ArcelorMittal reports third quarter 2022 results
Luxembourg, November 10, 2022 - ArcelorMittal
(referred to as “ArcelorMittal” or the “Company”) (MT (New York,
Amsterdam, Paris, Luxembourg), MTS (Madrid)), the world’s leading
integrated steel and mining company, today announced results1,2 for
the three-month and nine-month periods ended September 30,
2022.
Key highlights:
- Health and safety
performance: Protecting the health and well-being of
employees remains the Company’s overarching priority; LTIF rate3 of
0.54x in 3Q 2022 as compared to 0.67x in 2Q 2022
- Steel spread compression and
seasonally lower shipments: 3Q 2022 was impacted by a
negative price-cost effect, energy costs headwinds and a 5.6%
sequential decrease in steel shipments to 13.6Mt (-7.1% lower vs.
3Q 2021). Steel shipments remain broadly stable YoY excluding
ArcelorMittal Kryvyi Rih which is impacted by the ongoing war in
Ukraine
- Operating income:
$1.7bn in 3Q 2022 (vs. $4.5bn in 2Q 2022); 9M 2022 operating income
of $10.6bn (vs. $12.4bn in 9M 2021)
- EBITDA: $2.7bn in
3Q 2022 vs. $5.2bn in 2Q 2022; 9M 2022 EBITDA of $12.9bn (vs.
$14.4bn in 9M 2021)
- Net income: $1.0bn
in 3Q 2022 (vs. $3.9bn in 2Q 2022); 9M 2022 net income of $9.0bn
(vs. $10.9bn net income in 9M 2021)
- Share repurchases driving
enhanced value: Company repurchased a further 31m shares
during the quarter (96.2m in 9M 2022); diluted share count now 873m
(vs. 1,224m at end of September 30, 202020); 3Q 2022 basic EPS of
$1.11/sh; 9M 2022 basis EPS of $9.76/sh vs $9.52/sh for 9M 2021
benefiting from lower share count; last 12 months ROE15 of 26%;
book value per share12 of $59/sh
- Further FCF
generation: Free cash flow (FCF) of $1.1bn in 3Q 2022
($2.0bn net cash provided by operating activities less capex of
$0.8bn less minority dividends $0.1bn) despite $0.6bn investment in
working capital; FCF to be supported by a working capital release
in 4Q 2022
- Financial strength:
Net debt of $3.9bn at the end of September 2022 as compared to
$4.2bn at the end of June 2022 and $4.0bn at the end of December
2021; Gross debt of 9.0bn as at end of September 2022
Strategic update:
- Decarbonization
leadership: ArcelorMittal breaks ground on first
transformational low-carbon emissions steelmaking project in
Dofasco (Canada)19
- Strategic growth:
AMNS India announced its strategy to capture growth, expand its
market share and play a leading role in the development of the
Indian steel industry. Expansion of the Hazira plant to a ~15Mt
capacity by early 2026 is underway including automotive downstream
and enhancements to iron ore operations, with capex of ~$7.4bn and
targeting to increase the EBITDA capacity by 2.5x4
- Consistently returning
capital: As at September 30, 2022, the Company had
completed approximately 50% (i.e. ~31 million shares or ~$0.7bn) of
the previously announced share buy-back program which totaled 60
million shares, with the balance to be completed by the end of May
2023
Financial highlights (on the basis of
IFRS1,2):
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Sales |
18,975 |
22,142 |
20,229 |
62,953 |
55,765 |
Operating income |
1,651 |
4,494 |
5,345 |
10,578 |
12,418 |
Net income attributable to equity holders of the parent |
993 |
3,923 |
4,621 |
9,041 |
10,911 |
Basic earnings per common share (US$) |
1.11 |
4.25 |
4.17 |
9.76 |
9.52 |
|
|
|
|
|
|
Operating income/ tonne (US$/t) |
122 |
313 |
366 |
244 |
263 |
EBITDA |
2,660 |
5,163 |
6,058 |
12,903 |
14,352 |
EBITDA/ tonne (US$/t) |
196 |
359 |
414 |
298 |
304 |
|
|
|
|
|
|
Crude steel production (Mt) |
14.9 |
14.6 |
17.2 |
45.8 |
52.6 |
Steel shipments (Mt) |
13.6 |
14.4 |
14.6 |
43.3 |
47.2 |
Total group iron ore production (Mt) |
10.6 |
12.0 |
13.0 |
34.6 |
37.5 |
Iron ore production (Mt) (AMMC and Liberia only) |
6.9 |
7.3 |
6.8 |
21.1 |
19.0 |
Iron ore shipment (Mt) (AMMC and Liberia only) |
6.9 |
7.5 |
6.9 |
21.1 |
18.9 |
|
|
|
|
|
|
Number of shares outstanding (issued shares less treasury shares)
(millions) |
816 |
847 |
971 |
816 |
971 |
Commenting, Aditya Mittal, ArcelorMittal
Chief Executive Officer, said:
“The strong market conditions enjoyed for much of the past two
years deteriorated in the third quarter as seasonally lower
shipments, a reduction in exceptional price levels, destocking and
higher energy costs combined to put profits under pressure. The
business responded quickly to the changing environment, cutting
higher cost capacity to manage addressable demand and reduce fixed
costs, and reducing European gas consumption by 30%.
The group’s decarbonization goals remain a central part of the
strategy, with a key development being the ground breaking last
month in Ontario, Canada, for a new DRI-EAF plant, which is
hydrogen ready. This is an important milestone in our
decarbonization roadmap and has been achieved thanks to support
from both the regional and federal governments. With COP27 underway
we hope for progress on measures that can accelerate the road to
net zero, including the scaling up of renewable energy, critical
for both the decarbonization of steel and enhanced energy
security.
The short-term outlook for the industry remains uncertain and
caution is appropriate. But, ArcelorMittal has the strength,
resilience and experience to face the future with confidence.
Supported by a strong balance sheet, we will continue to focus on
executing our strategy, designed to ensure our long-term sector
leadership, as well as deliver sustainable investor returns.”
Sustainable development and safety
performance
Health and safety - Own personnel and
contractors lost time injury frequency rate18
Protecting the health and wellbeing of employees is the
Company’s overarching priority with ongoing strict adherence to
World Health Organization guidelines (in respect of COVID-19), and
specific government guidelines have been followed and
implemented.
Health and safety performance based on own personnel and
contractors lost time injury frequency ("LTIF") rate was 0.54x in
the third quarter of 2022 ("3Q 2022") as compared to 0.67x in the
second quarter of 2022 ("2Q 2022) and 0.76x in the third quarter of
20213 ("3Q 2021"). Health and safety performance in the first nine
months of 2022 (“9M 2022”) was 0.63x as compared to 0.80x in the
first nine months of 2021 (“9M 2021”).
Own personnel and contractors - Frequency
rate
Lost time injury frequency rate |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
NAFTA |
0.27 |
0.28 |
0.48 |
0.27 |
0.45 |
Brazil |
0.05 |
0.14 |
0.10 |
0.09 |
0.17 |
Europe |
1.03 |
0.99 |
1.38 |
1.05 |
1.23 |
ACIS |
0.50 |
0.81 |
0.80 |
0.63 |
0.94 |
Mining |
0.30 |
0.30 |
— |
0.92 |
0.44 |
Total |
0.54 |
0.67 |
0.76 |
0.63 |
0.80 |
Sustainable development highlights –
leading the decarbonization of the steel industry:
- On November 3, 2022, ArcelorMittal
announced it has invested $25 million in nuclear innovation company
TerraPower through its XCarb® innovation fund8. The investment is
part of an $830 million equity raise TerraPower has concluded,
which is the largest private raise among advanced nuclear
companies. TerraPower, which was founded by Bill Gates in 2008,
entered the nuclear energy arena because the company’s founders saw
clean energy as the pathway to lift billions out of poverty. It has
spent the last decade investing in and developing ground-breaking
nuclear technologies.Its flagship technology is Natrium™, which
features a cost-competitive sodium fast reactor combined with a
molten salt energy storage system. This combination will provide
clean, flexible energy and integrate seamlessly into power grids
with high penetrations of renewables. TerraPower is experiencing
significant growth, and is currently building its first Natrium™
reactor, a TerraPower and GE Hitachi technology, as part of the
U.S. Department of Energy’s Advanced Reactor Demonstration Program
(ARDP). The facility, being constructed near the site of a retiring
coal plant in Kemmerer, Wyoming, will feature a 345 MWe sodium fast
reactor alongside an energy storage system that can boost output to
500 MWe during peak demand. Large scale, first-of-a-kind, energy
generation projects like the Natrium™ project take years to come to
fruition, and TerraPower is targeting an in-service date for the
project within this decade.
