ArcelorMittal reports fourth quarter 2019 and full year 2019
results
Luxembourg, February 6, 2020 - 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 results1 for
the three-month and twelve-month periods ended December 31,
2019.
2019 key highlights:
- Against a challenging market backdrop in 2019, ArcelorMittal
generated $2.4bn free cash flow (net cash provided by operating
activities of $6.0bn less capex of $3.6bn) and reported a net loss
of $2.5bn (adjusted net income of $0.3bn, excluding impairment and
exceptional items)3
- Ended the year with gross debt of $14.3bn and net debt of
$9.3bn (the lowest level since the merger); targeting achievement
of the $7bn net debt objective by end of 2020
- Achieved further $0.4bn of Action2020 gains, with identified
new cost improvement opportunities totalling $1bn to be targeted in
2020
- Completed the acquisition of Essar Steel India in partnership
with Nippon Steel
Outlook for 2020:
- There are signs that the real demand slowdown is beginning to
stabilise, and the supportive inventory environment means that we
expect apparent steel consumption in our core markets to grow in
2020
- Certain cash needs of the business expected to be approximately
$4.5bn (vs. $5.0bn in 2019, primarily due to lower planned
capex)
Financial highlights (on the basis of
IFRS1):
(USDm) unless otherwise shown |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Sales |
15,514 |
|
16,634 |
|
18,327 |
|
70,615 |
|
76,033 |
|
Operating (loss) / income |
(1,535 |
) |
297 |
|
1,042 |
|
(627 |
) |
6,539 |
|
Net (loss)/income attributable to equity holders of the parent |
(1,882 |
) |
(539 |
) |
1,193 |
|
(2,454 |
) |
5,149 |
|
Basic (loss)/earnings per common share (US$) |
(1.86 |
) |
(0.53 |
) |
1.18 |
|
(2.42 |
) |
5.07 |
|
|
|
|
|
|
|
Operating (loss) / income / tonne (US$/t) |
(78 |
) |
15 |
|
51 |
|
(7 |
) |
78 |
|
EBITDA |
925 |
|
1,063 |
|
1,951 |
|
5,195 |
|
10,265 |
|
EBITDA/ tonne (US$/t) |
47 |
|
53 |
|
96 |
|
61 |
|
122 |
|
Steel-only EBITDA/ tonne (US$/t) |
32 |
|
34 |
|
79 |
|
42 |
|
107 |
|
|
|
|
|
|
|
Crude steel production (Mt) |
19.8 |
22.2 |
22.8 |
89.8 |
92.5 |
Steel shipments (Mt) |
19.7 |
20.2 |
20.2 |
84.5 |
83.9 |
Own iron ore production (Mt) |
14.8 |
13.6 |
14.9 |
57.1 |
58.5 |
Iron ore shipped at market price (Mt) |
9.6 |
8.4 |
10.0 |
37.1 |
37.6 |
Commenting, Mr. Lakshmi N. Mittal,
ArcelorMittal Chairman and CEO, said:
“2019 was a very tough year, clearly reflected in our
significantly reduced profitability. However, our cash generation
remained strong helping to reduce net debt to the lowest ever
level. This demonstrates the contribution of our Action2020
programme which was designed to ensure ArcelorMittal can be cash
flow positive through all aspects of the steel cycle. We expect to
make further deleveraging progress this year.
“Maintaining a strong balance sheet and reaching our net debt
target is a clear priority for ArcelorMittal. Having now completed
the acquisition of Essar Steel India in partnership with Nippon
Steel, we have also secured a new opportunity for the group in the
fast-growing Indian market. The asset is performing well and
offers considerable brownfield potential aligned with the country’s
ambition to triple crude steel production over the next ten
years.
“We also continue to invest strategically in research and
development, including lower carbon steel-making processes and low
carbon products. Steel has the potential to significantly
reduce its carbon emissions, but new policy will be vital. In
this regard we are encouraged by the position adopted by the new
European Commission, including their support for a carbon border
equalisation.
“Although market conditions remain challenging, there are
encouraging early signs of improvement particularly in our core
markets of US, Europe and Brazil. With inventory levels having
reached a very low level following a period of de-stocking, we are
seeing customers return to the market, supporting an improved
pricing environment.”
Sustainable development and safety
performance
Health and safety - Own personnel and
contractors lost time injury frequency rate
Health and safety performance2 (inclusive of ArcelorMittal
Italia (previously known as Ilva)), based on own personnel and
contractors lost time injury frequency (LTIF) rate was 1.25x in
fourth quarter of 2019 ("4Q 2019") as compared to 1.36x in the
third quarter of 2019 (“3Q 2019”). LTIF (inclusive of ArcelorMittal
Italia) in the twelve months of 2019 (“12M 2019”) was 1.21x.
Excluding the impact of ArcelorMittal Italia, the LTIF was 0.84x
for 4Q 2019 as compared to 0.82x for 3Q 2019 and 0.70x for the
fourth quarter of 2018 (“4Q 2018”). LTIF (excluding the impact of
ArcelorMittal Italia) for 12M 2019 was 0.75x as compared to 0.69x
for twelve months of 2018 ("12M 2018").
The Company’s efforts to improve its health and safety record
remain focused on both further reducing the rate of severe injuries
and preventing fatalities.
Own personnel and contractors -
Frequency rate
Lost time injury frequency rate |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Mining |
1.27 |
|
1.53 |
|
0.64 |
|
0.97 |
|
0.61 |
|
NAFTA |
0.63 |
|
0.54 |
|
0.37 |
|
0.58 |
|
0.53 |
Brazil |
0.32 |
|
0.21 |
|
0.28 |
|
0.36 |
|
0.36 |
Europe |
1.06 |
|
1.18 |
|
1.11 |
|
1.00 |
|
0.93 |
ACIS |
0.83 |
|
0.59 |
|
0.59 |
|
0.69 |
|
0.61 |
Total Steel |
0.78 |
|
0.71 |
|
0.71 |
|
0.73 |
|
0.70 |
Total (Steel and Mining) excluding ArcelorMittal
Italia |
0.84 |
|
0.82 |
|
0.70 |
|
0.75 |
|
0.69 |
ArcelorMittal Italia |
10.61 |
13.45 |
- |
11.13 |
- |
Total (Steel and Mining) including ArcelorMittal
Italia |
1.25 |
1.36 |
- |
1.21 |
- |
Key sustainable development highlights
for 4Q 2019:
- Following the public launch in December 2019 of the
ResponsibleSteel standard, the first multi-stakeholder ESG standard
for the steel industry, ArcelorMittal committed to a
target of certifying 100% Europe Flat steel sites to
ResponsibleSteel site standards by the end of 2020.
- ArcelorMittal announced a new target of reducing its CO2
emissions in Europe by 30% by 2030 over a baseline of 2018. This
further supports its ambition announced in May 2019 of being carbon
neutral in Europe by 2050.
- ArcelorMittal has been recognized by CDP for its leadership on
corporate transparency and action on climate change. Of the
>8,000 companies worldwide who were scored on their 2019
disclosures, ArcelorMittal scored an A- in the 2019 CDP Climate
Change assessment and designated as “leadership level”. The
positive score reflects CDP’s assessment of ArcelorMittal’s carbon
ambitions, our disclosure of climate related financial risks and
opportunities, and our work on a broad portfolio of low-emissions
technologies designed to reduce carbon emissions, all detailed in
our “Climate Action” report published in May last year.
Analysis of results for the twelve
months ended December 31, 2019 versus results for the twelve months
ended December 31, 2018
Total steel shipments for 12M 2019 were 84.5 million metric
tonnes representing an increase of 0.8% as compared to 83.9 million
metric tonnes in 12M 2018, primarily due to higher steel shipments
in Europe (+3.2%) due to the impact of the consolidation of
ArcelorMittal Italia as from November 1, 2018, offset in part by
the remedy asset sales related to the ArcelorMittal Italia
acquisition (completed June 30, 2019) and ongoing weak demand
driven by macroeconomic headwinds including declines in automobile
production. Weaker domestic apparent demand conditions led to lower
shipments in NAFTA (-5.1%), while weaker export markets led to
lower shipments in ACIS (-1.7%) and Brazil (-2.4%). Excluding the
impact of ArcelorMittal Italia, Votorantim, and remedy asset sales,
steel shipments in 12M 2019 were 1.4% lower as compared to 12M
2018.
Sales for 12M 2019 decreased by 7.1% to $70.6 billion as
compared with $76.0 billion for 12M 2018, primarily due to lower
average steel selling prices (-9.6%) offset in part by higher steel
shipments (+0.8%) and higher marketable iron ore selling price
(+34.3%).
Depreciation of $3.1 billion for 12M 2019 was higher as compared
with $2.8 billion in 12M 2018. Depreciation charges for 2019
include the depreciation of right-of-use assets recognized in
property, plant and equipment under IFRS 16 "Leases"4, which were
previously recorded as lease expenses in cost of sales and selling,
general and administrative expenses. FY 2020 depreciation is
expected to be approximately $3.0 billion (based on current
exchange rates).
Impairment charges for 12M 2019 were $1.9 billion related to
impairment of the fixed assets of ArcelorMittal USA ($1.3 billion),
following impairment assessments performed in the second and fourth
quarters of 2019, primarily resulting from decreases in the
near-term average selling price assumptions, remedy asset sales for
the ArcelorMittal Italia acquisition ($0.5 billion) and impairment
charges in South Africa ($0.1 billion). Impairment charges net of
purchase gains for 12M 2018 were $810 million and included $0.7
billion primarily related to Ilva acquisition and the remedy asset
sales for the Ilva acquisition and $0.1 billion related to the
remedy package required for the approval of the Votorantim
acquisition5.
Exceptional items for 12M 2019 were charges of $828 million as
compared to charges of $117 million for 12M 2018. Exceptional items
for 12M 2019 primarily include inventory related charges in NAFTA
and Europe following a period of exceptionally weak steel pricing.
Exceptional items for 12M 2018 primarily consisted of $113 million
in charges related to a blast furnace dismantling in Florange
(France), $60 million in charges related to the new collective
labour agreement in the US (including a signing bonus), a $146
million provision taken in 1Q 2018 in respect of a litigation case
that was paid in 3Q 20186 offset in part by PIS/COFINS tax
credits13 related to prior periods recognized in Brazil of $202
million.
Operating loss for 12M 2019 was $627 million as compared to an
operating income of $6.5 billion in 12M 2018, primarily impacted by
weaker operating conditions (negative price-cost effect in steel
segments) reflecting both the decline in steel prices and higher
raw material costs (due in particular to supply-side developments
in Brazil) and impairment and exceptional items as discussed above,
offset in part by improved mining segment performance (driven by
higher seaborne iron ore reference prices +34.3%). The raw material
prices increased during 12M 2019 and for the most part of the year
remained disconnected from steel fundamentals, compressing steel
spreads to unsustainably low levels.
