Luxembourg, February 11, 2021 - 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 for
the three-month and twelve-month periods ended December 31,
2020.
2020 Key highlights:
- Health and safety performance: Protecting the health and
wellbeing of employees remains the Company’s overarching priority;
LTIF rate of 0.61x in 2020 vs. 0.75x in FY 20192
- Despite the challenging market environment that saw steel
shipments decline in 2020 by 18.2% and a net loss of $0.7bn, the
Company delivered $1.5bn of free cash flow (“FCF”, net cash
provided by operating activities of $4.1bn less capex of $2.4bn
less dividends paid to minorities of $0.2bn)
- FY 2020 operating income of $2.1bn4,5 vs. $0.6bn operating
loss4,5 in FY 2019. FY 2020 EBITDA of $4.3bn with 4Q'20 EBITDA of
$1.7bn (almost double 4Q'19 level) reflecting recovering
fundamentals and providing good momentum into 2021; 4Q 2020
adjusted net income18 of $0.2bn vs. adjusted net loss of $0.2bn in
3Q 2020
- The Company ended 2020 with gross debt of $12.3 billion and net
debt of $6.4 billion, the lowest level since the 2006 merger,
allowing the Company to transition to a new capital allocation
policy prioritizing returns to shareholders
- Repositioned its North American footprint through the completed
sale of ArcelorMittal USA to Cleveland Cliffs, unlocking value and
significantly reducing liabilities
- Reinforced its European footprint through the agreed investment
by the Italian government in ArcelorMittal Italia (expected to be
deconsolidated in 1Q 2021)
- ArcelorMittal sold its first certified green steel products9 to
customers in December 2020, reflecting its leadership position in
technology and innovation and commitments to decarbonize
Priorities & Outlook:
- Global climate change leadership: Whilst
policy support remains crucial to the development of
decarbonization in the steel industry, the Company is focused on
progressing towards its 2050 net zero group carbon emissions
target. A range of innovative technology options are advancing,
including the Group’s first Smart Carbon projects (Carbalyst) to
start production in Ghent, Belgium (in 2022) and first Hydrogen
reduction project in Hamburg to start production (estimated
2023-2025)
- Cost advantage - New $1.0bn fixed cost reduction
program in progress to ensure that a significant portion
of fixed cost savings achieved during the COVID-19 crisis is
sustained; expected completion by the end of 2022 (savings from a
FY 2019 base)
- Strategic growth: The Company is focused on
organic growth, cost improvement, product portfolio and margin
enhancing projects in emerging growth markets, including: Mexico
HSM project (completion expected in 2021); Brazil cold rolling mill
complex project (recommenced, with startup targeted 2023); and
Liberia phase II expansion (first concentrate targeted in 4Q
2023)
- Consistent returns to shareholders: The
Company initiated its capital return to shareholders with a $500m
share buyback10 in 2H 2020 following the announced agreement to
sell ArcelorMittal USA to Cleveland Cliffs. This process continues
with a further $650m to be returned via a share buyback19 following
the partial sell-down of the Company’s equity stake in Cleveland
Cliffs announced on February 9, 2021. In addition, and in
accordance with the new capital return policy, the Board proposes
to restart the base dividend to shareholders at $0.30/sh (to be
paid in June 2021, subject to the approval of shareholders at the
AGM in May 2021), and return $570m of capital to shareholders
through a further share buyback program in 2021
- Recovery in steel
shipments: Recovery in apparent steel demand (growth of
+4.5% to +5.5% is currently forecast in 2021 vs. 2020); steel
shipments are expected to increase YoY (on a scope adjusted basis
i.e. excluding the impacts of the ArcelorMittal USA sale and the
deconsolidation of ArcelorMittal Italia12 (expected in 1Q
2021))
Financial highlights (on the basis of
IFRS1):
(USDm) unless otherwise shown |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Sales |
14,184 |
|
13,266 |
|
15,514 |
|
53,270 |
|
70,615 |
|
Operating income / (loss) |
1,998 |
|
718 |
|
(1,535) |
|
2,110 |
|
(627) |
|
Net income / (loss) attributable to equity holders of the
parent |
1,207 |
|
(261) |
|
(1,882) |
|
(733) |
|
(2,454) |
|
Basic earnings / (loss) per common share (US$) |
1.01 |
|
(0.21) |
|
(1.86) |
|
(0.64) |
|
(2.42) |
|
|
|
|
|
|
|
Operating income/ (loss) / tonne (US$/t) |
116 |
|
41 |
|
(78) |
|
31 |
|
(7) |
|
EBITDA |
1,726 |
|
901 |
|
925 |
|
4,301 |
|
5,195 |
|
EBITDA/ tonne (US$/t) |
100 |
|
52 |
|
47 |
|
62 |
|
61 |
|
Steel-only EBITDA/ tonne (US$/t) |
58 |
|
23 |
|
32 |
|
35 |
|
42 |
|
|
|
|
|
|
|
Crude steel production (Mt) |
18.8 |
17.2 |
19.8 |
71.5 |
89.8 |
Steel shipments (Mt) |
17.3 |
17.5 |
19.7 |
69.1 |
84.5 |
Own iron ore production (Mt) |
15.3 |
14.8 |
14.8 |
58.0 |
57.1 |
Iron ore shipped at market price (Mt) |
10.6 |
9.8 |
9.6 |
38.2 |
37.1 |
Commenting, Mr. Lakshmi N. Mittal,
ArcelorMittal Executive Chairman, said:
“2020 was a year of enormous challenge as countries, societies
and businesses across the world grappled with the disruption caused
by the COVID-19 pandemic. The impact on the steel industry was
significant, but I am very proud of the resilience and enterprise
shown by our people across the business which enabled ArcelorMittal
to deliver a solid operating performance in times of adversity. We
have fantastic teams across our operations.
Indeed, 2020 was a milestone year for the Company. Achieving our
$7 billion net debt target marked the end of a long-term
deleveraging program, and the start of a new phase which will allow
the Company to focus on delivering sustainable shareholder returns
as we continue to transform for the future. This process will be
supported by changes we made to our portfolio, increasing the
quality of its earnings potential, and by the investments we are
making in high-growth projects and markets, such as those in India,
Mexico, Brazil and Liberia.
Initiatives are also underway to ensure that we take the lessons
from our swift and comprehensive COVID-19 response actions and
embed these across the business, with a target of delivering more
than $1 billion of sustained savings by 2022. This effort is
complemented by an improvement in market conditions which supported
a significantly improved performance in the fourth quarter.
The combination of our stronger balance sheet, targeted growth
profile and competitive cost positioning underpin our commitment to
delivering more consistent returns across the cycle. They also
position the Company favorably to lead the industry’s transition to
low-emissions steelmaking as part of our 2050 net zero
commitment.
2020 was a year in which we saw further acceleration in the
drive to decarbonize the global economy. We have identified two
main routes to achieve net zero target by 2050, both leveraging one
or more clean energy infrastructures – one that utilizes
biomass/bioenergy with carbon capture utilization and storage and
the other which harnesses green electricity to power a
hydrogen-based direct reduced iron process. We will continue to
trial and pilot both routes while simultaneously promoting the
policies that are a crucial component of success if these
technologies are to be scaled up and commercially viable in the
long-term. Ahead of COP26 an increasing number of countries have
now made net zero commitments – it is imperative these commitments
are now accompanied by policy to enable success.
Although we must continue to navigate the COVID-19 challenge, I
expect 2021 to be another year of progress for the Company, and
look forward to working closely with Aditya our new CEO."
Sustainable development and safety
performance
Health and safety - Own personnel and
contractors lost time injury frequency rate
Protecting the health and wellbeing of employees remains the
Company’s overarching priority with ongoing strict adherence to
World Health Organization guidelines and specific government
guidelines have been followed and implemented. We continue to
ensure extensive monitoring, with stringent sanitary practices and
social distancing measures at all operations, and have implemented
remote working wherever possible and provided essential personal
protective equipment to our people.
Health and safety performance (inclusive of ArcelorMittal Italia
(previously known as Ilva)), based on own personnel and contractors
lost time injury frequency (LTIF) rate was 0.93x in the fourth
quarter of 2020 ("4Q 2020") as compared to 0.95x in third quarter
of 2020 ("3Q 2020") and 1.25x in fourth quarter of 2019 ("4Q
2019"). Excluding the impact of ArcelorMittal Italia, the LTIF was
0.65x for 4Q 2020 as compared to 0.56x for 3Q 2020 and 0.84x for
the 4Q 2019.
Health and safety performance (inclusive of ArcelorMittal
Italia), based on own personnel and contractors lost time injury
frequency (LTIF) rate was 0.92x for the twelve months of 2020 ("12M
2020") as compared to 1.21x in for the twelve months of 2019 ("12M
2019"). Health and safety performance (excluding the impact of
ArcelorMittal Italia) for 12M 2020 was 0.61x as compared to 0.75x
for 12M 2019.
The Company’s efforts to improve its health and safety record,
aims to strengthen the safety of its workforce with an absolute
focus on eradicating fatalities.
Own personnel and contractors - Frequency
rate
Lost time injury frequency rate |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Mining |
0.68 |
|
0.35 |
|
1.27 |
|
0.61 |
|
0.97 |
|
NAFTA |
0.44 |
|
0.32 |
|
0.63 |
|
0.53 |
|
0.58 |
Brazil |
0.17 |
|
0.36 |
|
0.32 |
|
0.29 |
|
0.36 |
Europe |
1.35 |
|
1.04 |
|
1.06 |
|
1.08 |
|
1.00 |
ACIS |
0.59 |
|
0.66 |
|
0.83 |
|
0.61 |
|
0.69 |
Total Steel |
0.65 |
|
0.60 |
|
0.78 |
|
0.62 |
|
0.73 |
Total (Steel and Mining) excluding ArcelorMittal
Italia |
0.65 |
|
0.56 |
|
0.84 |
|
0.61 |
|
0.75 |
ArcelorMittal Italia |
9.16 |
12.15 |
10.61 |
9.46 |
11.13 |
Total (Steel and Mining) including ArcelorMittal
Italia |
0.93 |
0.95 |
1.25 |
0.92 |
1.21 |
Key sustainable development highlights
for 4Q 2020:
During 4Q 2020, the Company
highlighted:
- The Company maintained its ‘A-’ CDP grade, putting it within
the top quartile of all metal smelting, refining and forming
companies and the top 10% of the steel industry. It was notable
that the Company achieved A grade scores for climate governance,
disclosure of climate related financial risk and opportunities,
strategy and planning and emissions reduction initiatives.
- The Company’s new Grade 80 steel was used for the first time in
the USA in the 51-story Union Station Tower located at 320 S. Canal
in Chicago. The superior 80 kip-per-square-inch strength of this
steel enabled the design team to reduce the amount of steel used in
the tower’s columns by almost 20%, which resulted in reduction to
project costs and the embodied CO2 of the building. In addition,
the column’s slimmer profiles allowed the developer-owner Riverside
Investment and Development to offer more open space on upper floors
to tenants.