- On October 13, 2022, ArcelorMittal
together with the governments of Canada and Ontario, broke ground
on its CAD$1.8 billion investment decarbonization project at the
ArcelorMittal Dofasco plant in Hamilton, Ontario, Canada. The
governments of Canada and Ontario having committed CAD$400 million
and CAD$500 million respectively to the overall project cost. The
project will fundamentally change the way steel is made at
ArcelorMittal Dofasco, transitioning the site to direct reduced
iron-electric arc furnace steelmaking, which carries a considerably
lower carbon footprint and removes coal from the ironmaking
process. The new 2.5Mt capacity DRI furnace will initially operate
on natural gas but will be constructed ‘hydrogen ready’ so it can
transition to green hydrogen when a sufficient and cost-effective
supply becomes available.19
- On October 4, 2022, ArcelorMittal
announced it has invested a further $17.5 million in Form Energy
Inc. via its XCarb® innovation fund. This is the second investment
ArcelorMittal has made in the company, following its initial
investment of $25 million announced in July 2021. Form Energy is
developing, manufacturing, and commercializing a new class of
cost-effective, multi-day energy storage systems that will enable a
reliable and fully renewable electric grid year-round.
- On September 22, 2022, ArcelorMittal
announced that ArcelorMittal Poland had received ResponsibleSteel™
certification, following a successful audit carried out by DNV
Poland which confirmed that the business fulfils the criteria
required to earn certification against the ResponsibleSteel
Standard. ArcelorMittal Poland is the first cluster of sites to be
certified in Eastern Europe by ResponsibleSteel, the industry’s
first global multi-stakeholder standard and certification
initiative.
Analysis of results for 3Q 2022 versus 2Q 2022 and 3Q
2021
Total steel shipments in 3Q 2022 were 13.6Mt, -5.6% lower as
compared with 14.4Mt in 2Q 2022, largely reflecting weaker demand
and seasonality in Europe (-11.1%), Brazil (-5.5%) mainly due to
lower exports, NAFTA (-4.6%) offset in part by higher shipments in
ACIS +37.6%.
3Q 2022 steel shipments were -7.1% lower as compared with 14.6Mt
in 3Q 2021, largely reflecting weaker demand in Europe (-6.2%) and
the war in Ukraine (-29.2%) offset in part by NAFTA (+2.6%).
Excluding the impact of Ukraine, steel shipments in 3Q 2022
declined by -1.0% as compared to 3Q 2021 with declines in Europe
-6.3%, offset by ACIS +17.0%, NAFTA +2.5% and Brazil +0.3%.
Sales in 3Q 2022 were $19.0 billion as compared to $22.1 billion
for 2Q 2022 and $20.2 billion for 3Q 2021. As compared to 2Q 2022,
the -14.3% decrease in sales was primarily due to lower average
steel selling prices (-11.3%), lower steel shipment volumes and
lower iron ore reference prices (-24.8%). Sales in 3Q 2022 were
-6.2% lower as compared to 3Q 2021 primarily due to lower steel
shipments (-7.1%) and lower iron ore reference prices (-36.5%).
Depreciation for 3Q 2022 was $628 million as compared to $669
million for 2Q 2022 and $590 million in 3Q 2021. Depreciation was
lower in 3Q 2022 than 2Q 2022 primarily due to foreign exchange
impacts.
Exceptional items for 3Q 2022 of $0.4 billion includes $0.5
billion of non-cash inventory related charges to reflect the net
realizable value of inventory under IFRS with declining market
prices in Europe and partially offset by a $0.1 billion purchase
gain on the acquisition of a Hot Briquetted Iron (‘HBI’) plant in
Texas. There were no exceptional items for 2Q 2022. Exceptional
items for 3Q 2021 of $123 million related to expected costs for the
decommissioning of the dam at the Serra Azul mine in Brazil.
Operating income for 3Q 2022 was $1.7 billion as compared to
$4.5 billion in 2Q 2022 and $5.3 billion for 3Q 2021, reflecting
negative price-cost effects, lower volumes, higher energy costs and
impacted by exceptional items as discussed above.
Income from associates, joint ventures and other investments9
for 3Q 2022 was $59 million as compared to $578 million for 2Q 2022
and $778 million in 3Q 2021. 3Q 2022 includes lower contribution
from AMNS Calvert5 impacted by a negative price-cost effect and
with lagged cost of slab inventory that does not reflect prevailing
slab market prices, AMNS India4 (negative price-cost effects) and
European investees impacted by negative price-cost effects. 2Q 2022
income from associates, joint ventures and other investments
included $0.1 billion income for Acciaierie d'Italia arising from
recognition of a deferred tax asset.
Net interest expense in 3Q 2022 was $37 million as compared to
$53 million in 2Q 2022 and lower than $62 million in 3Q 2021,
reflecting higher gains from interest income.
Foreign exchange and other net financing losses in 3Q 2022 were
$247 million as compared to losses of $183 million in 2Q 2022 and
$339 million in 3Q 2021. 3Q 2022 includes foreign exchange loss of
$108 million compared to $152 million in 2Q 2022 and a gain of $22
million in 3Q 2021.
ArcelorMittal recorded an income tax expense of $371 million
(including deferred tax benefit of $23 million) in 3Q 2022, lower
as compared to an income tax expense of $826 million (including
deferred tax benefit of $74 million) in 2Q 2022 due to lower
taxable results. Income tax expense in 3Q 2021 was $882 million
(including deferred tax benefit of $56 million).
ArcelorMittal recorded a net income for 3Q 2022 of $993 million
as compared to a net income for 2Q 2022 of $3,923 million, and net
income of $4,621 million for 3Q 2021. ArcelorMittal's basic
earnings per common share for 3Q 2022 was lower at $1.11 as
compared to $4.25 in 2Q 2022 and $4.17 in 3Q 2021.
Analysis of segment
operations2, 11
NAFTA
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Sales |
3,438 |
3,653 |
3,423 |
10,851 |
9,201 |
Operating income |
616 |
817 |
925 |
2,487 |
1,861 |
Depreciation |
(114) |
(93) |
(70) |
(300) |
(212) |
Exceptional items |
92 |
— |
— |
92 |
— |
EBITDA |
638 |
910 |
995 |
2,695 |
2,073 |
Crude steel production (kt) |
2,126 |
2,043 |
1,994 |
6,246 |
6,441 |
Steel shipments * (kt) |
2,339 |
2,453 |
2,280 |
7,248 |
7,381 |
Average steel selling price (US$/t) |
1,191 |
1,317 |
1,303 |
1,278 |
1,064 |
* NAFTA steel shipments include shipments sourced by NAFTA from
Group subsidiaries and sold to the Calvert JV that are eliminated
on consolidation.
NAFTA segment crude steel production increased by +4.1% to 2.1Mt
in 3Q 2022, as compared to 2.0Mt in 2Q 2022 (which had been
negatively impacted by labour actions in Mexico and maintenance in
Canada). Crude steel production in 3Q 2022 increased by +6.6% as
compared to 3Q 2021 which had been impacted by operational
disruptions (including the impact of hurricane Ida) in Mexico.
Steel shipments in 3Q 2022 decreased -4.6% to 2.3Mt, as compared
to 2.5Mt in 2Q 2022 due to weaker demand, and increased by +2.6% as
compared to 3Q 2021 which had been impacted by the factors
discussed above.