Income from associates, joint ventures and other investments for
12M 2019 was lower at $347 million as compared to $652 million for
12M 2018 driven by lower profitability of Calvert and Chinese
investee. Income in 12M 2019 included dividend income from Erdemir
of $93 million as compared to $87 million in 12M 2018.
Net interest expense was lower at $607 million for 12M 2019, as
compared to $615 million in 12M 2018. The Company expects full year
2020 net interest expense to be approximately $0.5 billion.
Foreign exchange and other net financing losses were $1.0
billion for 12M 2019 as compared to losses of $1.6 billion for 12M
2018. Foreign exchange gain for 12M 2019 was $4 million as compared
to losses of $235 million in 12M 2018. 12M 2019 includes non-cash
mark-to-market losses related to the mandatory convertible bond
call option following the market price decrease of the underlying
shares totalling $356 million as compared to a loss of $501 million
in 12M 2018.
ArcelorMittal recorded an income tax expense of $459 million for
12M 2019 as compared to tax benefit of $349 million for 12M 2018.
The difference originates from a deferred tax benefit recorded
mainly in Luxembourg in 2018.
ArcelorMittal’s net loss for 12M 2019 was $2.5
billion (or $2.42 basic loss per common share), as compared to a
net income in 12M 2018 of $5.1 billion (or $5.07 basic earnings per
common share).
Analysis of results for 4Q 2019 versus
3Q 2019 and 4Q 2018
Total steel shipments in 4Q 2019 were 2.3% lower at 19.7Mt as
compared with 20.2Mt for 3Q 2019 primarily due to lower steel
shipments in Europe (-4.2%), NAFTA (-2.1%) and Brazil (-3.3%),
offset in part by an improvement in ACIS (+9.8%, across Ukraine and
Kazakhstan). Total steel shipments in 4Q 2019 were 2.5% lower as
compared with 20.2Mt for 4Q 2018. Excluding the impact of the
ArcelorMittal Italia acquisition and the remedy asset sales, steel
shipments were 0.2% lower as compared to 4Q 2018.
Sales in 4Q 2019 were $15.5 billion as compared to $16.6 billion
for 3Q 2019 and $18.3 billion for 4Q 2018. Sales in 4Q 2019 were
6.7% lower as compared to 3Q 2019 primarily due to lower average
steel selling prices (-7.0%) and lower steel shipments (-2.3%),
lower realized iron ore pricing following lower seaborne reference
prices and the reduced premia for high grade product including
pellet11, offset in part by higher market-priced iron ore shipments
(+14.8%). Sales in 4Q 2019 were 15.4% lower as compared to 4Q 2018
primarily due to lower average steel selling prices (-16.2%), lower
steel shipments (-2.5%) and lower market-priced iron ore shipments
(-3.2%) offset in part by higher seaborne iron ore reference prices
(+24.3%).
Depreciation for 4Q 2019 was higher at $802 million as compared
to $766 million for 3Q 2019. Depreciation for 4Q 2019 was higher
than $723 million in 4Q 2018 primarily due to the impact of IFRS
16.
Impairment charges for 4Q 2019 were $830 million and related to
impairment of the fixed assets of ArcelorMittal USA ($0.7 billion)
following impairment assessments performed during the quarter,
primarily resulting from a further decrease in the near-term
average selling price assumption and in South Africa ($0.1 billion,
primarily related to the fixed assets of Newcastle Works in South
Africa following lower domestic volumes). Impairment charges for 3Q
2019 were nil. Impairment charges net of purchase gains for 4Q 2018
were $215 million3 and primarily related to Ilva and the remedy
asset sales for the Ilva acquisition.
Exceptional items for 4Q 2019 of $828 million primarily include
inventory related charges in NAFTA and Europe following a period of
exceptionally weak steel pricing. Exceptional items for 3Q 2019
were nil. Exceptional items for 4Q 2018 were $29 million primarily
related to income of $202 million for PIS/COFINS tax credits
related to prior periods recognized in Brazil, offset in part by
$113 million in charges related to a blast furnace dismantling in
Florange (France), and $60 million related to the new collective
labour agreement in the US (including a signing bonus).
Operating loss for 4Q 2019 was $1.5 billion as compared to an
operating income for 3Q 2019 of $297 million and an operating
income of $1.0 billion in 4Q 2018. Operating results for 4Q 2019
and 4Q 2018 were impacted by impairment charges net of purchase
gains and exceptional items as discussed above.
Income from associates, joint ventures and other investments for
4Q 2019 was $20 million as compared to $25 million for 3Q 2019.
Income from associates, joint ventures and other investments for 4Q
2018 of $227 million was positively impacted by $0.1 billion in
currency translation gains following the disposal of
ArcelorMittal’s investment in MacSteel (South Africa).
Net interest expense in 4Q 2019 was $140 million as compared to
$152 million in 3Q 2019 and $140 million in 4Q 2018.
Foreign exchange and other net financing losses in 4Q 2019 were
$117 million as compared to $524 million for 3Q 2019 and $556
million in 4Q 2018. Foreign exchange gain for 4Q 2019 was $130
million as compared to foreign exchange loss of $112 million and $7
million, in 3Q 2019 and 4Q 2018, respectively. 4Q 2019 includes
non-cash mark-to-market losses of $52 million related to the
mandatory convertible bonds call option; such losses amounted to
$243 million in 3Q 2019 and $443 million in 4Q 2018.
ArcelorMittal recorded an income tax expense of $125 million in
4Q 2019 as compared to $185 million for 3Q 2019 and $711 million
income tax benefit for 4Q 2018. The income tax benefit for 4Q
2018 includes a $0.8 billion deferred tax benefit recorded mainly
in Luxembourg.
ArcelorMittal recorded a net loss for 4Q 2019 of $1.9 billion
(or $1.86 basic loss per common share), as compared to net loss for
3Q 2019 of $0.5 billion (or $0.53 basic loss per common share), and
a net income for 4Q 2018 of $1.2 billion (or $1.18 basic earnings
per common share).
Analysis of segment
operations
NAFTA
(USDm) unless otherwise shown |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Sales |
4,020 |
|
4,395 |
|
4,857 |
|
18,555 |
|
20,332 |
|
Operating (loss) / income |
(912 |
) |
(24 |
) |
310 |
|
(1,259 |
) |
1,889 |
|
Depreciation |
(152 |
) |
(147 |
) |
(127 |
) |
(570 |
) |
(522 |
) |
Impairment |
(700 |
) |
— |
|
— |
|
(1,300 |
) |
— |
|
Exceptional items |
(200 |
) |
— |
|
(60 |
) |
(200 |
) |
(60 |
) |
EBITDA |
140 |
|
123 |
|
497 |
|
811 |
|
2,471 |
|
Crude steel production (kt) |
5,261 |
|
5,658 |
|
5,026 |
|
21,897 |
|
22,559 |
|
Steel shipments (kt) |
5,029 |
|
5,135 |
|
5,173 |
|
20,921 |
|
22,047 |
|
Average steel selling price (US$/t) |
731 |
|
792 |
|
882 |
|
810 |
|
852 |
|
NAFTA segment crude steel production decreased by 7.0% to 5.3Mt
in 4Q 2019 as compared to 5.7Mt in 3Q 2019, partly due to planned
outages both in flat and long product operations adjusting to
weaker demand.
Steel shipments in 4Q 2019 decreased by 2.1% to 5.0Mt as
compared to 5.1Mt in 3Q 2019, primarily due to a 2.9% decline in
flat steel shipments.
Sales in 4Q 2019 decreased by 8.5% to $4.0 billion as compared
to $4.4 billion in 3Q 2019, primarily due to a 7.8% decline in
average steel selling prices (with flat and long products down 7.4%
and 6.8%, respectively) and the ongoing supply chain destock
resulting in lower steel shipments.
Impairment charges for 4Q 2019 were $700 million related to a
further impairment of the fixed assets of ArcelorMittal USA
following impairment assessments performed during the quarter,
primarily resulting from a further decrease in the near-term
average selling prices assumption. Impairment charges for 3Q 2019
and 4Q 2018 were nil.
Exceptional items for 4Q 2019 were $200 million and relate to
inventory related charges following a period of exceptionally weak
steel pricing. Exceptional items for 4Q 2018 were $60 million
related to the new collective labour agreement in the US (which
included a signing bonus).
Operating loss in 4Q 2019 was $912 million as compared to $24
million in 3Q 2019 and an operating income of $310 million in 4Q
2018. Operating results for 4Q 2019 and 4Q 2018 were impacted by
the impairment and exceptional items as discussed above.
EBITDA in 4Q 2019 of $140 million was broadly stable as compared
to $123 million in 3Q 2019 with the negative impact from lower
average steel selling prices and steel shipment volumes offset by
lower costs following the decline in raw material costs including
lower iron ore pellet premiums. EBITDA in 4Q 2019 decreased by
71.9% as compared to $497 million in 4Q 2018 primarily due to
negative price-cost effect and lower steel shipments.
Brazil
(USDm) unless otherwise shown |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Sales |
1,902 |
|
1,929 |
|
2,429 |
|
8,113 |
|
8,711 |
|
Operating income |
177 |
|
196 |
|
398 |
|
846 |
|
1,356 |
|
Depreciation |
(63 |
) |
(62 |
) |
(84 |
) |
(274 |
) |
(298 |
) |
Impairment |
— |
|
— |
|
— |
|
— |
|
(86 |
) |
Exceptional items |
— |
|
— |
|
202 |
|
— |
|
202 |
|
EBITDA |
240 |
|
258 |
|
280 |
|
1,120 |
|
1,538 |
|
Crude steel production (kt) |
2,489 |
|
2,669 |
|
3,191 |
|
11,001 |
|
12,264 |
|
Steel shipments (kt) |
2,717 |
|
2,810 |
|
3,053 |
|
11,192 |
|
11,464 |
|
Average steel selling price (US$/t) |
628 |
|
676 |
|
687 |
|
679 |
|
719 |
|
Brazil segment crude steel production decreased by 6.7% to 2.5Mt
in 4Q 2019 as compared to 2.7Mt for 3Q 2019, primarily due to
decline in long products. Flat steel production remained stable
following the ongoing stoppage of ArcelorMittal Tubarão's blast
furnace #2 in response to deteriorating export market
conditions.
Steel shipments in 4Q 2019 decreased by 3.3% to 2.7Mt as
compared to 2.8Mt in 3Q 2019, primarily due to seasonality and
lower exports of long products. Overall long products shipments
decreased by 10.4% while flat products improved by 2.6%.
Sales in 4Q 2019 remained stable at $1.9 billion as compared to
3Q 2019. Sales in 4Q 2019 were impacted by 7.2% lower average steel
selling prices and lower steel shipments while 3Q 2019 sales were
negatively impacted by hyperinflation impact in Argentina.
Exceptional items for 4Q 2018 was an income of $202 million
related to PIS/COFINS tax credits for prior periods recognized in
Brazil.
