FI IR May 2015 Final With Economic Slides
20
Investor presentation May 2015
Transcript of FI IR May 2015 Final With Economic Slides
Investor presentation
May 2015
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 documents filed with or furnished to the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier) and the U.S. Securities and Exchange Commission (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 MeasuresThis document may include supplemental financial measures that are or may be non-GAAP financial measures, as defined in the rules of the SEC. They may exclude or include amounts that are included or excluded, as applicable, in the calculation of the most directly comparable financial measures calculated in accordance with IFRS. Accordingly, they should be considered in conjunction with ArcelorMittal's consolidated financial statements prepared in accordance with IFRS, which are available in the documents filed or furnished by ArcelorMittal with the SEC, including its annual report on Form 20-F and its interim financial report furnished on Form 6-K. A reconciliation of non-GAAP measures to IFRS is available on the ArcelorMittal website.
1
Agenda
• Leadership
• Markets
• Strategic progress
• Outlook
2
Steel industry’s differentiating factors
• Local markets structure counts � key regional markets have consolidated
• Steel is not a homogenous commodity � but a vast range of products with varying degrees of technicality
• Steel consumers value (and reward) service, quality and innovation
• Zero incentive to build new capacity � value of installed capacity will increase with demand
• China exports peaked? � negative for iron ore but positive for non-Chinese steel producers
• Has sentiment bottomed? � upside from improvement
Steel presents a differentiated opportunity to pure “commodity” metalsSteel presents a differentiated opportunity to pure “commodity” metals3
ArcelorMittal is the industry leader• Safety is the No1 priority
• Steel is the primary driver of profitability
• Supported by a sustainable iron ore business
• Developed markets are core
• Capacity to capitalise on demand recovery
• Optimized asset base in Europe…… with developing plans for the US
• Primary position in global automotive
• Balance sheet repositioned
ArcelorMittal positioned to benefit from demand rec overy and own actionsArcelorMittal positioned to benefit from demand rec overy and own actions4
Europe & NAFTA
Rest of World
Steel shipments 2014
Leader in steel for automotive• ArcelorMittal is the leading global steel
solution provider to the global automotive industry
• Unrivalled reputation for quality and innovation
• Steel set to remain material of choice for automotive industry
• Continued investment in R&D producing award winning automotive solutions
• Focused investment to capture growth opportunities:
• Calvert acquisition a break-through for NAFTA automotive franchise
• JV VAMA in China
• Dofasco
The leading provider of steel solutions to the glob al automotive sectorThe leading provider of steel solutions to the glob al automotive sector5
S-In-Motion for Pickup Trucks: Launched 2014
2015 Kia Carnival – 76% advanced high strength steel
Footprint optimization delivering results• European footprint optimization launched in 2011• Principle was to maintain market share whilst orientating capacity to most
competitive sites• Focus on “core assets” to ensure lowest cost footprint achieved • Savings through fixed cost removal with well loaded assets with stable
working points� Lower variable cost� Lower and more stable working capital requirements
� Better service and quality
� Reduce capex requirements
• >$1bn savings achieved through European footprint optimization • Similar plans under development for US asset base
European asset optimization yielding $1 billion ann ualized cost savingsEuropean asset optimization yielding $1 billion ann ualized cost savings6
EU28 Apparent steel consumption (Mt)
Steel demand in Europe is recovering but remains we ll below pre-crisis levels*Steel demand in Europe is recovering but remains we ll below pre-crisis levels*7
144
148
146
150
142
0
2013 2014 2015F
+6%
Demand has improved
* ArcelorMittal estimates
Spreads have improved
Spread between North Europe domestic HRC price and international RM Basket*, €/t
* RM Basket in HRC = 1.6 X IO (delivered to China)+ 0.6 X HCC (delivered to China)+ 0.15 X Scrap ( HMS 1/2 80:20 / East Asia import)Source: Platts, SBB, ArcelorMittal Corporate Strategy team analysis
Steel prices have increased relative to underlying raw materialsSteel prices have increased relative to underlying raw materials8
220208
178
+24%
1Q1520142013
Profitability has improved
Improving spreads are translating into improving pr ofitabilityImproving spreads are translating into improving pr ofitability9
ArcelorMittal Europe segment EBITDA* ($mn)
2,304
1,621
+42%
20142013
616
535
420
1Q’141Q’13 1Q’15
+15%
* Refer to appendix
3
5
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Jan-
07
May
-07
Sep
-07
Jan-
08
May
-08
Sep
-08
Jan-
09
May
-09
Sep
-09
Jan-
10
May
-10
Sep
-10
Jan-
11
May
-11
Sep
-11
Jan-
12
May
-12
Sep
-12
Jan-
13
May
-13
Sep
-13
Jan-
14
May
-14
Sep
-14
Jan-
15
EU28
USA
15
25
35
45
55
65
Jan-
07M
ay-0
7S
ep-0
7Ja
n-08
May
-08
Sep
-08
Jan-
09M
ay-0
9S
ep-0
9Ja
n-10
May
-10
Sep
-10
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ay-1
1S
ep-1
1Ja
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May
-12
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-12
Jan-
13M
ay-1
3S
ep-1
3Ja
n-14
May
-14
Sep
-14
Jan-
15
Developing ex ChinaChinaDeveloped
10
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 +1.2% in 1Q’15 vs. 4Q’14 • China ASC -4.8% in 1Q’15 vs. 1Q’14
• EU28 ASC +12.3% in 1Q’15 vs. 4Q’14• EU28 ASC -1.3% in 1Q’15 vs. 1Q’14
• Global ASC +0.3% in 1Q’15 vs. 4Q’14• Global ASC -1.4% in 1Q’15 vs. 1Q’14
• US ASC -6.1% in 1Q’15 vs. 4Q’14• US ASC +2.1% in 1Q’15 vs. 1Q’14
1Q’15 growth still positive YoY in US, largely stab le in EU28 and declining in China1Q’15 growth still positive YoY in US, largely stab le in EU28 and declining in China
(latest data point: Mar’15)(latest data point:Mar‘15)
Markets
200250300350400450500550600650700750
Jan-
02Ju
l-02
Jan-
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Jan-
04Ju
l-04
Jan-
05Ju
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Jan-
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Jan-
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l-08
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Jan-
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l-10
Jan-
11Ju
l-11
Jan-
12Ju
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Jan-
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l-13
Jan-
14Ju
l-14
Jan-
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ResidentialNon-residential
Exp
ansi
onC
ontr
actio
n
30
35
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60
65
Jan-
06A
pr-0
6Ju
l-06
Oct
-06
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pr-0
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pr-0
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l-09
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-09
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pr-1
0Ju
l-10
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pr-1
1Ju
l-11
Oct
-11
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12A
pr-1
2Ju
l-12
Oct
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pr-1
3Ju
l-13
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pr-1
4Ju
l-14
Oct
-14
Jan-
15
Eurozone construction PMIUSA Architectural Billings Index
US construction growth continues
• In the United States: – Architecture Billings Index (ABI) at 51.7
continues to indicate growth in Non-residential investment.
