basic materials & natural resources...
TRANSCRIPT
London, March 20th, 2018
Daniel Fairclough, Member of the Mgt Committee & Head of Investor Relations
Hetal Patel, GM Investor Relations
Valérie Mella, Investor Relations Specialist
Basic Materials & Natural Resources conference
Disclaimer
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.
1
2
Capital allocation policy to maximise value for shareholders
Positioned to deliver value
• Material improvement in results, reflecting strengthening market
backdrop
• Transformed balance sheet, with continued deleveraging bias
• Unique global portfolio of competitive well-invested assets
• Industry leader in product and process innovation
• Action 2020 continues to structurally improve profitability
• Investing with focus and discipline
• Reinstating base dividend with intention to increase capital returns
0.780.820.810.850.85
2008
1.8
20162009 2010 2011
1.4
1.9
2012
1.0
2014 20152013 2017
2.5
2007
3.1
3
Health & Safety Lost time injury frequency (LTIF) rate*
Mining & steel, employees and contractors
* LTIF = Lost time injury frequency defined as Lost Time Injuries per 1.000.000 worked hours; based on own personnel and contractors
Safety is our priority
Our goal is to be the safest Metals & Mining company
4
Significantly improved results
Significantly improved results
• EBITDA +34.4% YoY to $8.4bn
• Steel shipments +1.6% YoY to 85.2Mt
• Marketable iron ore shipments +6.1% YoY
• Net income +156.7% YoY to $4.6bn
• Working capital investment of $1.9bn reflecting stronger markets
• Free cash flow* $1.7bn ($2.1bn excluding bond premia**)
• Net debt down to $10.1bn (despite $0.7bn FX headwind)
* Free cash flow refers to cash flow from operations less capex; ** includes one-time premium paid on early repayment of debt totalling $389m
5
EBITDA impacted by improved ASP, steel volumes and Mining profitability
2017 operating performance highlights
Europe: EBITDA +42.3% to $3.6bn
Shipments +1.7% to 40.9Mt
EBITDA per tonne +39.8% to $87/t
NAFTA: EBITDA -0.9% to $1.7bn
Shipments +2.6% to 21.8Mt
EBITDA per tonne -3.4% to $78/t
BRAZIL: EBITDA +13.5% to $1.0bn
Shipments +0.8% to 10.8Mt
EBITDA per tonne +12.6% to $91/t
ACIS: EBITDA +51.4% to $1.0bn
Shipments -1.3% to 13.1Mt
EBITDA per tonne +53.4% to $78/t
Mining: EBITDA +84.7% to $1.4bn
Market-priced iron ore shipments +6.1% to 35.7Mt
FCF breakeven level remains at $40/t CFR China 62% Fe
7.25.2 6.3
8.4
FY14
34.4%
FY17FY16FY15
EBITDA 2014-2017 ($ billion)
2016 to 2017 EBITDA by segment ($ billion)
0.6
0.11.1
0.3
Mining
0.0
FY16
6.3
FY17
8.4
BrazilEuropeACISNAFTA
6
Action 2020 driving structural EBITDA improvement
Delivering on Action 2020
• Action 2020 impacted 2017
EBITDA by $0.6bn
• Volume improvements of $0.3bn
and cost/mix $0.3bn
3.0
1.5
0.9
2017 2020
Target
2016
Action 2020 cumulative EBITDA progress
(2016-2020 Target) ($billion)
• Europe: Transformation progressing well
savings in procurement/ productivity on track.
• More integrated centrally co-ordinated
approach, further reducing costs
• Enhanced use of digitalisation in the
manufacturing process, supply chain and
commercialisation
• NAFTA: Asset optimisation complete; savings from
No 2 steel shop idling; headcount rationalisation;
Calvert utilisation increasing to 88%
• Brazil: HAV mix improvement
• ACIS: Kazakhstan record steel production; Ukraine
savings from new coke oven battery No.6
• Mining: Remained focussed on service, quality and
asset reliability. FCF breakeven level of $40/t China
CFR 62% Fe
Continuous innovation
3rd Generation AHSS products
CR980HF & CR1180HF
• HF / Fortiform® provide additional weight
reduction due to enhanced mechanical properties
compared to conventional AHSS
New press hardenable steels (PHS) Usibor®2000 &
Ductibor®1000
• Bring immediate possibilities of 10% weight
saving on average compared to conventional
coated PHS produced by ArcelorMittal
Jet Vapor Deposition (JVD) line : Jetgal ®
• JVD line is a breakthrough technology to
produce Jetgal®, a new coating for AHSS steels
for automotive industry
Electrical steels
iCARe®, 2nd Generation
• Family of electrical steels for electrified powertrain
optimization and enhanced machine performance,
Save*, Torque** and Speed*** are specifically
designed for a typical electric automotive
application.
-
Steel remains material of choice
• Electric vehicles (EV) to favour lightweight
designs (similar to traditional vehicles)
• EV employ AHSS to achieve range goals
The mass-market Tesla Model 3 body and
chassis is a blend of steel and aluminium,
unlike the Tesla Model S which is an aluminium
body (Source: Tesla website+)
Steel to remain material of choice for automotive
7
* Save (Steels with very low losses): Ideal for the efficiency of the electrical machine. Their key role is maximize the use of the current coming from the battery.
** Torque (Steels with high permeability): They achieve the highest levels of mechanical power output for a motor or current supply for a generator
*** Speed (Steels for high speed rotors): Specific high strength electrical steels which maintain high level of magnetic performance. They allow the machine to be more compact and have a higher power density.
+ https://www.tesla.com/compare
http://automotive.arcelormittal.com/ElectricVehiclesImpactOnSteel
8
Strong global economic fundamentals support further expected steel demand expansion in 2018
Business outlook remains favourable
ArcelorMittal Global PMI* ArcelorMittal demand forecasts 2018
+1.5% to +2.5%
+3.0% to +4.0%
+6.5% to +7.5%
+1.0% to +2.0%
US
China
EU28
+2.0% to +3.0%
Global Ex China
+1.5% to +2.5%
Brazil
CIS
Global
-0.5% to +0.5%
* ArcelorMittal estimates
35
37
39
41
43
45
47
49
51
53
55
57
(latest data point: Jan-2018, 56.0)
9
Maintain investment grade rating (through the cycle)
Transformed balance sheet
• Net debt lowest since merger
• Investment grade rated (S&P)
• Interest costs declined by
~56% since 2012
• Maximising ability to translate
EBITDA to FCF
Net Debt ($bn)
Debt adjusted FCF ($bn)
$3bn cumulative FCF since 2012 increases to $8bn
adjusting for 2018F cash interest expense
10.111.115.715.816.1
21.8
-53%
2015201420132012 20172016
3.0
2.0
1.0
0.0
-1.0
2012 20142013 201720162015
Debt Adjusted FCF**
FCF*
* Free cash flow refers to cash flow from operations less capex; ** Debt adjusted FCF refers to historical FCF adjusted to reflect 2018 forecast interest expense of $0.6bn
10
Deleveraging bias to continue until net debt target achieved
Disciplined capital allocation
• Targeting $6bn net financial debt (NFD)
➢ Positive FCF* in all market environments**
➢ Investment grade metrics secure through the cycle
➢ Lower cost balance sheet Maximise FCF potential
➢ Position of strength to return capital to shareholders
Robust balance sheet
Invest in strengths
Returns to
shareholders
• Investing in opportunities with focus and discipline
➢ To grow EBITDA and enhance future returns
Grow FCF potential of the business
• Reinitiating base dividend at $0.10/share
• Capital returns to shareholders will increase to a
portion of FCF once NFD target achieved
Build
ing the s
trongest
pla
tform
for
consis
tent
capital re
turn
s t
o s
hare
hold
ers
* Free cash flow refers to cash flow from operations less capex ** Refers to the post merger period
11
Capitalising on high-return opportunities; Capex increasing to $3.8bn in 2018
Focused investment
• Italy: Restore ILVA as leading Italian steel
supplier
• Underperforming asset requiring turnaround
• Expanded product range with new HAV steel
grades
• Synergies €310m of which €50m to benefit
ArcelorMittal’s existing operations
• 2018 investment of ~$300m for environmental
capex (full year basis)
• Subject to regulatory approvals
• Mexico: $1.0bn three-year investment for
construction of a new 2.5Mt HSM
• High value return project improved HAV mix
• Capex investment of ~$350m in 2018 commenced
• Increase capability to serve domestic Mexican
industry
Capex in 2018 ($ billion)
0.1
0.3
0.5
0.1
Various
strategic
projects
ILVA &
Mexico
2017
carry
over
FY17
2.8
Forex FY18F
3.8
Primarily steel projects focusing on
downstream optimisation in Europe and
HAV in Canada & Europe
12
• ~50% of Action 2020 delivered
Capital allocation policy to maximise value for shareholders
Investing with focus
& discipline
Industry outlook
improving
Strategy delivering
Transformed
balance sheet
Commitment to
return cash to
shareholders
• Net debt / EBITDA down to 1.2x
• Deleveraging to continue
• Ex-China demand growth expected to
continue
• Global capacity utilization improving
• Leveraging strengths to grow returns
• Dividends restarted
Building the
strongest
foundations for
sustainable
value creation
Positioned to deliver value
14
Sustainable development - key to our resilience
Leadership in our response to long term trends
• Embedding 10 sustainable development (SD) outcomes into the business gives us long term view
of risks and opportunities.
