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1Q 2014 Results
9 May 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. 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
0.850.85
1Q’14 2013 2012
1.0
2011
1.4
2010
1.8
2009
1.9
2008
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
Continued improvement in safety
Our goal is to be the safest Metals & Mining company
Health and safety performance
• Safety:
• LTIF rate of 0.85 in 1Q’14 vs 0.75 in
4Q’13 and 0.93 in 1Q’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
• In 2014, specific attention will be on contractor
performance and on the main causes for fatal
accidents
4
• 23% underlying improvement in EBITDA vs. 1Q’13*
• Steel shipments up 2.4% YoY
• Market-priced iron ore shipments up 28% YoY
• Net loss of $0.2bn in 1Q’14 vs. net loss of $0.3bn in 1Q’13
• Net debt of $18.5bn at end of March 31, 2014
* EBITDA in 1Q 2013 of $1,565 million included the positive impact of a $47 million fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing
in Canada and $92 million of DDH income.
Improved YoY profitability
1Q’14 EBITDA 23% improvement in underlying performance YoY
(USDm) unless otherwise shown 1Q'14 4Q'13 3Q'13 2Q'13 1Q'13
Iron ore shipments at market price (Mt) 9.3 10.3 9.4 8.2 7.3
Steel Shipments (Mt) 21.0 20.5 20.7 20.9 20.5
Sales 19,788 19,848 19,643 20,197 19,752
EBITDA 1,754 1,910 1,713 1,700 1,565
Net (loss) (205) (1,227) (193) (780) (345)
5
Recap
Profitability of the steel business is clearly improving
• Steel only EBITDA/t increased $14/t vs. 1Q’13 on underlying basis
• NAFTA segment negatively impacted by severe weather and higher energy costs
• All other geographic segments delivered improved EBITDA vs. 1Q’13
Brazil** Europe ACIS*** NAFTA
Steel Segment EBITDA per tonne (US$) on underlying basis*
4661
1Q’14 1Q’13
-25%
1Q’13 1Q’14
153
+20%
183 5334
1Q’14 1Q’13
+56%
34
8
1Q’13
> 300%
1Q’14
Steel margin expansion
*Underlying EBITDA in 1Q 2013 excludes positive impact of $47m of fair valuation gain relating to the acquisition of an additional ownership interest in DJ Galvanizing in Canada
(NAFTA) and $92m of DDH income (Europe); ** Brazil includes Brazil and neighbouring countries; *** ACIS: 1Q’13 was negatively impacted by a $67m loss resulting from afire at
Vanderbijlpark (South Africa). Excluding this impact YoY improvement was 19%
9.310.3
9.48.2
7.3
2Q’13 1Q’13
+28%
1Q’14 4Q’13 3Q’13
Market priced iron ore shipment growth
(million Mt)
Improvement
6
Iron ore market priced shipment growth
2010 – 2014F (million Mt)
352928
25
2010 2011
+15%
2014F 2013 2012
On track to achieve 15% market priced iron ore shipment growth in 2014
• 28% YoY improvement in market priced iron ore shipments
• AMMC: expansion from 16Mt to 24Mt complete
– 24Mt production rate achieved in Dec 2013
– Unit costs benefiting from higher volumes
– 4.5Mt shipped in 1Q’14 vs. 3.3Mt in 1Q’13
• Liberia: phase 1 5Mt DSO complete; phase 2 underway
– Phase 1: Shipments running at the ~5Mtpa run rate
– Phase 2: Project underway for 15Mtpa premium sinter feed to replace DSO by end of 2015
– 1.4Mt shipped in 1Q’14 vs. 1.3Mt in 1Q’13
Higher iron ore volumes
Improvement
7
Opportunity to stretch iron ore capacity to 95Mt identified at low capex intensity
Iron ore production capacity (million mt)
95
84
70
60
Stretch 2015F 2013 2012
+11 • Options identified to stretch iron ore production capacity beyond current plan of 84Mt by end 2015
• Additional 11Mt* through:
– AMMC: additional 6Mtpa potential from 24Mt to 30Mt
– Liberia: additional 5Mtpa potential from 15Mt to 20Mt
• Low capex intensity
• Cost benefits from scale
*Stretch expansion subject to board approval
Iron ore growth plan stretched
8
• Award winning Automotive solutions
– ArcelorMittal’s R&D efforts continue to generate cost-competitive
solutions for the automotive industry's light-weighting requirements
– Industry’s first laser-welded, hot-stamped door ring provides exceptional
passenger safety performance improvement with 4Kg saving in weight
– At the same time we are now promoting our solution for an all steel door
that is very close to an aluminium door in weight; evaluation is currently
underway at various OEMs.