– However, the low oil price has negatively impacted energy related investment.
• In Europe:– Construction output began to grow in 2014
after declining strongly in both 2012 and 2013.
– Despite relatively weak confidence, we expect growth to gradually improve through 2015.
US residential and non-residential construction ind icators (SAAR) $bn*
11* Source: US Census Bureau; ** Source: Markit and The American Institute of Architects
Eurozone and US construction indicators**
(latest data point: Mar’15)
Construction gradually improving Construction gradually improving
(latest data point: Jan’15)
US
Sustainable iron ore business
Aggressive cost improvementsAggressive cost improvements12
2013
-38%
2014 2015F
1518
2326
+72%
2013 2015F2012 2014
AMMC iron ore production (MMt) AMMC concentrate cost index
• Centred around Mines Canada… a tier one operation
Improved cash conversion
• Capex down $1.7bn • Net interest down $0.5bn
Cash breakeven level transformed ���� Cash Flow expected to improve with EBITDACash breakeven level transformed ���� Cash Flow expected to improve with EBITDA13
3.0
3.73.5
4.7
2013
-36%
2014 2015F2012
1.41.5
1.81.9
2015F
-25%
20142012 2013
Capex expense (US$bn) Net interest expense (US$bn)
14
• 1Q’15 EBITDA of $1.4bn (includes $0.1bn onerous contracts)*
• Ex-Mining Segment, Underlying EBITDA stable YoY*
• Steel shipments +3.0% YoY
• Own iron ore production +5% YoY
• Iron ore unit cash costs down 13% YoY
• FY’15 capex expectation lowered to approx. $3.0bn
• Net debt at end of 1Q’15 of $16.6bn, compared to $18.5bn at end of 1Q’14
EBITDA impacted by lower iron ore prices; Steel-onl y margins stable YoY EBITDA impacted by lower iron ore prices; Steel-onl y margins stable YoY * Underlying basis; EBITDA in 1Q’15 includes the negative impact a $69m provision related to onerous hot rolled and cold rolled contracts in the US.
Recent performance
Cash flow performance and liquidity
15
Recovering the investment grade credit rating remai ns a strategic priorityRecovering the investment grade credit rating remai ns a strategic priority
• Seasonal net debt increase in 1Q’15 due to investment in working capital
• Net debt $1.9bn lower than 12 months ago• Net debt benefiting from lower interest expenses, capex
reductions and working capital focus
* Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale); ** LTM: refers to last twelve months.
-10%
Medium term target
15.0
1Q 15
16.6
1Q 14
18.5
Net debt* progress ($bn)
• $6bn lines of credit refinanced and extended in April; two tranches:
• $2.5bn matures April 2018• $3.5bn matures April 2020
• Covenant of Net Debt / LTM** EBITDA of 4.25x• Average debt maturity � 6.4 Yrs
6.0
2.8Cash
Bank lines
At March 31, 2015
8.8
Strong liquidity ($bn)
16
Capacity to capture share of continued demand recov ery in core marketsCapacity to capture share of continued demand recov ery in core markets
Core market recovery expected to continue
2012 2013 2014 2015 2016 2017 2018
150
155
145
0
160
140
April 2013 forecast
April 2015 forecast
EU28 Medium term ASC forecast*
2012 2013 2014 2015 2016 2017 2018
108
104
100
116
112
0
April 2013 forecast
April 2015 forecast
USA Medium term ASC forecast*
* ArcelorMittal estimates
Takeaways
• ArcelorMittal is the leader in the differentiated steel industry
• ArcelorMittal is the leader in steel for automotive and will continue to invest to capture the opportunities
• The learning's of footprint optimisation in Europe will be applied to the US asset base
• The demand recovery in Europe is driving improved steel spreads and profitability
• Clear progress has been achieved on mining costs, cash conversion and repositioning the balance sheet
• Positive outlook for core developed markets
17
Q&A
Daniel Fairclough – Global Head Investor [email protected]+44 207 543 1105
Hetal Patel – UK/European Investor [email protected]+44 207 543 1128
Valérie Mella – European/Retail Investor [email protected]+44 207 543 1156
Maureen Baker – Fixed Income/Debt Investor [email protected]+33 1 71 92 10 26
Lisa Fortuna – US Investor [email protected]+312 899 3985
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