• We intend to publish our third step towards integrated reporting in April 2018 – an integrated
assessment of sustainable development within the ArcelorMittal group business in the short,
medium and long term
• Customers increasingly expect us to support their sustainability ambitions. We have made good
progress in 2017 with multiple stakeholders towards a comprehensive third-party certification
system (ResponsibleSteel™) to reassure steel customers of social and environmental standards
in their supply chains. We are preparing a number of European sites to comply.
• We are assessed and included in a number of sustainability leadership indices:
Key trade case update: EU & USUS Flat RolledProd Exporter Status Timeline
Core AD/CVD
China
India
Italy
Korea
Taiwan
• DOC final determination:
─ CVD: China: 39.05 – 241.07%, India: 8% - 29.46%;
Italy: 0.07 – 38.15%; Korea: 0.72-1.19%; Taiwan –
de minimus (no duty imposed)
─ AD: China 209.97%; India 3.05-4.44%; Italy 12.63-
92.12%; Korea 8.75-47.8.5%; Taiwan: 3.77%
• ITC voted affirmative on all countries – orders
issued
Measures in
place for the
next 5 years
CRC AD/CVD
Brazil
China
India
Korea
AD only
Japan
UK
• DOC final determinations:
─ CVD: Brazil: 11.09%-11.31%; China: 256.44%;
India: 10%; Korea: 3.91%-58.36%
─ AD: Brazil:14.35%-35.43%; China: 265.79%; India:
7.6%; Japan: 71.35%; Korea: 6.32%-34.33%; UK:
5.4%-25.56%
• ITC voted affirmative on Brazil, China, India, Korea,
Japan and UK – orders issued
• ITC voted negative on Russia AD and CVD - no orders
will be issued
Measures in
place for the
next 5 years
HRC AD/CVD
Korea
Brazil
AD only
Australia
Japan
Netherlands
Turkey
UK
• DOC final determination:
─ CVD: Brazil: 11.09%-11.30%; Korea: 3.89%-
57.04%
─ AD: Australia: 29.37%, Brazil: 33.14%- 34.28%,
Japan: 4.99%-7.51%, Korea: 3.89%-9.49%,
Netherlands: 3.73%, Turkey: 3.66%-7.15%, UK:
33.06%
• ITC voted affirmative on all AD and Korea and Brazil
CVD – orders issued; the ITC voted negative on Turkey
CVD – no order issued
Measures in
place for the
next 5 years
QP AD/ CVD
China
Korea
AD
Austria
Belgium
Brazil
France
Germany
Italy
Japan
South Africa
Turkey
Taiwan
• DOC final determinations for cooperating countries:
─ CVD: China: 210.50%; Korea 4.31%
─ AD: Austria: 53.72%, Belgium: 5.40%-51.78%,
Brazil: 74.52%, China: 68.27%, France: 8.62%-
148.02%, Germany: 5.38%-22.90%, Italy: 6.08%-
22.19%, Japan: 14.79%-48.67%, Korea: 7.39%,
South Africa: 87.72%- 94.14%, Taiwan 3.62%-
6.95%, Turkey: 42.02%-50%
• ITC voted affirmative on all countries
• Brazil, S. Africa and Turkey orders issued 26 Jan‘17;
China order issued 20 Mar’17; all others issued May
26
Measures in
place for the
next 5 years
Europe Flat, Long and Tubes
Prod Exporter Status Timeline
CRC AD
China
Russia
• Definitive measures and retroactive
implementation were voted in favour
on July 7: China: 19.8% to 22.1%,
Russia: 18.1% to 35.9%
• Measures in place
for the next 5 years
HRC AD
China
CVD
China
AD
Iran, Ukraine,
Russia & Brazil
• AD Provisional measures published
on Oct 17 - duties from 13.2% to
22.6%
• AD final measures voted in favour on
the10th of Feb 2017 – duties from
18.1% to 36.6%
• CVD China final measures approved 9th
June 2017
• AD (5 Cs) Investigation started July 7,
2016; the European Commission
announced in Oct‘17 fixed AD duties on
imports of HRC (duties from €17.6/t to
€96.5/t) from Brazil, Iran, Ukraine and
Russia (Serbia excluded)
CRS
(HDG – non
auto)
AD
China
• Initiation of investigation in December
2016; final duties against China
announced Dec’17 (duties from 17.2%
to 27.9%)
QP AD
China
• AD Provisional measures published
on Oct 17 - duties from 65% to 74%
• AD final measures voted in favour on
the 10 Feb 2017 – same level as
provisional measures
15
Notes:─ Timelines provided are defined based on regulation maximum limits
─ Provisional AD duties vs Rebar LF from Belarus published 19 Dec at 12.5%
─ Provisional AD duties vs Seamless tubes (large diameter) from China published 11th Nov
from 45.4% to 81.1%
Trade case: Ongoing focus
US
• Anti-Dumping (AD) and Anti Subsidy (AS) duties are in place on all four flat product
categories: CORE, CRC, HRC, and plate from key importing countries measures in
place for five years from determination
• Anti-circumvention investigations initiated by the Department of Commerce (DOC)
for CRC and CORE imports from China (through Vietnam). DOC affirmative preliminary
determination announced Dec 6, 2017. Importers will be required to post cash deposits for
potential AD/CVD duties. Final determination expected April 25, 2018
• Section 232: On March 8, 2018, President Trump signed the proclamation with 25%
tariffs on imported steel, effective in 15 days. Canada and Mexico are exempt from
tariffs as the NAFTA negotiations continue
16
• Final AD duties on CRC imports from China & Russia
• Final AD duties on HRC and QP imports from China approved on Feb 10, 2017 by
the EU council
• AS AD on HRC imports from China Approved by the EU Council June 9, 2017,
(duties aligned under the Lesser duty rule with the AD duties to final level from 18.1% to
35.9%)
• AD on HRC imports from four additional countries – the European Commission
announced in Oct‘17 fixed AD duties on imports of HRC (duties from €17.6/t to €96.5/t)
from Brazil, Iran, Ukraine and Russia (Serbia excluded)
• AD investigation started in December 2016 on imports from China of Corrosion
resistant steel (HDG non-auto) – final duties against China announced Dec’17 (duties
from 17.2% to 27.9%)
10% YoY** reduction achieved
Capturing benefits of currency devaluation
and good operational performance in CIS
Quarterly production records achieved in
the CIS (Combined Ukraine & Kazakhstan
production up +6.7% YoY**)
Procurement, reliability & productivity
savings on track
Centralisation of key processes underway
Portfolio optimized (closure Zumarraga,
partial shut down Sestao & Zaragoza sale)
US footprint optimization underway*
Calvert utilisation rate 79%
Portfolio optimized (Sale of LaPlace and
Vinton, closure of Point Lisas)
17
Volume growth remains a key driver for outstanding Action 2020 gains
Action 2020 Progress;$1.5bn achieved to date, half
way to $3.0bn target
Business Drivers
AMERICAS
- Ramp-up of Calvert
improved value added mix
- US footprint optimization
- Brazil value plan
EUROPE - Transformation program
MINING- 10% reduction in average
unit iron ore cash costs
ACIS
- New coke battery and
PCI usage in CIS
- New iron ore supply
agreement and tariffs in
South Africa
* #1 alum. line, 84” hot strip mill, and #5 continuous galv. line idled; new caster at No.3 steel shop complete and running; ** YoY refers to FY’16 v FY’15 *** refers to FY’17 v FY’16
2016 progress
Cash breakeven level - $40/t CFR China
62% Fe maintained
Indiana Harbor footprint optimization completed:
Headcount rationalization and efficiencies
following closure of its 84” HSM, idling of No.2
steel shop, benefits of new caster No.3 steel shop.