Operating income in 4Q 2019 declined to $177 million as compared
to $196 million in 3Q 2019 and $398 million in 4Q 2018. Operating
results for 4Q 2018 were impacted by the exceptional gain as
discussed above.
EBITDA in 4Q 2019 decreased by 6.9% to $240 million as compared
to $258 million in 3Q 2019 primarily due to lower steel shipments.
EBITDA in 4Q 2019 was 14.1% lower as compared to $280 million in 4Q
2018 primarily due to lower steel shipment volumes (-11.0%).
Europe
(USDm) unless otherwise shown |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Sales |
8,035 |
|
8,796 |
|
9,761 |
|
37,721 |
|
40,488 |
|
Operating (loss) / income |
(649 |
) |
(168 |
) |
98 |
|
(1,107 |
) |
1,632 |
|
Depreciation |
(323 |
) |
(311 |
) |
(323 |
) |
(1,256 |
) |
(1,195 |
) |
Impairment charges net of purchase gains |
(28 |
) |
— |
|
(215 |
) |
(525 |
) |
(724 |
) |
Exceptional items |
(456 |
) |
— |
|
(113 |
) |
(456 |
) |
(259 |
) |
EBITDA |
158 |
|
143 |
|
749 |
|
1,130 |
|
3,810 |
|
Crude steel production (kt) |
9,030 |
|
10,432 |
|
11,580 |
|
43,913 |
|
44,693 |
|
Steel shipments (kt) |
9,290 |
|
9,698 |
|
10,098 |
|
42,352 |
|
41,020 |
|
Average steel selling price (US$/t) |
654 |
|
686 |
|
771 |
|
696 |
|
787 |
|
Europe segment crude steel production decreased by 13.4% to
9.0Mt in 4Q 2019 as compared to 10.4Mt in 3Q 2019. As
previously announced in May 2019, the 4.2Mt annualized flat steel
production curtailments to bring supply in line with addressable
demand that took effect in part in 3Q 2019 were completed as
scheduled in 4Q 2019 including curtailments at Krakow (flat
production down 16% vs prior quarter). Europe segment crude steel
production decreased by 22.0% to 9.0Mt in 4Q 2019 as compared to
11.6Mt in 4Q 2018 (18.7% lower excluding the impact of
ArcelorMittal Italia and sale of remedy assets).
Steel shipments in 4Q 2019 decreased by 4.2% to 9.3Mt as
compared to 9.7Mt in 3Q 2019 primarily driven by lower flat steel
shipments (-5.5%) driven by ongoing weak demand driven by
macroeconomic headwinds including declines in automobile
production. Steel shipments were 8.0% lower in 4Q 2019 as compared
to 4Q 2018 (4.0% lower excluding the impact of ArcelorMittal Italia
and sale of remedy assets).
Sales in 4Q 2019 were $8.0 billion, 8.6% lower as compared to
$8.8 billion in 3Q 2019, with 4.7% lower average steel selling
prices (flat and long products prices down 4.7% and 6.1%,
respectively) and lower steel shipments, as discussed above.
Impairment charges net of purchase gains for 4Q 2019 were $28
million. Impairment for 3Q 2019 was nil. Impairment charges net of
purchase gains for 4Q 2018 were $215 million primarily related to
Ilva and the remedy asset sales for the Ilva acquisition.
Exceptional items for 4Q 2019 were $456 million and primarily
include inventory related charges following a period of
exceptionally weak steel pricing. Exceptional items for 4Q 2018
were $113 million related to a blast furnace dismantling in
Florange (France).
Operating loss in 4Q 2019 was $649 million as compared to an
operating loss in 3Q 2019 of $168 million and an operating income
of $98 million in 4Q 2018. Operating results for 4Q 2019 and 4Q
2018 were impacted by impairment charges and exceptional items as
discussed above.
EBITDA in 4Q 2019 of $158 million was broadly stable as compared
to $143 million in 3Q 2019. The negative impact from lower volumes
and lower average selling prices was offset by lower costs,
including the benefit of reduced high-cost capacity, the impact of
declining raw material basket prices and lower iron ore pellet
premium.
EBITDA in 4Q 2019 decreased by 78.9% as compared to $749 million
in 4Q 2018 primarily due to negative price-cost effect and losses
of ArcelorMittal Italia.
For the purposes of comparison with previous periods it should
be noted that the EBITDA contribution of ArcelorMittal Italia
(former Ilva assets) for 12M 2019 deteriorated by $0.6 billion vs.
12M 2018 consolidated as from November 1, 2018.
ACIS
(USDm) unless otherwise shown |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Sales |
1,632 |
|
1,654 |
|
1,763 |
|
6,837 |
|
7,961 |
|
Operating (loss) / income |
(238 |
) |
35 |
|
121 |
|
(25 |
) |
1,094 |
|
Depreciation |
(105 |
) |
(93 |
) |
(77 |
) |
(364 |
) |
(311 |
) |
Impairment |
(102 |
) |
— |
|
— |
|
(102 |
) |
— |
|
Exceptional items |
(76 |
) |
— |
|
— |
|
(76 |
) |
— |
|
EBITDA |
45 |
|
128 |
|
198 |
|
517 |
|
1,405 |
|
Crude steel production (kt) |
2,973 |
|
3,450 |
|
2,975 |
|
12,998 |
|
13,022 |
|
Steel shipments (kt) |
2,985 |
|
2,718 |
|
2,669 |
|
11,547 |
|
11,741 |
|
Average steel selling price (US$/t) |
460 |
|
532 |
|
561 |
|
517 |
|
598 |
|
ACIS segment crude steel production in 4Q 2019 decreased by
13.8% to 3.0Mt as compared to 3.5Mt in 3Q 2019 primarily due to
lower production in Ukraine and South Africa following weak market
conditions.
Steel shipments in 4Q 2019 increased by 9.8% to 3.0Mt as
compared to 2.7Mt as at 3Q 2019, due to improvements in Kazakhstan
following maintenance of the hot strip mill and timing of shipments
in Ukraine (both impacting 3Q 2019), offset in part by lower
shipments in South Africa due to weaker demand.
Sales in 4Q 2019 decreased marginally by 1.3% to $1.6 billion as
compared to $1.7 billion in 3Q 2019 primarily due to lower average
steel selling prices (-13.6%), offset in part by higher steel
shipments.
Impairment charges for 4Q 2019 was $0.1 billion primarily
related to the fixed assets of Newcastle Works in South Africa
following lower domestic volumes.
Exceptional items for 4Q 2019 were $76 million and primarily
include closure costs related to Saldanha and retrenchment costs in
relation to announced Section 189 process in Saldanha (South
Africa).
Operating loss in 4Q 2019 was $238 million as compared to
operating income of $35 million in 3Q 2019 and $121 million in 4Q
2018.
EBITDA decreased by 65.1% to $45 million in 4Q 2019 as compared
to $128 million in 3Q 2019 primarily due to negative price-cost
effect offset in part by higher steel shipment volumes. EBITDA in
4Q 2019 was lower as compared to $198 million in 4Q 2018, primarily
due to negative price-cost effect offset in part by higher steel
shipment volumes.
Mining
(USDm) unless otherwise shown |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Sales |
1,105 |
|
1,182 |
|
1,114 |
|
4,837 |
|
4,211 |
|
Operating income |
185 |
|
260 |
|
241 |
|
1,215 |
|
860 |
|
Depreciation |
(116 |
) |
(112 |
) |
(102 |
) |
(448 |
) |
(418 |
) |
EBITDA |
301 |
|
372 |
|
343 |
|
1,663 |
|
1,278 |
|
|
|
|
|
|
|
Own iron ore production (Mt) |
14.8 |
|
13.6 |
|
14.9 |
|
57.1 |
|
58.5 |
|
Iron ore shipped externally and internally at market price (a)
(Mt) |
9.6 |
|
8.4 |
|
10.0 |
|
37.1 |
|
37.6 |
|
Iron ore shipment - cost plus basis (Mt) |
5.8 |
|
6.2 |
|
5.7 |
|
22.2 |
|
20.6 |
|
Own coal production (Mt) |
1.4 |
|
1.4 |
|
1.3 |
|
5.5 |
|
5.9 |
|
Coal shipped externally and internally at market price (a)
(Mt) |
0.7 |
|
0.7 |
|
0.7 |
|
2.8 |
|
2.5 |
|
Coal shipment - cost plus basis (Mt) |
0.7 |
|
0.8 |
|
0.7 |
|
2.9 |
|
3.3 |
|
(a) Iron
ore and coal shipments of market-priced based materials include the
Company’s own mines and share of production at other mines
Own iron ore production in 4Q 2019 increased by 9.5% to 14.8Mt
as compared to 13.6Mt in 3Q 2019, primarily due to higher
production at ArcelorMittal Mines Canada7 (AMMC) following an
electrical failure in the prior quarter which led to a temporary
stoppage of the concentrator and a seasonal recovery in production
at ArcelorMittal Liberia (following rainy season during the prior
quarter). Own iron ore production in 4Q 2019 decreased by 0.7% as
compared to 4Q 2018 primarily due to higher production in
Kazakhstan offset part by lower AMMC production.
Market-priced iron ore shipments in 4Q 2019 increased by 14.8%
to 9.6Mt as compared to 8.4Mt in 3Q 2019, primarily driven by
higher shipments in AMMC and seasonal pick up in market-priced iron
ore shipments in Liberia. Market-priced iron ore shipments in 4Q
2019 were 3.2% lower as compared to 4Q 2018 driven by lower
shipments in AMMC and Brazil, offset by higher shipments in
Ukraine. Market-priced iron ore shipments for 12M 2019 declined by
1.4% as compared to 12M 2018, marginally below the stable year on
year guidance due to slow ramp-up of the concentrator in AMMC.
Market-priced iron ore shipments for FY 2020 are expected to be
stable as compared to FY 2019.
Own coal production in 4Q 2019 of 1.4Mt decreased 6.2% as
compared 3Q 2019 primarily due to lower production at Princeton
(US) and in Temirtau (Kazakhstan). Own coal production in 4Q 2019
increased by 4.1% to 1.4Mt as compared to 1.3Mt in 4Q 2018 due to
higher production at Temirtau (Kazakhstan) offset in part by lower
Princeton production.
Market-priced coal shipments in 4Q 2019 remained stable at 0.7Mt
as compared to 3Q 2019 and 4Q 2018.
Operating income in 4Q 2019 decreased by 29.0% to $185 million
as compared to $260 million in 3Q 2019 and decreased by 23.3% as
compared to $241 million in 4Q 2018.
EBITDA in 4Q 2019 decreased by 19.1% to $301 million as compared
to $372 million in 3Q 2019, primarily due to the impact of lower
seaborne iron ore reference price (-12.8%), lower iron ore quality
premia, as well as the impact of lower seaborne marketable coking
coal prices (-13.5%), offset in part by higher market-priced iron
ore shipments (+14.8%). EBITDA in 4Q 2019 was 12.2% lower as
compared to $343 million in 4Q 2018, primarily due to lower
market-priced iron ore shipments (-3.2%), lower iron ore quality
premia as well as the impact of lower seaborne marketable coking
coal prices (-36.9%), offset in part by higher seaborne iron ore
reference prices (+24.3%).
