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3Q 2014 Results
7 November 2014
Lakshmi N Mittal, Chairman and Chief Executive Officer
Aditya Mittal, Chief Financial Officer
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 Annual Report on Form 20-F for the
year ended December 31, 2013 filed with the SEC and with respect to Items 3, 4, 5, 6 and 18 of
such Annual Report on Form 20-F, such Items have been retrospectively adjusted to reflect the
retrospective application of changes in its segment information, which can be found in the current
report on Form 6-K filed with the SEC on August 5, 2014. ArcelorMittal undertakes no obligation
to publicly update its forward-looking statements, whether as a result of new information, future
events, or otherwise.
1
Agenda
• Results overview and recent developments
• Market outlook
• Results analysis
• Outlook and guidance
2
0.780.870.850.85
2Q’14 1Q’14 2013 2012
1.0
2011
1.4
2010
1.8
2009
1.9
2008
2.5
2007
3.1
3Q’14
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 focus
Our goal is to be the safest Metals & Mining company
Health and safety performance
• Safety improvement: LTIF rate of 0.78x in
3Q’14 vs 0.87x in 2Q’14 and 0.84x in 3Q’13
• The Company’s effort to improve the
Group’s Health and Safety record will
continue
• The Company is focused on further
reducing the rate of severe injuries and
fatality prevention
Focus on value drivers delivering results
Capturing volume recovery in core steel markets
Margin restoration through cost optimization and
operational improvement
Franchise development through R&D driven
product innovation and targeted investment
Lower mining costs through expanded volumes
Reducing net debt remains a priority
3Q 14 progress vs 3Q 13:
• Steel shipments +3.9%
• EBITDA/t +$6 to $89/t
• Marketable IO shipments +6.3%
• Mining cash costs on track for 7%
reduction FY14 v FY13
4
(USDm) unless otherwise shown 3Q'14 2Q'14* 3Q'13 9M'14* 9M'13**
Iron ore shipments at market price (Mt) 10.0 10.5 9.4 29.9 24.9
Steel Shipments (Mt) 21.5 21.5 20.7 63.9 62.1
Sales 20,067 20,704 19,643 60,559 59,592
EBITDA 1,905 1,763 1,713 5,422 4,978
Net income / (loss) 22 52 (193) (131) (1,318)
Steel EBITDA margins up $19/t YoY
* EBITDA in 2Q’14 was negatively impacted by $90m following the settlement of US antitrust litigation ** EBITDA in 9M’13 included the positive impact of a $47m fair valuation gain
relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada and $92m of DDH income.
5
Recap
Developed markets profitability improving; ACIS turnaround progressing
• Steel only EBITDA/t increased $19/t vs. 3Q’13
NAFTA $1/t improvement YoY – improved pricing and volume offset by higher costs
Brazil segment lower – weak domestic market offset in part by higher slab exports
Europe $20/t improvement YoY – benefiting from lower cost and higher volume
ACIS $30/t improvement – driven by Kazakhstan and Ukraine turnaround
Brazil* Europe ACIS NAFTA
Steel segment EBITDA per tonne (US$)
7372
3Q’14 3Q’13
+1% -16%
3Q’14
162
3Q’13
194 5333
+61%
3Q’14 3Q’13
6434
3Q’14 3Q’13
+88%
Steel margin expansion
* Brazil includes Brazil and neighbouring countries
6
Mining volumes driving lower costs
• Growth: market priced iron ore shipments +6.3% YoY in Q3; +20.1% YoY for 9M’14
AMMC: Benefitting from expanded capacity; Shipping at near full capacity in 3Q’14 after
minor operational issues; 23.5Mt expected in 2014
Liberia: production and shipments on target for 5Mt in 2014; Phase 2 expansion
currently progressing at a slower pace due to contractors declaring force majeure
• Costs: overall mining costs reduction of 7% in 2014 vs. 2013
Continued mining volume growth and cost progress
-7%
2014F 2013
Mining cash cost index
10.010.59.3
10.39.4
+6.3%
3Q’14 2Q’14 1Q’14 4Q’13 3Q’13
IO marketable shipments (Mt)
35292825
+15%
2014F 2012 2011 2010 2013
IO marketable shipments (Mt)
7
• Fortiform® launched
– New range of cold-formable high strength steels
– Complements our existing Advanced High Strength Steels
(AHSS) offering which includes Usibor® and Ductibor®
• Steel to remain the material of choice for auto
– ArcelorMittal’s AHSS offering allows for significant weight
savings while improving safety
– Helps customers meet their sustainability requirements in
order to meet future regulations on tailpipe emissions
– Recent information released by major OEMs supports the
case for steel remaining the material of choice
Committed to producing innovative steel solutions for our automotive customers
Auto franchise developments
New Volvo XC-90
Chevrolet recently launched AHSS-intensive
“toughnology” concept for the 2015 Silverado
• Gallatin JV sale
– Sale of 50% interest in Gallatin JV to Nucor
– Generating $385m cash in 4Q’14
– Exit of a non-consolidated, non-core business
– Non franchise business
– Premium exit valuation
• NAFTA portfolio upgrade
– Gallatin stake sale accommodated investment
in Calvert**
– Calvert is a state-of-the-art facility orientated
towards high-margin end markets
– Maintained group financial discipline and
deleveraging objectives
Disciplined M&A capturing value creating opportunities
AM/NS Calvert: Pickling line
Focussed M&A: creating value
$4.3
billion
cash
proceeds
since
Sept
2011*
* Gallatin JV sale completed in 3Q’14. Cash proceeds from sale received in 4Q’14 ** ArcelorMittal acquired Calvert through a 50:50 JV with Nippon Steel for total consideration of
$1.55bn. Transaction was largely financed through debt at the JV level, while ArcelorMittal and Nippon Steel each only contributed ~$258m of equity to the JV.