Sales in 3Q 2022 decreased by -5.9% to $3.4 billion, as compared
to $3.7 billion in 2Q 2022 primarily on account of lower average
steel selling prices (-9.6%) and lower steel shipment volumes,
partly offset by the scope effect of ArcelorMittal Texas HBI
(consolidated as from June 30, 2022). Sales were stable in 3Q 2022
as compared to 3Q 2021 at $3.4 billion primarily on account of
lower average steel selling prices (-8.6%) offset by higher steel
shipment volumes (+2.6%) and the scope effect of ArcelorMittal
Texas HBI.
Exceptional items for 3Q 2022 of $0.1 billion are the purchase
gain on the acquisition of the HBI plant in Texas.
Operating income in 3Q 2022 declined -24.5% to $616 million as
compared to $817 million in 2Q 2022 and -33.4% lower as compared to
$925 million in 3Q 2021.
EBITDA in 3Q 2022 of $638 million was -29.9% lower as compared
to $910 million in 2Q 2022, primarily due to a negative price-cost
effect and the impact of lower steel shipments. The newly acquired
HBI plant in Texas contributed $31 million in EBITDA during 3Q
2022. 2Q 2022 was impacted negatively by $0.1 billion from labor
action in Mexico. EBITDA in 3Q 2022 was -35.9% lower as compared to
$995 million in 3Q 2021 mainly due to a negative price-cost
effect.
Brazil16
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Sales |
3,486 |
3,986 |
3,606 |
10,838 |
9,404 |
Operating income |
598 |
1,201 |
1,164 |
2,473 |
2,906 |
Depreciation |
(57) |
(71) |
(59) |
(186) |
(168) |
Exceptional items |
— |
— |
(123) |
— |
(123) |
EBITDA |
655 |
1,272 |
1,346 |
2,659 |
3,197 |
Crude steel production (kt) |
2,969 |
3,085 |
3,112 |
9,094 |
9,296 |
Steel shipments (kt) |
2,837 |
3,003 |
2,829 |
8,877 |
8,661 |
Average steel selling price (US$/t) |
1,137 |
1,234 |
1,196 |
1,137 |
1,023 |
Brazil segment crude steel production decreased by -3.8% to
3.0Mt in 3Q 2022 as compared to 3.1Mt in 2Q 2022 and -4.6% as
compared to 3Q 2021.
Steel shipments of 2.8Mt in 3Q 2022 were -5.5% lower as compared
to 3.0Mt at 2Q 2022, primarily due to lower exports, but stable as
compared to 3Q 2021.
Sales in 3Q 2022 decreased by -12.5% to $3.5 billion as compared
to $4.0 billion in 2Q 2022, primarily due to -7.8% decrease in
average steel selling prices. Sales in 3Q 2022 were -3.3% lower
than $3.6 billion at 3Q 2021 primarily on account of lower average
steel selling prices (-4.9%).
Operating income in 3Q 2022 of $598 million was lower as
compared to $1,201 million in 2Q 2022 and $1,164 million in 3Q
2021. Operating income in 3Q 2021 was impacted by exceptional items
of $123 million related to expected costs for the decommissioning
of the dam at the Serra Azul mine in Brazil.
EBITDA in 3Q 2022 decreased by -48.5% to $655 million as
compared to $1,272 million in 2Q 2022, primarily due to a negative
price-cost effect, lower steel shipments and negative forex
translation impact ($0.1 billion) while 2Q 2022 also benefited from
a gain of $0.2 billion related to Pis/Cofins tax credits from prior
years for scrap purchases17. EBITDA in 3Q 2022 was -51.3% lower
than $1,346 million in 3Q 2021 primarily due to negative price-cost
effect.
Europe
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Sales |
10,694 |
13,449 |
11,228 |
37,186 |
31,255 |
Operating income |
158 |
2,063 |
1,925 |
4,302 |
3,786 |
Depreciation |
(300) |
(326) |
(284) |
(952) |
(899) |
Exceptional items |
(473) |
— |
— |
(473) |
— |
EBITDA |
931 |
2,389 |
2,209 |
5,727 |
4,685 |
Crude steel production (kt) |
7,998 |
8,261 |
9,091 |
24,948 |
28,174 |
Steel shipments (kt) |
7,079 |
7,967 |
7,551 |
23,380 |
24,857 |
Average steel selling price (US$/t) |
1,150 |
1,292 |
1,098 |
1,222 |
945 |
Europe segment crude steel production declined by -3.2% to 8.0Mt
in 3Q 2022 as compared to 8.3Mt in 2Q 2022. Production was -12.0%
lower as compared to 9.1Mt in 3Q 2021 given significantly lower
apparent demand and curtailed production in light of higher energy
prices. Given the weaker macroeconomic conditions and order book,
high energy and carbon costs and rising imports, the Company
announced further, more significant, production curtailments
commencing in 4Q 2022 (in France, Spain, Germany and Poland)21 to
bring supply in line with addressable demand.
Steel shipments declined by -11.1% to 7.1Mt in 3Q 2022 as
compared to 8.0Mt in 2Q 2022 due to seasonality and lower demand.
Shipments declined by -6.2% as compared to 7.6Mt in 3Q 2021
primarily due to weaker apparent demand.
Sales in 3Q 2022 decreased by -20.5% to $10.7 billion, as
compared to $13.4 billion in 2Q 2022, due to a -11.1% reduction in
steel shipments and -11.0% lower average selling prices (including
a -5.5% negative forex translation impact). Sales declined by -4.8%
as compared to 3Q 2021 primarily due to lower steel shipments
offset in part by higher average steel selling prices (+4.7%).
Exceptional items for 3Q 2022 of $473 million relate to non-cash
inventory charges to reflect the net realizable value of inventory
under IFRS with declining market prices.
Operating income in 3Q 2022 significantly declined to $158
million as compared to $2,063 million in 2Q 2022 and lower than
$1,925 million in 3Q 2021.
EBITDA in 3Q 2022 of $931 million declined significantly as
compared to $2,389 million in 2Q 2022, due to the impacts of lower
steel shipments, negative price-cost effect, higher energy costs
(approximately $0.3 billion higher compared to 2Q 2022, with higher
market prices partially offset by hedges in place) and negative
forex translation impact ($0.1 billion).
ACIS14
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Sales |
1,569 |
1,484 |
2,419 |
5,139 |
7,315 |
Operating (loss) / income |
(55) |
43 |
808 |
268 |
2,266 |
Depreciation |
(93) |
(106) |
(112) |
(304) |
(332) |
EBITDA |
38 |
149 |
920 |
572 |
2,598 |
Crude steel production (kt) |
1,842 |
1,261 |
3,014 |
5,555 |
8,672 |
Steel shipments (kt) |
1,675 |
1,218 |
2,367 |
4,964 |
7,763 |
Average steel selling price (US$/t) |
773 |
925 |
864 |
845 |
770 |
ACIS segment crude steel production in 3Q 2022 was +46.0% higher
at 1.8Mt as compared to 1.3Mt in 2Q 2022 primarily due to the
recovery in South Africa following the impact from a 2-week labour
action and logistic issues in the prior quarter. Crude steel
production in 3Q 2022 was -38.9% below 3.0Mt in 3Q 2021 primarily
due to lower steel production in Ukraine due to the ongoing
war.
One of the three blast furnaces in Ukraine, blast furnace No.6
which is approximately 20% of Kryvyi Rih capacity, was restarted on
April 11, 2022. During 3Q 2022, iron ore production was temporarily
suspended due to weaker demand and logistic constraints (versus
~55% capacity rate in 2Q 2022) and has restarted in early October
2022 at ~25% level.
Steel shipments in 3Q 2022 increased by +37.6% to 1.7Mt as
compared to 1.2Mt in 2Q 2022 primarily due to higher exports from
Kazakhstan. Shipments were -29.2% lower as compared to 2.4Mt in 3Q
2021, primarily in Ukraine due the ongoing war.
Sales in 3Q 2022 increased by +5.7% to $1.6 billion as compared
to $1.5 billion in 2Q 2022, primarily due to higher steel
shipments, offset in part by -16.5% lower average steel selling
prices.