Liquidity and Capital
Resources
For 4Q 2019 net cash provided by operating activities was $2,932
million as compared to $328 million in 3Q 2019 and $2,170 million
in 4Q 2018. Net cash provided by operating activities in 4Q 2019
includes in part a working capital release of $2,600 million as
compared to a working capital investment of $203 million in 3Q 2019
and a working capital release of $430 million in 4Q 2018.
The 12M 2019 working capital release of $2.2 billion was driven
by inventories, sales prices and raw material costs as well as
improved receivables. The 12M 2018 working capital investment was
$4.4 billion.
Net cash used in investing activities during 4Q 2019 was $1,751
million as compared to $816 million during 3Q 2019 and $1,926
million in 4Q 2018. Capex decreased to $815 million in 4Q 2019 as
compared to $941 million in 3Q 2019 and $1,156 million in 4Q 2018.
FY 2019 capex was $3.6 billion marginally above the guidance of
$3.5 billion. The Company maintains the ability to adapt its capex
plans to the operating environment and now expects FY 2020 to be
approximately $3.2 billion.
Net cash used in other investing activities in 4Q 2019 of $936
million primarily includes the final net $0.6 billion contribution
to the AMNS India JV and $0.4 billion cash outflow in relation
to the Indian rupee rolling hedge10 entered into in connection with
the acquisition of Essar Steel India (neutralising the $0.4 billion
collected since the hedge was entered into during 2018 and 2019).
In aggregate, including the $1.0 billion paid out in relation to
this transaction in 4Q 2018 brings ArcelorMittal’s total equity
contribution to the JV of $1.6 billion.
Net cash provided by other investing activities in 3Q 2019 of
$125 million primarily includes net proceeds from the sale of our
remaining 2.6% stake in Gerdau ($116 million cash received
following sale of 30 million shares) and final installment of
disposal proceeds from ArcelorMittal USA's 21% stake in the Empire
Iron Mine Partnership ($44 million), offset by the quarterly lease
payment for ArcelorMittal Italia. Cash used in other investing
activities in 4Q 2018 of $770 million primarily includes $1.0
billion investment for the Uttam Galva and KSS Petron debts
(India), quarterly lease payment for Ilva acquisition offset in
part by MacSteel (South Africa) disposal proceeds ($220
million).
Net cash provided by financing activities in 4Q 2019 was $19
million as compared to $659 million in 3Q 2019 and net cash used in
financing activities in 4Q 2018 of $411 million (primarily included
repayment of short-term facilities).
In 4Q 2019, net cash provided by financing activities includes a
net inflow of $126 million primarily related to the bond issuance
of €1.5 billion ($1,640 million) via 2 tranches: €750 million with
3.5 year maturity (May 2023) at 1% and €750 million with 6 year
maturity (November 2025) set at 1.75%, offset by repurchases via
tender offer (€318 million of the €600 million 2.85% Notes due 2020
outstanding (52.99%) and €214 million of the €500 million 3.0%
Notes due 2021 outstanding (42.90%)) and make whole redemption of
the remaining outstanding amount ($756 million) of the 5.5% Notes
due 2021. In 3Q 2019, net cash provided by financing activities
includes a net inflow of $804 million primarily related to the net
issuance and early redemption of bonds. In 4Q 2018, $406 million
outflows primarily include repayment of short-term facilities.
During 4Q 2019, the Company paid dividends of $21 million mainly
to minority shareholders in Bekaert (Brazil). During 3Q 2019, the
Company paid dividends of $61 million mainly to minority
shareholders in ArcelorMittal Mines Canada. During 4Q 2018, the
Company paid dividends of $32 million primarily to minority
shareholders in Bekaert (Brazil).
Outflows from lease payments and other financing activities
(net) were $86 million for 4Q 2019 and $84 million for 3Q 2019
respectively, as compared to $27 million inflow in 4Q 2018. The
increase year-on-year is as a result of the first-time application
of IFRS 16 effective from January 1, 2019, as the repayments of the
principal portion of the operating leases are presented under
financing activities (previously reported under operating
activities). 4Q 2018 also included the net proceeds from
transactions with minority shareholders primarily in relation to
the ArcelorMittal Italia transactions.
As of December 31, 2019, the Company’s cash and cash equivalents
amounted to $5.0 billion as compared to $3.6 billion as of
September 30, 2019 and $2.4 billion as of December 31, 2018.
Gross debt remained stable at $14.3 billion as of December 31,
2019, as compared to September 30, 2019 and increased as compared
to $12.6 billion in December 31, 2018. As of December 31, 2019, net
debt decreased by $1.3 billion to $9.3 billion as compared to $10.7
billion as of September 30, 2019 primarily driven by positive free
cash flow (including the substantial 4Q 2019 working capital
release), the sale of a 50% stake in shipping business ($0.4
billion)12 offset in part by the payment on the Essar Steel India
acquisition and Indian rupee hedge.
As of December 31, 2019, the Company had liquidity of $10.5
billion, consisting of cash and cash equivalents of $5.0 billion
and $5.5 billion of available credit lines8. The $5.5 billion
credit facility contains a financial covenant not to exceed 4.25x
Net debt / LTM EBITDA. As of December 31, 2019, the average debt
maturity was 5.3 years.
Action2020 progress
The Company remains focussed on achieving its 2020 targets. The
Company is four-fifths of the way along the Action2020 journey,
with ongoing progress achieved in 2019 on its strategic Action2020
plan. We made further Action2020 gains in 2019 of $0.4 billion
through cost/mix improvement, taking cumulative progress to $2.0
billion since 2016. Since market conditions have frustrated the
Group’s efforts to increase volumes by the targeted amount, the
Group has identified a further $1.0 billion of cost improvement
plans to be targeted in 2020 as it seeks full achievement of the
$3.0 billion Action2020 EBITDA improvement target.
Approximately one-third of these incremental savings will be from
fixed cost reductions, including logistic savings and restructuring
(i.e. Saldanha closure in South Africa). The remaining two-thirds
of the improvements are targeted variable costs improvements
including purchasing gains, yield, fuel rate and energy consumption
improvements mainly in the US and Europe.
Key recent developments
- On December 23, 2019, ArcelorMittal, announced it had signed a
share purchase agreement with DryLog Ltd (DryLog) for the sale of a
50% stake in Global Chartering Limited (GCL), its wholly owned
shipping business, and subsequently formed a 50:50 shipping joint
venture with DryLog. The transaction closed on December 31, 2019.
GCL currently operates 28 dry cargo vessels, which range from
Supramax to Cape Size, 25 of which are on long-term leases and will
be transferred into the joint venture, with the remaining three
being owned outright. The JV will benefit from the combination of
the two businesses respective knowledge and expertise, and
ArcelorMittal’s extensive annual cargo commitments, a portion of
which will be handled exclusively by the JV. It will also benefit
from DryLog’s ability to optimise transport solutions and its
technical and commercial vessel management expertise. These factors
should enable the JV to grow its operations and become a
significant player in the international shipping industry. The
stake sale and JV formation is expected to reduce ArcelorMittal’s
net debt by $530 million, with $400 million in 2019 and a further
$130 million in early 2020. The transaction is part of
ArcelorMittal’s commitment to unlock up to $2 billion of value from
its asset portfolio by mid-year 2021. The JV is accounted for using
the equity method as from the acquisition date.
- On December 20, 2019, ArcelorMittal announced that AM InvestCo
had signed a non-binding agreement with the government appointed
Ilva commissioners that forms a basis to continue
negotiations on a new industrial plan for Ilva, including
discussions on a substantial equity investment by a
government-controlled entity. The new industrial plan would
contemplate investments in green technology, including through a
new company funded by public and private investors. In light
of this, on December 20, 2019 the Civil Court of Milan granted the
parties’ request to further postpone the hearing of the Ilva
commissioners’ application for interim measures until February 7,
2020. Negotiations are ongoing; accordingly, it is currently
unclear whether the hearing will take place as scheduled or be
further postponed. Furthermore, in January 2020, the Taranto court
of appeals granted the authorization for blast furnace number 2 at
the Ilva site to continue operations, provided that the outstanding
prescriptions (mainly the automation of the casting floor
operations) are fulfilled within a year.
- On December 16, 2019, ArcelorMittal announced that it had
completed the acquisition of Essar Steel India Limited ("ESIL"),
and simultaneously established a joint venture with Nippon Steel,
called ArcelorMittal Nippon Steel India Limited (“AMNS India”),
which will own and operate ESIL. ArcelorMittal holds 60 per cent of
AMNS India, with Nippon Steel holding the balance.
- On December 13, 2019, ArcelorMittal Europe announced a CO2
roadmap to reduce emissions by 30% by 2030. The target, for
ArcelorMittal Europe – Flat Products, is in line with an ambition
announced in May 2019 to be carbon neutral in Europe by 2050. The
roadmap to achieve the 30% target is based on three distinct
pathways that have the potential to deliver a significant reduction
in carbon emissions, including:
- Clean power steelmaking, using clean power as the energy source
for hydrogen-based steelmaking, and longer term for direct
electrolysis steelmaking;
- Circular carbon steelmaking, which uses circular carbon energy
sources, such as waste biomass, to displace fossil fuels in
steelmaking, thereby enabling low-emissions steelmaking;
- Fossil fuel carbon capture and storage, where the current
method of steel production is maintained but the carbon is then
captured and stored or re-used rather than emitted into the
atmosphere.
Key to the success of the roadmap, and ArcelorMittal Europe’s
ambition to be carbon neutral by 2050, will be supportive policy to
ensure a global level playing field and so ArcelorMittal supports
the European Commission’s Green Deal, and believes the right market
mechanisms are a critical part of enabling the deployment of
low-emissions steelmaking. This includes a carbon border
equalization complementary to the existing Emissions Trading System
("ETS") and the Just Transition Fund, to invest in research,
innovation and green technology.
- On December 11, 2019 ArcelorMittal repurchased bonds pursuant
to its invitation for offers to sell any and all bonds for cash in
relation to the following bonds issued by ArcelorMittal
EUR 600,000,000 2.875% Notes due 6 July 2020 ("2020 Bonds");
and EUR 500,000,000 3.000% Notes due 9 April 2021 ("2021
Bonds"). ArcelorMittal paid total consideration (including accrued
interest) of €554.9 million to purchase €318 million of the 2020
Bonds and €214 million of the 2021 Bonds.
- On November 27, 2019, ArcelorMittal confirmed that it had given
notice that it would redeem all of the outstanding 5.500% Notes due
March 1, 2021 on December 27, 2019. Following prior tender
offers, the current outstanding principal amount of the 5.500%
Notes was U.S. $756,095,000 (original issuance of $1,500,000,000),
which were redeemed in full.