MacArthur Coal stake BNA stake Erdemir (½ of interest sold) Skyline Enovos Paul Wurth AMMC stake CLN Kiswire ATIC Circuit Foil Valin Gallatin
8
9
Global apparent steel consumption (ASC)
growth forecast in 2014** (v 2013)
Source: * Markit. Purchasing managers indices for over 40 countries weighted by share of ArcelorMittal finished steel deliveries. ** ArcelorMittal estimates
ArcelorMittal weighted global manufacturing PMI*
Global
CIS
2.25-2.75%
-3.0 to -3.5%
Brazil -4.5 to -5%
China 1.5-2.0%
EU28 3.0-3.5%
US 8.25-8.75%
PMI above 50 continues to point to further improved demand
Leading indicators remain positive
(latest data point: Oct’14: 52.7)
Financial results
11 * Relates to $90m charge following the settlement of antitrust litigation in the United States ** Includes non-steel EBITDA *** Includes translation losses on foreign exchange
EBITDA bridge from 2Q’14 to 3Q’14
($million)
200
90
Underlying
2Q’14
EBITDA
(9)
3Q’14
EBITDA
Forex***
(29)
US
litigation*
1,763
2Q’14
EBITDA
1,853
Volume &
Mix - Steel
Price / Cost
- Mining
(2)
Price / Cost
- Steel**
Volume &
Mix - Mining
(108)
1,905
EBITDA improved 2.8% 3Q’14 vs. 2Q’14 (excluding US litigation costs)
Mining impact Steel impact
12
EBITDA to net results 2Q
201
4
240
832
1,763
52 (188)
(327)
(383) 118
(931)
Weighted Avg No of shares: 1,791
EPS = $ 0.03/share
3Q’14 net income positive
3Q 2
014
($ million) Includes $315m forex losses
and $161m Brazilian federal
tax amnesty*
959
1,905
Net income
22 18
Pre-tax income
4
Taxes and
non-controlling
interest
Forex and
other Fin. Cost
(657)
Net interest
expense
(338)
Income from
equity
54
Operating
Income
D&A
(946)
EBITDA
Weighted Avg No of shares: 1,792
EPS = $ 0.01/share
* During 3Q’14, the Company settled an amnesty programme in Brazil in relation to Siderbras case and recorded other financing charges for an amount of $161 million out of which
$82 million settled with tax losses and the remainder over 30 monthly instalments.
13
EBITDA to free cash flow
3Q 2014 free cash flow waterfall ($ million)
1,905
501
(448)
Free cashflow
(949)
Cashflow from
operations
(828)
(576)
EBITDA
Change in
working
capital
Net financial
cost, tax
expense, and
others*
Capex
* Includes pension expense, non cash items etc.
Negative free cash flow during 3Q’14
14
Net debt analysis
3Q 2014 net debt analysis ($ million)
448
381 428
17,770
Net debt
at 3Q’14
Forex & others Dividends** M&A*
61
Free cashflow Net debt
at 2Q’14
17,430
Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments *M&A primarily relates to net proceeds from
Circuit Foil ** Dividends include $328 million paid to ArcelorMittal shareholders and $53 million paid to minority shareholders.