- ArcelorMittal continued to advance its leadership in providing
sustainability solutions for the automotive sector, enabling
lightweight yet stronger and safer vehicles. The Global Automotive
division rolled out its latest e-mobility solution to customers in
October 2020 with its S-in motion® Rear chassis solutions for
electric vehicles, which enable carmakers to design vehicles with
extended range and enhanced safety at reduced cost. ArcelorMittal
Dofasco announced a $24M CAD investment that will enable it to
become the only Canadian producer of Alusi®-coated Usibor®. Alusi®
coating is able to withstand high temperatures as well as being
highly corrosion-resistant. The first product from this coating
addition at the Hamilton hot dip galvanizing line no. 5 is expected
in 2H 2022. This investment complements additional strategic North
America developments announced previously, including a new electric
arc furnace (EAF) at AM/NS Calvert in the US and a new hot strip
mill in Mexico.
- ArcelorMittal Long Products announced a collaboration with Vow
subsidiary ETIA to build the first dedicated industrial scale
biogas plant for the steel industry at Rodange, Luxembourg, with
the aim of starting production in 2022. The plant will convert
sustainable biomass into biogas to replace the use of natural gas
at the plant’s rolling mill reheating furnace, so reducing CO2
emissions from the production of steel, including Rodange’s
specialized grooved rails for major rail projects around the
world.
- The Company has strengthened its Code for Responsible Sourcing
to reflect its alignment with its 10 sustainable development
outcomes, its commitment to the ResponsibleSteel standards and the
expectations it has of its suppliers on their sustainability
standards.
- Group-wide CO2 reduction 2030 target to be announced early 2Q
2021, reflecting segment by segment reduction plans.
Analysis of results for the twelve months ended December
31, 2020 versus results for the twelve months ended December 31,
2019Total steel shipments for 12M 2020 were 69.1 million
metric tonnes (Mt) representing a decrease of 18.2% as compared to
84.5Mt in 12M 2019. On a comparable basis, adjusting for the impact
of the remedy asset sales related to the ArcelorMittal Italia
acquisition in 2019 and ArcelorMittal USA sale in December 2020,
steel shipments for 12M 2020 declined by 15.8% to 60.1Mt as
compared to 71.3Mt in 12M 2019, primarily due to the impact of the
COVID-19 pandemic and the slowdown that occurred in 1H 2020.
Shipments were lower in Europe (-22.4%, down -18.6% excluding the
impact of the remedy asset sales related to the ArcelorMittal
Italia acquisition for 12M 2019), Brazil (-15.9%), NAFTA (-14.4%,
-8.7% excluding ArcelorMittal USA) and ACIS (-14.4%).
Sales for 12M 2020 decreased by 24.6% to $53.3 billion as
compared with $70.6 billion for 12M 2019, primarily due to the
impacts of the COVID-19 pandemic on lower steel shipments (as
discussed above) and average steel selling prices (-8.7%).
Depreciation of $3.0 billion for 12M 2020 was broadly stable as
compared with $3.1 billion for 12M 2019. FY 2021 depreciation is
expected to be approximately $2.7 billion following the sale of
ArcelorMittal USA in December 2020 and anticipated deconsolidation
of ArcelorMittal Italia in early 2021 (assuming current exchange
rates).
Net impairment gain for 12M 2020 amounted to $133 million
included the partial reversal of impairment charges (recorded in
2019) following the sale of ArcelorMittal USA ($660 million),
offset in part by impairment charges of $331 million related to
revised future cashflows of plate assets in Europe, charges of $104
million following the permanent closure of a blast furnace and
steel plant in Krakow (Poland) in 3Q 2020 and charges related to
the permanent closure of the coke plant in Florange (France) in 1Q
2020 of $92 million. Impairment charges for 12M 2019 were $1.9
billion related to impairment of the fixed assets of ArcelorMittal
USA ($1.3 billion), remedy asset sales for the ArcelorMittal Italia
acquisition ($0.5 billion) and impairment charges in South Africa
($0.1 billion).
Net exceptional items for 12M 2020 were gains of $636 million
related to the gain on disposal of ArcelorMittal USA ($1.5 billion)
partially offset by site restoration and termination charges
following the permanent closure of a blast furnace and steel plant
in Krakow (Poland) totaling $146 million and inventory related
charges in NAFTA and Europe ($0.7 billion). Exceptional expense for
12M 2019 of $828 million primarily included inventory related
charges in NAFTA and Europe
Operating income for 12M 2020 of $2.1 billion was positively
impacted by impairment and exceptional net gains totaling $0.8
billion as discussed above. Excluding these items, operating income
for 12M 2020 of $1.3 billion was impacted by weaker operating
conditions as compared to 2019, including a negative price-cost
effect in steel segments and lower steel shipments due to the
COVID-19 pandemic offset in part by improved mining performance.
Operating loss of $627 million in 12M 2019 was negatively impacted
by impairment and exceptional items as discussed above. Excluding
these items operating income for 12M 2019 was $2.1 billion.
Income from associates, joint ventures and other investments for
12M 2020 was $234 million as compared to $347 million for 12M 2019.
12M 2020 income from associates, joint ventures and other
investments14 includes positive contributions from AMNS India8
offset in part by the negative impact of the COVID-19 pandemic on
investees including a $211 million impairment of the Company's
investment in DHS (Germany). In addition, in 12M 2020 the annual
dividend income from Erdemir was lower at $12 million as compared
to $93 million in 12M 2019.
Net interest expense in 12M 2020 was lower at $421 million
(below the Company's previous $0.5bn guidance) as compared to $607
million in 12M 2019 following debt repayments and liability
management transactions. The Company expects full year 2021 net
interest expense to be approximately $0.3 billion.
Foreign exchange and other net financing losses were $835
million for 12M 2020 as compared to losses of $1,045 million for
12M 2019. Losses in 12M 2020 are lower on account of a foreign
exchange gain of $107 million as compared to a foreign exchange
gain of $4 million in 12M 2019. 12M 2020 also includes non-cash
mark-to-market losses of $68 million related to the mandatory
convertible bonds call option (versus $356 million in 12M 2019) and
$178 million non-cash expenses related to the extension of the
mandatory convertible bond. 12M 2020 also includes early bond
redemption premium expenses of $120 million as compared to $71
million in 12M 2019.
ArcelorMittal recorded an income tax expense of $1,666 million
for 12M 2020 as compared to $459 million for 12M 2019. The deferred
tax expense for 12M 2020 mainly includes derecognition of deferred
tax assets recorded in Luxembourg following the sale of
ArcelorMittal USA ($624 million), due to anticipated lower
intra-group income from ArcelorMittal USA (primarily lower
branding, R&D fees and interest
income). ArcelorMittal’s
net loss for 12M 2020 was $0.7 billion, or $0.64 basic loss per
common share, as compared to a net loss in 12M 2019 of $2.5
billion, or $2.42 basic loss per common share.
Analysis of results for 4Q 2020 versus 3Q 2020 and 4Q
2019Total steel shipments in 4Q 2020 were 17.3Mt, 1% lower
as compared with 17.5Mt in 3Q 2020. On a comparable basis,
excluding ArcelorMittal USA (following its sale to Cleveland Cliffs
on December 9, 2020), steel shipments in 4Q 2020 increased by 1.5%
to 15.5Mt as compared 15.3Mt in 3Q 2020, as economic activity
continued to gradually recover following the severe impacts of the
COVID-19 pandemic earlier in the year, with all segments except
ACIS experiencing quarter-on-quarter shipment growth (Europe +4.7%,
Brazil +6.1% and NAFTA +4.9% (on a scope adjusted basis following
the sale of ArcelorMittal USA) offset by ACIS -5.0%). Despite the
sequential improvement, steel demand remains well below pre-crisis
levels, with total steel shipments in 4Q 2020 of 17.3Mt, 12.4%
lower than 19.7Mt in 4Q 2019 (down 9.2% on a scope adjusted basis
excluding ArcelorMittal USA sale) with Europe -7.8%, Brazil -5.2%,
NAFTA -1.4% (scope adjusted) and ACIS -20.5% (primarily due to
South Africa).
Sales in 4Q 2020 were $14.2 billion as compared to $13.3 billion
for 3Q 2020 (+6.9%) and $15.5 billion for 4Q 2019 (-8.6%). This
6.9% increase was primarily due a better sales mix (higher
automotive volumes share) and 7.1% higher realized selling prices
(only partially capturing the significant increase in global steel
prices due to lag effects), and increased mining sales revenue
(+24.9%) due in part to higher market-priced iron ore shipments
(+7.9%) and higher seaborne iron ore reference prices (+13.0%).
Sales in 4Q 2020 were 8.6% lower as compared to 4Q 2019 primarily
due to the ongoing impact of the COVID-19 pandemic on overall steel
demand (shipments down 12.4%) offset in part by higher average
steel selling prices (+5.5%), significantly higher seaborne iron
ore reference prices (+49.9%) and higher market-priced iron ore
shipments (+9.8%).
Depreciation for 4Q 2020 was lower at $711 million as compared
to $739 million for 3Q 2020 and $802 million in 4Q 2019.
Impairment expenses in 4Q 2020 were $331 million following the
revised future cashflow expectations of plate assets in Europe. Net
impairment gain in 3Q 2020 amounted to $556 million, consisting of
the partial reversal of impairment charges recorded following the
announced sale of ArcelorMittal USA ($660 million) and an
impairment charge of $104 million related to the permanent closure
of a blast furnace and steel plant in Krakow (Poland). Impairment
charges for 4Q 2019 were $830 million and related to the fixed
assets of ArcelorMittal USA ($0.7 billion) and in South Africa
($0.1 billion).
Exceptional items in 4Q 2020 of $1.3 billion related to gain on
the sale of ArcelorMittal USA5 offset by site restoration and
termination charges related to the closure of the steel shop and
blast furnace at Krakow (Poland). Exceptional items for 3Q 2020
were nil. Exceptional items for 4Q 2019 of $828 million primarily
include inventory related charges in NAFTA and Europe following a
period of exceptionally weak steel pricing.
Operating income for 4Q 2020 was $2.0 billion as compared to
$718 million in 3Q 2020 and an operating loss of $1.5 billion in 4Q
2019, impacted by the impairments and exceptional items as
discussed above. Operating income for 4Q 2020 as compared to 3Q
2020 reflects a positive price-cost effect in the steel business
and improved mining performance driven by higher iron ore
prices.
Income from associates, joint ventures and other investments for
4Q 2020 was $7 million compared to $100 million for 3Q 2020 and an
income of $20 million in 4Q 2019. Income in 4Q 2020 includes the
positive contribution from AMNS India8 offset by a $211 million
impairment of the Company's investment in DHS (Germany).
Net interest expense in 4Q 2020 was lower at $88 million as
compared to $106 million in 3Q 2020 and $140 million in 4Q 2019,
mainly due to savings following the repayments of bonds.
Foreign exchange and other net financing losses in 4Q 2020 were
$270 million as compared to losses of $150 million in 3Q 2020 and
losses of $117 million in 4Q 2019. Foreign exchange gain in 4Q 2020
was $78 million compared to $17 million in 3Q 2020 and $130 million
in 4Q 2019. 4Q 2020 includes $178 million non-cash expenses related
to the extension of the mandatory convertible bond and non-cash
mark-to-market gains of $59 million related to the mandatory
convertible bonds call option, and amounted to $52 million loss in
4Q 2019.