Operating loss in 3Q 2022 of $55 million compared to an
operating income of $43 million in 2Q 2022 and $808 million in 3Q
2021.
EBITDA of $38 million in 3Q 2022 was lower as compared to $149
million in 2Q 2022, primarily due to lower average steel selling
prices (-16.5%) offset in part by higher steel shipments. 2Q 2022
had also been impacted by higher costs including labour action and
logistic issues in ArcelorMittal South Africa ($0.1 billion).
EBITDA in 3Q 2022 was lower as compared to $920 million in 3Q 2021
due to lower steel shipments (-29.2%) and lower average steel
selling prices (-10.5%).
Mining
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Sales |
742 |
1,005 |
1,153 |
2,680 |
3,221 |
Operating income |
254 |
463 |
741 |
1,228 |
2,028 |
Depreciation |
(57) |
(64) |
(56) |
(177) |
(171) |
EBITDA |
311 |
527 |
797 |
1,405 |
2,199 |
|
|
|
|
|
|
Iron ore production (Mt) |
6.9 |
7.3 |
6.8 |
21.1 |
19.0 |
Iron ore shipment (Mt) |
6.9 |
7.5 |
6.9 |
21.1 |
18.9 |
Note: Mining segment comprises iron ore operations of
ArcelorMittal Mines Canada and ArcelorMittal Liberia.
Iron ore production decreased in 3Q 2022 by -5.3% to 6.9Mt as
compared to 7.3Mt in 2Q 2022, but marginally higher than 6.8Mt in
3Q 2021. Lower production in 3Q 2022 as compared to 2Q 2022 was
primarily due to lower production in AMMC6 mainly due to impacts of
exceptionally heavy rains in September 2022.
Iron ore shipments decreased in 3Q 2022 by -8.4% to 6.9Mt as
compared to 7.5Mt in 2Q 2022, primarily driven by the impact of
lower production on shipments at AMMC. 3Q 2022 iron ore shipments
were stable as compared to 3Q 2021.
Operating income in 3Q 2022 was $254 million as compared to $463
million in 2Q 2022 and $741 million in 3Q 2021.
EBITDA in 3Q 2022 decreased to $311 million as compared to $527
million in 2Q 2022, largely reflecting the effect of lower iron ore
reference prices (-24.8%), lower quality premia and lower shipments
(-8.4%), offset in part by lower freight costs. EBITDA in 3Q 2022
was lower as compared to $797 million in 3Q 2021, primarily due to
lower iron ore reference prices (-36.5%) and lower quality
premia.
Joint ventures
ArcelorMittal has investments in various joint ventures and
associate entities globally. The Company considers the Calvert (50%
equity interest) and AMNS India (60% equity interest) joint
ventures to be of particular strategic importance, warranting more
detailed disclosures to improve the understanding of their
operational performance and value to the Company.
Calvert5
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Production (100% basis) (kt)* |
1,055 |
1,127 |
1,239 |
3,306 |
3,734 |
Steel shipments (100% basis) (kt)** |
1,030 |
1,123 |
1,203 |
3,324 |
3,495 |
EBITDA (100% basis)*** |
2 |
261 |
397 |
590 |
821 |
* Production: all production of the hot strip mill including
processing of slabs on a hire work basis for ArcelorMittal group
entities and third parties, including stainless steel slabs.
** Shipments: including shipments of finished products processed
on a hire work basis for ArcelorMittal group entities and third
parties, including stainless steel products.
*** EBITDA of Calvert presented here on a 100% basis as a
stand-alone business and in accordance with the Company's policy,
applying the weighted average method of accounting for
inventory.
Calvert’s hot strip mill ("HSM") production during 3Q 2022
decreased by -6.4% to 1.1Mt, as compared to 2Q 2022 and by -14.9%
as compared to 1.2Mt in 3Q 2021.
Steel shipments in 3Q 2022 were -8.3% below 2Q 2022 due to
weaker demand.
EBITDA*** during 3Q 2022 of $2 million was significantly lower
than $261 million in 2Q 2022 primarily due to negative price-cost
effect resulting from the decline in sales prices for non-contract
volumes while cost continues to be impacted by the lagged cost of
slabs and inventory that does not reflect the prevailing market
prices. The impact of weighted average cost of inventories versus
replacement cost in 3Q 2022 was approximately $0.2 billion.
AMNS India4
(USDm) unless otherwise shown |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Crude steel production (100% basis) (kt) |
1,663 |
1,668 |
1,891 |
5,061 |
5,546 |
Steel shipments (100% basis) (kt) |
1,634 |
1,511 |
1,765 |
4,877 |
5,191 |
EBITDA (100% basis) |
204 |
365 |
551 |
1,039 |
1,561 |
Crude steel production in 3Q 2022 was stable at 1.7Mt as
compared to 2Q 2022 but -12.1% lower as compared to 1.9Mt in 3Q
2021 on account of maintenance.
Steel shipments in 3Q 2022 increased by +8.2% to 1.6Mt as
compared to 1.5Mt in 2Q 2022 but lower as compared to 1.8Mt in 3Q
2021.
EBITDA during 3Q 2022 of $204 million was lower compared to $365
million in 2Q 2022, due to lower selling prices, higher coal costs
and lower pellet sales contribution (following the introduction of
the export duty during the prior quarter) offset in part by higher
steel shipments.
Liquidity and Capital
Resources
Net cash provided by operating activities for 3Q 2022 was $1,981
million as compared to $2,554 million in 2Q 2022 and $2,442 million
in 3Q 2021. Net cash provided by operating activities in 3Q 2022
includes a working capital investment of $580 million as compared
to investments of $1,008 million in 2Q 2022 and $2,896 million in
3Q 2021. 3Q 2022 working capital requirements were driven primarily
by the lagged effects of higher raw material costs and higher
energy costs on steel inventories. Based on current market
conditions, the Company expects a working capital release in 4Q
2022.
Capex in 3Q 2022 amounted to $784 million compared with $655
million in 2Q 2022 and $675 million in 3Q 2021. Full year 2022
capex guidance has been reduced to $3.5 billion (from $4.2 billion
previous guidance) implying 4Q 2022 capex of ~$1.5 billion. The
reduction in capex guidance reflects some moderate delays to
certain strategic and decarbonization spending plans due to project
mobilization/contractors but these are now accelerating. There has
also been a $0.2 billion reduction from foreign exchange effects
relative to initial 2022 budget. Sustaining capex is expected to
increase in 4Q 2022 (although the full year 2022 amount is lower
than previous guidance) as the Company capitalizes on a period of
lower production and prepares for anticipated future stronger
apparent demand. Full year 2023 capex plans and guidance will be
provided at full year 2022 results in February 2023, but 2H 2022
run rate levels are a good base-line for full year 2023. Given the
previously announced strategic pipeline ($3.65 billion for 3 years)
the Company expects strategic projects capex in 2023 to be higher
than full year 2022 ($0.7 billion). Decarbonization capex spending
is expected to accelerate in full year 2023 versus the $0.2 billion
in full year 2022.13
Net cash used in other investing activities in 3Q 2022 was $19
million mainly related to investment in Form Energy Inc. (through
the XCarbTM innovation fund), as compared to $886 million in 2Q
2022 (primarily related to the acquisition of the HBI plant,
Texas). Net cash provided by other investing activities in 3Q 2021
of $1,184 million included a cash inflow primarily related to the
redemption of preferred shares of Cleveland Cliffs.
Net cash used in financing activities in 3Q 2022 was $219
million as compared to $1,651 million in 2Q 2022 and $2,740 million
in 3Q 2021. In 3Q 2022, ArcelorMittal raised a €600 million 4 year
note which was offset by the repurchase of 31 million shares for a
total value of $712 million (of which $649 million was paid by the
end of September 2022 and $63 million settled in early October
2022) and paid minority dividends of $124 million mainly paid to
minority shareholders of AMMC.