Net debt increased due to working capital investment & dividends offset by forex
15
Outlook and guidance
Operating conditions remain generally favorable. The impact of declining
iron ore prices on Mining segment profitability is being offset by
improvement in the steel business
The Company reiterates its guidance for EBITDA in excess of $7.0 billion
in 2014
Net interest expense is expected to be approximately $1.5 billion for
2014 down from previous $1.6 billion guidance
2014 capital expenditure is expected to be approximately $3.8 billion
The Company maintains its medium term net debt target of $15 billion
The Company still expects FY 2014 EBITDA to be greater than $7.0 billion
Appendix
Selective steel projects:
AM/NS Calvert JV
• Slab yard expansion to increase Calvert’s slab
staging capacity and efficiency ($40m):
– The current HSM consists of 3 bays with 335kt
capacity for incoming slabs (less than the
staging capacity required to achieve the 5.3Mt
target)
– Includes additional overhead cranes, foundation
work and structural steel erection, to increase
the staging and storage capacity in support of
achieving full capacity
– Project completion expected in 2Q 2016
• Investment in the existing No.4 continuous
coating line:
– Increases ArcelorMittal’s North American
capacity to produce press hardenable
steels, one of the strongest steels used in
automotive applications, Usibor®, a type
one aluminum-silicon coated (Al Si) high
strength steel
– AM/NS Calvert will also be capable of
producing Ductibor®, an energy-absorbing
high strength steel grade designed
specifically to complement Usibor® and
offer ductility benefits to customers
– The modifications are expected to be
complete by the end of 2014 and the first
coil is targeted for production in early 2015
17 17
Investment in Calvert to further enhance automotive capabilities
AM/NS Calvert announced two important investment projects that will further enhance the
capabilities of the world’s most advanced steel finishing facility in Calvert, Alabama
Monlevade expansion project in Brazil restarted:
• Phase 1 (approved) focuses on downstream facilities and
consists of:
– a new wire rod mill in Monlevade with additional capacity of
1,050ktpy of coils with capital expenditure of $280m;
– Juiz de Fora rebar capacity increase from 50 to 400ktpy
(replacing some wire rod production capacity) and meltshop
capacity increase by 200ktpy
• Expected completion in 2015
• A decision whether to invest in Phase 2 of the project, focusing on
the upstream facilities in Monlevade (sinter plant, blast furnace
and meltshop), will be taken at a later date
18 18
Selective steel projects: Monlevade (Brazil segment)
Expansion supported by improved market for long products in Brazil
Vertical stands Hangar of the rolling mill # 3
Intermediate mill
Wire rod mill
Billet charging table
New rolling mill at Acindar (Argentina):
• New rolling mill (Huatian) in Santa Fe province to
increase rebar capacity by 0.4mt/year for civil
construction market:
– New rolling mill will also enable Acindar to optimize
production at its special bar quality (SBQ) rolling mill
in Villa Constitución, which in future will only
manufacture products for the automotive and mining
industries
• Estimated capital expenditure of ~$100m and completion
in 2016
Progress update
• Equipment import: Rolling mill Huatian received at
Acindar
• Disassembly of the existing rolling mill (from March to
July): electrical disassembly at 65%, mechanical
disassembly at 35%
19 19
Selective steel projects: Acindar (Brazil segment)
Expansion supported by improved construction market in Argentina
Selective steel projects: Dofasco (NAFTA)
Cost optimization, mix improvement and increase of shipments of
galvanized products:
• Phase 1: New heavy gauge galvanize line (#6 Galvanize Line):
– Restart construction of heavy gauge galvanizing line #6 (cap.
660ktpy) and closure of line #2 (cap. 400ktpy) increased
shipments of galvanized sheet by 260ktpy, along with improved mix
and optimized cost
– Line #6 will incorporate AHSS capability part of program to
improve Dofasco’s ability to serve customers in the automotive,
construction, and industrial markets
– Expected completion in 2015
• Phase 2: Approved Galvanized line conversion:
– Restart conversion of #4 galvanize line to dual pot line (capacity
160ktpy of galvalume and 128ktpy of galvanize products) and
closure of line #1 galvanize line (cap.170ktpy of galvalume)
increased shipments of galvanized sheet by 128ktpy, along with
improved mix and optimized cost.