ArcelorMittal recorded an income tax expense of $358 million in
4Q 2020 as compared to $784 million for 3Q 2020 and $125 million
for 4Q 2019. The tax expense for 3Q 2020 included a $624 million
deferred tax expense as discussed above.
ArcelorMittal recorded a net income for 4Q 2020 of $1,207
million (or $1.01 basic earnings per common share), as compared to
a net loss for 3Q 2020 of $261 million (or $0.21 basic loss per
common share), and a net loss for 4Q 2019 of $1,882 million (or
$1.86 basic loss per common share).
Analysis of segment
operations
NAFTA
(USDm) unless otherwise shown |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Sales |
3,196 |
|
3,329 |
|
4,020 |
|
13,597 |
|
18,555 |
|
Operating income / (loss) |
1,507 |
|
607 |
|
(912) |
|
1,667 |
|
(1,259) |
|
Depreciation |
(61) |
|
(126) |
|
(152) |
|
(449) |
|
(570) |
|
Impairment items |
— |
|
660 |
|
(700) |
|
660 |
|
(1,300) |
|
Exceptional items |
1,460 |
|
— |
|
(200) |
|
998 |
|
(200) |
|
EBITDA |
108 |
|
73 |
|
140 |
|
458 |
|
811 |
|
Crude steel production (kt) |
4,180 |
|
4,432 |
|
5,261 |
|
17,813 |
|
21,897 |
|
Steel shipments (kt) |
4,134 |
|
4,435 |
|
5,029 |
|
17,902 |
|
20,921 |
|
Average steel selling price (US$/t) |
714 |
|
701 |
|
731 |
|
702 |
|
810 |
|
NAFTA segment crude steel production decreased by 5.7% to 4.2Mt
in 4Q 2020, as compared to 4.4Mt in 3Q 2020 following the sale of
ArcelorMittal USA to Cleveland Cliffs on December 9, 2020. On a
scope adjusted basis (i.e. excluding ArcelorMittal USA), crude
steel production increased by 2.8% to 2.1Mt following the gradual
improvement in demand.
Steel shipments in 4Q 2020 decreased by 6.8% to 4.1Mt, as
compared to 4.4Mt in 3Q 2020, largely on account of the sale of
ArcelorMittal USA. On a scope adjusted basis (excluding
ArcelorMittal USA), steel shipments in 4Q 2020 increased by 4.9% to
2.3Mt following the gradual improvement in demand. Steel shipments
were 17.8% lower in 4Q 2020 as compared to 5Mt in 4Q 2019 (-1.4% on
a scope adjusted basis for ArcelorMittal USA sale).
Sales in 4Q 2020 decreased by 4.0% to $3.2 billion, as compared
to $3.3 billion in 3Q 2020, primarily due to the decrease in steel
shipments offset in part by a 1.9% increase in average steel
selling prices.
Operating income in 4Q 2020 was $1.5 billion as compared to $607
million in 3Q 2020 and an operating loss of $912 million in 4Q
2019. 4Q 2020 operating income includes $1.5 billion exceptional
gain5 on the completed sale of ArcelorMittal USA. 3Q 2020 operating
income included a $660 million gain related to the partial reversal
of impairments recorded in ArcelorMittal USA following the
announced sale.
EBITDA in 4Q 2020 of $108 million was higher as compared to $73
million in 3Q 2020, primarily due to a positive price-cost effect.
EBITDA in 4Q 2020 was lower as compared to $140 million in 4Q 2019
driven primarily by lower steel shipments and negative price cost
effect partially offset by lower fixed costs.
Brazil
(USDm) unless otherwise shown |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Sales |
1,884 |
|
1,603 |
|
1,902 |
|
6,271 |
|
8,113 |
|
Operating income |
290 |
|
197 |
|
177 |
|
754 |
|
846 |
|
Depreciation |
(49) |
|
(55) |
|
(63) |
|
(224) |
|
(274) |
|
EBITDA |
339 |
|
252 |
|
240 |
|
978 |
|
1,120 |
|
Crude steel production (kt) |
2,868 |
|
2,300 |
|
2,489 |
|
9,539 |
|
11,001 |
|
Steel shipments (kt) |
2,575 |
|
2,425 |
|
2,717 |
|
9,410 |
|
11,192 |
|
Average steel selling price (US$/t) |
702 |
|
625 |
|
628 |
|
634 |
|
679 |
|
Brazil segment crude steel production increased by 24.7% to
2.9Mt in 4Q 2020 as compared to 2.3Mt for 3Q 2020 with increases in
both flat (restart of BF#3 at ArcelorMittal Tubarao in 4Q 2020) and
long products given the ongoing recovery in demand.
Steel shipments in 4Q 2020 increased by 6.1% to 2.6Mt as
compared to 2.4Mt in 3Q 2020, with 26.4% increase in flat product
shipments (primarily due to improved export demand), offset in part
by lower domestic long products shipments following an
exceptionally strong third quarter. Steel shipments were 5.2% lower
in 4Q 2020 as compared to 2.7Mt in 4Q 2019 primarily due to lower
flat products exports.
Sales in 4Q 2020 increased by 17.6% to $1.9 billion as compared
to $1.6 billion in 3Q 2020, with a 6.1% increase in steel shipments
and a 12.3% increase in average steel selling prices (buoyed by
improvements for both domestic and export flat and long
products).
Operating income in 4Q 2020 of $290 million was higher as
compared to $197 million in 3Q 2020 and $177 million in 4Q
2019.
EBITDA in 4Q 2020 increased by 34.7% to $339 million as compared
to $252 million in 3Q 2020, primarily due to a positive price-cost
effect and higher steel shipments offset in part by negative mix
impact on account of exports. EBITDA in 4Q 2020 was 41.1% higher as
compared to $240 million in 4Q 2019 primarily due to a positive
price-cost effect.
Europe
(USDm) unless otherwise shown |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Sales |
7,604 |
|
7,013 |
|
8,035 |
|
28,071 |
|
37,721 |
|
Operating loss |
(447) |
|
(342) |
|
(649) |
|
(1,444) |
|
(1,107) |
|
Depreciation |
(355) |
|
(356) |
|
(323) |
|
(1,413) |
|
(1,256) |
|
Impairment items |
(331) |
|
(104) |
|
(28) |
|
(527) |
|
(525) |
|
Exceptional items |
(146) |
|
— |
|
(456) |
|
(337) |
|
(456) |
|
EBITDA |
385 |
|
118 |
|
158 |
|
833 |
|
1,130 |
|
Crude steel production (kt) |
9,110 |
|
7,908 |
|
9,030 |
|
34,004 |
|
43,913 |
|
Steel shipments (kt) |
8,569 |
|
8,187 |
|
9,290 |
|
32,873 |
|
42,352 |
|
Average steel selling price (US$/t) |
695 |
|
651 |
|
654 |
|
655 |
|
696 |
|
Europe segment crude steel production increased by 15.2% to
9.1Mt in 4Q 2020 as compared to 7.9Mt in 3Q 2020 as demand and
activity levels gradually improved, particularly automotive and
manufacturing activity. Although the Company has restarted
capacity, some steel-making capacity during the quarter remained
idled, including a blast furnace at Ghent, Belgium that is due to
restart mid-February 2021 following a planned major reline.
Steel shipments in 4Q 2020 improved by 4.7% to 8.6Mt as compared
to 8.2Mt in 3Q 2020 driven by higher flat steel shipments (+3.1%)
and long products (+8.0%). Steel shipments were 7.8% lower in 4Q
2020 as compared to 9.3Mt in 4Q 2019 (across both flat and long
products) primarily due to the impacts of the COVID-19 pandemic on
demand.
Sales in 4Q 2020 were $7.6 billion, 8.4% higher as compared to
$7.0 billion in 3Q 2020, primarily due to higher shipment volumes
(as discussed above) and 6.8% higher average selling prices (flat
products +7.2% and long products +4.8%).
Impairment charges for 4Q 2020 were $331 million following the
revised future cashflow expectations of plate assets as compared to
impairment charges of $104 million in 3Q 2020 related to the
closure of the blast furnace and the steel plant in Krakow
(Poland). Impairment charges net of purchase gains for 4Q 2019 were
$28 million.
Exceptional items for 4Q 2020 were $146 million related to site
restoration and termination charges following the closure of the
blast furnace and the steel plant in Krakow (Poland). Exceptional
items for 3Q 2020 were nil. Exceptional items for 4Q 2019 were $456
million and primarily included inventory related charges.
Operating loss in 4Q 2020 was $447 million as compared to an
operating loss of $342 million and $649 million for 3Q 2020 and 4Q
2019, respectively.
EBITDA in 4Q 2020 of $385 million was significantly higher as
compared to $118 million in 3Q 2020, primarily due to a positive
price-cost effect and higher steel shipment volumes. EBITDA in 4Q
2020 increased by 144% as compared to $158 million in 4Q 2019
primarily due to lower fixed costs and improved ArcelorMittal
Italia performance offset in part by lower steel shipments
(-7.8%).
ACIS
(USDm) unless otherwise shown |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Sales |
1,477 |
|
1,400 |
|
1,632 |
|
5,507 |
|
6,837 |
|
Operating income / (loss) |
177 |
|
37 |
|
(238) |
|
84 |
|
(25) |
|
Depreciation |
(89) |
|
(82) |
|
(105) |
|
(332) |
|
(364) |
|
Impairment |
— |
|
— |
|
(102) |
|
— |
|
(102) |
|
Exceptional items |
— |
|
— |
|
(76) |
|
(21) |
|
(76) |
|
EBITDA |
266 |
|
119 |
|
45 |
|
437 |
|
517 |
|
Crude steel production (kt) |
2,673 |
|
2,544 |
|
2,973 |
|
10,171 |
|
12,998 |
|
Steel shipments (kt) |
2,373 |
|
2,499 |
|
2,985 |
|
9,881 |
|
11,547 |
|
Average steel selling price (US$/t) |
511 |
|
465 |
|
460 |
|
464 |
|
517 |
|
ACIS segment crude steel production in 4Q 2020 increased by 5.1%
to 2.7Mt as compared to 2.5Mt in 3Q 2020 primarily due to a
recovery in volume in Ukraine following planned maintenance in the
prior quarter. Crude production in 4Q 2020 was 10.1% lower as
compared to 3.0Mt in 4Q 2019, including the impact of the permanent
closure of the Saldanha facility.
Steel shipments in 4Q 2020 decreased by 5.0% to 2.4Mt as
compared to 2.5Mt as at 3Q 2020, mainly due to maintenance outages
(planned and unplanned) in South Africa.
Sales in 4Q 2020 increased by 5.5% to $1.5 billion as compared
to $1.4 billion in 3Q 2020, primarily due to higher average steel
selling prices (+9.9%) offset in part by lower steel shipments
(-5.0%).
Operating income in 4Q 2020 was $177 million as compared to $37
million in 3Q 2020 and an operating loss of $238 million in 4Q
2019.
