097 2,396
controlling interests
-------------------------------------------------------------------------------
Current tax expense (116) (126) (67) (449) (174)
-------------------------------------------------------------------------------
Deferred tax benefit / (expense) 45 (71) (79) (102) (825)
-------------------------------------------------------------------------------
Income tax expense (71) (197) (146) (551) (999)
-------------------------------------------------------------------------------
Income including non-controlling 1,207 1,316 689 3,546 1,397
interests
-------------------------------------------------------------------------------
Non-controlling interests (income) (2) 6 (9) (17) (21)
/ loss
-------------------------------------------------------------------------------
Net income attributable to equity 1,205 1,322 680 3,529 1,376
holders of the parent
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Basic earnings per common share 1.18 1.30 0.67 3.46 1.48
($)(2)
-------------------------------------------------------------------------------
Diluted earnings per common share 1.18 1.29 0.67 3.45 1.48
($)(2)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Weighted average common shares 1,020 1,020 1,020 1,020 931
outstanding (in millions)(2)
-------------------------------------------------------------------------------
Diluted weighted average common
shares outstanding (in 1,023 1,023 1,021 1,023 932
millions)(2)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
OTHER INFORMATION
-------------------------------------------------------------------------------
EBITDA (C = A-B) 1,924 2,112 1,897 6,267 4,594
-------------------------------------------------------------------------------
EBITDA Margin % 10.9% 12.2% 13.1% 12.3% 10.8%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Own iron ore production (Mt) 14.2 14.7 13.7 42.9 41.3
-------------------------------------------------------------------------------
Crude steel production (Mt) 23.6 23.2 22.6 70.4 69.0
-------------------------------------------------------------------------------
Total shipments of steel products 21.7 21.5 20.3 64.2 63.9
(Mt)
-------------------------------------------------------------------------------
ArcelorMittal Condensed Consolidated Statement of Cash flows(1 )
Three months ended Nine months ended
-------------------------------------------------------------------------------
In millions of U.S. dollars Sept 30, Jun 30, Sept 30, Sept 30, Sept 30,
2017 2017 2016 2017 2016
-------------------------------------------------------------------------------
Operating activities:
-------------------------------------------------------------------------------
Income attributable to equity 1,205 1,322 680 3,529 1,376
holders of the parent
-------------------------------------------------------------------------------
Adjustments to reconcile net
income to net cash (used in) /
provided by operations:
-------------------------------------------------------------------------------
Non-controlling interest's income 2 (6) 9 17 21
/ (loss)
-------------------------------------------------------------------------------
Depreciation and impairment 690 722 693 2,067 2,074
-------------------------------------------------------------------------------
Exceptional income(4) - - - - (832)
-------------------------------------------------------------------------------
Income from associates, joint (117) (120) (109) (323) (601)
ventures and other investments
-------------------------------------------------------------------------------
Deferred tax (benefit)/ expense (45) 71 79 102 825
-------------------------------------------------------------------------------
Change in working capital (801) (548) (565) (3,530) (1,518)
-------------------------------------------------------------------------------
Other operating activities (net) (171) (227) 89 (184) (290)
-------------------------------------------------------------------------------
Net cash provided by operating 763 1,214 876 1,678 1,055
activities (A)
-------------------------------------------------------------------------------
Investing activities:
-------------------------------------------------------------------------------
Purchase of property, plant and (637) (566) (535) (1,783) (1,642)
equipment and intangibles (B)
-------------------------------------------------------------------------------
Other investing activities (net) 74 (172) 235 (116) 1,308
-------------------------------------------------------------------------------
Net cash used in investing (563) (738) (300) (1,899) (334)
activities
-------------------------------------------------------------------------------
Financing activities:
-------------------------------------------------------------------------------
Net proceeds / (payments) relating
to payable to banks and long-term 587 (726) (717) 604 (5,557)
debt
-------------------------------------------------------------------------------
Dividends paid (80) - (7) (120) (54)
-------------------------------------------------------------------------------
Equity offering - - - - 3,115
-------------------------------------------------------------------------------
Other financing activities (net) 7 (18) (17) (48) 38
-------------------------------------------------------------------------------
Net cash provided by / (used in) 514 (744) (741) 436 (2,458)
financing activities
-------------------------------------------------------------------------------
Net decrease in cash and cash 714 (268) (165) 215 (1,737)
equivalents
-------------------------------------------------------------------------------
Cash and cash equivalents
transferred from assets held for - - - 13 -
sale
-------------------------------------------------------------------------------
Effect of exchange rate changes on 9 30 29 42 (112)
cash
-------------------------------------------------------------------------------
Change in cash and cash 723 (238) (136) 270 (1,849)
equivalents
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Free cashflow (C=A+B) 126 648 341 (105) (587)
-------------------------------------------------------------------------------
Appendix 1: Product shipments by region
-------------------------------------------------------
(000'kt) 3Q 17 2Q 17 3Q 16 9M 17 9M 16
-------------------------------------------------------
Flat 4,820 4,748 4,698 14,512 13,906
-------------------------------------------------------
Long 984 845 829 2,658 2,830
-------------------------------------------------------
NAFTA 5,655 5,419 5,364 16,684 16,270
-------------------------------------------------------
Flat 1,766 1,682 1,730 4,812 4,812
-------------------------------------------------------
Long 1,181 945 1,026 2,992 3,100
-------------------------------------------------------
Brazil 2,940 2,622 2,751 7,788 7,912
-------------------------------------------------------
Flat 7,098 7,482 6,562 21,957 21,430
-------------------------------------------------------
Long 2,954 2,913 2,767 8,673 9,147
-------------------------------------------------------
Europe 10,116 10,466 9,382 30,790 30,712
-------------------------------------------------------
CIS 2,297 2,212 2,459 6,628 6,983
-------------------------------------------------------
Africa 1,065 1,045 950 3,212 3,192
-------------------------------------------------------
ACIS 3,362 3,257 3,408 9,840 10,176
-------------------------------------------------------
Note: "Others and eliminations" lines are not presented in the table
Appendix 2a: Capital expenditures
-------------------------------------------------
(USDm) 3Q 17 2Q 17 3Q 16 9M 17 9M 16
-------------------------------------------------
NAFTA 95 90 98 282 307
-------------------------------------------------
Brazil 79 55 44 191 156
-------------------------------------------------
Europe 213 248 171 713 638
-------------------------------------------------
ACIS 114 75 105 262 269
-------------------------------------------------
Mining 132 94 113 316 255
-------------------------------------------------
Total 637 566 535 1,783 1,642
-------------------------------------------------
Note: "Others and eliminations" are not presented in the table
Appendix 2b: 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
-------------------------------------------------------------------------------
Segment Site / unit Project Capacity / Actual
details completion
-------------------------------------------------------------------------------
NAFTA Indiana Harbor Indiana Harbor New caster at 4Q 2016((a))
"footprint No.3 Steelshop
optimization installed
project"
-------------------------------------------------------------------------------
NAFTA AM/NS Calvert Phase 2: Slab Increase coil 2Q 2017
yard expansion production level
(Bay 5) from 4.6Mt/year
to 5.3Mt/year
coils
-------------------------------------------------------------------------------
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
galv
Unternehmensinformation / Kurzprofil:
Datum: 10.11.2017 - 07:00 Uhr
Sprache: Deutsch
News-ID 567592
Anzahl Zeichen: 65589
contact information:
Town:
London
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 274 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"ArcelorMittal reports third quarter 2017 results"
steht unter der journalistisch-redaktionellen Verantwortung von
ArcelorMittal S.A. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