– Expected completion in 2016
20 20
Expansion supported by strong market for galvanized products
Selective steel projects: VAMA-JV with Hunan Valin
• VAMA: JV between ArcelorMittal and Hunan Valin which will
produce steel for high-end applications in the automobile
industry, supplying international automakers and first-tier
Chinese car manufacturers as well as their supplier networks
for rapidly growing Chinese market
• Construction of automotive facility, the main components are:
– State of the art pickling tandem CRM (1.5mt)
– Continuous annealing line (0.9mt), and
– Hot dip galvanizing line (0.5mt)
• Capital expenditure of ~$832 million (100% basis)
• First automotive coils targeted for 1Q 2015
21 21
Robust Chinese automotive market: > 50% growth to 25 million vehicles by 2018
3
5
7
9
11
13
15
17
19
Jan-0
7
Ma
y-0
7
Sep-0
7
Jan-0
8
Ma
y-0
8
Sep-0
8
Jan-0
9
Ma
y-0
9
Sep-0
9
Jan-1
0
Ma
y-1
0
Sep-1
0
Jan-1
1
Ma
y-1
1
Sep-1
1
Jan-1
2
Ma
y-1
2
Sep-1
2
Jan-1
3
Ma
y-1
3
Sep-1
3
Jan-1
4
Ma
y-1
4
Sep-1
4
EU28
USA
15
25
35
45
55
65
Jan-0
7
Ma
y-0
7
Sep-0
7
Jan-0
8
Ma
y-0
8
Sep-0
8
Jan-0
9
Ma
y-0
9
Sep-0
9
Jan-1
0
Ma
y-1
0
Sep-1
0
Jan-1
1
Ma
y-1
1
Sep-1
1
Jan-1
2
Ma
y-1
2
Sep-1
2
Jan-1
3
Ma
y-1
3
Sep-1
3
Jan-1
4
Ma
y-1
4
Sep-1
4
Developing ex ChinaChinaDeveloped
22
Continued growth in developed markets
Global apparent steel consumption (ASC)*
(million tonnes per month) US and European apparent steel consumption (ASC)**
(million tonnes per month)
* ArcelorMittal estimates; ** AISI, Eurofer and ArcelorMittal estimates
• China ASC -2.6% in 3Q’14 vs. 2Q’14
• China ASC -0.5% in 3Q’14 vs. 3Q’13 • EU ASC -8.7% in 3Q’14 vs. 2Q’14
• EU ASC +1.7% in 3Q’14 vs. 3Q’13
• Global ASC -2.2% in 3Q’14 vs. 2Q’14
• Global ASC +1.6% in 3Q’14 vs. 3Q’13
• US ASC +0.9% in 3Q’14 vs. 2Q’14
• US ASC +10.2% in 3Q’14 vs. 3Q’13
Year-on-Year growth in core markets continued in 3Q’14
(latest data point: Sept ‘14) (latest data point: Sept’14)
23
• Global manufacturing output has continued to expand in our key markets, but manufacturing PMIs suggest the pace of expansion has moderated.
• US manufacturing output picked up to 3.9% y-o-y in 3Q’14 from 3.5% in 2Q’14 and composite manufacturing PMI** increased to 57.1 in September.
• EU28 manufacturing growth eased to 0.4% y-o-y in August. “Flash” manufacturing PMI ticked up to 50.7 in October.
• In China, industrial output rebounded to 8.0% y-o-y in September from 6.9% in August and the composite manufacturing PMI** averaged 51.0 in Q3.
• Both Brazil and Russia face significant headwinds. Brazil’s manufacturing PMI remains below 50 indicating further contraction.
Global indicators remain positive
Source: *Markit. ArcelorMittal estimates
** Composite manufacturing PMIs is an average of the Markit and ISM for the US and Markit and China Federation of Logistics and Purchasing for China
Global indicators signal continued growth in developed markets in 4Q’14
(latest data point: Oct’14: 52.7)
Exp
an
sio
nC
on
tra
ctio
n
30
35
40
45
50
55
60
65
Ja
n-0
6A
pr-
06
Ju
l-0
6O
ct-
06
Jan-0
7A
pr-
07
Ju
l-0
7O
ct-
07
Ja
n-0
8A
pr-
08
Ju
l-0
8O
ct-
08
Ja
n-0
9A
pr-
09
Ju
l-0
9O
ct-
09
Ja
n-1
0A
pr-
10
Ju
l-1
0O
ct-
10
Ja
n-1
1A
pr-
11
Ju
l-1
1O
ct-
11
Jan-1
2A
pr-
12
Ju
l-1
2O
ct-
12
Ja
n-1
3A
pr-
13
Ju
l-1
3O
ct-
13
Ja
n-1
4A
pr-
14
Ju
l-1
4
Eurozone construction PMI USA Architectural Billings Index
200250300350400450500550600650700750
Jan-0
2
Jul-
02
Jan-0
3
Jul-
03
Jan-0
4
Jul-
04
Jan-0
5
Ju
l-0
5
Jan-0
6
Ju
l-0
6
Jan-0
7
Ju
l-0
7
Jan-0
8
Ju
l-0
8
Jan-0
9
Jul-
09
Jan-1
0
Jul-
10
Jan-1
1
Jul-
11
Jan-1
2
Jul-
12
Jan-1
3
Jul-
13
Jan-1
4
Jul-
14
Residential
Non-residential
US construction growth continues;
Europe easing back • US growth continues in 3Q’14
– Total construction spending fell slightly in August, bringing the y-o-y growth rate down to 5%.
– Non-residential is growing more strongly than residential, up 6.4% ytd
– Strength is likely to persist as the Architecture Billings Index picked up to 55.2 in September.
• European construction easing back
– Eurozone construction PMI remains below 50, rising only slightly to 43.1 in September.
– In contrast, EU28 construction growth actually picked up in August to 2.2% y-o-y.
– Output in 2014 expected to be higher than 2013, led by growth in Germany, Poland and the UK. Construction in Southern Europe remains weak despite a pick up from low levels in Spain.