Gross debt increased to $9.0 billion as of September 30, 2022,
as compared to $8.8 billion as of June 30, 2022, and $8.4 billion
as of December 31, 2021. Net debt decreased by $0.3 billion to $3.9
billion as of September 30, 2022, as compared to $4.2 billion as of
June 30, 2022, and decreased by $0.1 billion from $4.0 billion as
of December 31, 2021.
As of September 30, 2022, and June 30, 2022, the Company had
liquidity of $10.6 billion and $10.1 billion, respectively. As of
September 30, 2022, liquidity consisted of cash and cash
equivalents of $5.1 billion (June 30, 2022, cash and cash
equivalents of $4.6 billion) and $5.5 billion of available credit
lines7. As of September 30, 2022, the average debt maturity was 5.5
years.
Capital return
Following the completion of its previously announced share
buyback plans (totaling 65.1 million shares in 1H 2022), the
Company announced a new share buyback program on July 29, 2022 to
purchase a further 60 million shares by the end of May 2023. This
is the maximum shares purchasable under current shareholder
authorization. Pursuant to this program, the Company repurchased
~31 million shares at a cost of $0.7 billion during the third
quarter of 2022.
Outlook
The Company has adapted its capacity for 4Q 2022 to address the
weak apparent demand environment and higher energy costs,
particularly in Europe. Apparent demand conditions are expected to
improve once the current destocking phase reaches maturity. The
Company is adapting its cost base during this period of low
capacity utilization, optimizing energy consumption and reducing
fixed costs of unproductive capacity. At current spot levels,
variable costs per tonne (raw materials and energy) are expected to
decline in the 4Q 2022, but less than revenue per tonne. Working
capital is believed to have peaked, and the unwind expected from 4Q
2022 and into 2023 is expected to support free cash flow.
The Company expects to mitigate some of the fixed costs of idled
capacity during 4Q 2022 i.e. utilize economic unemployment support
from governments; reduced working hours etc.
Based on the slowing real demand outlook and supply chain
destocking, ArcelorMittal expects the following demand by key
region:
- In the US, real consumption in 2022
is expected to grow, but a greater impact than previously expected
from destocking (particularly in the second half of the year) is
forecast to lead to a slight contraction of apparent consumption by
up to -1%;
- In Europe, inflation headwinds are
leading to slower (but still positive) real consumption growth in
2022, however the impact of destocking is significant (particularly
in the second half of the year) and expected to lead to a
contraction of apparent consumption by up to -7.0%;
- In Brazil, demand is in line with
previous expectations, with a slight contraction in real
consumption and a significant reduction in inventory forecast
(following destocking) to lead to a contraction in apparent
consumption by -10% or more;
- In India, apparent consumption in
2022 is forecast to grow between +7.5% to +8.5%, which is at the
upper end of our previous expectations;
- In the CIS region (which includes
Commonwealth of Independent States and Ukraine), we forecast ASC to
contract by up to -7.0%; and
- In China, the ongoing economic
weakness caused by COVID-19 restrictions and the weak construction
sector are forecast to lead to a decline in apparent demand of
approximately -3.5%.
ArcelorMittal Condensed Consolidated Statement of
Financial Position1
In millions of U.S. dollars |
Sept 30, 2022 |
Jun 30, 2022 |
Dec 31, 2021 |
ASSETS |
|
|
|
Cash and cash equivalents |
5,067 |
4,565 |
4,371 |
Trade accounts receivable and other |
4,677 |
5,931 |
5,143 |
Inventories |
20,566 |
23,303 |
19,858 |
Prepaid expenses and other current assets |
6,114 |
7,189 |
5,567 |
Total Current Assets |
36,424 |
40,988 |
34,939 |
|
|
|
|
Goodwill and intangible assets |
4,035 |
4,307 |
4,425 |
Property, plant and equipment |
28,515 |
29,542 |
30,075 |
Investments in associates and joint ventures |
10,742 |
10,992 |
10,319 |
Deferred tax assets |
8,033 |
7,974 |
8,147 |
Other assets10 |
3,467 |
3,223 |
2,607 |
Total Assets |
91,216 |
97,026 |
90,512 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Short-term debt and current portion of long-term debt |
2,580 |
2,719 |
1,913 |
Trade accounts payable and other |
13,384 |
16,736 |
15,093 |
Accrued expenses and other current liabilities |
6,556 |
6,514 |
7,161 |
Total Current Liabilities |
22,520 |
25,969 |
24,167 |
|
|
|
|
Long-term debt, net of current portion |
6,414 |
6,069 |
6,488 |
Deferred tax liabilities |
2,394 |
2,489 |
2,369 |
Other long-term liabilities |
5,971 |
6,053 |
6,144 |
Total Liabilities |
37,299 |
40,580 |
39,168 |
|
|
|
|
Equity attributable to the equity holders of the parent |
51,563 |
53,992 |
49,106 |
Non-controlling interests |
2,354 |
2,454 |
2,238 |
Total Equity |
53,917 |
56,446 |
51,344 |
Total Liabilities and Shareholders’ Equity |
91,216 |
97,026 |
90,512 |
ArcelorMittal Condensed Consolidated Statement of
Operations1
|
Three months ended |
Nine months ended |
In millions of U.S. dollars unless otherwise
shown |
Sept 30, 2022 |
Jun 30, 2022 |
Sept 30, 2021 |
Sept 30, 2022 |
Sept 30, 2021 |
Sales |
18,975 |
22,142 |
20,229 |
62,953 |
55,765 |
Depreciation (B) |
(628) |
(669) |
(590) |
(1,944) |
(1,811) |
Exceptional items (B) |
(381) |
— |
(123) |
(381) |
(123) |
Operating income (A) |
1,651 |
4,494 |
5,345 |
10,578 |
12,418 |
Operating margin % |
8.7 % |
20.3 % |
26.4 % |
16.8 % |
22.3 % |
|
|
|
|
|
|
Income from associates, joint ventures and other investments |
59 |
578 |
778 |
1,196 |
1,821 |
Net interest expense |
(37) |
(53) |
(62) |
(141) |
(229) |
Foreign exchange and other net financing (loss) |
(247) |
(183) |
(339) |
(570) |
(766) |
Income before taxes and non-controlling
interests |
1,426 |
4,836 |
5,722 |
11,063 |
13,244 |
Current tax expense |
(394) |
(900) |
(938) |
(1,989) |
(2,275) |
Deferred tax benefit |
23 |
74 |
56 |
237 |
447 |
Income tax expense (net) |
(371) |
(826) |
(882) |
(1,752) |
(1,828) |
Income including non-controlling interests |
1,055 |
4,010 |
4,840 |
9,311 |
11,416 |
Non-controlling interests income |
(62) |
(87) |
(219) |
(270) |
(505) |
Net income attributable to equity holders of the
parent |
993 |
3,923 |
4,621 |
9,041 |
10,911 |
|
|
|
|
|
|
Basic earnings per common share ($) |
1.11 |
4.25 |
4.17 |
9.76 |
9.52 |
Diluted earnings per common share ($) |
1.11 |
4.24 |
4.16 |
9.73 |
9.49 |
|
|
|
|
|
|
Weighted average common shares outstanding (in millions) |
892 |
924 |
1,109 |
926 |
1,147 |
Diluted weighted average common shares outstanding (in
millions) |
895 |
926 |
1,112 |
929 |
1,150 |
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
EBITDA (C = A-B) |
2,660 |
5,163 |
6,058 |
12,903 |
14,352 |
EBITDA Margin % |
14.0 % |
23.3 % |
29.9 % |
20.5 % |
25.7 % |
|
|
|
|
|
|
Total group iron ore production (Mt) |
10.6 |
12.0 |
13.0 |
34.6 |
37.5 |
Crude steel production (Mt) |
14.9 |
14.6 |
17.2 |
45.8 |
52.6 |
Steel shipments (Mt) |
13.6 |
14.4 |