EBITDA was $266 million in 4Q 2020 as compared to $119 million
in 3Q 2020, primarily due to positive price-cost effect offset in
part by lower steel shipments. EBITDA in 4Q 2020 was significantly
higher as compared to $45 million in 4Q 2019, primarily due to
positive price-cost effect.
Mining
(USDm) unless otherwise shown |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Sales |
1,499 |
|
1,200 |
|
1,105 |
|
4,753 |
|
4,837 |
|
Operating income |
579 |
|
382 |
|
185 |
|
1,411 |
|
1,215 |
|
Depreciation |
(148) |
|
(114) |
|
(116) |
|
(500) |
|
(448) |
|
EBITDA |
727 |
|
496 |
|
301 |
|
1,911 |
|
1,663 |
|
|
|
|
|
|
|
Own iron ore production (Mt) |
15.3 |
|
14.8 |
|
14.8 |
|
58.0 |
|
57.1 |
|
Iron ore shipped externally and internally at market price (a)
(Mt) |
10.6 |
|
9.8 |
|
9.6 |
|
38.2 |
|
37.1 |
|
Iron ore shipment - cost plus basis (Mt) |
5.2 |
|
5.0 |
|
5.8 |
|
19.8 |
|
22.2 |
|
Own coal production (Mt) |
1.1 |
|
1.2 |
|
1.4 |
|
5.0 |
|
5.5 |
|
Coal shipped externally and internally at market price (a)
(Mt) |
0.6 |
|
0.6 |
|
0.7 |
|
2.7 |
|
2.8 |
|
Coal shipment - cost plus basis (Mt) |
0.6 |
|
0.6 |
|
0.7 |
|
2.4 |
|
2.9 |
|
(a) Iron ore and coal shipments of market-priced based materials
include the Company’s own mines and share of production at other
mines
Own iron ore production in 4Q 2020 increased by 4.2% to 15.3Mt
as compared to 14.8Mt in 3Q 2020 primarily due to higher production
at ArcelorMittal Mines Canada (AMMC)3. On December 9, 2020,
Princeton coal mines and Hibbing/Minorca iron ore mines were sold
as part of the ArcelorMittal USA disposal to Cleveland Cliffs.
Own iron ore production in 4Q 2020 increased by 3.5% to 15.3Mt
as compared to 14.8Mt in 4Q 2019. Adjusted for the scope effect of
the ArcelorMittal USA sale, own iron ore production in 4Q 2020 of
13.9Mt increased by 7.9% as compared to 12.9Mt in 4Q 2019 primarily
due to higher production in AMMC, Ukraine and Liberia.
Market-priced iron ore shipments in 4Q 2020 increased by 7.9% to
10.6Mt as compared to 9.8Mt in 3Q 2020, primarily driven by higher
shipments in AMMC, Liberia and Mexico. Market-priced iron ore
shipments in 4Q 2020 were 9.8% higher as compared to 4Q 2019
reflecting higher production levels in particular at AMMC and
Ukraine. FY 2020 market priced shipments of 38.2Mt are up +2.9%
YoY. FY 2021 market-priced iron ore shipments are expected to
increase to approximately 39Mt.
Own coal production in 4Q 2020 of 1.1Mt decreased by 8.2% as
compared to 1.2Mt in 3Q 2020 in part due to the disposal of the
Princeton coal mines on December 9, 2020 as part of the
ArcelorMittal USA disposal to Cleveland Cliffs. On a scope adjusted
basis, own coal production increased +7.0% quarter on quarter. Own
coal production in 4Q 2020 decreased by 18.8% to 1.1Mt as compared
to 1.4Mt in 4Q 2019 due in part to Princeton coal mines disposal
(stable year on year on a scope adjusted basis).
Market-priced coal shipments in 4Q 2020 were stable at 0.6Mt as
compared to 3Q 2020 but declined slightly compared to 4Q 2019.
Operating income in 4Q 2020 increased to $579 million as
compared to $382 million in 3Q 2020 and $185 million in 4Q
2019.
EBITDA in 4Q 2020 increased by 46.7% to $727 million as compared
to $496 million in 3Q 2020, reflecting the positive impact of
higher market-priced iron ore shipments (+7.9%) and seaborne market
prices (+13.0%) and lower freight costs. EBITDA in 4Q 2020 was
significantly higher as compared to $301 million in 4Q 2019,
primarily due to higher market-priced iron ore shipments (+9.8%),
higher seaborne iron ore reference prices (+49.9%) and lower
freight costs, offset in part lower coking coal reference prices
(-21.1%).
Liquidity and Capital
ResourcesNet cash provided by operating activities for 4Q
2020 was $1,416 million as compared to $1,770 million in 3Q 2020
and $2,932 million in 4Q 2019. Net cash provided by operating
activities includes a working capital release of $925 million
driven by a significantly improved receivable rotation days
(including historically low overdues) and higher accounts payables,
which more than offset the planned increase in inventories as
activity levels ramped up during the quarter. This compares to a
working capital release of $1,072 million in 3Q 2020 and $2,600
million in 4Q 2019. Working capital needs in 2021 will be
determined by the operating conditions towards the end of the
year.
Net cash used in investing activities during 4Q 2020 was $406
million as compared to $486 million during 3Q 2020 and $1,751
million in 4Q 2019. Capex of $668 million in 4Q 2020 compares to
$520 million in 3Q 2020 and $815 million in 4Q 2019. Capex of $2.4
billion in FY 2020 (in line with previous guidance). Excluding the
capex of ArcelorMittal USA and ArcelorMittal Italia, scope-adjusted
capex in 2020 would have been $1.9 billion. As described
previously, the Company expects demand conditions to improve in
2021 which is expected to result in a normalization of maintenance
capex levels. In addition, the Company intends to spend on
strategic projects to enhance future returns through investment in
selective brownfield growth and product mix improvement projects,
in Mexico and Brazil as well as developing the iron ore resource in
Liberia. Accordingly, the Company expects FY 2021 capex to increase
to $2.8 billion (broadly in line with FY 2019 capex of $2.9 billion
excluding the impact of ArcelorMittal USA and ArcelorMittal Italia
deconsolidation). Net cash provided by other investing activities
in 4Q 2020 of $262 million compared to $34 million in 3Q 2020 and
net cash used in other investing activities in 4Q 2019 of $936
million. 4Q 2020 cash inflow relates to $0.5 billion proceeds from
the sale of ArcelorMittal USA offset in part by an investment in
short term deposits related to such sale. Net cash used in other
investing activities in 4Q 2019 primarily included the final net
$0.6 billion contribution to the AMNS India JV11.
Net cash used in financing activities in 4Q 2020 was $2,227
million as compared to $401 million in 3Q 2020 and net cash
provided by financing activities in 4Q 2019 of $19 million. In 4Q
2020, net cash used in financing activities includes outflow of
$1.5 billion primarily related to: $0.7 billion of bonds
repurchased in October 2020 pursuant to cash tender offers;
reimbursement of the Schuldschein entered into on October 9, 2017
and maturing in October 2021 for a total principal amount of €231.5
million ($0.3 billion); and $0.3 billion decrease of commercial
paper portfolio. Net cash used in financing activities in 3Q 2020
of $270 million primarily included bond repayments.
On November 2, 2020, ArcelorMittal announced it had completed
the share buyback program launched on September 28, 2020. By market
close on October 30, 2020, ArcelorMittal had repurchased 35,636,253
shares for a total cost of $0.5 billion ($487 million paid in the
fourth quarter) at an approximate average price per share of
€11.92. All details are available on the Company’s website at:
https://corporate.arcelormittal.com/investors/equity-investors/share-buyback-program.
During 4Q 2020 and 4Q 2019, the Company paid dividends of $16
million and $21 million, respectively, to minority shareholders in
Bekaert (Brazil). During 3Q 2020, the Company paid dividends of $55
million to minority shareholders of ArcelorMittal Mines Canada3
(AMMC) and Bekaert (Brazil).
Outflows from lease payments and other financing activities
(net) were $218 million for 4Q 2020 and includes $135 million paid
to Banca Intesa16, $63 million in 3Q 2020 and $86 million in 4Q
2019.
As of December 31, 2020, the Company’s cash and cash equivalents
and restricted funds amounted to $6.0 billion as compared to $6.6
billion as of September 30, 2020 and $5.0 billion as of December
31, 2019. Gross debt decreased by $1.4 billion to $12.3 billion as
of December 31, 2020, as compared to $13.7 billion as of September
30, 2020 and was $2 billion lower as compared to $14.3 billion as
of December 31, 2019. As of December 31, 2020, net debt decreased
to $6.4 billion as compared to $7.0 billion as of September 30,
2020 driven by working capital release offset in part by foreign
exchange loss on debt (following a 4.8% depreciation of USD versus
EUR). Net debt as of December 31, 2020 was $3.0 billion lower than
net debt of $9.3 billion as of December 31, 2019.
As of December 31, 2020, the Company had liquidity of $11.5
billion, consisting of cash and cash equivalents and restricted
funds of $6.0 billion and $5.5 billion of available credit lines6.
After ArcelorMittal’s execution of the second option to extend the
facility, the Company has been notified that banks have agreed a
one-year extension with a new maturity of December 19, 2025. The
$5.5 billion credit facilities contain a financial covenant not to
exceed 4.25x Net debt / LTM EBITDA (as defined in the
facilities).
As of December 31, 2020, the average debt maturity was 5.2
years.
Key recent developments
- On February 9, 2021, ArcelorMittal
North America Holdings LLC, a wholly-owned subsidiary of the
Company, announced an agreement to sell 40 million Cleveland-Cliffs
common shares through a fully underwritten public market offering.
The transaction is a part of a combined primary and secondary
public offering of Cleveland-Cliffs’ shares. This divestment
crystallizes additional proceeds from the transaction with
Cleveland-Cliffs announced on September 28, 2020 and completed on
December 9, 2020. The proceeds from the sale of Cleveland-Cliffs
common shares will be used for a new share buyback program of
ArcelorMittal common shares. Following the sale of 40 million of
Cleveland-Cliffs common shares ArcelorMittal North America Holdings
LLC will continue to hold approximately 38 million common shares in
addition to shares of non-voting preferred stock redeemable at
Cleveland-Cliffs’ option for approximately 58 million common shares
or the equivalent value in cash.
- On December 23, 2020, ArcelorMittal
Dofasco announced a coating addition to its No.5 Hot-Dipped
Galvanizing Line in Hamilton, Ontario . With the investment,
ArcelorMittal Dofasco will become the only Canadian producer of
Alusi® Coated Usibor® (press hardenable steel for automotive
structural and safety components). The total project cost is $24M
CAD and the first Alusi® Coated Usibor® product is expected to come
off the line in 2H 2022. No.5 Line is planned to produce up to
160,000-tons of Alusi® coated steel.
- On December 23, 2020, ArcelorMittal
announced that it had signed a definitive agreement with Nippon
Steel Corporation (‘Nippon Steel’) to build an electric arc furnace
(‘EAF’) at AM/NS Calvert in Alabama, USA, a 50:50 joint venture
between ArcelorMittal and Nippon Steel. ArcelorMittal first
announced its intention to build an EAF at AM/NS Calvert on August
12, 2020. Construction of the 1.5Mt capacity EAF, which will cost
c. $775 million, will commence in 2021 and come onstream in the
first half of 2023. The project will be funded by AM/NS Calvert.