Calvert ramp up: cap. utilization (+10% YoY***).
Integrated centrally coordinated approach,
reducing costs
Digitalization in the manufacturing process,
supply chain & commercialization.
Volume gains & improved mix with higher HSM
production offset lower volumes (longs)
Ukraine: Construction of new coke oven
battery #6 & PCI/energy savings
Record production in Kazakhstan offset by
lower shipment volumes in Ukraine
2017 progress
✓
✓
✓
✓
✓
✓
✓
✓
✓
19
ArcelorMittal remains focussed on controlling its cash requirements
Cash needs of the business
• Cash needs* to rise in 2018:
– Increase of $1.2bn vs. 2017 reflects
a) higher CAPEX (increase from $2.8bn to
$3.8bn largely reflecting Mexico project
and anticipated ILVA capex)
b) expected increases in cash taxes primarily
on account of timing impacts
* Cash needs of the business defined as: capex, net interest, cash taxes, pensions and other cash costs but excluding working capital investment
** Estimates for cash taxes in 2018 largely reflect the taxable profits of 2017
• Working capital requirements to be driven by market conditions
2.8
3.8
0.8
0.60.8
1.24.4
2018F
Net interest
Capex
5.6
Taxes**, pension and other
2017
Cash needs of business ($ billion)
20
Liquidity and debt maturity profile
Investment grade credit rating achieved
Liquidity at Dec 31, 2017 ($ billion)
Liquidity lines:
• $5.5bn lines of credit refinanced and extended in Dec 2016; two tranches:
• $2.3bn matures Dec 2019
• $3.2bn matures Dec 2021
• Continued strong liquidity
• Average debt maturity 4.6 Yrs
Debt maturity: Ratings:
• S&P**: BBB-, stable outlook
• Moody’s: Ba1, positive outlook
• Fitch: BB+, positive outlook
5.5
2.8
Unused credit lines
Cash
Liquidity at
Dec 31, 2017
8.3
Debt maturities at Dec 31, 2017 ($ billion)
0.9 0.9
1.9
1.4 1.5
2.8
0.8
0.3
0.4
0.5
1.1
2021
0.2
2022 >20232019 20202018*
0.2
Other loans Commercial paper Bonds
The 2018 maturities in “other loans” include an additional $298 million of a borrowing base facility in South Africa, which matures in 2020, ** S&P upgrade on 1 Feb’18
21* Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale); ** Liquidity is defined cash and cash equivalents plus available credit lines excluding back-up lines for commercial paper program
Balance sheet structurally improved
Balance sheet fundamentals improved
Net debt* ($ billion) Average debt maturity (Years)
Liquidity** ($ billion) Bank debt as component of total debt (%)
32.5
10.1
-22.4
4Q 20173Q 2008
4.6
2.6
4Q 20173Q 2008
8.3
12.0
4Q 20173Q 2008
10%
4Q 20173Q 2008
75%
22
EBITDA to free cash flow
* Change in working capital: cash movement in trade accounts receivable plus inventories less trade and other accounts payable
Strong free cashflow generation
8,408
4,563
1,744
(1,972)
(1,873)
EBITDA
(2,819)
Cash flow from
operations
Free cash flowChange in
working
capital*
Net financial cost,
tax and othersCapex
2017 EBITDA to free cash flow analysis ($ million)
Includes $0.4bn
bond premium
23
Net debt analysis
Net debt reduction driven by positive free cash flow offset in part by forex
758
Net debt at
Dec 31, 2017
10,142
Forex and otherDividend
141
M&A *
(72)
Free cash flow
(1,744)
Net debt at
Dec 31, 2016
11,059
Dec 31, 2016 to Dec 31 2017 ($ million)
*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 $133m plus assumptions of all
partnership liabilities. The payment of the $133m will be in 3 equal instalments with the 1st payment in August 2017 ($44m), with the 2 subsequent payments to be received in August 2018 and 2019.
Forex of $715m: Mainly
driven by USD depreciation
against the Eur 13.8%
Mainly dividends paid
to Posco (AMMC) and
Bekaert
Taranto
Genova: Cold rolling, hot dip galvanising and
tin plate capacities
Taranto: Integrated plant for production and sale
of HRC, plates, pipes and tubes
25
New ILVA – a tier 1 steel asset
ILVA is a strong fit within ArcelorMittal’s existing business & strategy
• ILVA is the perfect opportunity for
ArcelorMittal
– Italy is the 2nd largest steel consuming
country in Europe (Mt)
– Large scale, underperforming asset
requiring turnaround
– Significant cost improvement potential
and synergies identified
– Opportunity to leverage AM strengths in
R&D and product leadership and service
– Ilva will be re-established as a tier one
supplier to European & Italian customers
• Minimal balance sheet impact, EBITDA
accretive in Year 1
• Next step is regulatory approvals; European
Commission initiated a Phase II review on 8
Nov’17; regulatory approval expected
conclusion April 2018
97Mt Total European Flat
Steel demand in 2015
SOURCE: World Steel, Steel Statistical Yearbook 2015; Notes: *Iberia defined as Spain + Portugal
Novi Ligure: Cold rolling mill to serve end-users
customers (e.g. packaging, white goods)
26
Our vision for ILVA
A clear vision of long-term, sustainable success for ILVA
• Significant environmental issues –
need to bring ILVA up to and beyond EU
environmental standards
• Industrial challenge: investment and
expertise to improve operational
performance of ILVA’s assets
• Poor financial performance: material
decline in revenue since 2011, loss-
making for the past 4 years
• Low share of high-value added steels
in the portfolio of ILVA
• Need to rebuild client confidence:
product quality, innovation, supply chain
• Become a world-class player in terms
of competitiveness, sustainability,
environmental performance, value-add
• Leading presence in Italy, adding
value to the Italian industrial fabric
• A company recognised for
environmental performance
excellence: emissions to be reduced to
best practice levels, in line with and
beyond European environmental
standards and legislation
• A sustainably profitable company:
one that creates value for all
stakeholders, and the Italian economy
ILVA Today ILVA’s Future
Industrial
2018 - 2024
Environmental
2018 - 2023
Total CAPEX
2018 - 2024
27
Investment plan to revitalise ILVA
Commitment to invest €2.4 billion over the next 7 years
1.25
1.15
2.4
• €1.15bn environmental investment
plan to materially improve
performance, including:
– €0.3bn stock pile coverage
– €0.2bn investment at coke ovens
– €0.2bn in waste water treatment
– €0.3bn environmental remediation
(clean-up) which will be financed with
funds seized from the Riva Group
• €1.25bn industrial investment plan to
rapidly restore and improve:
– ‘catch-up’ capex for delayed
maintenance
– capex program for blast furnaces
and steel plants
– includes full €0.2bn re-vamping of
BF#5
CAPEX commitments through 2024 (€bn)
Riva Funds
utilised
0.3
2.1
Net CAPEX
28
Industrial plan to restore ILVA’s market
position
Crude steel production is limited to 6Mt until environmental capex plan completed
Operating BF#1, BF#2, BF#4 supplemented by imported slabs/coils
Restart
BF#5
alongside,
BF#1, BF#4
6.0 6.0 6.0 6.0 6.0 6.0
8.08.5
9.5
2018 2019 2020 2021 2022 2023 2024
Production (Mt crude steel) Shipments (Mt finished steel)
2018 2019 2020 2021 2022 2023 2024
29
ILVA impact on ArcelorMittal financials
On completion ILVA will be fully consolidated by ArcelorMittal
• Acquisition will “complete” following receipt of EU Merger Regulation approval;
European Commission initiated a Phase II review on 8 November 2017 with
expected conclusion in April 2018
• Following completion ArcelorMittal will fully consolidate ILVA
• Purchase price of €1.8bn, will be recognized on the BS as a payable, reduced by
the quarterly instalments of €45mn that will flow through investing activities in CF
• New ILVA will be transferred with circa €1bn of net working capital and free of long
term liabilities and financial debt
• New ILVA will be transferred to ArcelorMittal with a re-calibrated labor force
• ArcelorMittal will immediately commence the environmental capex plan and other
investments
• ILVA is expected to be accretive to ArcelorMittal EBITDA in Year 1 and
accretive to ArcelorMittal cash flow in Year 3 (based on 2016 steel spreads)
Investments completed in 2017
• Calvert: Phase 2: Slab yard expansion Bay 5
Increase coil production from 4.6mt/pa to
5.3mt/pa (completed 2Q’17)
• Dofasco: increased shipments of galvanized
sheets by ~130ktpy, along with improved mix
and optimized cost (completed 2Q’17)
• Poland: Investment in the downstream
operations:
➢ Increase of the HSM mill capacity by 0.9Mtpa
(completed 2Q’17)
➢ Increasing the HDG capacity by 0.4Mtpa
(completed 2Q’17)
Furthering our downstream capabilities for
automotive and industrial applications
HDG2 Krakow
Calvert: Slab Yard bay 5
Dofasco galvanizing line
Continuous shift towards higher added value products
31
Europe: UHSS Automotive Program
Investments to enhance UHSS capabilities
Upgrade of capabilities to produce new steels
Fortiform® grades offer a 20% weight saving on identified application
Commercial benefits of additional ~400kt UHSS (Ultra High Strength Steel)
The project is executed in several sub projects in Gent cluster (Liège and Gent plants):
Gent:
• Upgrade of Gent HSM completed end 2016
• Erection of new furnace for Gent HDG expected completion in 1Q’18
Liège:
• 1st step of annealing line transformation (cooling zone) - completed 3Q’15
• JVD 1st trial coils were produced in 3Q’16
• Second step of annealing line transformation - completed 1Q’17
• Remaining process optimizations & modifications on CAL expected completion in 1Q’18
New stand F1 in front of line –
Gent HSM
Top rolls of new direct flaming
furnace - Liege
32
Cooling water plant -
Gent
Improving and growing high added value products
Indiana Harbor Plant
No. 3SP: New #2 Caster
• Investment features:
– new cooling bed; new cold saw; new gag press
• Customer benefits:
– improved service in terms of lead time and reliability
– highest quality for the most demanding grades & largest
sizes thanks to improved straightness and surface
quality
• Expected completion in 1Q 2018
33
ArcelorMittal Differdange: Investing in Grey mill:
Modernization of rolling mill
• ArcelorMittal Differdange Grey Mill (Luxembourg) ranks among the
leader for heavy and jumbo beams.
