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Premium Review conference Daniel Fairclough, VP Investor Relations Valérie Mella, IR Specialist 5 December 2013 Disclaimer Forward-Looking Statements This presentation may contain forward-looking information
Premium Review conference Daniel Fairclough, VP Investor Relations Valérie Mella, IR Specialist 5 December 2013 Disclaimer Forward-Looking Statements This presentation 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, 2012 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. Non-GAAP Financial Measures This presentation may contain supplemental financial measures that are or may be non- GAAP financial measures. Definitions of such supplemental financial measures and a discussion of the most directly comparable IFRS financial measures can be found on ArcelorMittal's website at 1 Takeaways ArcelorMittal retains the core attributes to deliver value through the cycle The balance sheet is repositioned Our West European business is optimised and delivering improved results We are focussed on protecting our global cost position with a new $3bn Management Gains program by end 2015 Mining growth capex now delivering growth volumes Concentrating our investments to protect and expand our franchise businesses such as Global autos, Mining and Brazil We have a roadmap to normalised EBITDA of $150/t ArcelorMittal: the industry leader with a global presence backed by raw materials 2 Progress Safety improvement Balance sheet repositioned Focus Footprint optimisation Cost improvement Franchise development Outlook Roadmap to $150/t EBITDA 3 Progress Continued improvement in safety Quarterly Health & Safety frequency rate* for mining & steel Further safety improvement: LTIF rate improved to 0.8x in 3Q Target Leading the industry: Across the World Steel Association (WSA) members, 176 sites have a LTIF rate of 1;. 114 out of these sites belong to ArcelorMittal Q Q Q 2013 Sustainability remains a priority: ArcelorMittal maintained its membership in the Dow Jones Sustainability Index Europe Our goal is to be the safest Metals & Mining company * WSA: LTIF = Lost time injury frequency defined as Lost Time Injuries per worked hours; based on own personnel and contractors 4 Progress Balance sheet repositioned Net debt progression $billion ~ Q 11 3Q 13 4Q 13F Medium term target Net debt/ltm EBITDA* 2.3x 2.7x Year end FY13 net debt expected to be ~$17bn medium term target of $15bn Ratio of Net debt/ltm EBITDA is based on last twelve months reported EBITDA. Figures based on recast EBITDA as per new accounting standards adopted. Note: 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). At September 30, 2013 cash included $42 million and debt included $202 million held at Annaba, which has since been classified as asset/liabilities held for sale. 5 Progress Profitability is recovering Comparable EBITDA (US$mn) Q3 13 EBITDA 24% higher than comparable Q3 12 3Q'12A 3Q'13A H'12A 1H'13A 2H'13Con* Consensus* is forecasting an improvement in comparable EBITDA FY'12A FY'13Con* We continue to believe that the 2H 12 will mark the low-point in AM EBITDA cycle Note: Note: *Bloomberg Consensus on 11/11/13 is for 2013 EBITDA of $6697mn (based on mean of 33 estimates) 6 Progress Safety improvement Balance sheet repositioned Focus Footprint optimisation Cost improvement Franchise development Outlook Roadmap to $150/t EBITDA 7 Focus Relentless cost focus new $3bn cost improvement underway New $3bn management gains program ($ billion) Annualized savings Bottom up plan across the group Savings targets 9Q 13 achieved Leveraging extensive benchmarking opportunities within the group Improvements in reliability, fuel rate, yield, productivity, etc F 2014F 2015F Business units plans rolled out and key personnel accountable for delivery Gap analysis completed in 2012 defined the priorities for plan 8 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 Focus Footprint optimisation creates value Western Europe Footprint optimized Concentrated slab production in 5 coastal sites: Dunkirk; Ghent; Bremen, Fos & Asturias Idled least competitive lines Asset optimization ensures FCE achieves: Savings through fixed cost removal Well loaded assets with stable working points Lower variable cost Lower and more stable working capital requirements Better service and quality Reduce capex requirements New Footprint in Western Europe*: # Blast furnaces # Hot strip mills 8 7 # Cold rolling mills Asset Optimization savings achieved ($ million) Residual Costs Run Rate-Savings Including residual costs, the targeted run-rate savings of $1bn has been exceeded Residual costs should disappear from