- On November 26, 2019, ArcelorMittal announced plans to roll out
a new sustainability programme across Europe, aiming to secure
ResponsibleSteel site certification for all its ArcelorMittal
Europe - Flat Products sites. The 12-month programme will enable
each site to prove that our production processes meet rigorously
defined standards across a broad range of social, environmental and
governance criteria. ResponsibleSteel is the industry’s first
global multi-stakeholder standard and certification initiative,
dedicated to defining and promoting responsible practice, aimed at
improving: Climate change and greenhouse gas emissions; Water
stewardship and biodiversity; Human rights & labour rights;
Community relations and business integrity. The standard is based
on 12 principles with a variety of criteria and underlying
requirements. To be awarded with ResponsibleSteel certification,
each site will undergo a rigorous third-party audit with an
independent Certification Committee making the final certification
decision.
- On November 19, 2019, ArcelorMittal announced the issuance of
€750 million 1.0% Notes due May 19, 2023 (the “2023 Notes”) and
€750 million 1.750% Notes due November 19, 2025 (the “2025
Notes” and together with the 2023 Notes, the “Notes”). The
Notes were issued under ArcelorMittal’s €10 billion wholesale Euro
Medium Term Notes Programme. The proceeds of the issuance were used
for general corporate purposes including refinancing of existing
indebtedness.
- In recent periods, the performance of ArcelorMittal South
Africa (AMSA) has been challenged by increased electricity, port
and rail regulated costs, and uncompetitive raw material sourcing
as well as the ongoing weak economic backdrop in South Africa. AMSA
has undertaken an intensive review of its business focused on cash
preservation and cost reduction through an expanded Business
Transformation Programme. At the same time a strategic asset
footprint review was launched to establish an asset base with an
enduring competitive advantage to ensure the long-term
sustainability of the Company. Following this review, a large-scale
employee reorganization (over 1000 employees) has been finalized
with an additional repricing and rescoping of sub-contractor
services expected by the end of 1Q 2020. During the first phase of
the Asset Review it has been agreed to orderly and commercially
wind-down the Saldanha Works. The process is progressing according
to plan and is anticipated to be largely completed by the end of 1Q
2020. The second phase of the Asset Review commenced in November
2019, focusing on Newcastle Works and certain of the long steel
products rolling facilities in Pretoria and Vereeniging. The
objective of this phase of the review is to sustainably improve
these operations’ structural cost position and service offerings.
The closure of significant long steel product plants is not
anticipated in the near future, and notably, primary steel making
operations will continue in the short-term at Newcastle Works,
although it will now be focused on primarily serving the domestic
and Africa Overland markets. Significant organizational
configuration opportunities have been identified to improve both
operational effectiveness and controllable cost competitiveness of
not only the long steel product business, but that of the overall
Company.
Dividend
ArcelorMittal intends to progressively increase
the base dividend paid to its shareholders, and, on attainment of
the net debt target, return a percentage of free cash flow
annually. Given the improving balance sheet strength and ongoing
deleveraging, the Board proposes the base dividend for 2020 (in
respect of 2019) of $0.30 per share which will be proposed to the
shareholders at the Annual General Meeting in May 2020.
Financial calendar for 2020
- General Meeting of Shareholders:
- May 5, 2020: ArcelorMittal Annual General Meeting
- Earnings results announcements:
- May 7, 2020: earnings release 1Q 2020
- July 30, 2020: earnings release 2Q 2020 and half year 2020
- November 5, 2020: earnings release 3Q 2020
Outlook and guidance
Based on the current economic outlook, ArcelorMittal expects an
expansion in global apparent steel consumption (“ASC”) in 2020 by
+1.0% to +2.0% (versus growth of +1.1% in 2019).
Supply chain destocking constrained demand in our core markets,
particularly for flat products, and the Company estimates that
World-ex China ASC declined by 0.8% in 2019. China had a better
than expected year with ASC estimated to have increased by 3.2%.
Whilst acknowledging the risks and uncertainties, ArcelorMittal
believes that there are signs that the real demand slowdown is
beginning to stabilise, and the supportive inventory environment
means that we are more optimistic on the apparent demand outlook
for 2020. By region:
- In the US, ASC is expected to grow within a range of +0.0% to
+1% in 2020 (versus an estimated -1.7% contraction in 2019), with
stronger ASC in flat products offsetting an anticipated decline in
ASC for long products.
- In Europe, ASC is expected to grow within a range of +1.0% to
+2.0% in 2020 (versus an estimated -4.3% contraction in 2019);
although automotive is expected to remain weak, the end of
destocking is expected to support improved ASC for flat products,
similarly the end of destocking should offset the impact of the
slowdown in construction activity on long products ASC.
- In Brazil, ASC is expected to rebound in 2020 with growth
expected in the range of +4.0% to +5.0% (versus estimated -2.6%
contraction in 2019) following the pronounced destocking of flat
products in 2019 and expected growth in construction activity.
- In the CIS, ASC growth in 2020 is expected to slow but remain
positive within a range of +0.0% to +1.0% (versus +4.0% estimated
growth in 2019).
- As a result, overall World ex-China ASC in 2020 is expected to
grow within the range of +2.0% to +2.5% (versus estimated -0.8%
contraction in 2019).
- In China, overall demand is expected to grow in 2020 within a
range of +0.0% to +1.0% (versus estimated growth of +3.2% in 2019)
driven by robust real estate activity and reflect our current view
on Coronavirus.
The China and global ASC forecast reflect the Company’s base
case view of the impact of Coronavirus. Absent a degradation of the
situation and/or a further extension of the holiday period, we
believe the effect of the Coronavirus will likely have a short-term
negative demand impact in China and to a lesser degree elsewhere.
Our current view is that the vast majority of the impact on 1Q 2020
demand is expected to be recovered throughout the remainder of the
year. Our perspective on the fundamentals of the Chinese steel
market remain unchanged.
The Company expects certain cash needs of the business
(including capex, interest, cash taxes, pensions and certain other
cash costs but excluding working capital movements) to total $4.5
billion in 2020 versus $5.0 billion in 2019. The Company maintains
the ability to adapt its capex plans to the operating environment
and now expects FY 2020 to be $3.2 billion (down from $3.6 billion
in 2019). Interest expense in 2020 is expected to be $0.5 billion
(versus $0.6 billion in 2019) while cash taxes, pensions and other
cash costs are expected to be stable at $0.8 billion (versus
2019).
The Group released $2.2 billion in working capital in 2019
(versus working capital investment of $4.4 billion in 2018). Whilst
we do not at this stage want to give a firm target or specific
guidance for working capital needs in 2020 (due to the fact that it
is so dependent on operating conditions towards the end of the
year), should market conditions remain at current levels then there
is the potential to reduce working capital by a further $1
billion.
As previously announced in the 2Q 2019 results, and in line with
our ongoing efforts to optimize our asset portfolio, we have
identified opportunities to unlock $2 billion of value from the
portfolio over the next 2 years. The Company has made good progress
to date and has achieved ~$0.6 billion (including Gerdau stake sale
($0.1 billion) and the sale of a 50% stake in Global Chartering Ltd
which is expected to reduce net debt in total by $0.5 billion ($0.4
billion in 4Q 2019 and $0.1 billion early 2020). We remain engaged
in active discussions with interested parties on several additional
opportunities.
Given the ongoing focus on delivering the $1 billion of
identified cost improvement plans in order to fully achieve the
Action2020 targets, the potential for a circa $1 billion working
capital release assuming market conditions remain at current
levels, together with further progress on portfolio optimisation
efforts, the Company is optimistic that it can achieve its $7.0
billion net debt objectives by year end 2020 which would provide
strong foundations for improved shareholder returns going
forward.
ArcelorMittal intends to progressively increase the base
dividend paid to its shareholders, and, given the resilient cash
flow and progress towards its net debt target, the Board proposes a
base dividend of $0.30 per share for 2020 (in respect of 2019)
which will be proposed to the shareholders at the Annual General
Meeting in May 2020.