• It produces a unique portfolio of heavy sections. Contribute to some
of the most prestigious landmarks over the world (ie. Manhattan
skyline in New York)
• Aim to supply the most advanced structural steel products and
solutions for construction and high rise buildings
• We are installing the largest straightener in the world for sections in
Luxembourg
Roller straightener in pre-assembly stage
Freedom Tower-New York
One Bank street construction: October 2017, U.K One Bank street after completion in 2018
34
Kryvyi Rih - New LF&CC 2&3
Kryvyi Rih investments to ensure sustainability & improve productivity
• Facilities upgrade to switch from ingot to continuous casting route; additional billets capacity of
290kt/y
• Industrial target: Step-by-step steel plant modernization with state-of-art technology:
– Product mix development
• Supportive target:
– Cost reduction
– Billet quality improvement for sustaining customers
– Better yield and productivity
• Project completion expected in 4Q’18
Entry section o Continuous Annealing Line
Site
preparation for
LF&CC 2&3
<–>
AM Kryvyi Rih LF&CC 1
35
ArcelorMittal USA progressing with a “footprint optimization project” at Indiana Harbor
Indiana Harbor “footprint optimization project”:
• Current configuration uncompetitive structural changes
required across all cost elements
• #1 aluminize, 84” hot strip mill (HSM), #5 continuous galvanizing
line (CGL), and steel shop No.2 now idled; all planned asset
consolidation now complete
• Planned investments totalling ~US$200m:
− New caster at No.3 steelshop installed & commissioned 4Q’16
− Restoration of 80” hot strip mill and IH finishing, and logistics
ongoing
− Project completion expected in 2018
Indiana Harbor - USA Footprint
Indiana Harbor Plant 80”HSM: 5 Walking Beam Furnace No. 3SP: New Downcomer
No. 3SP: New #2 Caster
No. 3SP: New #2 Caster commissioning
36
ArcelorMittal Poland Sosnowiec - Wire Rod Mill
modernization• Sosnowiec is a double strand rolling mill located in
Sosnowiec, Poland.
• The investment will introduce new and innovative
techniques for the production of high quality wire rod for high
demanding applications (automotive app., steel cords,
welding wires, cold heading screws, suspension springs,
special ropes)
• Detailed engineering for the installation of the new
equipment is expected in 1H 2018
• Full project completion expected in 2019.
Investment features and benefits:
• New independent stands with motors & drives avoiding
material twisting
• Modernized finishing blocks for improvement of final product
diameter tolerance
• New state of art air & water cooling system with accurate
process control
• Project implementation will result in increased production
of high quality wire rod for demanding applications.
Long products strategy to grow HAV grades
37
Mexico currently heavily reliant on imports of value-added steel; high growth expected
• US$1.0 billion three-year investment
commitment
➢ Construction of a new 2.5Mt hot strip mill
initiated late 4Q 2017
➢ Investments to sustain the competitiveness
of mining operations
➢ Modernizing its existing asset base
➢ Estimated ~$350m capex in 2018
• Enable full production capacity to be
achieved and significantly enhance proportion
of HAV mix
• Will benefit from Lázaro Cárdenas designation
as one of 5 new Special Economic Zones in
Mexico
• In-line with Action 2020 plan
Disciplined capital allocation focused on value
driven strategic initiatives: Mexico HSM
ArcelorMittal Mexico:
• Current production 4Mt increasing to ~5.3Mt
(2.5Mt flat; 1.8Mt long and 1Mt semi-finished
slabs)
• Vertically integrated with flat and long product
capabilities
• ArcelorMittal Lazaro Cardenas’s raw materials
and slabs shipped through a dedicated port
facility (Mexico’s largest bulk handling port)
AM USA expands surface critical capability at Burns Harbor to provide a sustained automotive footprint
Burns Harbor - New Walking Beam Furnaces
Burns Harbor Hot Mill - New Walking Beam
Furnaces:
• Install 2 latest generation walking beam
furnaces, including recuperators & stacks,
building extension & foundations for new units
• Benefits associated to the project:
• Hot rolling quality and productivity
• Sustaining market position
• Reducing energy consumption
• Project completion expected in 2021
38
40
Demand in core markets is growing
End market growth prospects in US (2007=100)
Demand recovery in core markets has been offset by high imports…
Europe
Brazil ACIS
12% 15%
47%
25% NAFTA
Steel shipment split by segment FY’17
75% of shipment to
developed markets
End market growth prospects in EU28 (2007=100)
707580859095
100105110
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
405060708090
100110120
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Construction* Auto***Machinery**
Source: * & ** Oxford Economics Global Industry Forecasts; *** Oxford Economics Global Industry Forecasts, and LMC Automotive Global Car and Truck Forecasts; (latest update: 2Q 2017)
Source: *ArcelorMittal estimates ** Excludes tubular demand. ASC growth in 2017 in the US including pipes and tubes of +6.1%
Global steel demand for 2017
2017 ASC growth of +3.2%; positive outlook for 2018
3.5%
3.2%
5.4%
4.6%
1.5%
1.3%
Global
Brazil
EU28
US**
China
CIS
Global ASC 2017 v 2016*
41
• Global apparent steel consumption
increased by +3.2% in 2017
• Healthy demand backdrop maintained in
Europe and US
• China: Positive demand growth due to
strength in automotive and machinery
• Brazil: Positive demand with growth in
automotive offset by ongoing weakness
in construction
• CIS: Reflecting stronger economic growth
in Russia
ArcelorMittal ASC demand estimates 2017
42* Source: AISI, Eurofer and ArcelorMittal estimates; ** includes pipes and tubes
Global ASC rates
Global ASC improvement of +3.2% 2017 vs 2016
Global apparent steel consumption (ASC)* (million
tonnes per month)
US and European apparent steel consumption
(ASC)* (million tonnes per month)
• EU ASC +2.9% in 4Q’17 vs. 3Q’17
• EU ASC +1.6% in 4Q’17 vs. 4Q’16
• EU ASC +1.5% in 12M’17 vs. 12M’16
• US** ASC -5.2% in 4Q’17 vs. 3Q’17
• US** ASC +6.3% in 4Q’17 vs. 4Q’16
• US** ASC +6.1% in 12M’17 vs. 12M’16
• China ASC -5.9% in 4Q’17 vs. 3Q’17
• China ASC +1.7% in 4Q’17 vs. 4Q’16
• China ASC +3.5% in 12M’17 vs. 12M’16
• Global ASC -3.9% in 4Q’17 vs. 3Q’17
• Global ASC +2.6% in 4Q’17 vs. 4Q’16
• Global ASC +3.2% in 12M’17 vs. 12M’16
3
5
7
9
11
13
15
17
19 US EU28
(latest data point: Dec-2017)
20
25
30
35
40
45
50
55
60
65
China Developing ex-China Developed
(latest data point: Dec-2017)
43* Source: US Census Bureau; ** Source: Markit and The American Institute of Architects
Construction markets in developed market
Construction growth accelerating in 2017
• 2017 housing permits increased to 3.9% from 2.0% in
2016, boding well for residential construction in 2018.