14.6 |
43.3 |
47.2 |
ArcelorMittal Condensed Consolidated Statement of Cash
flows1
|
Three months ended |
Nine months ended |
In millions of U.S. dollars |
Sept 30, 2022 |
Jun 30, 2022 |
Sept 30, 2021 |
Sept 30, 2022 |
Sept 30, 2021 |
Operating activities: |
|
|
|
|
|
Income attributable to equity holders of the
parent |
993 |
3,923 |
4,621 |
9,041 |
10,911 |
Adjustments to reconcile net income to net cash provided by
operations: |
|
|
|
|
|
Non-controlling interests income |
62 |
87 |
219 |
270 |
505 |
Depreciation |
628 |
669 |
590 |
1,944 |
1,811 |
Exceptional items |
381 |
— |
123 |
381 |
123 |
Income from associates, joint ventures and other investments |
(59) |
(578) |
(778) |
(1,196) |
(1,821) |
Deferred tax benefit |
(23) |
(74) |
(56) |
(237) |
(447) |
Change in working capital |
(580) |
(1,008) |
(2,896) |
(3,635) |
(6,431) |
Other operating activities (net) |
579 |
(465) |
619 |
1 |
1,100 |
Net cash provided by operating activities (A) |
1,981 |
2,554 |
2,442 |
6,569 |
5,751 |
Investing activities: |
|
|
|
|
|
Purchase of property, plant and equipment and intangibles (B) |
(784) |
(655) |
(675) |
(1,968) |
(1,863) |
Other investing activities (net) |
(19) |
(886) |
1,184 |
(982) |
2,758 |
Net cash (used in) / provided by investing
activities |
(803) |
(1,541) |
509 |
(2,950) |
895 |
Financing activities: |
|
|
|
|
|
Net proceeds / (payments) relating to payable to banks and
long-term debt |
592 |
389 |
(806) |
1,360 |
(3,662) |
Dividends paid to ArcelorMittal shareholders |
— |
(332) |
(28) |
(332) |
(312) |
Dividends paid to minorities (C) |
(124) |
(166) |
(157) |
(302) |
(239) |
Share buyback |
(649) |
(1,496) |
(1,703) |
(2,649) |
(3,350) |
Lease payments and other financing activities (net) |
(38) |
(46) |
(46) |
(132) |
(345) |
Net cash used in financing activities |
(219) |
(1,651) |
(2,740) |
(2,055) |
(7,908) |
Net increase / (decrease) in cash and cash equivalents |
959 |
(638) |
211 |
1,564 |
(1,262) |
Cash and cash equivalents transferred from assets held for
sale |
— |
— |
— |
— |
3 |
Effect of exchange rate changes on cash |
(451) |
(367) |
(9) |
(814) |
(68) |
Change in cash and cash equivalents |
508 |
(1,005) |
202 |
750 |
(1,327) |
|
|
|
|
|
|
Free cash flow (D=A+B+C) |
1,073 |
1,733 |
1,610 |
4,299 |
3,649 |
Appendix 1: Product shipments by
region1,2
(000'kt) |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
Flat |
1,743 |
1,800 |
1,613 |
5,354 |
5,331 |
Long |
676 |
748 |
770 |
2,081 |
2,349 |
NAFTA |
2,339 |
2,453 |
2,280 |
7,248 |
7,381 |
Flat |
1,519 |
1,643 |
1,523 |
4,909 |
4,635 |
Long |
1,345 |
1,380 |
1,325 |
4,034 |
4,076 |
Brazil |
2,837 |
3,003 |
2,829 |
8,877 |
8,661 |
Flat |
4,978 |
5,705 |
5,333 |
16,636 |
17,697 |
Long |
1,967 |
2,146 |
2,121 |
6,388 |
6,815 |
Europe |
7,079 |
7,967 |
7,551 |
23,380 |
24,857 |
CIS |
1,170 |
730 |
1,684 |
3,305 |
5,816 |
Africa |
503 |
492 |
679 |
1,662 |
1,942 |
ACIS |
1,675 |
1,218 |
2,367 |
4,964 |
7,763 |
Note: “Others and eliminations” are not presented in the
table
Appendix 2: Capital
expenditures1,2
(USDm) |
3Q 22 |
2Q 22 |
3Q 21 |
9M 22 |
9M 21 |
NAFTA |
97 |
115 |
118 |
299 |
265 |
Brazil |
154 |
123 |
102 |
367 |
241 |
Europe |
242 |
211 |
231 |
640 |
809 |
ACIS |
135 |
107 |
139 |
332 |
353 |
Mining |
128 |
92 |
78 |
290 |
175 |
Total |
784 |
655 |
675 |
1,968 |
1,863 |
Note: “Others” are not presented in the table
Appendix 3: Debt repayment schedule as of September 30,
2022
(USD billion) |
2022 |
2023 |
2024 |
2025 |
2026 |
>2026 |
Total |
Bonds |
— |
1.1 |
0.8 |
0.9 |
1.0 |
1.7 |
5.5 |
Commercial paper |
0.9 |
— |
— |
— |
— |
— |
0.9 |
Other loans |
0.4 |
0.3 |
0.2 |
0.6 |
0.1 |
1.0 |
2.6 |
Total gross debt |
1.3 |
1.4 |
1.0 |
1.5 |
1.1 |
2.7 |
9.0 |
Appendix 4: Reconciliation of gross debt to net
debt
(USD million) |
Sept 30, 2022 |
Jun 30, 2022 |
Dec 31, 2021 |
Gross debt |
8,994 |
8,788 |
8,401 |
Less: Cash and cash equivalents |
(5,067) |
(4,565) |
(4,371) |
Net debt |
3,927 |
4,223 |
4,030 |
|
|
|
|
Net debt / LTM EBITDA |
0.2 |
0.2 |
0.2 |
Appendix 5: Terms and
definitions
Unless indicated otherwise, or the context otherwise requires,
references in this earnings release to the following terms have the
meanings set out next to them below:
Apparent steel consumption: calculated as the
sum of production plus imports minus exports.
Average steel selling prices: calculated as
steel sales divided by steel shipments.
Cash and cash equivalents: represents cash and
cash equivalents, restricted cash, and short-term investments.
Capex: represents the purchase of property,
plant and equipment and intangibles.
Crude steel production: steel in the first
solid state after melting, suitable for further processing or for
sale.
Depreciation: refers to amortization and
depreciation.
EPS: refers to basic or diluted earnings per
share.
EBITDA: operating results plus depreciation and
exceptional items.
EBITDA/tonne: calculated as EBITDA divided by
total steel shipments.
Exceptional items: income / (charges) relate to
transactions that are significant, infrequent or unusual and are
not representative of the normal course of business of the
period.
Foreign exchange and other net financing income /
(loss): include foreign currency exchange impact, bank
fees, interest on pensions, impairment of financial assets,
revaluation of derivative instruments and other charges that cannot
be directly linked to operating results.
Free cash flow (FCF): refers to net cash
provided by operating activities less capex less dividends paid to
minority shareholders
Gross debt: long-term debt and short-term
debt.
Iron ore reference prices: refers to iron ore
prices for 62% Fe CFR China.
Kt: refers to thousand metric tonnes.
Liquidity: cash and cash equivalents plus
available credit lines excluding back-up lines for the commercial
paper program.
LTIF: lost time injury frequency rate equals
lost time injuries per 1,000,000 worked hours, based on own
personnel and contractors.
Mt: refers to million metric tonnes.
Net debt: long-term debt and short-term debt
less cash and cash equivalents.
Net debt/LTM EBITDA: refers to Net debt divided
by EBITDA.
Net interest expense: includes interest expense
less interest income
Operating results: refers to operating
income/(loss).
Operating segments: NAFTA segment includes the
Flat, Long and Tubular operations of Canada, Mexico; and also
includes all Mexico mines. The Brazil segment includes the Flat,
Long and Tubular operations of Brazil and its neighboring countries
including Argentina, Costa Rica, Venezuela; and also includes
Andrade and Serra Azul captive iron ore mines. The Europe segment
includes the Flat, Long and Tubular operations of the European
business, as well as Downstream Solutions, and also includes Bosnia
and Herzegovina captive iron ore mines. The ACIS segment includes
the Flat, Long and Tubular operations of Kazakhstan, Ukraine and
South Africa; and also includes the captive iron ore mines in
Ukraine and iron ore and coal mines in Kazakhstan. Mining segment
includes iron ore operations of ArcelorMittal Mines Canada and
ArcelorMittal Liberia.