the system by 2014 Savings are tangible and apparent in improved reported results Post optimization: FCF positive in current market environment * Note: this is the prospective footprint once all proposals implemented 9 Focus Franchise steel development Dofasco (NAFTA auto) Restarted project to expand and upgrade galvanizing capacity by 2015 New line #6 (660ktpy capacity) to serve growing NAFTA automotive market Older and smaller galvanizing line #2 (400ktpy capacity) will be closed Increased shipment of galvanized sheet (260ktpy), improved mix and cost Acindar (Argentina long products) Project to optimize and expand downstream capacity by 2016 Installation of a new rolling mill with capacity of 400ktpy bars Improved productivity and lower costs Monlevade*/Juiz de Fora (Brazil long products) restart approved in 2Q 2013; completion expected in 2015 Expansion of downstream facilities with a new wire rod mill in Monlevade (additional capacity of 1,050ktpy of coils) Juiz de Fora rebar capacity increase from 50 to 400ktpy (replacing some wire rod production capacity) and meltshop capacity increase by 200ktpy Dofasco: #6 Galvanize Line foundations Dofasco: tension reel for new #6 line VAMA: S2 mill housing construction VAMA (China automotive steel JV) proceeding well Phase 1: capacity to supply 1.5mt for automotive applications in China State-of-the-art pickling tandem CRM, continuous annealing line and HDG Project is proceeding well; first coil now targeted in 2H 14 Restart of some steel investment in franchise businesses * Investment decision on Phase 2 of Monelvade project to focus on the upstream facilities (sinter plant, blast furnace and melt shop with additional crude steel capacity of 1.2mtpa) will be taken in the future 10 Focus Automotive steel is a franchise business: we will invest ArcelorMittal is the leading supplier to the automotive industry We will continue to invest in R&D to stay ahead of the product development curve We will increase participation in emerging markets to maintain global market share Market share* Automotive Steel (indexed 2008 = 100) Market share* Advanced High Strength Steels (indexed 2008 = 100) Overall market share growing in US and stable in EU US EU Share of fast-growing HSS market has increased since 2008 US EU We will continue to invest to protect and grow our Automotive steel franchise * Based on ArcelorMittal estimates; Regional ArcelorMittal Auto market intelligence; LMC auto/csm ** Source: LMC auto 11 Focus TK Alabama: Growing our NAFTA Franchise ArcelorMittal and Nippon Steel & Sumitomo Metal Corporation (NSSMC) agreed to acquire 100% of TK USA for $1,550m on debt free cash free basis and inclusive of working capital Calvert Hot strip mill: State of the art walking beam reheating furnace Financed by combination of JV-level debt and equity with minimal impact on ArcelorMittal s net debt ArcelorMittal to directly fund $258mn cash upfront Medium term $15bn target remain unchanged JV will off-take 2mt of slabs until 30 September 2019* from TK CSA in Brazil at a market-based price Synergies amounting to ~$60mn annually identified, mostly on an account of incremental slab sales from ArcelorMittal facilities (vs. selling in the international slab market) Calvert: Pickling line Significant expansion in growing NAFTA automotive steel market, a key franchise business and expands presence in other important markets including energy Asset is expected to be fully operational asset from the start and expected to be EBITDA positive in year 1 and free cash flow positive from year 2 Deal captures value opportunity without compromising balance sheet discipline *At TK s option, potential to extend slab off-take for additional 3 years at more favourable price to the JV as compared to initial period 12 CAPACITY Focus Mining expansions on track Own iron ore growth plan production and capacity (Mt) On track to achieve 84mt own iron ore capacity in 2015; ~20% increase in marketable shipments in Focus Mining growth plan: key projects AMMC: expansion to 24mt on track Ramp-up proceeding well 18.5mt production forecast in 2013 vs. 15mt in mt production rate to be achieved by year-end 2013 Unit costs benefiting from higher volumes Liberia: phase 1 shipments ahead of expectations in 2013; phase 2 underway Phase 1: New production record in 3Q 13; 3.7mt shipped 9M 13 (+89% vs. 9M 12) Phase 2: Project underway for 15mtpa premium sinter feed to replace 4mtpa DSO by 2015 All environmental permits for phase 2 received Major equipment procurement ongoing Civil works commenced at the mine and concentrator sites Baffinland: early revenue phase underway 3.5mtpa of DSO trucked to