US residential and non-residential construction indicators
(SAAR) $bn*
24 * Source: US Census Bureau; ** Source: Markit and The American Institute of Architects
Eurozone and US construction indicators**
Construction gradually improving
(latest data point: Aug’14)
(latest data point: Aug’14)
-15%
0%
15%
30%
45%
60%
75%
Jan-0
7
Ma
y-0
7
Sep-0
7
Jan-0
8
Ma
y-0
8
Sep-0
8
Jan-0
9
Ma
y-0
9
Sep-0
9
Jan-1
0
Ma
y-1
0
Sep-1
0
Jan-1
1
Ma
y-1
1
Sep-1
1
Jan-1
2
Ma
y-1
2
Sep-1
2
Jan-1
3
Ma
y-1
3
Sep-1
3
Jan-1
4
Ma
y-1
4
0
3
6
9
12
15
18
21
0
20
40
60
80
100
120
Jan-0
7A
pr-
07
Jul-0
7O
ct-
07
Jan-0
8A
pr-
08
Jul-0
8O
ct-
08
Jan-0
9A
pr-
09
Jul-0
9O
ct-
09
Jan-1
0A
pr-
10
Jul-1
0O
ct-
10
Jan-1
1A
pr-
11
Jul-1
1O
ct-
11
Jan-1
2A
pr-
12
Jul-1
2O
ct-
12
Jan-1
3A
pr-
13
Jul-1
3O
ct-
13
Jan-1
4A
pr-
14
Jul-1
4
Steel inventory at warehouses (RHS)
Finished steel production (LHS)
Steel inventory at mills (RHS)
Chinese industrial growth stable
• Industrial output growth slowed from 8.9% (2Q’14) to
8% in 3Q’14 but Manufacturing PMI has rebounded
slightly indicating stabilised growth in 4Q’14
• Infrastructure investment continues to grow robustly at
15% y-o-y in 3Q’14 but has slowed from rapid growth
rates seen in the second quarter (+24% y-o-y)
• Despite a loosening of purchase restrictions in many
cities, and a relaxation of lending rules for
homebuyers:
– Prices declined m-o-m in 68 out of 69 cities.
– The real estate market remains oversupplied, with
vacant floor space at record levels.
– Newly started construction was down 9.3% y-o-y
in Jan-Sep’14, while property sales declined by
8.6% y-o-y over the same period.
• Flat products demand continues to be supported by
strong demand from auto, and stabilising shipbuilding
after two years of decline.
• Steel production data indicates that output continued
to grow in 3Q’14 but mainly due to rising exports.
• Warehouse inventories to historical lows in days of
supply, but partially offset by still high inventory at
mills.
25
Crude steel finished production and inventory (mmt)
*Mma refer to months moving average. Source: NBS, CISA, WSA, Mysteel, ArcelorMittal Strategy estimates
China infrastructure investment 3mma* (Y-o-Y)
Chinese economy growth slows with steel demand impacted by weak real estate
(latest data point: Jul’14)
(latest data point: Jul’14)
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0100200300400500600700800900
1,0001,1001,2001,3001,400
Ja
n-0
7A
pr-
07
Jul-0
7O
ct-
07
Ja
n-0
8A
pr-
08
Ju
l-0
8O
ct-
08
Ja
n-0
9A
pr-
09
Ju
l-0
9O
ct-
09
Jan-1
0A
pr-
10
Ju
l-1
0O
ct-
10
Ja
n-1
1A
pr-
11
Ju
l-1
1O
ct-
11
Ja
n-1
2A
pr-
12
Jul-1
2O
ct-
12
Ja
n-1
3A
pr-
13
Ju
l-1
3O
ct-
13
Ja
n-1
4A
pr-
14
Ju
l-1
4
Flat stocks at service centresMonths of supply (RHS)
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Jan-0
7A
pr-
07
Jul-0
7O
ct-
07
Jan-0
8A
pr-
08
Jul-0
8O
ct-
08
Jan-0
9A
pr-
09
Jul-0
9O
ct-
09
Jan-1
0A
pr-
10
Jul-1
0O
ct-
10
Jan-1
1A
pr-
11
Jul-1
1O
ct-
11
Jan-1
2A
pr-
12
Jul-1
2O
ct-
12
Jan-1
3A
pr-
13
Jul-1
3O
ct-
13
Jan-1
4A
pr-
14
Jul-1
4
USA (MSCI)
Months Supply
Growth in developed market inventory slows German inventories (000 MT)
26
China service centre inventories* (Mt/mth) with ASC% Brazil service centre inventories (000 MT)
US service centre total steel Inventories (000 MT)