• Although non-residential construction spending slowed
in 2Q’17 - 3Q’17, it showed signs of recovery in 4Q’17.
• Architecture Billings Index (ABI) for 2017 came in
strong, with 10 out of 12 months reading >50 and
4Q’17 at 53.2.
• Continued uncertainty over the ability of the new
administration to pass an infrastructure bill means the
pick-up in infrastructure spending delayed until 2019
US residential and non-residential construction indicators (SAAR) $bn*
Eurozone and US construction indicators**
United States
Europe
• European construction accelerated to an estimated
3.5% in 2017 from 1.8% in 2016.
• Growth in construction was led by Eastern European
countries, particularly Poland and Hungary, with both
growing double digits.
• Overall, construction activity in 2017 was supported by
the fastest GDP growth in a decade at 2.5% yoy.
• Eurozone construction PMI now >50 for 14 months
200
300
400
500
600
700
Residential
Non residential
(latest data point: Nov-2017)
30
35
40
45
50
55
60
65 Architecture Billings Index (USA)
Eurozone construction PMI
(latest data point: Dec-2017)
44* Last source updated Jun 2017
** Source: WSA, Mysteel, ArcelorMittal Strategy estimates
Regional inventories
Inventory trends
German inventories (000 Mt)*
China service centre inventories** (Mt/mth) with ASC%
Brazil service centre inventories (000 Mt)
US service centre total steel inventories (000 Mt)
2.0
2.5
3.0
3.5
4.0
4.5
1,200
1,400
1,600
1,800
2,000
2,200
Germany flat stocksMonths Supply (RHS) (latest data point: Jun 2017)
0%
10%
20%
30%
40%
50%
0
5
10
15
20
25Flat and long
% of ASC (RHS)
(latest data point: Dec-2017)
1.0
2.0
3.0
4.0
5.0
6.0
7.0
200
400
600
800
1,000
1,200
1,400Flat stocks at service centres
Months Supply (RHS)
(latest data point: Dec 2017)
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
USA (MSCI)
Months Supply (RHS)
(latest data point: Dec-2017)
45* Source: China National Bureau of Statistics, China Real Estate Index System (via Haver) and ArcelorMittal estimates; Source: NBS, CISA, WSA, Mysteel, ArcelorMittal Strategy estimates
China overview
China ASC demand grow 3.5% in 2017; more stable in 2018 with growth of -0.5% to +0.5%
• GDP growth slowing gradually after a modest
tightening of monetary conditions, as the government
seeks to control financial risks but valuing stability,
no major policy change
• Non-financial corporate debt remains an issue
(>150% of GDP), mainly SOE’s – therefore the
government will continue to focus on capacity cuts of
heavy industry to improve profitability and reduce
environmental concerns
• Despite slowing as expected in 3Q’17, real estate
sales and new starts growth rebounded in Nov/Dec,
potentially leading to stronger real estate demand in
2018
• 2018 ASC to be broadly stable with machinery
helped by rising exports due to strong global demand
and without a drag from declining construction
• Chinese exports down over 30% in 2017; we expect
production cuts to constrain exports in the short term
• Inventories lower than usual due to policy restricted
output
Crude steel finished production and inventory (mmt)
China construction % change YoY, (3mth moving av.)*China
-40%
-20%
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Residential floor space sold (6 month lag)
Residential floor space started
(latest data point: Nov-2017)
0
5
10
15
20
25
35
45
55
65
75 Steel inventory at warehouses (RHS)
Steel inventory at mills (RHS)
Finished steel production (LHS)
(Latest data point: Dec-2017)
46
• Chinese government committed to tackle overcapacity
and environmental issues
• Capacity reduction ahead of expectations: net capacity
reduction achieved vs. 140Mt target
• Steel replacement policy in favour of EAF v BF; no
new capacity to be built ratio 1:1 for EAF and 1:1.25
for BF-BOF
• Industry operating at high rates of capacity utilisation
higher domestic steel spreads
• Stronger domestic fundamentals plus global trade
restrictions reduced incentive to export
• “Winter shutdowns” supporting fundamentals through
seasonally weaker demand period
• Domestic capacity must reflect demand outlook
China supply reform ahead of schedule
Supply side reform progressing well; China ahead of initial plans to close steel capacity
115Mt permanent capacity
closed further 25Mt
targeted in 2018
Additional ~120Mt illegal
induction furnace capacity
closed
Steel exports reduced
Industry capacity
utilization
~85-90% today
47
China addressing its excess capacity
China steel capacity rationalisation will take time… trade action to protect during this transition
11th 5-year plan
• Eliminate capacity
below following
standard:
- BF < 300m3
- BOF < 20t
- EAF < 20t
• By 2005, overall
energy consumption
< 0.76 tons of coal
equivalent; water
consumption < 12t
per ton
• By 2010, overall
energy consumption
< 0.73 TCE; water
consumption < 8t
• By 2012, overall
energy consumption
< 0.7 TCE; water
consumption < 6t
• Eliminate capacity
below following
standard by 2011:
- BF < 400m3
- BOF < 30t
- EAF < 30t
• By 2011, overall
energy consumption
< 0.62 TCE; water
consumption < 5t per
ton; dust emission
per ton < 1 kilogram;
CO2 emission per
ton < 1.8 kilogram
• Eliminate capacity
below following
standard :
- BF < 400m3
- BOF < 30t
- EAF < 30t
• By 2015, overall
energy
consumption < 0.58
TCE; water
consumption < 4
m3; SO2 emission
per ton < 1
kilogram
• Reduce 80mt
capacity
• Increase financial
incentives in
capacity reduction
or volume swap
proposals
• Implement
penalties through
high electricity &
water prices for
those companies
that fail to meet
environmental
standard
2009 12th 5-year plan 2013 September 2018 January
Previous capacity closures more than offset by rapid capacity additions
2016 February
• Reduce 100-150mt
capacity over 5 years
• No projects of new
capacity
• There will be a
“mandatory” part and
a “voluntary” part
• The “mandatory” part
uses same criteria as
earlier policy but
adds criteria for
product quality and
for safety
• The “voluntary” part
will rely upon
financial incentives to
cut capacity. Special
funds will be used
for redeployment
incentives and debt
restructuring
• 115Mt net capacity
reduction of the
140Mt target (65Mt
in 2016 and 50Mt in
2017)
• In 2018, ~25Mt left to
be cut
• Elimination of
~120Mt induction
furnaces (IF) in June
2017
• Winter shut downs
from Nov’17 to
Mar’18; utilization
rates cut to 50% in 2
+ 26 cities
• Steel replacement
policy in favour of
EAF v BF; no new
capacity to be built
ratio 1:1 for EAF and
1:1.25 for BF-BOF
for key areas*
* *The ratio 1:1.25 BF-BOF is for so-called “the environmentally-sensitive areas”, which means population-intensive and pollution-intensive as well, including Beijing-Tianjin-Hebei area, Yangtze-River-Delta area (Shanghai, Jiangsu Province and Zhejiang Province) and Zhujiang-River-Delta area (9 key cities including Guangzhou in Guangdong province).