The plan includes an option to add further capacity at lower capex
intensity.
- On December 22, 2020, ArcelorMittal
announced the extension of the conversion date for the $1 billion
privately placed mandatory convertible bond (MCB) issued on
December 28, 2009 by one of its wholly-owned Luxembourg
subsidiaries. This amendment to the MCB, which is mandatorily
convertible into preferred shares of such subsidiary, was executed
on December 22, 2020. The mandatory conversion date of the bond has
been extended to January 31, 2024. The other main features of the
MCB remain unchanged. The bond was placed privately with Credit
Agricole Corporate and Investment Bank and is not listed. The
subsidiary simultaneously executed amendments providing for the
extension of the outstanding notes into which it invested the
proceeds of the bond issuance, which are linked to shares of the
listed company China Oriental Group Company Limited, which is held
by an ArcelorMittal subsidiary.
- On December 15, 2020, ArcelorMittal
announced that the Company had entered into separate, privately
negotiated exchange agreements with a limited number of holders of
the Company’s 5.50% Mandatorily Convertible Subordinated Notes due
2023 (the “Notes”). Pursuant to the exchange agreements, the
Company exchanged $246.8 million in aggregate principal amount of
the Notes, for an aggregate of (i) 22,653,933 shares (all existing
shares held in treasury) of ArcelorMittal common stock (i.e. the
minimum conversion ratio under the Notes) plus (ii) $25.4 million
(including accrued interest on the exchanged Notes up to, but
excluding, the settlement date). The Company did not receive any
proceeds from the delivery of such shares of common stock.
Following completion of the exchanges, approximately $1.0 billion
aggregate principal amount of the Notes remained outstanding.
- On December 11, 2020, ArcelorMittal
announced that it had signed a binding agreement (the 'Investment
Agreement') with Invitalia, an Italian state-owned company, forming
a public-private partnership between the parties13. The Investment
Agreement will result in a recapitalization of AM InvestCo,
ArcelorMittal’s subsidiary which signed the lease and obligation to
purchase agreement for Ilva’s business. Invitalia will invest in AM
InvestCo in two tranches:
- A first investment of €400 million,
which is expected to be made in the second half of February 2021;
in return, Invitalia will receive shares in ArcelorMittal Italia
with 50% of the voting rights that, along with governance rights,
will provide it with joint control over ArcelorMittal Italia (at
which point ArcelorMittal Italia will be deconsolidated);
- A second tranche (consisting of up
to €680 million in equity and a shareholder loan of up to €25
million) is payable on closing of the purchase obligation of the
former Ilva business units, which itself is subject to the
satisfaction of various conditions precedent by May 2022. This
second investment is expected to bring Invitalia’s shareholding in
ArcelorMittal Italia to 60%. ArcelorMittal would need to invest up
to €70 million to retain a 40% shareholding and equivalent voting
rights.
Details of the updated industrial plan involves investment in
lower-carbon steelmaking technologies, including the construction
of a 2.5Mtpa EAF, which is expected to open in mid-2024, and the
relining of BF #5, which is expected to begin production in 2024.
This industrial plan, which targets reaching 8Mtpa of production in
2025 (crude steel production is limited to 6Mtpa until the
environmental plan is completed), will become effective upon the
closing of the first investment. It integrates a series of public
support measures including ongoing government funded employment
support and includes, for the period between 2021 and 2025,
environmental capital expenditures of €0.3 billion and industrial
capital expenditures of €1.1 billion as well as capital
expenditures of €0.2 billion for the revamp of BF#5 and €0.3
billion for the construction of the EAF. Going forward, the joint
venture will be responsible for funding the lease rentals (expected
to terminate May 2022) and future capex payments.
- On December 9, 2020, ArcelorMittal
announced that the sale of ArcelorMittal USA to Cleveland-Cliffs
for a combination of cash and stock had been completed on such day.
Under the terms of the sale, ArcelorMittal received $505 million
cash, 78 million shares of Cleveland-Cliffs common stock and
non-voting preferred stock which is redeemable for approximately 58
million shares of Cleveland-Cliffs common stock or an equivalent
amount in cash[1]. As agreed, Cleveland-Cliffs has assumed the
liabilities of ArcelorMittal USA, including net liabilities of
approximately $0.5 billion and pensions and other post-employment
benefit liabilities (‘OPEB’)[2].
[1] Cleveland-Cliffs Inc.’s share price closed on September 25,
2020 (the last day of trading prior to the transaction
announcement) at $5.88; its closing price (December 8, 2020) was
$13.04.[2] As a result of the transaction closing in December 2020,
pension and OPEB liabilities with a carrying value of $3.2 billion
were deconsolidated from the ArcelorMittal balance sheet as of
December 31, 2020.
$1.0 billion fixed cost reduction
program
A fundamental part of the Company’s response at the onset of the
COVID-19 pandemic was to align costs to the lower activity level.
The comprehensive measures taken to “variabilise” fixed costs were
critical to protecting profitability and cash flows.
Throughout this period, the Company sought to identify and
develop options for structural cost improvements to appropriately
position the fixed cost base for the post-COVID-19 operating
environment. These savings implemented are expected to limit the
increase in fixed costs as activity and production levels recover,
thus leading to lower fixed costs per-tonne. In total, $1.0 billion
of structural cost improvements are identified within the program,
(with the majority of savings expected in FY 2021) and fully
realized in FY 2022 relative to scope-adjusted FY 2019.
The Company has already implemented a footprint optimization,
including the permanent closure of a blast furnace and steel plant
in Krakow (Poland), the permanent closure of the Florange coke oven
battery and the closure of the Saldanha facility in South Africa.
Productivity and logistics are expected to provide approximately
40% of the retained savings through continuous improvement
programs, improvements in productivity and maintenance efficiency
and the rationalization of support functions. Actions in repairs
and maintenance are expected to provide approximately 35% of the
savings, as the Company reduces contractors through insourcing and
the reallocation of internal resources. Selling, general and
administrative expenses (SG&A) is expected to account for
approximately 25% of the savings (including a 20% reduction in
corporate office headcount), digital transformation and leveraging
of shared services and centers of excellence.
These improvements will augment those achieved under the
Action2020 program, which was superseded at the onset of the
COVID-19 pandemic.
Capital returnFollowing the
achievement of the Group’s net debt target, and in line with its
previous statements, the Board has approved a new capital return
policy. Going forward, the Company expects to pay a base annual
dividend (to be progressively increased over time). After paying
this base dividend, 50% of the surplus free cash flow (i.e. free
cash flow after payment of the base dividend) will be allocated to
a share buyback program to be completed over the subsequent
12-month period. Should the ratio of net debt to EBITDA be greater
than 1.5x then only the base dividend will be paid. According to
this policy, the Board recommends a $0.30/share base dividend be
paid in June 2021, subject to the approval of shareholders at the
AGM in May 2021, and has approved a $570 million share buyback
program to be completed within the 2021 calendar year.
This return is additional to the $650 million
share buyback19 to return the proceeds of the partial sell-down of
the Company’s equity stake in Cleveland Cliffs announced on
February 9, 2021.
Financial calendar for 2021
- General meeting of shareholders: May
4, 2021: ArcelorMittal Annual General Meeting
- Earnings results announcements: May
6, 2021: Earnings release 1Q 2021; July 29, 2021: Earnings release
2Q 2021 and half year 2021; November 11, 2021: Earnings release 3Q
2021
Outlook Based on the current
economic outlook, ArcelorMittal expects global apparent steel
consumption (“ASC”) in 2021 to grow between +4.5% to +5.5% (versus
a contraction of 1.0% in 2020).
Economic activity progressively improved during 2H 2020 as
lockdown measures eased. Following a prolonged period of
destocking, the global steel industry is now benefiting from a
favorable supply demand balance, supporting increasing utilization
as demand recovers. Given this positive outlook (and subject to
pandemic-related macroeconomic uncertainties), the Company expects
ASC to grow in 2021 versus 2020 in all our core markets. By
region:
- In the US, ASC is expected to grow
within a range of +10.0% to +12.0% in 2021 (versus an estimated
-16.0% contraction in 2020, when flat products declined by 12.0%),
with stronger ASC in flat products particularly automotive while
construction demand (non-residential) remains weak.
- In Europe, ASC is expected to grow
within a range of +7.5% to +9.5% in 2021 (versus an estimated
-10.0% contraction in 2020); with strong automotive demand expected
to recover from low levels and continued support for infrastructure
and residential demand.
- In Brazil, ASC is expected to
continue to expand in 2021 with growth expected in the range of
+6.0% to +8.0% (versus estimated +1.0% growth in 2020) supported by
ongoing construction demand and recovery in the end markets for
flat steel.
- In the CIS, ASC growth in 2021 is
expected to recover to within a range of +4.0% to +6.0% (versus
-5.0% estimated contraction in 2020).
- In India, ASC growth in 2021 is
expected to recover to within a range of +16% to +18% (versus 17.0%
estimated contraction in 2020).
- As a result, overall World ex-China
ASC in 2021 is expected to grow within the range of +8.5% to +9.5%
supported by a strong rebound in India (versus -11.0% contraction
in 2020).
- In China, overall demand is expected
to continue to grow in 2021 to +1.0% to +3.0% (supported by ongoing
stimulus) (versus estimated growth of +9.0% in 2020 which recovered
well post the COVID-19 pandemic earlier in the year driven by
stimulus).
The FY 2020 cash needs of the business (including capex,
interest, cash taxes, pensions and certain other cash costs but
excluding working capital movements) total $4.1 billion (higher
than the previous $3.7 billion guidance). This includes cash taxes,
pensions and other cash costs of $1.3 billion ($0.5 billion higher
than previous guidance largely on account of higher tax payments
(including higher mining profitability)) and $0.1 billion premium
on early repayment of bonds). Capex was $2.4 billion (in line with
guidance) and net interest expense of $0.4 billion ($0.1bn lower
than previous guidance). The Company has provided capex guidance
for FY 2021 of $2.8 billion and net interest expense of $0.3
billion for 2021. Taxes, pension and others will be determined by
the level of profitability in FY 2021.