Source: WSA, Mysteel, ArcelorMittal Strategy estimates
Slow rebound in inventory is supporting demand growth in developed market
(latest data point: Sept’14)
(latest data point: Sep’14)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2
4
6
8
10
12
14
16
18
20
22
Jan
-07
Ap
r-07
Jul-
07
Oct-
07
Jan
-08
Ap
r-08
Jul-
08
Oct-
08
Jan
-09
Ap
r-09
Jul-
09
Oct-
09
Jan
-10
Ap
r-10
Jul-
10
Oct-
10
Jan
-11
Ap
r-11
Jul-
11
Oct-
11
Jan
-12
Ap
r-12
Jul-
12
Oct-
12
Jan
-13
Ap
r-13
Jul-
13
Oct-
13
Jan
-14
Ap
r-14
Jul-
14
Flat and Long
% of ASC (RHS)
(latest data point: Sept’14)
0
1
2
3
4
5
0
500
1,000
1,500
2,000
2,500
Jan-0
7A
pr-
07
Jul-0
7O
ct-
07
Jan-0
8A
pr-
08
Jul-0
8O
ct-
08
Jan-0
9A
pr-
09
Jul-0
9O
ct-
09
Jan-1
0A
pr-
10
Jul-1
0O
ct-
10
Jan-1
1A
pr-
11
Jul-1
1O
ct-
11
Jan-1
2A
pr-
12
Jul-1
2O
ct-
12
Jan-1
3A
pr-
13
Jul-1
3O
ct-
13
Jan-1
4A
pr-
14
Jul-1
4
Germany Flat Stocks
Months Supply (RHS)
(latest data point: Aug’14)
27
Global apparent steel consumption China
NAFTA
EU28
Rest of World*
0
100
200
300
400
500
600
700
800 +9%
+1.5- 2%
+70%
2014F 2013 2012 2011 2010 2009 2008 2007
ArcelorMittal estimates; * World ex. China, NAFTA and EU28
40
60
80
100
120
140
160
2013 2012 2011 2010 2009 2008 2007 2014F
-9%
-2%
+8.25- 8.75%
50
100
150
200
250
300
350
400
450
500
550+3% +2%
+11%
2014F 2013 2012 2011 2010 2009 2008 2007
Estimated 2014 ASC growth of 2.25-2.75%
40
60
80
100
120
140
160
180
200
220
+1% +3- 3.5%
-30%
2014F 2013 2012 2011 2010 2009 2008 2007
Raw material prices stabilizing
Spot iron ore, coking coal and scrap price (index IH 2008=100)*
Regional steel price HRC ($/t)
28
Coking coal stable during the quarter; iron ore and scrap declined
* Source data: ArcelorMittal estimates; Platts
(latest data point: Oct’14) (latest data point: Oct’14)
20
30
40
50
60
70
80
90
100
110
120
130
Jan 0
8A
pr
08
Jul 08
Oct 08
Jan 0
9A
pr
09
Jul 09
Oct 09
Jan 1
0A
pr
10
Jul 10
Oct 10
Jan 1
1A
pr
11
Jul 11
Oct 11
Jan 1
2A
pr
12
Jul 12
Oct 12
Jan 1
3A
pr
13
Jul 13
Oct 13
Jan 1
4A
pr
14
Jul 14
Oct 14
Spot Iron Ore
Coking Coal
Scrap
400
500
600
700
800
900
1000
1100
1200
1300
Jan 0
8A
pr
08
Jul 0
8O
ct 0
8Ja
n 0
9A
pr
09
Jul 0
9O
ct 0
9Ja
n 1
0A
pr
10
Jul 1
0O
ct 1
0Ja
n 1
1A
pr
11
Jul 1
1O
ct 1
1Ja
n 1
2A
pr
12
Jul 1
2O
ct 1
2Ja
n 1
3A
pr
13
Jul 1
3O
ct 1
3Ja
n 1
4A
pr
14
Jul 1
4O
ct 1
4
China domestic Shanghai (Inc 17% VAT)
N.America FOB Midwest
N.Europe domestic ex-works
29
Net debt ($ billion) Average maturity (years)
Liquidity ($ billion) Bank debt as component of total debt (%)
Balance sheet structurally improved
17.8
32.5
-45%
3Q 2014* 3Q 2008
6.1
2.6
3Q 2014 3Q 2008
10.2
12.0
3Q 2014 3Q 2008 3Q 2014
10%
3Q 2008
84%
Balance sheet fundamentals improved
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). *As at September 30, 2014, net debt includes $0.1 billion from distribution centers in Europe held for sale
Working capital
30
OWCR and rotation days* ($ billion and days)
Business will invest in working capital as conditions necessitate
* Rotation days are defined as days of accounts receivable plus days of inventory minus days of accounts payable. Days of accounts payable and inventory are a function of cost of goods sold of the quarter on an annualized basis. Days of accounts receivable are a function of sales of the quarter on an annualized basis.