Milne Inlet for export during openwater season by 2015 $700m project capex in 50:50 JV Summer season open-water sea lift of construction materials and fuel completed in Q3 ahead of plan AMMC: Port Cartier Liberia: Offshore transshipment Baffinland: construction camp Three key projects to achieve 84mt own iron ore capacity in Progress Safety improvement Balance sheet repositioned Focus Footprint optimisation Cost improvement Franchise development Outlook Roadmap to $150/t EBITDA 15 Outlook Demand prospects improving Global PMI indicates developed manufacturing growing above trend for the first time in two years ArcelorMittal weighted global manufacturing PMI* US manufacturing grew q-o-q in 3Q 13 and up over 2.5% y-o-y. October PMI remained 50 near recent highs despite the impact of US government shutdown In Europe, manufacturing output still down y-o-y but in 3m to August is up over 3% annualised from previous 3m Eurozone PMI above 50 for four consecutive months. Strong readings for Czech Republic, Poland and UK PMI confirm EU27 PMI at highest since 1H 11 Chinese industrial output growth has rebounded to 10.1% y-o-y in 3Q 13 the best quarter since 1Q 12 supported by strong auto and a pick-up in the PMI 50 Global indicators signal continued growth in developed markets in 4Q 13, and confirm a rebound of Chinese growth since the summer Source: *Markit. ArcelorMittal estimates 16 Outlook Roadmap back to normalised profitability Management Gains (cost cutting) Steel Volume Recovery Mining Volume Growth Asset Optimization Average EBITDA/tonne * $150/t $90/t If steel shipments increase by ~15% then we believe $150/t EBITDA is achievable Driven by: Leverage to incremental volumes ($ /t margin on incremental tonne given limited additional fixed cost) Cost benefits from Asset Optimisation (completed $1bn sustainable savings) Cost benefit from new $3bn Management gains Execution of mining growth plan (+28MT new production capacity by 2015) Offsetting impact of lower iron ore price Improved industry utilization rates driving higher margins and profitability We believe EBITDA/tonne of $150 is an achievable normalized target * Note: EBITDA is underlying number excluding one-time items, CO2 gains and DDH 17 Outlook ArcelorMittal is in a position of strength to capitalise on opportunities & deliver value Cost competitive assets Exposed to fastest growing markets Industry leading returns World-class mining business Leading supplier to automotive industry Components are in place to deliver industry leading returns and value 18 Q&A 19 Appendix 20 3Q 2013 highlights EBITDA 24% higher than underlying EBITDA in 3Q 12* Steel shipments increased 6% vs. 3Q 12 Own iron ore production 4.5% higher than 3Q 12 Iron ore shipped at market price 32% higher than 3Q 12 Net debt temporarily increased to $17.8bn at Sept 30, 2013, inline with expectations $4bn reduction in gross debt since early June 2013 leads to $62mn (13%) lower net interest expense in 3Q 13 vs. 2Q 13 $0.8bn annualized management gains achieved during 9M 13 (USDm) unless otherwise shown 3Q Q Q M M 2012 Iron ore shipments at market price (Mt) Steel Shipments (Mt) Sales 19,643 20,197 19,723 59,592 64,904 EBITDA 1,713 1,700 1,445 4,978 6,122 Net income / (loss) (193) (780) (652) (1,318) % improvement in underlying EBITDA 3Q 13 vs. 3Q 12 *Reported EBITDA in 3Q 2012 of $1,445 million included the positive impact from $131 million for DDH income offset by a $72 million charge related to a one-time signing bonus and post retirement benefit costs following entry into a new labor contract in the U.S. As a result underlying EBITDA for 3Q 2012 is $1,386 million. 21 Key operational data overview Q112 Q212 Q312 Q Q113 Q213 Q313 Crude Steel FCA 26,476 16,556 23,101 24,215 6,249 6,014 5,726 5,933 23,922 6,197 5,589 6,343 Production FCE 34,338 22,752 30,026 29,510 7,182 7,143 6,718 6,375 27,418 7,279 7,481 7,438 (thousands of Long 25,198 18,901 22,550 23,558 5,785 5,885 5,713 5,240 22,623 5,722 5,742 5,771 metric tonnes) AACIS 15,118 13,411 14,906 14,608 3,615 3,691 3,721 3,241 14,268 3,245 3,681 3,710 Total Continuing operations 101,130 71,620 90,583 91,891 22,831 22,733 21,878 20,789 88,231 22,443 22,493 23,262 Steel FCA 25,810 16,121 21,028 22,249 5,672 5,735 5,351 5,533 22,291 5,559 5,407 5,759 Shipments* FCE 33,512 21,797 27,510 27,123 7,461 6,771 5,837 5,957 26,026 6,890 7,065 6,579 (thousands of Long 27,115 19,937 23,148 23,869 5,738 5,839 5,508 5,543 22,628 5,394 5,772 5,599 metric tonnes) AACIS 13,296 11,769 13,266 12,516 3,353 3,321 3,178 2,978 12,830 3,104 3,062 3,187 Total Continuing operations 99,733 69,624 84,952 85,757 22,224 21,666 19,874 20,011 83,775 