ArcelorMittal Condensed Consolidated
Statement of Financial Position1
In millions of U.S. dollars |
Dec 31,2020 |
Sept 30,2020 |
Dec 31,2019 |
ASSETS |
|
|
|
Cash and cash equivalents and restricted funds |
5,963 |
|
6,617 |
|
4,995 |
|
Trade accounts receivable and other |
3,072 |
|
3,133 |
|
3,569 |
|
Inventories |
12,328 |
|
12,327 |
|
17,296 |
|
Prepaid expenses and other current assets |
2,281 |
|
2,094 |
|
2,756 |
|
Asset held for sale7 |
4,329 |
|
6,069 |
|
— |
|
Total Current Assets |
27,973 |
|
30,240 |
|
28,616 |
|
|
|
|
|
Goodwill and intangible assets |
4,312 |
|
4,195 |
|
5,432 |
|
Property, plant and equipment |
30,622 |
|
31,326 |
|
36,231 |
|
Investments in associates and joint ventures |
6,817 |
|
6,488 |
|
6,529 |
|
Deferred tax assets |
7,866 |
|
8,052 |
|
8,680 |
|
Other assets15 |
4,462 |
|
2,224 |
|
2,420 |
|
Total Assets |
82,052 |
|
82,525 |
|
87,908 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
Short-term debt and current portion of long-term debt |
2,507 |
|
3,776 |
|
2,869 |
|
Trade accounts payable and other |
11,525 |
|
9,389 |
|
12,614 |
|
Accrued expenses and other current liabilities |
5,596 |
|
6,036 |
|
5,804 |
|
Liabilities held for sale7 |
3,039 |
|
5,642 |
|
— |
|
Total Current Liabilities |
22,667 |
|
24,843 |
|
21,287 |
|
|
|
|
|
Long-term debt, net of current portion |
9,815 |
|
9,608 |
|
11,471 |
|
Deferred tax liabilities |
1,832 |
|
1,928 |
|
2,331 |
|
Other long-term liabilities |
7,501 |
|
8,510 |
|
12,336 |
|
Total Liabilities |
41,815 |
|
44,889 |
|
47,425 |
|
|
|
|
|
Equity attributable to the equity holders of the parent |
38,280 |
|
35,838 |
|
38,521 |
|
Non-controlling interests |
1,957 |
|
1,798 |
|
1,962 |
|
Total Equity |
40,237 |
|
37,636 |
|
40,483 |
|
Total Liabilities and Shareholders’ Equity |
82,052 |
|
82,525 |
|
87,908 |
|
ArcelorMittal Condensed Consolidated
Statement of Operations1
|
Three months ended |
Twelve months ended |
In millions of U.S. dollars unless otherwise
shown |
Dec 31, 2020 |
Sept 30, 2020 |
Dec 31, 2019 |
Dec 31, 2020 |
Dec 31, 2019 |
Sales |
14,184 |
|
13,266 |
|
15,514 |
|
53,270 |
|
70,615 |
|
Depreciation (B) |
(711) |
|
(739) |
|
(802) |
|
(2,960) |
|
(3,067) |
|
Impairment items4(B) |
(331) |
|
556 |
|
(830) |
|
133 |
|
(1,927) |
|
Exceptional items5 (B) |
1,314 |
|
— |
|
(828) |
|
636 |
|
(828) |
|
Operating income / (loss) (A) |
1,998 |
|
718 |
|
(1,535) |
|
2,110 |
|
(627) |
|
Operating margin % |
14.1 |
% |
5.4 |
% |
(9.9) |
% |
4.0 |
% |
(0.9) |
% |
|
|
|
|
|
|
Income from associates, joint ventures and other investments |
7 |
|
100 |
|
20 |
|
234 |
|
347 |
|
Net interest expense |
(88) |
|
(106) |
|
(140) |
|
(421) |
|
(607) |
|
Foreign exchange and other net financing loss |
(270) |
|
(150) |
|
(117) |
|
(835) |
|
(1,045) |
|
Income / (loss) before taxes and non-controlling
interests |
1,647 |
|
562 |
|
(1,772) |
|
1,088 |
|
(1,932) |
|
Current tax expense |
(373) |
|
(204) |
|
(260) |
|
(839) |
|
(786) |
|
Deferred tax benefit / (expense) |
15 |
|
(580) |
|
135 |
|
(827) |
|
327 |
|
Income tax expense |
(358) |
|
(784) |
|
(125) |
|
(1,666) |
|
(459) |
|
Income / (loss) including non-controlling
interests |
1,289 |
|
(222) |
|
(1,897) |
|
(578) |
|
(2,391) |
|
Non-controlling interests (income)/ loss |
(82) |
|
(39) |
|
15 |
|
(155) |
|
(63) |
|
Net income / (loss) attributable to equity holders of the
parent |
1,207 |
|
(261) |
|
(1,882) |
|
(733) |
|
(2,454) |
|
|
|
|
|
|
|
Basic earnings / (loss) per common share ($) |
1.01 |
|
(0.21) |
|
(1.86) |
|
(0.64) |
|
(2.42) |
|
Diluted earnings / (loss) per common share ($) |
1.00 |
|
(0.21) |
|
(1.86) |
|
(0.64) |
|
(2.42) |
|
|
|
|
|
|
|
Weighted average common shares outstanding (in millions) |
1,199 |
|
1,228 |
|
1,012 |
|
1,140 |
|
1,013 |
|
Diluted weighted average common shares outstanding (in
millions) |
1,204 |
|
1,228 |
|
1,012 |
|
1,140 |
|
1,013 |
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
EBITDA (C = A-B) |
1,726 |
|
901 |
|
925 |
|
4,301 |
|
5,195 |
|
EBITDA Margin % |
12.2 |
% |
6.8 |
% |
6.0 |
% |
8.1 |
% |
7.4 |
% |
|
|
|
|
|
|
Own iron ore production (Mt) |
15.3 |
|
14.8 |
|
14.8 |
|
58.0 |
|
57.1 |
|
Crude steel production (Mt) |
18.8 |
|
17.2 |
|
19.8 |
|
71.5 |
|
89.8 |
|
Steel shipments (Mt) |
17.3 |
|
17.5 |
|
19.7 |
|
69.1 |
|
84.5 |
|
ArcelorMittal Condensed Consolidated
Statement of Cash flows1
|
Three months ended |
Twelve months ended |
In millions of U.S. dollars |
Dec 31, 2020 |
Sept 30, 2020 |
Dec 31, 2019 |
Dec 31, 2020 |
Dec 31, 2019 |
Operating activities: |
|
|
|
|
|
Income /(loss) attributable to equity holders of the
parent |
1,207 |
|
(261) |
|
(1,882) |
|
(733) |
|
(2,454) |
|
Adjustments to reconcile net income/ (loss) to net cash provided by
operations: |
|
|
|
|
|
Non-controlling interests loss / (gain) |
82 |
|
39 |
|
(15) |
|
155 |
|
63 |
|
Depreciation and impairment items4 |
1,042 |
|
183 |
|
1,632 |
|
2,827 |
|
4,994 |
|
Exceptional items5 |
(1,314) |
|
— |
|
828 |
|
(636) |
|
828 |
|
(Income) from associates, joint ventures and other investments |
(7) |
|
(100) |
|
(20) |
|
(234) |
|
(347) |
|
Deferred tax (benefit) / expense |
(15) |
|
580 |
|
(135) |
|
827 |
|
(327) |
|
Change in working capital |
925 |
|
1,072 |
|
2,600 |
|
1,496 |
|
2,197 |
|
Other operating activities (net) |
(504) |
|
257 |
|
(76) |
|
380 |
|
1,063 |
|
Net cash provided by operating activities (A) |
1,416 |
|
1,770 |
|
2,932 |
|
4,082 |
|
6,017 |
|
Investing activities: |
|
|
|
|
|
Purchase of property, plant and equipment and intangibles (B) |
(668) |
|
(520) |
|
(815) |
|
(2,439) |
|
(3,572) |
|
Other investing activities (net) |
262 |
|
34 |
|
(936) |
|
428 |
|
(252) |
|
Net cash used in investing activities |
(406) |
|
(486) |
|
(1,751) |
|
(2,011) |
|
(3,824) |
|
Financing activities: |
|
|
|
|
|
Net (payments) / proceeds relating to payable to banks and
long-term debt |
(1,506) |
|
(270) |
|
126 |
|
(2,395) |
|
1,262 |
|
Dividends paid to minorities (C) |
(16) |
|
(55) |
|
(21) |
|
(181) |
|
(129) |
|
Dividends paid to ArcelorMittal shareholders |
— |
|
— |
|
— |
|
— |
|
(203) |
|
Share buyback |
(487) |
|
(13) |
|
— |
|
(500) |
|
(90) |
|
Common share offering |
— |
|
— |
|
— |
|
740 |
|
— |
|
Proceeds from Mandatorily Convertible Notes |
— |
|
— |
|
— |
|
1,237 |
|
— |
|
Lease payments and other financing activities (net) |
(218) |
|
(63) |
|
(86) |
|
(399) |
|
(326) |
|
Net cash (used in) / provided by financing
activities |
(2,227) |
|
(401) |
|
19 |
|
(1,498) |
|
514 |
|
Net (decrease) / increase in cash and cash equivalents |
(1,217) |
|
883 |
|
1,200 |
|
573 |
|
2,707 |
|
Cash and cash equivalents transferred (to) / from assets held for
sale |
67 |
|
(70) |
|
— |
|
(3) |
|
10 |
|
Effect of exchange rate changes on cash |
234 |
|
73 |
|
131 |
|
163 |
|
(22) |
|
Change in cash and cash equivalents |
(916) |
|
886 |
|
1,331 |
|
733 |
|
2,695 |
|
|
|
|
|
|
|
Free cash flow (D=A+B+C)17 |
732 |
|
1,195 |
|
2,096 |
|
1,462 |
|
2,316 |
|
Appendix 1: Product shipments by
region(1)
(000'kt) |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Flat |
3,462 |
|
3,779 |
|
4,325 |
|
15,422 |
|
18,261 |
|
Long |
807 |
|
746 |
|
819 |
|
2,884 |
|
3,260 |
|
NAFTA |
4,134 |
|
4,435 |
|
5,029 |
|
17,902 |
|
20,921 |
|
Flat |
1,324 |
|
1,047 |
|
1,553 |
|
4,722 |
|
6,328 |
|
Long |
1,268 |
|
1,393 |
|
1,176 |
|
4,740 |
|
4,918 |
|
Brazil |
2,575 |
|
2,425 |
|
2,717 |
|
9,410 |
|
11,192 |
|
Flat |
6,210 |
|
6,025 |
|
6,827 |
|
23,907 |
|
31,523 |
|
Long |
2,246 |
|
2,080 |
|
2,323 |
|
8,550 |
|
10,360 |
|
Europe |
8,569 |
|
8,187 |
|
9,290 |
|
32,873 |
|
42,352 |
|
CIS |
1,912 |
|
1,914 |
|
2,087 |
|
7,685 |
|
7,425 |
|
Africa |
458 |
|
585 |
|
890 |
|
2,190 |
|
4,112 |
|
ACIS |
2,373 |
|
2,499 |
|
2,985 |
|
9,881 |
|
11,547 |
|
Note: “Others and eliminations” are not presented in the
table
Appendix 2a: Capital
expenditures(1)
(USDm) |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
NAFTA |
66 |
|
81 |
|
191 |
|
459 |
|
727 |
|
Brazil |
64 |
|
48 |
|
96 |
|
208 |
|
328 |
|
Europe |
326 |
|
222 |
|
273 |
|
1,039 |
|
1,353 |
|
ACIS |
88 |
|
68 |
|
108 |
|
324 |
|
513 |
|
Mining |
111 |
|
92 |
|
133 |
|
370 |
|
480 |
|
Total |
668 |
|
520 |
|
815 |
|
2,439 |
|
3,572 |
|
Note: “Others” are not presented in the table
Appendix 2b: Capital expenditure
projectsThe following tables summarize the Company’s
principal growth and optimization projects involving significant
capex.