Own iron ore production: includes total of all
finished production of fines, concentrate, pellets and lumps and
includes share of production.
Price-cost effect: a lack of correlation or a
lag in the corollary relationship between raw material and steel
prices, which can either have a positive (i.e., increased spread
between steel prices and raw material costs) or negative effect
(i.e., a squeeze or decreased spread between steel prices and raw
material costs).
Shipments: information at segment and group
level eliminates intra-segment shipments (which are primarily
between Flat/Long plants and Tubular plants) and inter-segment
shipments respectively. Shipments of Downstream Solutions are
excluded.
STIP: refers to short term incentive plan.
LTIP: refers to long term incentive plan.
Working capital change (working capital investment /
release): Movement of change in working capital - trade
accounts receivable plus inventories less trade and other accounts
payable.
Footnotes
- The financial information in this
press release has been prepared consistently with International
Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”) and as adopted by
the European Union. The interim financial information included in
this announcement has also been prepared in accordance with IFRS
applicable to interim periods, however this announcement does not
contain sufficient information to constitute an interim financial
report as defined in International Accounting Standard 34, “Interim
Financial Reporting”. The numbers in this press release have not
been audited. The financial information and certain other
information presented in a number of tables in this press release
have been rounded to the nearest whole number or the nearest
decimal. Therefore, the sum of the numbers in a column may not
conform exactly to the total figure given for that column. In
addition, certain percentages presented in the tables in this press
release reflect calculations based upon the underlying information
prior to rounding and, accordingly, may not conform exactly to the
percentages that would be derived if the relevant calculations were
based upon the rounded numbers. Segment information presented in
this press release is prior to inter-segment eliminations and
certain adjustments made to operating result of the segments to
reflect corporate costs, income from non-steel operations (e.g.,
logistics and shipping services) and the elimination of stock
margins between the segments. This press release also includes
certain non-GAAP financial/alternative performance measures.
ArcelorMittal presents EBITDA and EBITDA/tonne, free cash flow
(FCF) and ratio of net debt/EBITDA which are non-GAAP
financial/alternative performance measures, as additional measures
to enhance the understanding of its operating performance;
ArcelorMittal also presents Equity book value per share and ROE as
shown in footnotes to this press release. ArcelorMittal believes
such indicators are relevant to provide management and investors
with additional information. ArcelorMittal also presents net debt
and change in working capital as additional measures to enhance the
understanding of its financial position, changes to its capital
structure and its credit assessment. Non-GAAP financial/alternative
performance measures should be read in conjunction with, and not as
an alternative for, ArcelorMittal's financial information prepared
in accordance with IFRS.
- Effective 2Q 2021, ArcelorMittal
retrospectively amended its presentation of reportable segments.
The results of each mine are accounted for within the steel segment
that it primarily supplies. Summary of changes: NAFTA: all Mexico
mines; Brazil: Andrade and Serra Azul mines; Europe: ArcelorMittal
Prijedor mine (Bosnia and Herzegovina); ACIS: Kazakhstan and
Ukraine mines; and Mining: only AMMC and Liberia iron ore
mines.
- LTIF figures presented for 3Q 2022
of 0.54x, 2Q 2022 of 0.67x, 3Q 2021 of 0.76x, 9M 2022 of 0.63x and
9M 2021 of 0.80x exclude ArcelorMittal Italia (which was
deconsolidated as from 2Q 2021 onwards).
- AMNS India is debottlenecking its
operations (steel shop and rolling parts) to achieve capacity of
8.6Mt per annum by the end of 2024. AMNS India medium-term plans
are to expand and grow initially to ~15Mt by early 2026 in Hazira
(phase 1A) including automotive downstream and enhancements to iron
ore operations, with estimated capex of ~$7.4 billion (for $0.8
billion for debottlenecking, $1.0 billion for downstream projects
and $5.6 billion for upstream projects. Phase 1A plans include a
CRM2 complex and galvanizing and annealing line, 2 blast furnaces,
steel shop, HSM, ancillary equipment (including coke, sinter,
networks, power, gas, oxygen plant etc.); and raw material
handling. Start of BF2 expected in 2025 and BF3 in 2026. BF1 net
capacity increase from 2Mtpa to 3Mtpa. There are further options to
potentially grow to 20Mt per annum (Phase 1B). AMNS India has
agreed to acquire port, power and other logistics and
infrastructure assets in India from the Essar Group for a net value
of ~$2.4bn. AMNS India has completed part of the power closing
transaction on October 19, 2022 ($0.4 billion) whilst the remaining
transaction closing is subject to the completion of certain
corporate and regulatory approvals. In March 2021, AMNS India
signed a Memorandum of Understanding ("MoU") with the Government of
Odisha in view of building an integrated steel plant with a 12Mtpa
capacity in Kendrapara district of state Odisha. A pre-feasibility
study report was submitted to the state government in 3Q 2021, and
AMNS India is currently engaging with the government for further
studies and clearances. Further options to build a 6Mtpa integrated
steel plant are being assessed. The Thakurani mine is operating at
full 5.5Mtpa capacity since 1Q 2021, while the second Odisha pellet
plant was commissioned and started in September 2021, adding 6Mtpa
for a total 20Mtpa of pellet capacity. In addition, in September
2021, AMNS India commenced operations at Ghoraburhani - Sagasahi
iron ore mine in Odisha. The mine is set to gradually ramp up
production to a rated capacity of 7.2Mtpa and contribute
significantly to meeting AMNS India’s long-term raw material
requirements.
- AMNS Calvert ("Calvert") has plans
to construct a new 1.5Mt EAF and caster is expected to be completed
in 2023. The joint venture is to invest $775 million. Option to add
a further 1.5Mt EAF at lower capex intensity is being studied.
- ArcelorMittal Mines Canada,
otherwise known as ArcelorMittal Mines and Infrastructure
Canada.
- On December 19, 2018, ArcelorMittal
signed a $5.5 billion Revolving Credit Facility, with a five-year
maturity plus two one-year extension options. During the fourth
quarter of 2019, ArcelorMittal executed the option to extend the
facility to December 19, 2024. The extension was completed for $5.4
billion of the available amount, with the remaining $0.1 billion
remaining with a maturity of December 19, 2023. In December 2020,
ArcelorMittal executed the second option to extend the facility,
and the new maturity is now extended to December 19, 2025. On April
30, 2021, ArcelorMittal amended its $5.5 billion RCF to align with
its sustainability and climate action strategy. As of September 30,
2022, the $5.5 billion revolving credit facility was fully
available.
- XCarb™ is designed to bring together
all of ArcelorMittal’s reduced, low and zero-carbon products and
steelmaking activities, as well as wider initiatives and green
innovation projects, into a single effort focused on achieving
demonstrable progress towards carbon neutral steel. Alongside the
new XCarb™ brand, we have launched three XCarb™ initiatives: the
XCarb™ innovation fund, XCarb™ green steel certificates and XCarb™
recycled and renewably produced for products made via the Electric
Arc Furnace route using scrap. The Company is offering green steel
using a system of certificates (XCarb® green certificates). These
will be issued by an independent auditor to certify tonnes of CO2
savings achieved through the Company’s investment in
decarbonization technologies in Europe. Net-zero equivalence is
determined by assigning CO2 savings certificates equivalent to CO2
per tonne of steel produced in 2018 as the reference. The
certificates will relate to the tonnes of CO2 saved in total, as a
direct result of the decarbonization projects being implemented
across a number of its European sites.
- In addition to the AMNS India and
Calvert joint ventures, the Company has important investments in
China that provide valuable dividend streams and growth
optionality. VAMA, our 50:50 joint venture with Hunan Valin, is a
state-of-the-art facility focused on rolling steel for
high-demanding applications in particular automotive. The business
is performing well and plans to expand the current capacity by 40%
to 2Mtpa over the next 2 years, financed from its own resources.