ArcelorMittal Condensed Consolidated Statement of
Financial Position1
In millions of U.S. dollars |
Dec 31,2019 |
Sept 30,2019 |
Dec 31,2018 |
ASSETS |
|
|
|
Cash and
cash equivalents |
4,995 |
|
3,647 |
|
2,354 |
|
Trade
accounts receivable and other |
3,569 |
|
4,340 |
|
4,432 |
|
Inventories |
17,296 |
|
18,938 |
|
20,744 |
|
Prepaid
expenses and other current assets |
2,756 |
|
2,830 |
|
2,834 |
|
Assets
held for sale9 |
— |
|
115 |
|
2,111 |
|
Total Current Assets |
28,616 |
|
29,870 |
|
32,475 |
|
|
|
|
|
Goodwill
and intangible assets |
5,432 |
|
5,408 |
|
5,728 |
|
Property,
plant and equipment |
36,231 |
|
35,903 |
|
35,638 |
|
Investments in associates and joint ventures |
6,529 |
|
4,826 |
|
4,906 |
|
Deferred
tax assets |
8,680 |
|
8,449 |
|
8,287 |
|
Other
assets |
2,420 |
|
3,691 |
|
4,215 |
|
Total Assets |
87,908 |
|
88,147 |
|
91,249 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Short-term debt and current portion of long-term debt |
2,869 |
|
3,337 |
|
3,167 |
|
Trade
accounts payable and other |
12,614 |
|
12,440 |
|
13,981 |
|
Accrued
expenses and other current liabilities |
5,804 |
|
5,288 |
|
5,486 |
|
Liabilities held for sale9 |
— |
|
29 |
|
821 |
|
Total Current Liabilities |
21,287 |
|
21,094 |
|
23,455 |
|
|
|
|
|
Long-term
debt, net of current portion |
11,471 |
|
10,968 |
|
9,316 |
|
Deferred
tax liabilities |
2,331 |
|
2,160 |
|
2,374 |
|
Other
long-term liabilities |
12,336 |
|
11,696 |
|
11,996 |
|
Total Liabilities |
47,425 |
|
45,918 |
|
47,141 |
|
|
|
|
|
Equity
attributable to the equity holders of the parent |
38,521 |
|
40,242 |
|
42,086 |
|
Non-controlling interests |
1,962 |
|
1,987 |
|
2,022 |
|
Total Equity |
40,483 |
|
42,229 |
|
44,108 |
|
Total Liabilities and Shareholders’ Equity |
87,908 |
|
88,147 |
|
91,249 |
|
ArcelorMittal Condensed Consolidated Statement of
Operations1
|
Three months ended |
Twelve months ended |
In millions of U.S. dollars unless otherwise
shown |
Dec 31,2019 |
Sept 30,2019 |
Dec 31,2018 |
Dec 31,2019 |
Dec 31,2018 |
Sales |
15,514 |
|
16,634 |
|
18,327 |
|
70,615 |
|
76,033 |
|
Depreciation
(B) |
(802 |
) |
(766 |
) |
(723 |
) |
(3,067 |
) |
(2,799 |
) |
Impairment
charges net of purchase gains (B) |
(830 |
) |
— |
|
(215 |
) |
(1,927 |
) |
(810 |
) |
Exceptional
items3 (B) |
(828 |
) |
— |
|
29 |
|
(828 |
) |
(117 |
) |
Operating (loss) / income (A) |
(1,535 |
) |
297 |
|
1,042 |
|
(627 |
) |
6,539 |
|
Operating
margin % |
(9.9 |
)% |
1.8 |
% |
5.7 |
% |
(0.9 |
)% |
8.6 |
% |
|
|
|
|
|
|
Income from
associates, joint ventures and other investments |
20 |
|
25 |
|
227 |
|
347 |
|
652 |
|
Net interest
expense |
(140 |
) |
(152 |
) |
(140 |
) |
(607 |
) |
(615 |
) |
Foreign
exchange and other net financing loss |
(117 |
) |
(524 |
) |
(556 |
) |
(1,045 |
) |
(1,595 |
) |
(Loss) / income before taxes and non-controlling
interests |
(1,772 |
) |
(354 |
) |
573 |
|
(1,932 |
) |
4,981 |
|
Current tax expense |
(260 |
) |
(121 |
) |
(198 |
) |
(786 |
) |
(928 |
) |
Deferred tax (expense) / benefit |
135 |
|
(64 |
) |
909 |
|
327 |
|
1,277 |
|
Income tax
(expense) / benefit |
(125 |
) |
(185 |
) |
711 |
|
(459 |
) |
349 |
|
(Loss) / income including non-controlling
interests |
(1,897 |
) |
(539 |
) |
1,284 |
|
(2,391 |
) |
5,330 |
|
Non-controlling interests loss / (income) |
15 |
|
— |
|
(91 |
) |
(63 |
) |
(181 |
) |
Net
(loss) / income attributable to equity holders of the
parent |
(1,882 |
) |
(539 |
) |
1,193 |
|
(2,454 |
) |
5,149 |
|
|
|
|
|
|
|
Basic (loss) / earnings per common share ($) |
(1.86 |
) |
(0.53 |
) |
1.18 |
|
(2.42 |
) |
5.07 |
|
Diluted (loss) / earnings per common share ($) |
(1.86 |
) |
(0.53 |
) |
1.17 |
|
(2.42 |
) |
5.04 |
|
|
|
|
|
|
|
Weighted average common shares outstanding (in millions) |
1,012 |
|
1,012 |
|
1,014 |
|
1,013 |
|
1,015 |
|
Diluted weighted average common shares outstanding (in
millions) |
1,012 |
|
1,012 |
|
1,020 |
|
1,013 |
|
1,021 |
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
EBITDA (C =
A-B) |
925 |
|
1,063 |
|
1,951 |
|
5,195 |
|
10,265 |
|
EBITDA
Margin % |
6.0 |
% |
6.4 |
% |
10.6 |
% |
7.4 |
% |
13.5 |
% |
|
|
|
|
|
|
Own iron ore
production (Mt) |
14.8 |
|
13.6 |
|
14.9 |
|
57.1 |
|
58.5 |
|
Crude steel
production (Mt) |
19.8 |
|
22.2 |
|
22.8 |
|
89.8 |
|
92.5 |
|
Steel shipments (Mt) |
19.7 |
|
20.2 |
|
20.2 |
|
84.5 |
|
83.9 |
|
ArcelorMittal Condensed Consolidated Statement of Cash
flows1
|
Three months ended |
Twelve months ended |
In millions of U.S. dollars |
Dec 31,2019 |
Sept 30,2019 |
Dec 31,2018 |
Dec 31,2019 |
Dec 31,2018 |
Operating
activities: |
|
|
|
|
|
(Loss)/income attributable to equity holders of the parent |
(1,882 |
) |
(539 |
) |
1,193 |
|
(2,454 |
) |
5,149 |
|
Adjustments to reconcile net income to net cash provided by
operations: |
|
|
|
|
|
Non-controlling interests loss / (income) |
(15 |
) |
— |
|
91 |
|
63 |
|
181 |
|
Depreciation and impairment charges net of purchase gains |
1,632 |
|
766 |
|
938 |
|
4,994 |
|
3,609 |
|
Exceptional items3 |
828 |
|
— |
|
(29 |
) |
828 |
|
117 |
|
Income
from associates, joint ventures and other investments |
(20 |
) |
(25 |
) |
(227 |
) |
(347 |
) |
(652 |
) |
Deferred
tax expense / (benefit) |
(135 |
) |
64 |
|
(909 |
) |
(327 |
) |
(1,277 |
) |
Change in
working capital |
2,600 |
|
(203 |
) |
430 |
|
2,197 |
|
(4,384 |
) |
Other
operating activities (net) |
(76 |
) |
265 |
|
683 |
|
1,063 |
|
1,453 |
|
Net cash provided by operating activities (A) |
2,932 |
|
328 |
|
2,170 |
|
6,017 |
|
4,196 |
|
Investing activities: |
|
|
|
|
|
Purchase
of property, plant and equipment and intangibles (B) |
(815 |
) |
(941 |
) |
(1,156 |
) |
(3,572 |
) |
(3,305 |
) |
Other
investing activities (net) |
(936 |
) |
125 |
|
(770 |
) |
(252 |
) |
(454 |
) |
Net cash used in investing activities |
(1,751 |
) |
(816 |
) |
(1,926 |
) |
(3,824 |
) |
(3,759 |
) |
Financing activities: |
|
|
|
|
|
Net
proceeds / (payments) relating to payable to banks and long-term
debt |
126 |
|
804 |
|
(406 |
) |
1,262 |
|
(212 |
) |
Dividends
paid |
(21 |
) |
(61 |
) |
(32 |
) |
(332 |
) |
(220 |
) |
Share
buyback |
— |
|
— |
|
— |
|
(90 |
) |
(226 |
) |
Lease
payments and other financing activities (net) |
(86 |
) |
(84 |
) |
27 |
|
(326 |
) |
(31 |
) |
Net cash provided by / (used in) financing
activities |
19 |
|
659 |
|
(411 |
) |
514 |
|
(689 |
) |
Net
increase / (decrease) in cash and cash equivalents |
1,200 |
|
171 |
|
(167 |
) |
2,707 |
|
(252 |
) |
Cash and
cash equivalents transferred (to)/from assets held for sale |
— |
|
— |
|
13 |
|
10 |
|
(10 |
) |
Effect of
exchange rate changes on cash |
131 |
|
(155 |
) |
3 |
|
(22 |
) |
(140 |
) |
Change in cash and cash equivalents |
1,331 |
|
16 |
|
(151 |
) |
2,695 |
|
(402 |
) |
|
|
|
|
|
|
Free cash flow (C=A+B) |
2,117 |
|
(613 |
) |
1,014 |
|
2,445 |
|
891 |
|
Appendix 1: Product shipments by
region
(000'kt) |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Flat |
4,325 |
|
4,454 |
|
4,406 |
|
18,261 |
|
19,113 |
|
Long |
819 |
|
847 |
|
890 |
|
3,260 |
|
3,554 |
|
NAFTA |
5,029 |
|
5,135 |
|
5,173 |
|
20,921 |
|
22,047 |
|
Flat |
1,553 |
|
1,513 |
|
1,832 |
|
6,328 |
|
6,421 |
|
Long |
1,176 |
|
1,312 |
|
1,232 |
|
4,918 |
|
5,087 |
|
Brazil |
2,717 |
|
2,810 |
|
3,053 |
|
11,192 |
|
11,464 |
|
Flat |
6,827 |
|
7,225 |
|
7,398 |
|
31,523 |
|
29,510 |
|
Long |
2,323 |
|
2,333 |
|
2,666 |
|
10,360 |
|
11,367 |
|
Europe |
9,290 |
|
9,698 |
|
10,098 |
|
42,352 |
|
41,020 |
|
CIS |
2,087 |
|
1,657 |
|
1,645 |
|
7,425 |
|
7,251 |
|
Africa |
890 |
|
1,060 |
|
1,023 |
|
4,112 |
|
4,491 |
|
ACIS |
2,985 |
|
2,718 |
|
2,669 |
|
11,547 |
|
11,741 |
|
Note: “Others and eliminations” are not presented in the
table1
Appendix 2a: Capital
expenditures
(USDm) |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
NAFTA |
191 |
|
210 |
|
244 |
|
727 |
|
669 |
|
Brazil |
96 |
|
68 |
|
102 |
|
328 |
|
244 |
|
Europe |
273 |
|
390 |
|
499 |
|
1,353 |
|
1,336 |
|
ACIS |
108 |
|
153 |
|
159 |
|
513 |
|
534 |
|
Mining |
133 |
|
107 |
|
143 |
|
480 |
|
485 |
|
Total |
815 |
|
941 |
|
1,156 |
|
3,572 |
|
3,305 |
|
Note: “Others” are not presented in the table1
Appendix 2b: Capital expenditure
projects
The following tables summarize the Company’s principal growth
and optimization projects involving significant capex.
Completed projects in most recent
quarters
Segment |
Site
/ unit |
Project |
Capacity / details |
Actual completion |
Europe |
Sosnowiec (Poland) |
Modernization of Wire Rod Mill |
Upgrade rolling technology improving the mix of HAV products and
increase volume by 90kt |
4Q 2019 |
ACIS |
ArcelorMittal Kryvyi Rih (Ukraine) |
New LF&CC 3 |
Facilities upgrade to switch from ingot to continuous caster route.
Additional billets of up to 145kt over ingot route through yield
increase |
2Q 2019 |
Ongoing projects
Segment |
Site / unit |
Project |
Capacity / details |
Forecasted completion |
ACIS |
ArcelorMittal Kryvyi Rih (Ukraine) |
New LF&CC 2 |
Facilities upgrade to switch from ingot to continuous caster route.