Completed projects in the past
year
Segment |
Site / unit |
Project |
Capacity / details |
Completion |
ACIS |
ArcelorMittal Kryvyi Rih (Ukraine) |
New LF&CC 2 |
Facilities upgrade to switch from ingot to continuous caster route.
Additional billets of up to 145kt over ingot route through yield
increase |
1Q 2020 |
Ongoing projects
Segment |
Site / unit |
Project |
Capacity / details |
Key date / forecast completion |
NAFTA |
Mexico |
New Hot strip mill |
Production capacity of 2.5Mt/year |
2021 (a) |
NAFTA |
ArcelorMittal Dofasco (Canada) |
Hot strip mill modernization |
Replace existing three end of life coilers with two state of the
art coilers and new runout tables |
2021 (b) |
NAFTA |
ArcelorMittal Dofasco (Canada) |
#5 CGL conversion to AluSi® |
Addition of up to 160kt/year Aluminum Silicon (AluSi®) coating
capability to #5 Hot-Dip Galvanizing Line for the production of
Usibor® steels |
2H 2022 (c) |
Brazil |
ArcelorMittal Vega Do Sul |
Expansion project |
Increase hot dipped / cold rolled coil capacity and construction of
a new 700kt continuous annealing line (CAL) and continuous
galvanising line (CGL) combiline |
4Q 2023 (d) |
Mining |
Liberia |
Phase 2 premium product expansion project |
Increase production capacity to 15Mt/year |
4Q 2023 (e) |
Brazil |
Juiz de Fora |
Melt shop expansion |
Increase in melt shop capacity by 0.2Mt/year |
On hold (f) |
Brazil |
Monlevade |
Sinter plant, blast furnace and melt shop |
Increase in liquid steel capacity by 1.2Mt/year; |
On hold (f) |
a) On September 28, 2017, ArcelorMittal announced a major $1.0
billion investment programme at its Mexican operations, which is
focused on building ArcelorMittal Mexico’s downstream capabilities,
sustaining the competitiveness of its mining operations and
modernizing its existing asset base. The programme is designed to
enable ArcelorMittal Mexico to meet the anticipated increased
demand requirements from domestic customers, realize in full
ArcelorMittal Mexico’s production capacity of 5.3 million tonnes
and significantly enhance the proportion of higher added-value
products in its product mix. The main investment will be the
construction of a new hot strip mill. Upon completion, the project
will enable ArcelorMittal Mexico to produce c. 2.5 million tonnes
of flat rolled steel, long steel c. 1.8Mt and the remainder made up
of semi-finished slabs. Coils from the new hot strip mill will be
supplied to domestic, non-auto, general industry customers. The hot
strip mill project commenced late 4Q 2017 and is expected to be
completed at the end of 2021 (with capex of approximately $0.2
billion in 2021).
b) Investment in ArcelorMittal Dofasco (Canada) to modernize the
hot strip mill. The project is to install two new state of the art
coilers and runout tables to replace three end of life coilers. The
strip cooling system will be upgraded and include innovative power
cooling technology to improve product capability. The project is
expected to be completed in 2021.
c) Investment to replace #5 Hot-Dip Galvanizing Line Galvanneal
coating capability with 160kt/year Aluminum Silicon (AluSi®)
capability for the production of ArcelorMittal’s patented Usibor®
Press Hardenable Steel for automotive structural and safety
components. With the investment, ArcelorMittal Dofasco will become
the only Canadian producer of AluSi® coated Usibor®. This
investment complements additional strategic North America
developments, including a new EAF and caster at AM/NS Calvert in
the US and a new hot strip mill in Mexico, and will allow to
capitalize on increasing Auto Aluminized PHS demand in North
America. The project is expected to be completed in 2022, with the
first coil planned for 2H 2022.
d) In February 2021, ArcelorMittal announced the resumption of
the Vega Do Sul expansion to provide an additional 700kt of
cold-rolled annealed and galvanized capacity to serve the growing
domestic market. The ~$0.35 billion investment programme to
increase rolling capacity with construction of a new continuous
annealing line and CGL combiline (and the option to add a ca. 100kt
organic coating line to serve construction and appliance segments),
and upon completion, will strengthen ArcelorMittal’s position in
the fast growing automotive and industry markets through Advanced
High Strength Steel products. The investments will look to
facilitate a wide range of products and applications whilst further
optimizing current ArcelorMittal Vega facilities to maximize site
capacity and its competitiveness, considering comprehensive digital
and automation technology. The project is expected to be completed
in 4Q 2023.
e) ArcelorMittal Liberia has been operating a 5Mt direct
shipping ore (DSO) since 2011 (Phase 1). In 2013, the Company had
started construction of a Phase 2 project that envisaged the
construction of 15 million tonnes of concentrate sinter fines
capacity and associated infrastructure; this project was then
suspended due to the onset of Ebola in West Africa and the
subsequent force-majeure declaration by the onsite contracting
companies. ArcelorMittal Liberia has now completed the revised
detailed feasibility study (which was updated in 2019 to apply best
available technology and replace wet with dry stack tailings
treatment) for the modular build of a 15 million tonne concentrator
(Phase 2), with aligned mine, concentrator, rail and port capacity.
The plan is now to recommence the project in 2021, with first
concentrate expected in 4Q 2023. The capex required to conclude the
project is expected to total approximately $0.8 billion as the
project is effectively a brownfield opportunity given that 85% of
the procurement has already been done (with the equipment on site)
and 60% of the civil construction complete.
f) Although the Monlevade wire rod expansion project and Juiz de
Fora rebar expansion were completed in 2015, both the melt shop
expansion (in Juiz de Fora) and the sinter plant, blast furnace and
meltshop (in Monlevade) projects are currently on hold and are
expected to be completed upon Brazil domestic market
recovery.
Appendix 3: Debt repayment schedule as
of December 31, 2020
(USD billion) |
2021 |
2022 |
2023 |
2024 |
2025 |
>2025 |
Total |
Bonds |
0.4 |
0.6 |
1.4 |
2.0 |
1.1 |
2.3 |
7.8 |
Commercial paper |
1.0 |
— |
|
— |
|
— |
|
— |
|
— |
|
1.0 |
Other loans |
1.1 |
0.4 |
1.1 |
0.2 |
0.2 |
0.5 |
3.5 |
Total gross debt |
2.5 |
1.0 |
2.5 |
2.2 |
1.3 |
2.8 |
12.3 |
Appendix 4: Reconciliation of gross debt to
net debt
(USD million) |
Dec 31, 2020 |
Sept 30, 2020 |
Dec 31, 2019 |
Gross debt (excluding that held as part of the liabilities
held for sale) |
12,322 |
|
13,384 |
|
14,340 |
|
Gross debt held as part of the liabilities held for sale |
24 |
|
292 |
|
— |
|
Gross debt |
12,346 |
|
13,676 |
|
14,340 |
|
Less: Cash and cash equivalents and restricted funds |
(5,963) |
|
(6,617) |
|
(4,995) |
|
Less: Cash and cash equivalents and restricted funds held as part
of the assets held for sale |
(3) |
|
(70) |
|
— |
|
Net debt (including that held as part of assets and the
liabilities held for sale) |
6,380 |
|
6,989 |
|
9,345 |
|
|
|
|
|
Net debt / LTM EBITDA |
1.5 |
|
|
1.8 |
|
Appendix 5: Adjusted net income /
(loss)
(USDm) |
4Q 20 |
3Q 20 |
4Q 19 |
12M 20 |
12M 19 |
Net income / (loss) |
1,207 |
|
(261) |
|
(1,882) |
|
(733) |
|
(2,454) |
|
Impairment items4 |
(331) |
|
556 |
|
(830) |
|
133 |
|
(1,927) |
|
Exceptional items5 |
1,314 |
|
— |
|
(828) |
|
636 |
|
(828) |
|
Derecognition of deferred tax assets on disposal of ArcelorMittal
USA |
— |
|
(624) |
|
— |
|
(624) |
|
— |
|
Adjusted net income / (loss) |
224 |
|
(193) |
|
(224) |
|
(878) |
|
301 |
|
Appendix 6: Terms and
definitionsUnless indicated otherwise, or the context
otherwise requires, references in this earnings release report to
the following terms have the meanings set out next to them
below:
Adjusted net income / (loss): refers to
reported net income/(loss) less impairment items, exceptional items
and derecognition of deferred tax assets on disposal of
ArcelorMittal USA.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 and restricted funds: represents cash and cash
equivalents, restricted cash, restricted funds 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.EBITDA: operating results plus depreciation,
impairment items 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 (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
shareholdersGross debt: long-term debt and
short-term debt (including that held as part of the liabilities
held for sale).Impairment items: refers to
impairment charges net of reversals. Liquidity:
cash and cash equivalents and restricted funds 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.Market-priced tonnes: represent
amounts of iron ore and coal from ArcelorMittal mines that could be
sold to third parties on the open market. Market-priced tonnes that
are not sold to third parties are transferred from the Mining
segment to the Company’s steel producing segments and reported at
the prevailing market price. Shipments of raw materials that do not
constitute market-priced tonnes are transferred internally and
reported on a cost-plus basis.Mining segment
sales: i) “External sales”: mined product sold to third
parties at market price; ii) “Market-priced tonnes”: internal sales
of mined product to ArcelorMittal facilities and reported at
prevailing market prices; iii) “Cost-plus tonnes” - internal sales
of mined product to ArcelorMittal facilities on a cost-plus basis.
The determinant of whether internal sales are reported at market
price or cost-plus is whether the raw material could practically be
sold to third parties (i.e. there is a potential market for the
product and logistics exist to access that market).Net
debt: long-term debt and short-term debt less cash and
cash equivalents and restricted funds (including those held as part
of assets and liabilities held for sale).Net debt/LTM
EBITDA: refers to Net debt divided by EBITDA (as used in
the Company’s financial reporting) over the last twelve
months.Net interest expense: includes interest
expense less interest incomeOn-going projects:
refer to projects for which construction has begun (excluding
various projects that are under development), even if such projects
have been placed on hold pending improved operating
conditions.Operating results: refers to operating
income/(loss).Operating segments: NAFTA segment
includes the Flat, Long and Tubular operations of USA, Canada and
Mexico. The Brazil segment includes the Flat, Long and Tubular
operations of Brazil and its neighbouring countries including
Argentina, Costa Rica and Venezuela. The Europe segment comprises
the Flat, Long and Tubular operations of the European business, as
well as Downstream Solutions. The ACIS segment includes the Flat,
Long and Tubular operations of Kazakhstan, Ukraine and South
Africa. Mining segment includes iron ore and coal
operations.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 an abnormal 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).Seaborne iron ore reference prices: refers
to iron ore prices for 62% Fe CFR China.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.Steel-only
EBITDA: calculated as EBITDA total less Mining segment
EBITDA.Steel-only EBITDA/tonne: calculated as
steel-only EBITDA divided by total steel shipments.Working
capital change (working capital investment / release):
Movement of change in working capital - trade accounts receivable
plus inventories less trade and other accounts
payable.YoY: refers to year-on-year.