20,947 21,306 21,124 Revenue FCA 25,761 12,310 17,684 21,035 5,270 5,359 4,840 4,683 20,152 4,859 4,788 4,921 (US$ millions) FCE 38,300 19,981 25,550 31,062 7,719 7,223 6,108 6,142 27,192 6,834 6,903 6,334 Long 32,230 16,741 21,315 25,165 5,763 5,698 5,189 5,232 21,882 5,103 5,420 5,133 AACIS 13,047 7,577 9,706 10,779 2,787 2,677 2,457 2,130 10,051 2,129 2,115 2,112 AMDS 23,126 13,524 15,744 19,055 4,431 4,292 3,716 3,855 16,294 3,553 3,597 3,425 Mining 3,557 2,573 4,380 6,268 1,271 1,576 1,288 1,255 5,390 1,199 1,351 1,595 Holding & service co's and eliminations (19,080) (11,685) (16,354) (19,391) (4,538) (4,347) (3,875) (3,988) (16,748) (3,925) (3,977) (3,877) Total 116,942 61,021 78,025 93,973 22,703 22,478 19,723 19,309 84,213 19,752 20,197 19,643 EBITDA (US$ millions) Average Steel EBITDA/tonne (US$/tonne) FCA 4, ,555 2, , FCE 6,448 1,946 2,015 1, , Long 6,635 1,647 2,075 1, , AACIS 3, ,135 1, AMDS 1,103 (97) (24) Mining 1, ,263 3, , Holding & service co's and eliminations (668) (135) (975) (18) (65) (71) (144) Total 23,652 5,600 8,525 10,117 1,972 2,447 1,336 1,323 7,078 1,564 1,700 1,713 FCA FCE Upgrade railway line linking mine to port in Liberia Long AACIS Total** The 2012 information has been adjusted retrospectively for the mandatory adoption of new accounting standards 22 * Figures exclude shipments from Distribution Solutions which are fully eliminated on consolidation and Mining division EBITDA and shipment breakdown EBITDA breakdown 9M 2013 Mining, 27% Flat North America, 15% Long North America, 3% Other Steel, 4% Flat Europe, 16% Asia, 2% Africa, 3% Long South America, 16% Flat South America, 9% Long Europe, 6% Steel shipments by region* 9M 2013 Africa, 5% Asia, 10% Others, 1% Flat Nth America, 21% Long Sth America, 7% Flat Sth America, 5% Long Nth America, 5% Long Europe, 13% Flat Europe, 32% 23 Strategy 24 24 ArcelorMittal s strategy Our strategy is to leverage our distinctive attributes that enable us to achieve a leading position in the most attractive components of the steel value chain In steel, capture a leading position in attractive businesses by leveraging our technical capabilities and global scale and scope Be the supplier of choice for customers who value distinctive products and services Grow in markets with attractive structures Minimize costs in commodity businesses to lower risks and capture boom-market potential In operations, achieve bestin-class competitiveness by leveraging our technical capabilities and diverse portfolio of assets and businesses Be the safest Concentrate production at the best assets and run them well Be cost competitive by benchmarking, sharing best practices, and investing to optimize our multi-site footprint Innovate (product/process) In mining, grow a world-class business utilizing our financial strength and diverse portfolio of assets and businesses Invest to expand output at Tier I and Tier II assets Optimize the value proposition associated with our products value in use Be the supplier of choice for a balanced mix of internal and external customers Provide a natural hedge against market volatility and potential oligopolies Enablers A clear licence to operate A strong balance sheet An effective organisational structure Active portfolio management The best talent 25 Positioned for industry-leading returns and value A global champion well positioned for new market opportunities and servicing globalising customer industries Leading market position in developed world Access to high growth markets Ability to service global customers Diversified Leading supplier to premium markets Leading supplier to high-growth markets Significant selfsufficiency in raw materials Higher and more stable returns through the cycle Access to own raw materials ArcelorMittal: the industry leader with a global presence backed by raw materials 26 Focussing on value drivers New $3bn management gains plan Cost Leadership Product Leadership Best-in-class service Portfolio Optimisation Focussed investment Improved EBITDA/tonne ($150/t normalised target) Capital Efficiency Returns WACC Focussing on Franchise businesses All levels of ArcelorMittal aligned with one goal improved returns on Capital 27 Non-Franchise Franchise Focussed capital allocation We are backing our franchise businesses with capital Steel shipment split: Other steel Franchise steel Approximate EBITDA split: 55% of steel shipments from businesses identified as Franchise e.g. Global Autos, Brazil long, Sheet Piles Capital priority Invest to protect and expand Other steel Mining Franchise businesses contribute 80% of steel EBITDA Focus
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