Additional billets of up to 145kt over ingot route through yield
increase |
2020 |
NAFTA |
Mexico |
New Hot strip
mill |
Production
capacity of 2.5Mt/year |
2021(a) |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Hot Strip Mill Modernization |
Replace existing three end of life coilers with two states of the
art coilers and new runout tables |
2021(b) |
NAFTA |
Burns Harbor (US) |
New Walking Beam Furnaces |
Two new walking beam reheat furnaces bringing benefits on
productivity, quality and operational cost |
2021 |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped / cold rolled coil capacity and construction of
a new 700kt continuous annealing line (CAL) and continuous
galvanising line (CGL) combiline |
2022(c) |
Brazil |
Juiz de Fora |
Melt shop expansion |
Increase in meltshop capacity by 0.2Mt/year |
On hold(d) |
Brazil |
Monlevade |
Sinter plant, blast furnace and melt shop |
Increase in liquid steel capacity by 1.2Mt/year;Sinter feed
capacity of 2.3Mt/year |
On hold(d) |
Mining |
Liberia |
Phase 2 expansion project |
Increase production capacity to 15Mt/year |
Under review(e) |
a) On September 28, 2017, ArcelorMittal announced a major $1.0
billion, investment programme at its Mexican operations, which is
focused on building ArcelorMittal Mexico’s downstream capabilities,
sustaining the competitiveness of its mining operations and
modernizing its existing asset base. The programme is designed to
enable ArcelorMittal Mexico to meet the anticipated increased
demand requirements from domestic customers, realize in full
ArcelorMittal Mexico’s production capacity of 5.3 million tonnes
and significantly enhance the proportion of higher added-value
products in its product mix, in-line with the Company’s Action2020
plan. The main investment will be the construction of a new hot
strip mill. Upon completion, the project 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. The hot
strip mill project commenced late 4Q 2017 and is expected to be
completed in 2021.
b) Investment in ArcelorMittal Dofasco (Canada) to modernize the
hot strip mill. The project is to install two new state of the art
coilers and runout tables to replace three end of life coilers. The
strip cooling system will be upgraded and include innovative power
cooling technology to improve product capability. The project is
expected to be completed in 2021.
c) In August 2018, ArcelorMittal announced the resumption of the
Vega Do Sul expansion to provide an additional 700kt of cold-rolled
annealed and galvanized capacity to serve the growing domestic
market. The three-year ~$0.3 billion investment programme to
increase rolling capacity with construction of a new continuous
annealing line and CGL combiline (and the option to add a ca. 100kt
organic coating line to serve construction and appliance segments),
and upon completion, will strengthen ArcelorMittal’s position in
the fast growing automotive and industry markets through Advanced
High Strength Steel products. The investments will look to
facilitate a wide range of products and applications whilst further
optimizing current ArcelorMittal Vega facilities to maximize site
capacity and its competitiveness, considering comprehensive digital
and automation technology. Project completion is expected at the
end of 2022.
d) Although the Monlevade wire rod expansion project and Juiz de
Fora rebar expansion were completed in 2015, both the melt
shop expansion (in Juiz de Fora) and the sinter plant, blast
furnace and meltshop (in Monlevade) projects are currently on
hold and are expected to be completed upon Brazil domestic market
recovery.
e) ArcelorMittal had previously announced a Phase 2 project that
envisaged the construction of 15 million tonnes of concentrate
sinter fines capacity and associated infrastructure. The Phase 2
project was initially delayed due to the declaration of force
majeure by contractors in August 2014 due to the Ebola virus
outbreak in West Africa, and then reassessed following rapid iron
ore price declines over the ensuing period. ArcelorMittal Liberia
has completed the detailed feasibility study to identify optimal
concentration solution for utilizing resources at Tokadeh and other
deposits and is working on the final investment submission.
Appendix 3: Debt repayment schedule as
of December 31, 2019
(USD billion) |
2020 |
2021 |
2022 |
2023 |
2024 |
≥2024 |
Total |
Bonds |
0.5 |
0.3 |
1.5 |
1.4 |
1.9 |
3.7 |
9.3 |
Commercial paper |
1.2 |
|
|
|
|
|
1.2 |
Other loans |
1.1 |
0.7 |
0.4 |
0.8 |
0.2 |
0.6 |
3.8 |
Total gross debt |
2.8 |
1.0 |
1.9 |
2.2 |
2.1 |
4.3 |
14.3 |
Appendix 4: Reconciliation of gross debt
to net debt
(USD million) |
Dec 31, 2019 |
Sept 30, 2019 |
Dec 31, 2018 |
Gross
debt (excluding that held as part of the liabilities held for
sale) |
14,340 |
|
14,305 |
|
12,483 |
|
Gross debt held as part of the liabilities held for sale |
— |
|
— |
|
77 |
|
Gross debt |
14,340 |
|
14,305 |
|
12,560 |
|
Less: |
|
|
|
Cash and cash equivalents |
(4,995 |
) |
(3,647 |
) |
(2,354 |
) |
Cash and cash equivalents held as part of the assets held for
sale |
— |
|
— |
|
(10 |
) |
Net debt (including that held as part of the assets and the
liabilities held for sale) |
9,345 |
|
10,658 |
|
10,196 |
|
|
|
|
|
Net debt / LTM EBITDA |
1.8 |
|
1.7 |
|
1.0 |
|
Appendix 5: Terms and
definitions
Unless indicated otherwise, or the context otherwise requires,
references in this earnings release report to the following terms
have the meanings set out next to them below:
Adjusted net (loss) / income: refers to
reported net (loss) / income less impairment and exceptional
items.Apparent steel consumption: calculated as
the sum of production plus imports minus exports.Average
steel selling prices: calculated as steel sales divided by
steel shipments.Cash and cash equivalents:
represents cash and cash equivalents, restricted cash and
short-term investments.Capex: represents the
purchase of property, plant and equipment and
intangibles.Crude steel production: steel in the
first solid state after melting, suitable for further processing or
for sale.EBITDA: operating results plus
depreciation, impairment expenses and exceptional
items.EBITDA/tonne: calculated as EBITDA divided
by total steel shipments.Exceptional items: income
/ (charges) relate to transactions that are significant, infrequent
or unusual and are not representative of the normal course of
business of the period.Foreign exchange and other net
financing (loss) / gain: include foreign currency exchange
impact, bank fees, interest on pensions, impairment of financial
assets, revaluation of derivative instruments and other charges
that cannot be directly linked to operating results.Free
cash flow (FCF): refers to net cash provided by operating
activities less capex.Gross debt: long-term debt,
plus short-term debt (including that held as part of the
liabilities held for sale). Long-term debt and short-term debt
include IFRS 16 “Leases” liabilities
impact.Liquidity: cash and cash equivalents plus
available credit lines excluding back-up lines for the commercial
paper program.LTIF: lost time injury frequency
rate equals lost time injuries per 1,000,000 worked hours, based on
own personnel and contractors.MT: refers to
million metric tonnesMarket-priced tonnes:
represent amounts of iron ore and coal from ArcelorMittal mines
that could be sold to third parties on the open market.
Market-priced tonnes that are not sold to third parties are
transferred from the Mining segment to the Company’s steel
producing segments and reported at the prevailing market price.
Shipments of raw materials that do not constitute market-priced
tonnes are transferred internally and reported on a cost-plus
basis.Mining segment sales: i) “External sales”:
mined product sold to third parties at market price; ii)
“Market-priced tonnes”: internal sales of mined product to
ArcelorMittal facilities and reported at prevailing market prices;
iii) “Cost-plus tonnes” - internal sales of mined product to
ArcelorMittal facilities on a cost-plus basis. The determinant of
whether internal sales are reported at market price or cost-plus is
whether the raw material could practically be sold to third parties
(i.e. there is a potential market for the product and logistics
exist to access that market).Net debt: long-term
debt, plus short-term debt less cash and cash equivalents
(including those held as part of assets and liabilities held for
sale). Long-term debt and short-term debt include IFRS 16 “Leases”
liabilities impact Net debt/LTM EBITDA: refers to
Net debt divided by last twelve months (LTM) EBITDA
calculation.Net interest expense: includes
interest expense less interest incomeOn-going
projects: refer to projects for which construction has
begun (excluding various projects that are under development), even
if such projects have been placed on hold pending improved
operating conditions.Operating results: refers to
operating income/(loss).Operating segments: NAFTA
segment includes the Flat, Long and Tubular operations of USA,
Canada and Mexico. The Brazil segment includes the Flat, Long and
Tubular operations of Brazil and its neighbouring countries
including Argentina, Costa Rica and Venezuela. The Europe segment
comprises the Flat, Long and Tubular operations of the European
business, as well as Downstream Solutions. The ACIS segment
includes the Flat, Long and Tubular operations of Kazakhstan,
Ukraine and South Africa. Mining segment includes iron ore and coal
operations.Own iron ore production: includes total
of all finished production of fines, concentrate, pellets and lumps
and includes share of production.PMI: refers to
purchasing managers index (based on ArcelorMittal
estimates)Seaborne iron ore reference prices:
refers to iron ore prices for 62% Fe CFR
ChinaShipments: information at segment and group
level eliminates intra-segment shipments (which are primarily
between Flat/Long plants and Tubular plants) and inter-segment
shipments respectively. Shipments of Downstream Solutions are
excluded.Steel-only EBITDA: calculated as EBITDA
total less Mining segment EBITDA.Steel-only
EBITDA/tonne: calculated as steel-only EBITDA divided by
total steel shipments.Working capital change (working
capital investment / release): Movement of change in
working capital - trade accounts receivable plus inventories less
trade and other accounts payable.YoY: refers to
year-on-year.
Appendix 6: Adjusted net (loss) /
income
(USDm) |
4Q 19 |
3Q 19 |
4Q 18 |
12M 19 |
12M 18 |
Net (loss) / income |
(1,882 |
) |
(539 |
) |
1,193 |
|
(2,454 |
) |
5,149 |
|
Impairment |
(830 |
) |
— |
|
(215 |
) |
(1,927 |
) |
(810 |
) |
Exceptional items |
(828 |
) |
— |
|
29 |
|
(828 |
) |
(117 |
) |
Adjusted net (loss) / income |
(224 |
) |
(539 |
) |
1,379 |
|
301 |
|
6,076 |
|
Footnotes
- The financial information in this press release has been
prepared consistently with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”) and as adopted by the European Union. The
interim financial information included in this announcement has
also been also prepared in accordance with IFRS applicable to
interim periods, however this announcement does not contain
sufficient information to constitute an interim financial report as
defined in International Accounting Standard 34, “Interim Financial
Reporting”. The numbers in this press release have not been
audited. The financial information and certain other information
presented in a number of tables in this press release have been
rounded to the nearest whole number or the nearest decimal.
Therefore, the sum of the numbers in a column may not conform
exactly to the total figure given for that column. In addition,
certain percentages presented in the tables in this press release
reflect calculations based upon the underlying information prior to
rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. This press release also includes
certain non-GAAP financial/alternative performance measures.
ArcelorMittal presents EBITDA, and EBITDA/tonne, which are non-GAAP
financial/alternative performance measures and calculated as shown
in the Condensed Consolidated Statement of Operations, as
additional measures to enhance the understanding of operating
performance. ArcelorMittal believes such indicators are relevant to
describe trends relating to cash generating activity and provides
management and investors with additional information for comparison
of the Company’s operating results to the operating results of
other companies. Segment information presented in this press
release are prior to inter-segment eliminations and certain
adjustments made to operating result of the segments to reflect
corporate costs, income from non-steel operations (e.g., logistics
and shipping services) and the elimination of stock margins between
the segments. ArcelorMittal also presents net debt and change in
working capital as additional measures to enhance the understanding
of its financial position, changes to its capital structure and its
credit assessment. ArcelorMittal also presents Adjusted net (loss)
/ income as it believes it is a useful measure for the underlying
business performance excluding impairment and exceptional items.