• AM/NS Calvert acquisition complete
– Well placed to serve growth markets of SE US and Mexico
– State of the art plant capable of producing Advanced High strength Steels
– Integration process underway; Steel operations ~80% utilized;
– AM/NS Calvert EBITDA positive in March, inline with expectation of
EBITDA positive Yr1 and free cash flow positive in Yr2
• VAMA China automotive steel JV:
– State-of-the art facility to serve the fast-growing China automotive
industry; due to start production early in 2H 2014
– Initial capacity of 1.5 million tons expandable up to 2.3 million tons should
support ~10% share of the market
Committed to producing innovative steel solutions for our automotive customers
Calvert: Cold rolling mill
Auto franchise developments
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*
Brazil
Global
-2.0% to 0%
3.0-3.5%
CIS
2.0-3.0%
China 3.0-4.0%
EU28 2.0-3.0%
US 3.5-4.5%
Outlook for core markets in 2014 continues to improve
Improving demand indicators
(latest data point: Apr’14)
Financial results
11 * Others primarily represents forex
EBITDA bridge from 4Q’13 to 1Q’14
248
753
241
3,413
2,582
61
Q1'11 EBITDA Volume & Mix Selling Price / Cost Non Steel EBITDA* Others** Q2'11 EBITDA
($million)
120
(31)
(100)
Volume &
Mix - Mining
1,754
1Q’14
EBITDA
Volume &
Mix - Steel
Non-steel
EBITDA
Price / Cost
- Steel
(100)
4Q’13
EBITDA
1,910
4
Price / Cost
- Mining
Others*
(49)
Steel impact
Mining impact
8.2% decline in 1Q’14 EBITDA vs. 4Q’13
Steel PCS impact would have been
clearly positive were it not for the
effects of the severe weather on our
NAFTA operations
12
EBITDA to net results
(36)
(1,227)
65
(1,292)
(384)
(419)
(453)
(379)
(304)
(1,263) 1,910
* Kiswire includes $41m booked in impairments and $111m in income from investment, associates and JV. ;** Amnesty Brazil : $80m corresponding to a contingent consideration in
relation with the acquisition of AM Serra Azul in 2008 booked in foreign exchange and other financing costs, with $222m recorded in income tax expense
1Q 2
014
Brazil tax amnesty**: (80)
($ million)
Thabazimbi: (181)
Mauritania: (61)
Kiswire*: (41)
Brazil tax amnesty**: (222)
China Oriental: (200)
Kiswire*: (111)
Coal of Africa: (111)
Erdemir: (57)
4Q 2
013
Weighted Avg No of shares: 1,790
EPS = $ (0.69)/share
(205)(109)
674(380)
Net interest
expense
(426)
(Loss)/
income from
equity
36
Operating
Income
Restructuring
0
Impairment
0
D&A
(1,080)
EBITDA
1,754
Net Ioss Taxes
and non-
controlling
interest
Pre-tax loss
(96)
Forex
and other
Fin. Cost
Weighted Avg No of shares: 1,790
EPS = $ (0.12)/share
($ million)
1Q’14 net loss of $0.2 billion
13
EBITDA to free cash flow
1Q 2014 free cash flow waterfall ($ million)
1,754
(471)
(1,346)
(875)
Free cashflow Cashflow from
operations
(1,319)
(906)
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 1Q’14
14
Net debt analysis
1Q 2014 net debt analysis ($ million)
657
1,346
18,501
Net debt
at 1Q’14
Forex &
others**
186
Perpertual
bond
M&A*
233
Free cashflow Net debt
at 4Q’13
16,079
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). *M&A primarily includes $258 million from the acquisition of 50/50 joint venture partnership with Nippon Steel & Sumitomo Metal Corporation (“NSSMC”) to acquire
100% of ThyssenKrupp Steel USA (“TK Steel USA”) offset by proceeds related to disposal of 4.97% stake in Hunan Valin. ** Forex and others primarily include dividends and foreign
exchange losses ($130m)
Net debt increased due to redemption of perpetual bond, M&A and OWC investment
15
Outlook and guidance framework
Key 2014 guidance framework assumptions:
- Steel shipments are expected to increase by approximately 3% in 2014 as compared to 2013
- Marketable iron ore shipments are expected to increase by approximately 15%
- Iron ore price assumption remains an average of ~120$/t (for 62% Fe CFR China)
- A moderate improvement in steel margins
- 2014 capex is expected to be approximately $3.8-4.0bn
- Medium term net debt target of $15 billion maintained
Company reiterates 2014 EBITDA of approximately $8.0bn
Steel
Mining
Pricing
Capex
Debt
Margins
Appendix
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
17 17
Selective steel projects: Monlevade (Brazil segment)
Expansion supported by strong market for long products in Brazil
Installation area of the rolling mill # 3 Hangar of the rolling mill # 3
New rolling mill at Acindar (Argentina)
• New rolling mill (Huatian) in Santa Fe