Highly Restricted 48
Lower Chinese exports
Source: ArcelorMittal Corporate Strategy team analysis 48
2017 exports lower by ~31% YoY
• Full year 2017 finished steel exports were ~76Mt, approx. 31% below 2016 levels
(109Mt) and 33% below the 2015 peak (112Mt)
• January 2018 exports down 18% MoM and 37% YoY, lowest since February 2013
• Production cuts should constrain exports in short term
No1 in automotive steel: Maintaining
leadership position
• ArcelorMittal is the global leader in steel for
automotive 40% market share in our core markets
• Global R&D platform sustains a material
competitive advantage
• Proven record of developing new products and
affordable solutions to meet OEM targets
• Advanced high strength steels used to make
vehicles lighter, safer and stronger
• Automotive business backed with capital with
ongoing investments in product capability and
expanding our geographic footprint:
• AM/NS Calvert JV: Break-through for NAFTA
automotive franchise
• VAMA JV in China: Auto certifications progressing
• Dofasco: Galvanizing line expansion
50
S-In-Motion SUV/Mid-Size Sedans
AM/NS Calvert
Continue to invest and innovate to maintain competitiveness
Global presence and reach
Source: LMC figures for Western and Eastern Europe and Russia; IHS figures for all other regions; personal cars and light commercial vehicles < 6t
Global supplier with increasing emerging market exposure
51
> 20 M veh
> 15 M veh & < 20 M veh
> 10 M veh & < 15 M veh
> 5 M veh & < 10 M veh
> 2.5 M veh & < 5 M veh
> 1 M veh & < 2.5 M veh
< 1 M veh
Vehicle production 2017
Automotive production facilities
Alliances & JVs
Commercial teams
R&D centres
Automotive growth in developed world
USA / Canada and EU28 + Turkey vehicles production
million units• USA and Canadian automotive
production stabilized
• Stability supported by replacement
(average age of fleet 11.5 years),
continued economic and population
growth
• EU28 and Turkey production reached
record highs in 2017 and further growth
expected
USA/Canadian production stable, EU28 & Turkey continue to recover
52
13.2
20.5
5
7
9
11
13
15
17
19
21
23
USA+CANADA (LMC) USA+CANADA (IHS) EU28+Turkey (LMC)
Automotive emerging market growth
China vehicle production (‘000s)
• China production to grow steadily by +6mvh
in 2017 to ~33mvh by 2025
• India production to increase ~80% by 2025
(from 4.5mvh in 2017 to 8mvh in 2025)
• Mexico production is expected to increase
by 6.3% (2017 vs 2025)
• Brazil production growth expected to
continue and reach 3.9mvh in 2025
• Russia production is expected to recover
and reach 2013 level in 2022
Brazil, India, Russia & Mexico vehicle production (‘000’s)
Source: IHS
27,636
33,506
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000China
1,4462,327
4,456
8,027
2,637
3,9283,946
4,193
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000Russia India Brazil Mexico
Strong growth expected in India, China and Brazi
53
ArcelorMittal’s S-in motion®
Demonstrating the weight saving potential of new products
ArcelorMittal generic steel solutions includes body-in-white, closures, and chassis parts
From steel provider to global automotive solutions provider
54
55
Continued investment in R&D supports
Portfolio of Next Generation Auto Steels
Third-generation UHSS for cold
stamping. Fortiform® and HF steel
grades allow OEMs to realize
lightweight high-strength structural
elements using cold forming
methods such as stamping.
Commercially launched in Europe
in 2014 and available in North
America at Calvert undergoing
customer qualifications
Press hardenable steels (PHS) / hot
stamping steels offer strengths up to
2000 MPa. Usibor® 2000 and
Ductibor® 1000 can also be
combined thanks to laser welded
blanks (LWB) to reduce weight while
achieving optimal crash behavior.
Both currently available in Europe;
Usibor ® 2000 is commercially
available in Europe and available for
qualification testing in North America
; Ductibor® 1000 is commercially
available in Europe and Nafta
A family of cold rolled fully
martensitic steels with current
tensile strengths from 900 to 1700
MPa. ArcelorMittal’s martINsite®
cold roll family of fully martensitic
steels is perfect for anti-intrusion
parts such as bumper and door
beams. Some are also available
in with an electrogalvanized
coating (ArcelorMittal’s
Electrosite® family of martensitic
steels) or with Jetgal®.
Fortiform®
HF Grades
Usibor® 2000
Ductibor®1000
MartINsite®
JVD is a breakthrough process, In
production and product
development.
Jetgal®: JVD zinc coating applied
to steel grades for the automotive
industry. Developed for steels
including UHSS Fortiform®;
Jetskin™: JVD zinc coating
applied to steel grades for
industrial applications such as
household appliances, doors,
drums and interior building
applications.
JVD® -Jetgal®
Jetskin™
Widest offering of AHSS steel grades which can be implemented into production vehicles
Automotive Industry Leadership
The head of Audi’s ‘Lightweight Construction Centre’ is quoted as saying that “There will be no cars made of
aluminium alone in the future. Press hardened steel will play a special role in this development. If you compare the
stiffness to weight ratio, PHS is currently ahead of aluminium”.
56
Audi coming
back to steel
Leveraging R&D for new products, solutions and processes
Over 40% of the
materials in the
2018 Audi A8
body structure
will be steel, of
which 17% will
be press
hardenable steel
57
ArcelorMittal preferred AHSS supplier
0%
5%
10%
15%
20%
25%
30%
35%
40%
2005 2010 2015 2020 2025
AH
SS
sh
are
of
tota
l s
tee
l d
em
an
d
AHSS evolution*
NAFTA
ArcelorMittal market share**
Europe
• ArcelorMittal is maintaining overall market share
in Europe, and increasing in NAFTA
• Our AHSS share is higher than overall market
share
• As the technology requirements to develop and
produce new AHSS like Fortiform® are higher,
our share in these products has further growth
potential
* Source: Ducker **Source: Regional ArcelorMittal Marketing Intelligence
Market share in AHSS exceeds overall share
Shanghai
VAMA
FAW-VW & BMW
Daimler & Nissan
BYD, Changan, Suzuki, CFMA & FAW-VW
Changfeng, Fiat, DPCA, Dongfeng, Honda, JMC & Suzuki
Geely, VW, GM, KIA, SAIC & Chery
SAIC, Toyota, GM, Honda, Nissan & BYD
Beijing
Guangzhou
Loudi
VAMA greenfield JV facility in China
VAMA: Valin ArcelorMittal Automotive target
areas and markets
• 1.5 MT state-of-the-art production facility
• Well-positioned to serve growing automotive market
• China 2017 output 27.6mvh (IHS) +3.2% YoY
• VAMA has successfully completed homologation on
UHSS/AHSS with key tier 1 auto OEMs (~60% complete)
Latest development:
• Strong sales & order book for licensed USIBOR 1500
• VAMA started the first commercial supply of exposed
products in 4Q 2017
• Start of production ceremony for downstream ATSs
project in 4Q 2017
BYD: Build Your Dreams; CFMA: Changan Ford Mazda Automobile; SAIC: Shanghai Automotive Industry Corporation; JMC: Jiangling Motors Corporation
VAMA well positioned to supply growing Chinese auto market
58
Furnace of CGL and CAL on both sides VAMA HQ in Loudi city, Hunan Province • Central office in Changsha with satellite offices in proximity
to decision making centers of VAMA’s customers
INDIA auto JV with SAIL
*(BNVSAP) & emission standards (BS VI): Bharat New Vehicle Safety Assessment Program is a proposed new car assessment program for India; BS-VI is the last norm on emission standard (Bharat Stage Emission Standards BSES)
Robust automotive growth / new regulation will drive demand for high grade automotive steel
59
INDIA AUTO OUTLOOK
▪ 2017-2025: India passenger vehicle segment is
expected to grow at 8-8.5% CAGR
▪ New safety regulation would accelerate
penetration of AHSS+ UHSS steel in passenger
vehicles and LCV to meet safety norms*
INDIA AUTO JV with SAIL
▪ ArcelorMittal & SAIL entered into a MoU on May
22, 2015 for setting up an automotive steel
facility under a joint venture agreement.
▪ Venture to offer technologically advanced steel
products to rapidly growing automotive industry
in India.