ArcelorMittal also presents free cash flow (FCF), which is a
non-GAAP financial/alternative performance measure calculated as
shown in the Condensed Consolidated Statement of Cash Flows,
because it believes it is a useful supplemental measure for
evaluating the strength of its cash generating capacity. The
Company also presents the ratio of net debt to EBITDA for the last
twelve-month period, which investors may find useful in
understanding the Company's ability to service its debt. Non-GAAP
financial/alternative performance measures should be read in
conjunction with, and not as an alternative for, ArcelorMittal's
financial information prepared in accordance with IFRS. Such
non-GAAP/alternative performance measures may not be comparable to
similarly titled measures applied by other companies.
- Annual FY 2019 LTIF rate of 0.75x and LTIF rate of 0.69x in FY
2018 exclude ArcelorMittal Italia. Health and safety performance
inclusive of ArcelorMittal Italia and related facilities
(“ArcelorMittal Italia”) (consolidated as from November 1, 2018)
was 1.25x for 4Q 2019 and 1.36x for 3Q 2019. Health and safety
figures excluding ArcelorMittal Italia were 0.84x for 4Q 2019 as
compared to 0.82x for 3Q 2019. From 1Q 2019 onwards, the
methodology and metrics used to calculate health and safety figures
for ArcelorMittal Italia have been harmonized with those of
ArcelorMittal.
- Impairment charges for 12M 2019 were $1.9 billion related to
impairment of the fixed assets of ArcelorMittal USA ($1.3 billion)
following impairment assessments performed in the second and fourth
quarters of 2019, primarily resulting from decreases in the
near-term average selling prices assumptions, remedy asset sales
for the ArcelorMittal Italia acquisition ($0.5 billion) and $0.1
billion impairment costs in South Africa. Impairment charges net of
purchase gains for 12M 2018 were $810 million and included $0.7
billion primarily related to Ilva and the remedy asset sales for
the Ilva acquisition and the agreed remedy package required for the
approval of the Votorantim acquisition5. Impairment charges for 4Q
2019 were $830 million and related to impairment of the fixed
assets of ArcelorMittal USA ($0.7 billion) following impairment
assessments performed during the fourth quarter of 2019, primarily
resulting from a further decrease in the near-term average selling
price assumption and $0.1 billion in South Africa. Impairment
charges for 3Q 2019 were nil. Impairment charges net of purchase
gains for 4Q 2018 of $0.2 billion include $0.4 billion impairment
expenses for ArcelorMittal Italia remedies and $0.2 billion
purchase gains on the ArcelorMittal Italia acquisition. Exceptional
items for FY 2019 were charges of $828 million as compared to
charges of $117 million for FY 2018. Exceptional items for FY 2019
primarily include inventory related charges in NAFTA and Europe
following a period of exceptionally weak steel pricing. Exceptional
items for FY 2018 primarily consisted of $113 million in charges
related to a blast furnace dismantling in Florange (France), $60
million in charges related to the new collective labour agreement
in the US (including a signing bonus), a $146 million provision
taken in 1Q 2018 in respect of a litigation case that was paid in
3Q 20186 offset in part by PIS/COFINS tax credits13 related to
prior periods recognized in Brazil of $202 million. Exceptional
items for 4Q 2019 of $828 million primarily include inventory
related charges in NAFTA and Europe following a period of
exceptionally weak steel pricing. Exceptional items for 4Q 2018
were $29 million primarily related to income of $202 million for
PIS/COFINS tax credits related to prior periods recognized in
Brazil, offset in part by $113 million in charges related to a
blast furnace dismantling in Florange (France), and $60 million
related to the new collective labour agreement in the US (including
a signing bonus).
- ArcelorMittal has applied IFRS 16 "Leases" as of January 1,
2019. Due to the transition option selected, the prior-period data
has not been restated. IFRS 16 "Leases" provides a single lessee
accounting model requiring lessees to recognize right-of-use assets
and lease liabilities for all non-cancellable leases except for
short-term leases and leases of low value assets. The right-of-use
assets are recognized as property, plant and equipment and measured
on January 1, 2019 at an amount equal to the lease liability
recognized as debt (short term $0.3 billion and long term $0.9
billion impact as of January 1, 2019) and measured on the basis of
the net present value of remaining lease payments. On January 1,
2019 net debt increased accordingly by $1.2 billion following the
adoption of IFRS 16 "Leases" standard. The recognition of the lease
expense in EBITDA for leases previously accounted for as operating
leases is replaced by a depreciation expense related to the
right-of-use assets and an interest expense reflecting the
amortization of the lease liability. In addition, cash payments
relating to the repayment of the principal amount of the lease
liability are presented in the consolidated statements of cash
flows as outflows from financing activities while lease payments
for operating leases were previously recognized as outflows from
operating activities.
- On April 20, 2018, following the approval by the Brazilian
antitrust authority - CADE of the combination of ArcelorMittal
Brasil’s and Votorantim’s long steel businesses in Brazil subject
to the fulfilment of divestment commitments, ArcelorMittal Brasil
agreed to dispose of its two production sites of Cariacica and
Itaúna, as well as some wire drawing equipment of ArcelorMittal
Brasil and ArcelorMittal Sul-Fluminense. The sale was completed
early May 2018 to the Mexican Group Simec S.A.B. de CV. A second
package of some wire drawing equipment of ArcelorMittal Brasil and
ArcelorMittal Sul-Fluminense was sold to the company Aço Verde do
Brasil as part of CADE's conditional approval.
- In July 2018, as a result of a settlement process, the Company
and the German Federal Cartel Office agreed to a €118 million ($146
million) fine to be paid by ArcelorMittal Commercial Long
Deutschland GmbH ending an investigation that began in the first
half of 2016 into antitrust violations concerning the ArcelorMittal
entities that were under investigation. The payment was made in
August 2018.
- ArcelorMittal Mines Canada, otherwise known as ArcelorMittal
Mines and Infrastructure Canada.
- On December 19, 2018, ArcelorMittal signed a $5,500,000,000
Revolving Credit Facility, with a five-year maturity plus two
one-year extension options. During the fourth quarter of
2019, ArcelorMittal executed the option to extend the facility to
December 19, 2024. The facility may be further extended for an
additional year in December 2020. As of December 31, 2019, the $5.5
billion revolving credit facility was fully available.
- Steelton is no longer held for sale as of December 31, 2019.
Assets and liabilities held for sale, as of September 30, 2019 are
related to the carrying value of the USA long product facilities at
Steelton (“Steelton”). Assets and liabilities held for sale, as of
December 31, 2018, include the ArcelorMittal Italia remedy package
assets (as previously disclosed in the 1Q 2018 earnings release)
and the USA long product facilities at Steelton.
- Relates to the rollover of the Indian rupee hedge at market
price which protects the dollar funds needed for the Essar Steel
India transaction as per the resolution plan approved by the
Committee of Creditors and the National Company Law Tribunal in
Ahmedabad. The hedge was unwound on the closing of the acquisition
in 4Q 2019. On October 17, 2018, the Company announced that it had
approved a payment of 7,469 crore rupees (c. $1 billion,
subsequently paid) to the financial creditors of Uttam Galva and
KSS Petron to clear overdue debts in order that the offer it
submitted for ESIL on April 2, 2018 would be eligible and
considered by ESIL’s Committee of Creditors.
- Weak global steel demand has contributed to further price and
margin compression during 4Q 2019. Correspondingly the demand for
higher priced iron ore direct charge materials (i.e., pellets and
higher-grade ore) decreased and related quality premia declined in
line with the market conditions.
- On December 23, 2019, ArcelorMittal, announced it had signed a
share purchase agreement with DryLog Ltd (DryLog) for the sale of a
50% stake in Global Chartering Limited (GCL), its wholly owned
shipping business, and will subsequently form a 50:50 shipping
joint venture with DryLog. The transaction closed on December 31,
2019. The stake sale and JV formation is expected to reduce
ArcelorMittal’s net debt by $530 million, with $400 million on
completion and a further $130 million due in early 2020. The
transaction is part of ArcelorMittal’s commitment to unlock up to
$2 billion of value from its asset portfolio by mid-year 2021. The
JV is accounted for using the equity method as from the acquisition
date.
- The PIS (Program of Social Integration) and COFINS
(Contribution for the Financing of Social Security) are Brazilian
federal taxes based on the turnover of companies. The PIS is
intended to finance the unemployment insurance system, and COFINS
to fund Social Security. For over two decades, ArcelorMittal Brasil
has been challenging the basis of the calculation of the COFINS and
PIS, specifically, whether Brazilian ICMS (tax on sales and
services) may be deducted from the base amount on which PIS
and COFINS taxes are calculated. Following the Supreme Court’s
decision in the leading case and certain lower court decisions
applying it, the Court issued final and unappealable judgments in
certain of the cases filed by ArcelorMittal Brasil, thereby
granting ArcelorMittal Brasil the right to exclude ICMS from the
PIS/COFINS tax base and the right to recognize the relevant credits
from the past. Accordingly, ArcelorMittal Brasil recognized $202
million additional PIS/COFINS credits in 4Q 2018 for the period of
2005 to 2013.
Fourth quarter 2019 earnings analyst
conference call
ArcelorMittal management (including CEO and CFO)
will host a conference call for members of the investment community
to present and comment on the three-month and twelve-month periods
ended December 31, 2019 on: Thursday February 6, 2020 at
9.30am US Eastern time; 14.30pm London time and 15.30pm
CET.
The dial in numbers are: |
|
|
Location |
Toll free
dial in numbers |
Local dial in
numbers |
Participant |
UK
local: |
0808 238
0676 |
+44 (0)203 057
6900 |
7995055# |
US local: |
+1 866 220 1433 |
+1 347 903 0960 |
7995055# |
France: |
0805 101 469 |
+33 1 7070 6079 |
7995055# |
Germany: |
0800 588 9185 |
+49 69 2222 2624 |
7995055# |
Spain: |
900 828 532 |
+34 914 144 464 |
7995055# |
Luxembourg: |
800 23 023 |
+352 2786 0311 |
7995055# |
To listen to the webcast recording, please visit the results
section on our website once the event has finished.
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 2019, ArcelorMittal
had revenues of $70.6 billion and crude steel production of 89.8
million metric tonnes, while own iron ore production reached 57.1
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
ArcelorMittal investor relations: Europe: +44 207 543 1128;
Americas: +1 312 899 3985; Retail: +44 207 543 1156; SRI: +44 207
543 1156 and Bonds/credit: +33 1 71 92 10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 0207 629 7988. Contact: Paul Weigh +44
203 214 2419
- ArcelorMittal reports fourth quarter 2019 and full year 2019
results
ArcelorMittal (EU:MT)
Historical Stock Chart
From Aug 2024 to Sep 2024
ArcelorMittal (EU:MT)
Historical Stock Chart
From Sep 2023 to Sep 2024