province to increase capacity by
0.4mt/year of rebars from 6 to 32mm for
civil construction:
– 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 ~$100
million
• Expected completion in 2016
18 18
Selective steel projects: Acindar (Brazil segment)
Expansion supported by strong construction market in Argentina and exports
Selective steel projects: Dofasco (NAFTA)
• Optimize cost and increase shipment of
galvanized products by 0.3mt / year
– Restart construction of heavy gauge
galvanizing line #6 (capacity 660ktpy)
and closure of line #2 (capacity
400ktpy) increased shipments of
galvanized sheet by 260ktpy, along with
improved mix and optimized cost
– Line #6 will incorporate AHSS capability
and is the key element in a broader
program to improve Dofasco’s ability to
serve customers in the automotive,
construction, and industrial markets
• Expected completion in 2015
19 19
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 which are:
– State of the art pickling tandem CRM
(1.5mt)
– Continuous annealing line (0.9mt), and
– Hot dip galvanizing line (0.5mt)
• Estimated capital expenditure of ~$850
million (100% basis)
• First coil to be produced in 2H 2014
20 20
Robust Chinese automotive market: > 50% growth to 25 million vehicles by 2018
21
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 +4.8% in 1Q’14 vs. 4Q’13
• China ASC +2.8% in 1Q’14 vs. 1Q’13 • EU ASC +11.3% in 1Q’14 vs. 4Q’13
• EU ASC +6.0% in 1Q’14 vs. 1Q’13
• Global ASC 4.4% in 1Q’14 vs. 4Q’13
• Global ASC +3.1% in 1Q’14 vs. 1Q’13
• US ASC +4.0% in 1Q’14 vs. 4Q’13
• US ASC 4.4% in 1Q’14 vs. 1Q’13
ArcelorMittal core market growth support continued growth in 2014
(latest data point: Mar’14) (latest data point: Feb’14)
22
• Global PMI indicates continuing strengthening in developed manufacturing
• Despite severe weather impacting US Jan production, manufacturing still up 2.2% in 1Q’14. Apr PMI remained >50 near recent highs
• Eurozone PMI, especially Germany, has continued to strengthen to its highest level since 1H’11. Czech Republic, Poland and UK PMIs remain strong
• In Eu28, manufacturing output has grown over the last year, now up 3.7% y-o-y
• Chinese industrial output growth has weakened to 8.7% y-o-y in 1Q’14; still supported by robust albeit slowing auto demand growth
Global indicators remain positive
Source: *Markit. ArcelorMittal estimates
Global indicators signal continued growth in developed markets in 2Q’14
US construction growth continues;
Europe improving • USA non-residential stable in 1Q’14
– Non residential output stable in early 2014, impacted by severe weather, however, output up 6% yoy compared to weak 1Q’13. Despite the Architectural Billings index (ABI) falling back below 50, we expect a gradual pick up through 2014 and into 2015
– US residential construction growth slowing to a more sustainable pace, as new home sales weaken due to higher prices
• European construction outlook gradually improving
– Eurozone construction PMI weakened to 46.2 in March, despite continued strength in German and in particular UK
– However construction output in EU28 is up >5% (Jan/Feb yoy), supported by mild weather and weak yoy comparatives
– Overall we expect output in 2014 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*
23 * Source: US Census Bureau ; ** Source: Markit and The American Institute of Architects
Eurozone and US construction indicators**
Construction gradually improving
(latest data point: Mar’14)
(latest data point: Mar’14)
Chinese industrial growth stable
• Industrial output growth slowed in 1Q’14 up
8.7% y-o-y, from 10% in 4Q’13
• Infrastructure investment continues to grow up
almost 20% y-o-y in 1Q’14, defying expectations
to slow. Outlook supported by recent
government measures.
• Weakening residential transactions and prices
and lack of available credit has caused housing
starts to decline sharply, down over 25% y-o-y
in 1Q’14. Housing starts were expected to
weaken but has happened more quickly than
anticipated.
• Flat products demand continues to be
supported by relatively strong growth in auto
production, up over 9% y-o-y in 1Q’14.
• Steel production has continued to grow in 1Q’14
(824mt annualized), up from 760mt in 4Q’14
helped by seasonality and rising exports.
• Inventories at warehouses declined by 3.5mt
during Mar/Apr’14 as is seasonal and driven by
lack of finance but inventory at mills remain up
y-o-y.