▪ Feasibility study currently underway for 1.5Mtpa
in phase 1 incl. PLTCM, CAL & CGL (Pickling
Line & Tandem Cold Mill, Continuous Annealing
Line, Continuous Galv. Line)
2.7 5.8
0.9
2.2 2.7
4.0
5.10.6
1.0
2.2
0.70.50.6
30
5
0
8
20
15
10
6
2
0
25
104
8.223%
2015
3.8
14%
2010
3.2
0.5
10%
28%
AHSS++ penetration(%)
Passenger vehicles productionMillion
20252020
5.8
PV
exports
PV
domestic
LCV
4.22.4
Medium to high grade steel demand from auto sector, MT
Steel demand by end market
Europe & NAFTA
China steel demand split
Railway
1%
Construction
68%
Household appliances
2%
Automobiles
8%
Machinery
19%
Shipbuilding
1%
Other transport
2%
Tubes
13%
Other
2%
Metal goods
14%
Mechanical enginering
14%
Domestic appliances
3%
Automobiles
18%
Construction
35%
Construction
40%
Defense & Homeland Security
3%
Appliances
4%
Machinery and equipment
10%
Automobile
26%
Container
4%
Energy
10%
Other
3%
US steel demand split
Europe steel demand split
Regional steel demand by end markets
Sources: China-Bloomberg, Europe: Eurofer, US: AISI 61
Brazil*
Revenues ($bn) 18.0 7.8 36.2 4.0 7.6
% Group** 24% 11% 49% 6% 10%
EBITDA ($bn) 1.7 1.0 3.6 1.4 1.0
% Group** 20% 11% 41% 16% 12%
Shipments (M mt) 21.8 10.8 40.9 57.4*** 13.1
% Group 25% 12% 48% 15%
~197,100 employees serving customers in over 160 countries
Europe Mining ACIS
* Brazil includes neighboring countries ** Percentage calculation for Revenue and EBITDA exclude others and eliminations; *** Iron ore shipments only (market price plus cost plus tonnage)
NAFTA
Global scale, regional leadership
Key performance data 12M 2017
Global scale delivering synergies
62
63
Group performance FY17 v FY16
Group profitability increased YoY
Average steel selling price $/t
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
589 690 709
+2.7%
4Q’173Q’174Q’16
21,705
4Q’16
20,045
-3.3%
4Q’17
20,996
3Q’17
1,661 1,924 2,141
3Q’174Q’16
11.2%
4Q’17
$83/t
+1.6%
FY’17
85,242
FY’16
83,934
6,255
FY’16 FY’17
8,408
+34.4%
567 682
FY’17
+20.4%
FY’16
$89/t $75/t $99/t$102/t• Crude steel production increased 2.6% to 93.1Mt with increases in
NAFTA (+5.7%), BRAZIL (+0.7%) and Europe (+2.7%) offset in part
by a decline in ACIS (-0.8%)
• Steel shipments increased 1.6% primarily due to increases in
NAFTA (+2.6%), BRAZIL (+0.8%) and Europe (+1.7%) offset in part
by a decline in ACIS (-1.3%)
• Sales increased 20.9% to $68.7bn vs. $56.8bn for FY’16, primarily
due to higher average steel selling prices (ASP) (+20.4%), higher
steel shipments (+1.6%), higher seaborne iron ore reference prices
(+22.3%) and higher marketable iron ore shipments (+6.1%).
• EBITDA improved 34.4% primarily due higher volumes and ASP in
the steel and mining businesses as well as the benefits of Action
2020 cost savings
FY17 v FY16 analysis:
64
Group performance 4Q’17 v 3Q’16
Group profitability increased QoQ
Average steel selling price $/t
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
589 690 709
+2.7%
4Q’173Q’174Q’16
-3.3%
4Q’17
20,996
3Q’17
21,705
4Q’16
20,045
1,661 1,924 2,141
4Q’173Q’174Q’16
11.2%
$83/t
+1.6%
FY’17
85,242
FY’16
83,934
6,255
+34.4%
FY’17
8,408
FY’16
567 682
+20.4%
FY’17FY’16
$89/t $75/t $99/t$102/t• Crude steel production decreased 3.8% to 22.7Mt with decreases in
NAFTA (-5.2%) and Europe (-8.3%) offset in part by improvements
in BRAZIL (+6.9%) and ACIS (+4.5%)
• Steel shipments decreased 3.3% primarily due to declines in
NAFTA (-8.9%) and ACIS (-3.2%) offset in part by increases at
Brazil (+3.8%) and marginally in Europe (0.3%)
• Sales increased 0.4% to $17.7bn vs. $17.6bn for 3Q’17, primarily
due to higher average steel selling prices (ASP) (+2.7%), offset in
part by lower steel shipments (-3.3%), lower seaborne iron ore
reference prices (-7.5%) and lower marketable iron ore shipments
(-7.2%).
• EBITDA improved 11.2% primarily due to higher volumes offset in
part by a negative price-cost effect
4Q’17 v 3Q’17 analysis:
65
NAFTA performance 4Q’17 v 3Q’17
Performance declined due to lower volumes offset in part by positive price-cost effect
Average steel selling price $/t
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
681 741 748
+0.8%
4Q’173Q’174Q’16
5,011 5,655 5,150
4Q’173Q’174Q’16
-8.9%
301 381292
-23.3%
4Q’173Q’174Q’16
$60/t
+2.6%
FY’17
21,834
FY’16
21,281
-0.9%
FY’17
1,703
FY’16
1,719
672 742
+10.3%
FY’17FY’16
$67/t $81/t $78/t$57/t• NAFTA segment crude steel production decreased by 5.2% to
5.6Mt in 4Q’17 primarily due to an operational issue in Mexico, a
planned maintenance in Dofasco and a market slowdown in the
US.
• Steel shipments in 4Q’17 decreased by 8.9% to 5.2Mt, driven
primarily by decrease in volumes in the flat and long products on
account of weak market.
• Sales in 4Q’17 declined 7.3% to $4.3bn, primarily due to lower
steel shipment volumes, offset in part by higher ASP (+0.8%)
(primarily in long products (+1.5%)).
• EBITDA in 4Q’17 decreased by 23.3% to $292m primarily due to
lower steel shipment volumes (-8.9%) offset in part by positive
price-cost effect.
4Q’17 v 3Q’17 analysis:
Improvement
Crude steel achievable capacity (million Mt)
NAFTA
Long
Flat
Mexico
5.6
Canada
6.2
USA
16.3
Long
Flat
NAFTA
100.0%
18.0%
82.0%
Number of facilities (BF and EAF)
NAFTA No. of BF No. of EAF
USA 7 2
Canada 3 4
Mexico 1 4
Total 11 10
Note: IH Bar facility closed in June 2015; Georgetown wire rod facility closed in August 2015, Vinton and LaPlace sold in 2Q 2016
NAFTA leading producer with 28.1Mt /pa installed capacity
66
67
BRAZIL performance 4Q’17 v 3Q’17
Performance improved significantly primarily due to positive price-cost effect and higher volumes
Average steel selling price $/t
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
565 651 685
+5.3%
4Q’173Q’174Q’16
2,841 2,940 3,052
+3.8%
4Q’173Q’174Q’16
213 202341
4Q’16
+68.4%
4Q’173Q’17
$75/t
10,84010,753
+0.8%
FY’17FY’16
872 990
+13.5%
FY’17FY’16
536 667
+24.5%
FY’17FY’16
$69/t $81/t $91/t$112/t
• Brazil segment crude steel production increased by 6.9% to 3.0Mt
following planned maintenance at Monlevade, Brazil, during 3Q’17.
• Steel shipments in 4Q’17 increased by 3.8% to 3.1Mt due to a
10.4% increase in flat product steel shipments (primarily export)
offset in part by 6.1% seasonal decrease in long product steel
shipments.
• Sales in 4Q’17 increased by 9.4% to $2.3bn, due to higher ASP
(5.3%) (with both domestic and export prices increasing) and higher
steel shipments).
• EBITDA in 4Q’17 increased to $341m due to higher steel shipment
volumes and positive price-cost effect.
4Q’17 v 3Q’17 analysis:
Cariacica
Long
Flat
BRAZIL facilities
Tubarao
Monlevade
Piracicaba
The map is showing primary facilities excl. Pipes and Tubes.