54
0
4
8
12
16
20
24
28
0
30
60
90
120
1Q
14
4Q
13
3Q
13
2Q
13
1Q
13
4Q
12
3Q
12
2Q
12
1Q
12
4Q
11
3Q
11
2Q
11
1Q
11
4Q
10
2Q
14
2Q
10
1Q
10
4Q
09
3Q
09
2Q
09
1Q
09
4Q
08
3Q
08
2Q
08
1Q
08
4Q
07
3Q
07
2Q
07
1Q
07
3Q
14
3Q
10
Rotation days - RHS Working capital ($ billion) - LHS
31
Net debt
Net Debt ($ billion) & Net Debt/LTM reported EBITDA* Ratio (x)
* Based on last twelve months (LTM) reported EBITDA. Figures prior to 1Q’12 have not been recast on quarterly basis for adoption of new accounting standards implemented from 1.1.13
2.4
0
5
10
15
20
25
30
35
0.0
1.0
2.0
3.0
4.0
2Q
07
1Q
07
3Q
13
2Q
13
1Q
13
4Q
12
3Q
12
2Q
12
1Q
12
4Q
11
3Q
11
2Q
11
1Q
11
4Q
10
3Q
10
2Q
10
1Q
10
4Q
09
3Q
09
2Q
09
1Q
09
4Q
08
3Q
08
2Q
08
1Q
08
4Q
07
4Q
13
3Q
07
1Q
14
3Q
14
2Q
14
Net Debt / LTM EBITDA Net Debt ($ billion) - LHS
Net debt increased by $0.4bn due to WC investment & dividends partly offset by forex
32
Liquidity and debt maturity profile
Debt maturities ($ billion)* Liquidity at September 30, 2014 ($ billion)
Liquidity lines:
• $3.6bn syndicated credit facility matures 18/03/16
• $2.4bn syndicated credit facility matures 06/11/18
• Continued strong liquidity
• Average debt maturity 6.1 years
Debt maturity: Ratings
• S&P – BB+, negative watch
• Moody’s – Ba1, negative outlook
• Fitch – BB+, stable outlook
0
1
2
3
4
5
6
7
8
9
10
>2018
9.7
2018
2.3
2017
2.9
2016
2.6
2015
2.3
2014
2.1
Bonds
Other
Commerical
1.7
4.2
6.0
Other loans
Cash Bonds
Commercial paper
Unused credit lines
Debt due
in 2014
2.1
0.3
0.1
Liquidity
at 30/9/14
10.2
Continued strong liquidity position and average debt maturity of 6.1 years
* On October 30, 2014, the Company redeemed its 9.0% Notes due February 15, 2015 and its 3.750% Notes due February 25, 2015 prior to their scheduled maturity. For purposes of the Company’s debt maturity profile table, these two issuances have been excluded from 2015 debt repayments and included in 2014 debt repayments.
33
Segment highlights
0
100
200
300
400
500
600
700 -48%
Mining ACIS Europe Brazil NAFTA
+90%
-8%
+73%
+3%
3Q’14 2Q’14 1Q’14 4Q’13 3Q’13
Segmental EBITDA* (US$mn)
0
50
100
150
200
250
Q3’14 Q2’14* 1Q’14 4Q’13 3Q’13
ACIS Europe Brazil NAFTA
Segmental EBITDA/tonne (US$/t)
* Improving YoY segment performance except Brazil and Mining
* Segmental figures shown above include one time adjustments; NAFTA EBITDA in 2Q 2014 of $177m included the negative impact from settlement of US litigation $90m
0
2,000
4,000
6,000
8,000
10,000
12,000
ACIS Europe Brazil NAFTA
+2%
+11%
+6%
+1%
Segmental shipments (kt)
6.8 6.34.2
6.2 7.1
9.4 10.3
9.3
10.5 10.0
0
5
10
15
20
0
5
10
15
20
3Q’14 2Q’14 1Q’14 4Q’13 3Q’13
Shipped at cost plus
Own iron ore prod
Shipped at market price Iron ore (mt)
34
NAFTA
Average steel selling price $/t
* EBITDA in 2Q’14 of $177 million was negatively impacted by $90 million following the settlement of US antitrust litigation; as well as residual costs associated with severe
winter in 1Q’14 (~$150 million) ;total 1H’14 weather impact (~$350 million)
• Crude steel production up 5.4% primarily
due to completion of BF reline in Indiana
Harbor No.7 in 3Q’14
• Steel shipments up 1.3% driven by:
• +2.9% increase in flat products
reflecting improved demand
• -1.8% decrease in long products
• Average steel selling prices (ASP) down
0.4% driven by:
• -3.1% decrease in long products and
remained stable for flat products
• EBITDA up 142.2%:
• 2Q’14 was negatively impacted by
$90 million litigation costs as well as
residual costs associated with severe
winter incurred in 1Q’14 (circa $150
million)
Analysis 3Q’14 v 2Q’14
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
853856818
3Q’13 2Q’14 3Q’14
+4.3%
5,774 5,790 5,866
+1.6%
2Q’14 3Q’14 3Q’13
417 429177
3Q’14
+2.8%
2Q’14* 3Q’13