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 also 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. This press release also includes
certain non-GAAP financial/alternative performance measures.
ArcelorMittal presents EBITDA, and EBITDA/tonne, which are non-GAAP
financial/alternative performance measures and calculated as shown
in the Condensed Consolidated Statement of Operations, as
additional measures to enhance the understanding of operating
performance. ArcelorMittal believes such indicators are relevant to
describe trends relating to cash generating activity and provides
management and investors with additional information for comparison
of the Company’s operating results to the operating results of
other companies. Segment information presented in this press
release are 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. 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. ArcelorMittal also presents Adjusted net income
/ (loss) as it believes it is a useful measure for the underlying
business performance excluding impairment items, exceptional items
and derecognition of deferred tax assets on disposal of
ArcelorMittal USA. ArcelorMittal also presents free cash flow
(FCF), which is a non-GAAP financial/alternative performance
measure calculated as shown in the Condensed Consolidated Statement
of Cash Flows, because it believes it is a useful supplemental
measure for evaluating the strength of its cash generating
capacity. The Company has revised the definition of free cash flow
to include dividends paid to minority shareholders in order to
reflect the measure it will use to determine dividends that will be
paid under its new dividend policy. The Company also presents the
ratio of net debt to EBITDA for the last twelve month period, which
investors may find useful in understanding the Company's ability to
service its debt. Such non-GAAP/alternative performance measures
may not be comparable to similarly titled measures applied by other
companies. 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.
- Figures presented exclude ArcelorMittal Italia. LTIF figures
Including the impact of ArcelorMittal Italia, was 0.92x for FY 2020
vs. 1.21x for FY 2019; 0.93x for 4Q 2020 vs. 0.95x in 3Q 2020 and
1.25x in 4Q 2019.
- ArcelorMittal Mines Canada, otherwise known as ArcelorMittal
Mines and Infrastructure Canada.
- Net impairment gain for 12M 2020 amounted to $133 million
included the partial reversal of impairment charges (recorded in
2019) following the sale of ArcelorMittal USA ($660 million),
offset in part by impairment charges of $331 million related to
revised future cashflows of plate assets in Europe, charges of $104
million following the permanent closure of a blast furnace and
steel plant in Krakow (Poland) in 3Q 2020 and charges related to
the permanent closure of the coke plant in Florange (France) in 1Q
2020 of $92 million. Impairment charges for 12M 2019 were $1.9
billion related to impairment of the fixed assets of ArcelorMittal
USA ($1.3 billion), remedy asset sales for the ArcelorMittal Italia
acquisition ($0.5 billion) and impairment charges in South Africa
($0.1 billion).
- Net exceptional items for 12M 2020 were gains of $636 million
related to the gain on disposal of ArcelorMittal USA ($1.5 billion)
partially offset by site restoration and termination charges
following the permanent closure of a blast furnace and steel plant
in Krakow (Poland) totaling $146 million and inventory related
charges in NAFTA and Europe ($0.7 billion). Exceptional items for
12M 2019 primarily include inventory related charges in NAFTA and
Europe. Exceptional $1.5 billion gain on ArcelorMittal USA disposal
relates to the consideration of $2.2 billion following the increase
of the Cleveland Cliff share price from $5.88/sh on September 25,
2020 to $13.04/sh on December 8, 2020 against a total carrying
value of $0.7 billion of ArcelorMittal USA, ArcelorMittal Monessen
and ArcelorMittal Princeton companies.
- On December 19, 2018, ArcelorMittal signed a $5,500,000,000
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. As of
December 31, 2020, the $5.5 billion revolving credit facility was
fully available. On May 5, 2020, ArcelorMittal and a syndicate of
banks signed a credit facility with tranches of $0.7 billion and
€2.1 billion (the “New Credit Facility”). Subsequently, the
Company's share offering, which closed on May 14, 2020, and the
mandatorily convertible notes offering, which closed on May 18,
2020, resulted in the cancellation of commitments of an equivalent
amount under the New Credit Facility that ArcelorMittal had entered
into on May 5, 2020. Subsequently, on July 17, 2020, ArcelorMittal
sent a cancellation notice for all unused amounts under the New
Credit Facility. The cancellation notice was effective on July 22,
2020. As of such date, the facility was terminated.
- Assets and liabilities held for sale, as of December 31, 2020
include the assets and liabilities of ArcelorMittal Italia and
heavy plate assets in Europe. Assets and liabilities held for sale,
as of September 30, 2020 include the assets and liabilities of
ArcelorMittal USA (as well as Princeton and Monessen and certain
other entities within the scope of the sale of ArcelorMittal
USA).
- AMNS India key performance indicators for 4Q 2020 are as
follows: AMNS India’s operations were impacted by the COVID-19
pandemic during 2Q 2020 with lockdown measures (in particular
impacting April 2020). Since then lock down measures have been
lifted, demand has improved and the assets are currently running at
higher utilization levels. 4Q 2020 crude steel production was 1.9Mt
(vs 1.8Mt in 3Q 2020, and FY 2020 at 6.6Mt) and EBITDA was $0.3
billion (with 12M 2020 EBITDA of $0.7 billion). AMNS India has
plans to debottleneck operations (steel shop and rolling parts) and
achieve capacity of 8.6Mt per annum and medium term plans to expand
and grow to 14Mt per annum. Its newly acquired Thakurani mines are
expected to operate at full 5.5Mtpa capacity by the end of 1Q 2021,
and the second Odisha pellet plant is expected to be completed by
the end of 1Q 2021, adding 6Mtpa for a total 20Mtpa of pellet
capacity.
- The Company is offering green steel using a system of
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.
- On September 28, 2020, in connection with the announced sale of
100% of the shares of ArcelorMittal USA, ArcelorMittal announced
its intention to repurchase, between September 28, 2020 and March
31, 2021, shares for an aggregate maximum amount of $500 million.
By market close on October 30, 2020, ArcelorMittal had repurchased
35,636,253 shares for a total value of $0.5 billion ($487 million
paid in the fourth quarter) at an approximate average price per
share of €11.92. All details are available on the Company’s website
at:
https://corporate.arcelormittal.com/investors/equity-investors/share-buyback-program.
- Relates to the rollover of the Indian rupee hedge at market
price which protects the dollar funds needed for the Essar Steel
India transaction as per the resolution plan approved by the
Committee of Creditors and the National Company Law Tribunal in
Ahmedabad. The hedge was unwound on the closing of the acquisition
in 4Q 2019. On October 17, 2018, the Company announced that it had
approved a payment of 7,469 crore rupees (c. $1 billion,
subsequently paid) to the financial creditors of Uttam Galva and
KSS Petron to clear overdue debts in order that the offer it
submitted for ESIL on April 2, 2018 would be eligible and
considered by ESIL’s Committee of Creditors.
- ArcelorMittal Italia crude steel production in 4Q 2020 of 0.9Mt
(FY 2020 3.4Mt); 4Q 2020 steel shipments of 1.0Mt (FY 2020 3.3Mt).
Capex of approximately $0.3 billion per annum has been invested in
ArcelorMittal Italia in 2019 and 2020.
- The conditions precedent to closing under the Ilva Agreement
include: the amendment of the existing environmental plan for the
Taranto plant to account for changes in the new industrial plan;
the lifting of all criminal seizures on the Taranto plant; the
absence of restrictive measures – in the context of criminal
proceedings where Ilva is a defendant – being imposed against
ArcelorMittal Italia; and a new agreement with trade unions. If
these conditions precedent are not fulfilled by May 2022,
ArcelorMittal Italia will not be required to purchase the business
units and instead will be required to return them to Ilva, which in
turn will be required to pay an end-of-lease adjustment determined
on the basis of the equity capital injected by ArcelorMittal
Italia’s shareholders and its net financial position. In turn, if
the conditions precedent are not fulfilled, Invitalia will also not
be required to make the second tranche of its investment.
- In addition to the AM/NS 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 expend 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 / NEV market and propel
it to be among the top 3 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 having recently
upgraded its asset portfolio. China Oriental has a strong balance
sheet and this investment could significantly increase the dividend
potential in the future.
- As of December 31, 2020, other assets include the listed
investment of Cleveland Cliffs (16%) at market value of $1,988
million and Erdemir (12%) at market value of $850 million.
- On November 1, 2018, ArcelorMittal Investco Italy Srl completed
the acquisition of Ilva Spa (former name of ArcelorMittal Italia)
and its subsidiaries. ArcelorMittal was the principal partner in AM
Investco with 94.45% equity stake in the consortium, with Banca
Intesa Sanpaolo holding 5.55%. ISP interest was subject to put and
call option arrangement. The put option was exercised in December
2020 simultaneous to the signing of an investment agreement with
Invitalia.
- The Company has revised the definition of free cash flow to
include dividends paid to minority shareholders in order to reflect
the measure it will use to determine dividends that will be paid
under its new dividend policy. The comparative figures for free
cash flow under the prior definition of cash flow from operations
less capex were: 4Q 2020 $748 million; 3Q 2020 $1,250 million; 4Q
2019 $2,117 million; 12M 2020 $1,643 million and 12M 2019 $2,445
million.
- See Appendix 5 for reconciliation of adjusted net income
/(loss).
- Share buyback is expected to commence on February 15, 2021, and
the significant shareholder has indicated that it intends to
maintain its voting rights in ArcelorMittal issued
shares.
Fourth quarter 2020 and full year 2020 earnings analyst
conference callArcelorMittal management (including
Executive Chairman and Chief Executive Officer) will host a
conference call for members of the investment community to present
and comment on the three-month and twelve periods ended December
31, 2020 on: Thursday February 11, 2021 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
linkhttps://interface.eviscomedia.com/player/1131/
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 StatementsThis
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
ArcelorMittalArcelorMittal is the world's leading steel
and mining company, with a presence in 60 countries and an
industrial footprint in 18 countries. Guided by a philosophy to
produce safe, sustainable steel, we are the leading supplier of
quality steel in the major global steel markets including
automotive, construction, household appliances and packaging, with
world-class research and development and outstanding distribution
networks.
Through our core values of sustainability, quality and
leadership, we operate responsibly with respect to the health,
safety and wellbeing of our employees, contractors and the
communities in which we operate. For us, steel is the fabric of
life, as it is at the heart of the modern world from railways to
cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of
the products and components people use in their everyday lives more
energy efficient.
We are one of the world’s five largest producers of iron ore and
metallurgical coal. With a geographically diversified portfolio of
iron ore and coal assets, we are strategically positioned to serve
our network of steel plants and the external global market. While
our steel operations are important customers, our supply to the
external market is increasing as we grow. In 2020, ArcelorMittal
had revenues of $53.3 billion and crude steel production of 71.5
million metric tonnes, while own iron ore production reached 58.0
million metric tonnes.
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/
EnquiriesArcelorMittal 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 0207
629 7988. Contact: Paul Weigh +44 203 214 2419
- ArcelorMittal reports fourth quarter 2020 and twelve months
2020 results
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