The investment will allow VAMA to broaden its product portfolio and
further enhance its competitiveness. This will in turn enable VAMA
to meet the growing demand of high value add solutions from the
Chinese automotive / new energy vehicle (NEV) market and propel it
to be among the top automotive steel players in China by 2025.
ArcelorMittal also owns a 37% interest in China Oriental, one of
the largest H-Beam producers in China which has recently upgraded
its asset portfolio and benefits from a strong balance sheet
position.
- Other assets include the main listed
investment of Erdemir (12%) at market value of $660 million, $688
million and $885 million as of September 30, 2022, June 30, 2022,
and December 31, 2021, respectively.
- Segment “Other & eliminations”,
EBITDA result was an income of $87 million in 3Q 2022, as compared
to a loss of $84 million in 2Q 2022 principally due to the decrease
of the stock margin eliminations driven by the decrease during the
quarter of the iron ore market price on intra-group stock sales
between steel and mining businesses.
- Equity book value per share is
calculated as the Equity attributable to the equity holders of the
parent divided by diluted number of shares at the end of the
period. 3Q 2022 total equity of $51.6 billion divided by 873
million diluted shares outstanding equals $59/sh. 2Q 2022 total
equity of $54.0 billion divided by 904 million diluted shares
outstanding equals $60/sh.
- Previously announced (to be updated
at the full year 2022 results in February 2023) strategic capex
envelope of $3.65 billion represents total to be spent on strategic
projects in the period from 2021 to 2024. Specifically, $0.5
billion of the $3.65 billion has been spent through September 30,
2022. The full year 2022 capex guidance of $3.5 billion has been
reduced by $0.7 billion from the previous guidance of $4.2 billion
to reflect some moderate delays to certain strategic ($0.4 billion)
and decarbonization ($0.1 billion) spending plans due to project
mobilization/contractors which are now accelerating.
- Blast furnace No.6 (approximately
20% of total Kryvyi Rih capacity), was restarted on April 11, 2022
(to resume low levels of pig iron production). Iron ore production
was temporarily suspended in 3Q 2022 (from ~55% capacity run rate
in 2Q 2022). Iron ore production in Ukraine has restarted in early
October 2022 at ~25% level.
- ROE refers to "Return on Equity"
which is calculated as trailing twelve-month net income
attributable to equity holders of the parent divided by the average
equity attributable to the equity holders of the parent over the
period. 3Q 2022 ROE of 26% ($13.1 billion / $51.1 billion). 2Q 2022
ROE of 34% ($16.7 billion / $49.6 billion).
- On March 30, 2022 Votorantim
exercised the put option right it has under its shareholders’
agreement with the Company to sell its entire equity interest in
ArcelorMittal Brasil to the Company, following the acquisition of
Votorantim S.A.'s long steel business in Brazil in 2018, which
became a wholly-owned subsidiary of ArcelorMittal Brasil. The
exercise price is calculated pursuant to an agreed formula in the
shareholders’ agreement which applies a 6x multiple of
ArcelorMittal Brasil Longs Business EBITDA in the four immediately
preceding calendar quarters from the date of the put option
exercise (subject to certain adjustments, such as the exclusion of
any unusual, infrequent or abnormal events) less an assumed net
debt of BRL 6.2 billion times 15%. ArcelorMittal Brasil calculated
the put option exercise price in the amount of $0.2 billion.
Votorantim S.A. has indicated that it does not agree with
ArcelorMittal Brasil’s calculation of the exercise price and filed
a request for arbitration on September 28, 2022.
- Following a favorable and
unappealable decision issued in May 2022 with respect to taxpayers’
right to register the Pis/Cofins credits over scrap purchases,
ArcelorMittal Brasil recorded a gain in the amount of $0.2 billion
for the previous periods.
- The Company has introduced a 50%
increase in the short term incentive plan (STIP) link to safety
performance (with fatalities acting as a circuit breaker);
increased the safety target in STIP to 15% and long term incentive
plan (LTIP) to 10%; and included ESG objectives in LTIP.
- On October 13, 2022, ArcelorMittal
together with the governments of Canada and Ontario, broke ground
on its CAD$1.8 billion investment decarbonization project at the
ArcelorMittal Dofasco plant in Hamilton, Ontario, Canada. The
governments of Canada and Ontario having committed CAD$400 million
and CAD$500 million respectively to the overall project cost. The
project will fundamentally change the way steel is made at
ArcelorMittal Dofasco, transitioning the site to direct reduced
iron-electric arc furnace steelmaking, which carries a considerably
lower carbon footprint and removes coal from the ironmaking
process. The new 2.5Mt capacity DRI furnace will initially operate
on natural gas but will be constructed ‘hydrogen ready’ so it can
transition to green hydrogen when a sufficient and cost-effective
supply becomes available. The first onsite construction work will
begin in January 2023. Construction on the new assets is currently
expected to be completed in 2026, at which point a 12-18 month
transition phase will begin with both steelmaking streams (BF-BOF
and DRI-EAF) active. The transition is expected to be completed by
2028. In addition to the new DRI facility, the project also
involves the construction of an EAF capable of producing 2.4
million tonnes of high-quality steel through ArcelorMittal
Dofasco’s existing casting, rolling and finishing facilities.
Modification of ArcelorMittal Dofasco’s existing EAF facility and
continuous casters will also be undertaken to align productivity,
quality and energy capabilities between all assets in the new
footprint.
- September 30, 2020 was the inception
date of the recent share buyback programs.
- In early November 2022,
ArcelorMittal announced that it is preparing to reduce its activity
at the Fos-sur-Mer site due to the slowdown in steel demand and the
impact of energy prices. The Company expects a temporary shutdown
of one of the site's two blast furnaces as of December 2022.
Third quarter 2022 earnings analyst
conference call
ArcelorMittal management will host a conference call for members
of the investment community to present and comment on the
three-month and nine-month period ended September 30, 2022 on:
Thursday November 10, 2022 at 9.30am US
Eastern time; 14.30pm London time and 15.30pm CET.
The dial in numbers are: |
|
|
Location |
Toll free dial in numbers |
Local dial in numbers |
Participant |
UK local: |
0808 238 0676 |
+44 (0)203 057 6900 |
7995055# |
US local: |
+1 866 220 1433 |
+1 347 903 0960 |
7995055# |
France: |
0805 101 469 |
+33 1 7070 6079 |
7995055# |
Germany: |
0800 588 9185 |
+49 69 2222 2624 |
7995055# |
Spain: |
900 828 532 |
+34 914 144 464 |
7995055# |
Luxembourg: |
800 23 023 |
+352 2786 0311 |
7995055# |
Join the call via telephone using the participant code 7995055#
or alternatively use the live audio webcast link.
https://interface.eviscomedia.com/player/1148/
Please visit the results section on our website to listen to the
reply once the event has finished
https://corporate.arcelormittal.com/investors/results
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.
About ArcelorMittal
ArcelorMittal is one of the world's leading steel and mining
company, with a presence in 60 countries and primary steelmaking
facilities in 16 countries. In 2021, ArcelorMittal had revenues of
$76.6 billion and crude steel production of 69.1 million metric
tonnes, while iron ore production reached 50.9 million metric
tonnes.
Our goal is to help build a better world with smarter steels.
Steels made using innovative processes which use less energy, emit
significantly less carbon and reduce costs. Steels that are
cleaner, stronger and reusable. Steels for electric vehicles and
renewable energy infrastructure that will support societies as they
transform through this century. With steel at our core, our
inventive people and an entrepreneurial culture at heart, we will
support the world in making that change. This is what we believe it
takes to be the steel company of the future.
ArcelorMittal is listed on the stock exchanges of New York (MT),
Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish
stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
For more information about ArcelorMittal please visit:
http://corporate.arcelormittal.com/
Enquiries
ArcelorMittal investor relations: +44 207 543 1128; Retail: +44
207 543 1156; SRI: +44 207 543 1156 and Bonds/credit: +33 1 71 92
10 26.
ArcelorMittal corporate communications (E-mail:
press@arcelormittal.com) +44 207 629 7988. Contact: Paul Weigh +44
203 214 2419.
- 3Q22 Earnings release Nov 10 FINAL.pdf
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