NAFTA profitability improved 3Q’14 v 2Q’14
$72/t
9M’13 9M’14
17,269
+3.0%
16,772
993 865
9M’14* 9M’13
-13%
831 849
9M’13
+2.3%
9M’14
$31/t $59/t $50/t $73/t
Due to severe
weather
impact
35
Brazil
Average steel selling price $/t
• Crude steel production up 24.7% following
restart of ArcelorMittal Tubarao blast
furnace No.3 on July 6, 2014
• Steel shipments up 23% primarily on
account of higher slab shipments from Brazil
post restart of blast furnace No.3 at Tubarao
• ASP down 7.3% driven by:
• -1.9% decrease for flat products
excluding mix impact
• -1.2% decrease for long products
• EBITDA up 11.1%
Analysis 3Q’14 v 2Q’14
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
893 934 866
-3.0%
3Q’14 2Q’14 3Q’13
2,559 2,312 2,844
3Q’13 2Q’14 3Q’14
+11.1%
498 414 460
-7.5%
3Q’14 2Q’14 3Q’13
Brazil profitability improved 3Q’14 v 2Q’14
$194/t
7,481
9M’13 9M’14
+0.4%
7,453
1,299
-7.1%
9M’14 9M’13
1,398
925 896
9M’13
-3.1%
9M’14
$179/t $188/t $174/t $162/t
Due to BF3 Tubarao restart
36
Europe
Average steel selling price $/t
• Crude steel production decreased by 0.9%
• Steel shipments down 3.6% driven by:
• 2.2% and 5.9% decrease in flat and
long products respectively, following
seasonally lower demand
• ASP lower primarily due to euro weakness :
• -5.4% decrease in flat products
• -4.0% decrease in long products
• EBITDA down 24.2% mainly driven by lower
shipments and the translation impact
following a weaker euro
Analysis 3Q’14 v 2Q’14
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
786 799 760
-3.3%
3Q’14 2Q’14 3Q’13
9,257 9,829
+6.2%
3Q’14 2Q’14
10,191
3Q’13
689 523303
+72.6%
3Q’14 2Q’14 3Q’13
Europe profitability declined 3Q’14 v 2Q’14
$33/t
30,029
9M’13
28,795
+4.3%
9M’14
9M’13
1,747
9M’14
1,213
+44.1%
804 789
9M’13
-1.8%
9M’14
$68/t $42/t $58/t $53/t
37
ACIS
Average steel selling price $/t
• Crude steel production was stable.
Production was higher in Kazakhstan and
Ukrainian, offset in part by lower South
African production following the on-going
reline at Newcastle blast furnace
• Steel shipments down 2.3% primarily driven
by lower exports
• Sales decreased 13.3% primarily due to
lower sales of non-steel products and lower
steel shipment volumes
• EBITDA +33.7% mainly driven by improved
performance (prices and costs) in the CIS
countries
Analysis 3Q’14 v 2Q’14
Steel shipments (000’t)
EBITDA ($ Millions) and EBITDA/t
607 592 594
-2.1%
3Q’14 2Q’14 3Q’13
3,208 3,306 3,229
+0.7%
3Q’14 2Q’14 3Q’13
+89.5%
3Q’14
208
2Q’14
156
3Q’13
110
ACIS profitability improved 3Q’14 v 2Q’14
$34/t
+3.3%
9M’14
9,722
9M’13
9,413
9M’13
260
+81.8%
9M’14
473
619 584
9M’13
-5.6%
9M’14
$47/t $28/t $49/t $64/t
38
Mining
Iron ore (Mt)
• Own iron ore production declined 4.5% due
to the rainy season in Liberia and minor
operational issues in Canada
• Market price iron ore shipments decreased
4.8% due to seasonally lower Liberian
shipments and lower Ukrainian shipments
• EBITDA 28.4% lower primarily due to lower
seaborne iron ore market prices, offset in
part by lower costs
Analysis 3Q’14 v 2Q’14
Coal (000’t)
EBITDA ($ Millions)
533388
278
-47.9%
3Q’14 2Q’14 3Q’13
Mining profitability declined Q3’14 v Q2’14
-21.4%
9M’14
1,099
9M’13
1,398
6.8 6.2 7.1
9.4 10.5 10.0
0
5
10
15
20
3Q’14 2Q’14 3Q’13
24.9 29.9
17.518.20
20
40
60
9M’14 9M’13
1.3 1.1 1.1
0.80.80.70
1
2
3
3Q’14 2Q’14 3Q’13
3.7 3.2
2.42.10
2
4
6
8
9M’14 9M’13
Shipped at cost plus
Own production
Shipped at market price
Contacts
Daniel Fairclough – Global Head Investor Relations
+44 207 543 1105
Hetal Patel – UK/European Investor Relations
+44 207 543 1128
Valérie Mella – European and Retail Investor Relations
+44 207 543 1156
Maureen Baker – Fixed Income/Debt Investor Relations
+33 1 71 92 10 26
Lisa Fortuna – US Investor Relations
+312 899 3985