24
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 steel demand growth continues, but impacted by reduced housing starts
(latest data point: Apr’14)
1Q’14 developed market stock levels rising German inventories (000 MT)
25
China service centre inventories* (Mt/mth) with ASC% Brazil service centre inventories (000 MT)
US service centre total steel Inventories (000 MT)
Slow rebound in inventory is supporting demand growth in developed market
(latest data point: Apr’14)
(latest data point: Mar’14)
(latest data point: Feb’14)
(latest data point: Apr’14)
Source: WSA, Mysteel, ArcelorMittal Strategy estimates
26
Global apparent steel consumption China
NAFTA
EU28
Rest of World*
0
100
200
300
400
500
600
700
800 +7%
+3.0- 4.0%
+67%
2014F 2013 2012 2011 2010 2009 2008 2007
ArcelorMittal estimates; * World ex. China, NAFTA and EU28
40
60
80
100
120
140
160
-1% +5%
-9%
2014F 2013 2012 2011 2010 2009 2008 2007
50
100
150
200
250
300
350
400
450
500
550+1% +3%
+11%
2014F 2013 2012 2011 2010 2009 2008 2007
2013 ASC growth of +3.5%; Estimated 2014 ASC growth of 3.0-3.5%
40
60
80
100
120
140
160
180
200
+1% +2.0- 3%
-30%
2014F 2013 2012 2011 2010 2009 2008 2007
Raw material prices declined
Spot iron ore, coking coal and scrap price (index IH 2008=100)*
Regional steel price HRC ($/t)
27
Raw material prices have declined particularly iron ore and coking coal
* Source data: ArcelorMittal estimates; Platts
(latest data point: Apr’14) (latest data point: Apr’14)
28
Segment highlights
0
100
200
300
400
500
600
-26%
+103%
+31% -15%
-36%
Mining ACIS Europe Brazil NAFTA
1Q’14 4Q’13 3Q’13 2Q’13 1Q’13
Segmental EBITDA* (US$mn)
0
50
100
150
200
250
1Q’14 4Q’13 3Q’13 2Q’13 1Q’13
ACIS Europe Brazil NAFTA
Segmental EBITDA/tonne (US$/t)
* Q1’14: seasonal pick up in ACIS/Europe offset by weaker NAFTA, Brazil & Mining
* Segmental figures shown above include one time adjustments
0
2,000
4,000
6,000
8,000
10,000
12,000
+6%
+6%
-1%
-2%
ACIS Europe Brazil NAFTA
Segmental shipments (kt)
4.8 6.5 6.8 6.34.2
7.38.2 9.4 10.3
9.3
0
5
10
15
20
0
2
4
6
8
10
12
14
16
1Q’14 4Q’13 3Q’13 2Q’13 1Q’13
Shipped at cost plus
Own iron ore prod
Shipped at market price Iron ore (mt)
29
Net debt ($ billion) Average maturity (years)
Liquidity ($ billion) Bank debt as component of total debt** (%)
Balance sheet structurally improved
18.5
32.5
-43%
1Q 2014 3Q 2008
5.9
2.6
1Q 2014 3Q 2008
11.112.0
1Q 2014 3Q 2008 1Q 2014
10%
3Q 2008
84%
Balance sheet fundamentals improved
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.
61
0
4
8
12
16
20
24
28
0
30
60
90
120
1Q
14
4Q
12
2Q
12
3Q
12
4Q
13
3Q
13
2Q
13
1Q
13
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
3Q
07
2Q
07
1Q
07
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
2.6
0
5
10
15
20
25
30
35
0.0
1.0
2.0
3.0
4.0
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
3Q
10
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
1Q
14
Net Debt ($ billion) - LHS Net Debt / LTM EBITDA
Net debt increased to $18.5bn due to WC, redemption of perpetual bond and M&A
32
Liquidity and debt maturity profile
Debt maturities ($ billion) Liquidity at March 31, 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 5.9 years
Debt maturity: Ratings
• S&P – BB+, negative outlook
• Moody’s – Ba1, negative outlook
• Fitch – BB+, stable outlook
0
1
2
3
4
5
6
7
8
9
>2018
9.0
2018
2.3
2017
3.0
2016
2.8
2015
2.5
2014
4.0
Convertible
Bonds
Other
Commerical
2.55.1
6.0
11.1
Other loans
Cash convertible
Commercial paper
Unused credit lines
Debt due
in 2Q’14
3.1
0.5
0.1
Liquidity
at 31/3/14
Continued strong liquidity position and average debt maturity of 5.9 years
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
Thomas A McCue – US Investor Relations
+312-899-3927
Lisa Fortuna – US Investor Relations
+312-899-3985