Acindar
Improvement
Crude steel achievable capacity (million Mt)
Brazil
1.4
Flat
Argentina
Long
Brazil
10.5
Flat
Long
Brazil
100.0%
41.0%
59.0%
Number of facilities (BF and EAF)
No. of BF No. of EAF
Flat 3 -
Long 3 6
Total 6 6
Geographical footprint and logistics
Brazil leading producer with 11.9t /pa installed capacity
Juiz de Flora
Vega
68
69
EUROPE performance 4Q’17 v 3Q’17
Performance improved due to marginally higher volumes
Average steel selling price $/t
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
590 723 736
+1.8%
4Q’173Q’174Q’16
9,535
+0.3%
4Q’17
10,151
3Q’17
10,116
4Q’16
698 848 861
+1.6%
4Q’173Q’174Q’16
$73/t
+1.7%
FY’17
40,941
FY’16
40,247
+42.3%
FY’17
3,560
FY’16
2,503
568 702
+23.5%
FY’17FY’16
$84/t $62/t $87/t$85/t• Europe segment crude steel production decreased by 8.3% to
10.3Mt in 4Q’17, primarily due to a reline in ArcelorMittal Bremen
and blast furnace maintenance in ArcelorMittal Galati.
• Steel shipments in 4Q’17 increased marginally to 10.2Mt, primarily
due to a 2.8% increase in flat product shipments offset in part by a
4.5% decline in long product shipments.
• Sales in 4Q’17 were $9.6bn, higher vs. 3Q’17, with higher ASP
(+1.8%) predominantly in the long product business and higher steel
shipments.
• EBITDA in 4Q’17 increased by 1.6% to $861m primarily due to
higher volumes.
4Q’17 v 3Q’17 analysis:
Improvement
Crude steel achievable capacity (million Mt)
Europe
Long
Flat
53.0
Long
Flat
Europe
100.0%
29.0%
71.0%
Number of facilities (BF and EAF)
EUROPE No. of BF No. of EAF
Flat 20 5
Long 5 9
Total 25 14
Geographical footprint and logistics
(*) Excludes 2BF’s in Florange
(*)
(*)
Europe leading producer with 53.0Mt /pa installed capacity
The map is showing primary facilities excl. Pipes and Tubes.
Long
Flat
EUROPE facilities
Asturias
Dunkirk
Bremen
Florange
LiègeGhent
EHSDabrowa
Krakow
Fos
GalatiZenica
Ostrava
Flat and Long
Hamburg
Belval; Differdange
70
Duisburg
71
ACIS performance 4Q’17 v 3Q’17
Significant improvement due to positive price-cost effect partly offset by lower shipments
Average steel selling price $/t
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
432 515 546
+6.0%
4Q’173Q’174Q’16
3,095 3,362 3,254
-3.2%
4Q’173Q’174Q’16
239423
142
4Q’16 4Q’173Q’17
+77.0%
$46/t
FY’16
13,271
-1.3%
FY’17
13,094
678
FY’17
1,027
FY’16
+51.4%
395 515
+30.5%
FY’17FY’16
$71/t $51t $78/t$130/t• ACIS segment crude steel production in 4Q’17 increased 4.5% to
3.8Mt
• Steel shipments in 4Q’17 decreased by 3.2% to 3.3Mt primarily due
to lower steel shipments in CIS.
• Sales in 4Q’17 increased by 5.1% to $2.0bn, primarily due to higher
ASP (+6.0%) primarily in CIS, offset in part by lower steel shipments
(-3.2%).
• Operating income in 4Q’17 was $182m and impacted by
impairments of $160m related to a downward revision of cash flow
projections across all steel facilities in ArcelorMittal South Africa.
• EBITDA in 4Q’17 increased 77% to $423mn, primarily due to
improved performance in both CIS and South Africa (positive price-
cost effect), partly offset by lower shipment volumes.
4Q’17 v 3Q’17 analysis:
Crude steel achievable capacity (million Mt)
ACIS
8.2
Long
6.4
UkraineKazaksthan
5.1
Flat
S Africa
Long
Flat
58.0%
42.0%
100.0%
ACIS
Number of facilities (BF and EAF)
ACIS No. of BF No. of EAF
Kazakhstan 3 -
Ukraine 5 -
South Africa 4 2
Total 12 2
Geographical footprint and logistics
ACIS leading producer with 19.7Mt /pa installed capacity
The map is showing primary facilities excl. Pipes and Tubes.
Long
Flat
ACIS facilities
Kryviy Rih Temirtau
Vanderbijlpark
VereenigingSaldanha
Newcastle
4
72
Flat and Long
73
Mining: Profitability improved
Mining profitability positively impacted by higher iron ore prices and shipment volumes * CFR China 62% Fe
2017
1,407
2016
762
+84.7%
EBITDA $m
• Performance: 2017 EBITDA increased +84.7%
YoY due to higher market priced IO shipments
(+6.1% YoY) and higher seaborne IO market
prices (+22.3% YoY)
• Growth: 2018 Market priced iron ore shipments
expected to grow ~10% YoY
• Liberia: Transition to new deposit progressing
well; 5Mt run-rate achieved Dec’17. (expect
5Mtpa in 2018 – increase of 3Mt)
• Focus on quality: ongoing commitment on quality,
service and delivery
• Cost focus maintained: FCF breakeven remains
$40/t*
Marketable iron ore shipments (Mt)
2016
33.6
2017
+6.1%
35.7
74
Mining performance 4Q’17 v 3Q’17
Mining performance declined QoQ primarily due to lower iron ore prices and volumes
Iron ore (MT)
Coal (Mt)
EBITDA ($ Millions) and EBITDA/t
297 341267
-21.8%
4Q’173Q’174Q’16
762
+84.7%
FY’17
1,407
FY’16
• Own iron ore production in 4Q’17 increased by 1.4% to 14.4Mt. Despite
weather related delays at the start of the quarter, Liberia produced at
5Mt run-rate by Dec’17.
• Market-priced iron ore shipments in 4Q’17 decreased 7.2% to 8.4Mt,
primarily driven by lower shipments in AMMC impacted by poor
weather conditions.
• FY 2017 market-priced iron ore shipments grew 6.1% YoY.
• Iron ore shipments are expected to grow by approximately 10% in 2018
versus 2017 (primarily due to Liberia which is expected to grow by
approximately 3Mt on a full year basis to 5Mt in 2018).
• Own coal production in 4Q’17 decreased by 1.4% to 1.5Mt due to lower
production in Kazakhstan.
• EBITDA in 4Q’17 decreased by 21.8% to $267m, primarily due to
decreased seaborne iron ore reference prices (-8.1%) and lower
market-priced iron ore shipments (-7.2%).
4Q’17 v 3Q’17 analysis:
5.9
8.1 9.1 8.4
5.4 5.8
4Q’173Q’174Q’16 FY’17
22.2
35.7
FY’16
22.3
33.6
0.9 0.9 0.9
0.9 0.6 0.6
3Q’174Q’16 4Q’17
3.4 3.5
2.83.4
FY’17FY’16
Shipped at market price Shipped at cost plusOwn production
* Includes share of production
1) ArcelorMittal entered into an agreement to sell 15% of its stake in AM Mines Canada to a consortium lead POSCO and China Steel Corporation (CSC).
2) New exploration projects, Indian Iron Ore & Coal exploration, Coal of Africa (9.71%) is excluded in the above .
3) On Jan 19, 2015, ArcelorMittal announced the sale of its interest in the Kuzbass Coal mines in the Kemerovo region of Siberia, Russia, to Russia’s National Fuel Company (NTK). This transaction closed on December 31, 2014.
A global mining portfolio addressing Group
steel needs and external market
Key assets and projects
USA Iron Ore
Minorca 100%
Hibbing 62.31%*
Mexico Iron Ore
Las Truchas &
Volcan 100%;
Pena 50%*Liberia
Iron Ore 85%
Brazil
Iron Ore
100%
Canada
AMMC 85% (1)
Bosnia
Iron Ore
51%
USA Coal
100%
Ukraine
Iron Ore
95.13%
Kazakhstan
Coal
8 mines 100%
Kazakhstan Iron
Ore
4 mines 100%
Iron ore mine
Coal mine
Canada
Baffinland 31.07%
Geographically diversified mining assets
75
Daniel Fairclough – Global Head Investor Relations
+44 207 543 1105
Hetal Patel – UK/European Investor Relations
+44 207 543 1128
Valérie Mella – European/Retail Investor Relations
+44 207 543 1156
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+33 1 71 92 10 26
Lisa Fortuna – US Investor Relations
+312 899 3985
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