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ArcelorMittal proposes to maintain annual dividend payment
ArcelorMittal's Board of Directors proposes to maintain the annual dividend payment at USD 0.20 per share for 2015. Subject to shareholder approval at the next annual general meeting on May 5th 2015, this dividend would be paid in June 2015.
Key recent developments;
On February 3th 2015, Standard & Poor's downgraded ArcelorMittal's long term credit rating to BB with a stable outlook (from BB+ with a negative outlook).
On January 23rd 2015, ArcelorMittal announced that it will idle its Indiana Harbor Long Carbon (IHLC) facility beginning with the electric arc furnace on March 1, 2015, followed by the rolling mill operation in Q2 2015, pending customer requirements.
On January 19th 2015, ArcelorMittal announced the sale of its interest in the Kuzbass coal mines in the Kemerovo region of Siberia, Russia, to Russia's National Fuel Company. The assets include the coal mines of Berezovskaya and Pervomaskaya, which together produce 700,000 tonnes of coal a year. The Company's Ukrainian steel operations now source coking coal from ArcelorMittal's mines in Kazakhstan. This transaction closed on December 31st 2014.
On January 14th 2015, ArcelorMittal announced the issuance of €750 million 3.125% Notes due January 14th 2022. The Notes were issued under ArcelorMittal's EUR 3 billion whole sale Euro Medium Term Notes Program.
On November 25th 2014, ArcelorMittal and the Algerian state owned companies Sider and Ferphos Group signed an agreement whereby the Company's interest in the Tebessa mines in Ouenza and Boukhadra will be diluted from 70% to 49%. The transaction was completed on January 10, 2015.
On November 14, 2014, ArcelorMittal signed a memorandum of understanding with the Banque et Caisse d'Epargne de l'Etat whereby the Company and BCEE irrevocably agreed to sell and buy, respectively, the Liberte property (formerly the headquarters of the Company) in Luxembourg city. Accordingly, the property was classified as held for sale at December 31st 2014. The disposal was completed on January 23rd 2015.
Outlook and guidance;
Based on the current economic outlook, ArcelorMittal expects global apparent steel consumption to increase by approximately +1.5% to +2.0% in 2015. ArcelorMittal expects the pick-up in European manufacturing activity to continue and support ASC growth of approximately +1.5% to +2.5% in 2015 (versus a growth of 3.4% in 2014). Driven by robust underlying steel demand and significant restocking, ASC in the US grew by 10% in 2014.
Whilst underlying demand continues to expand, due to the absence of a further inventory build in 2015, ASC in the US is expected to be similar, or up to 1% below 2014 levels. Following a 6% decline in 2014, Brazil ASC is expected to grow by +1 to +2% in 2015. In China, we see signs of stabilization due to the government's targeted stimulus, and expect steel demand growth in the range of +1.5% to +2.5% for 2015.
While there remain risks to the global demand picture, given ArcelorMittal's specific geographical and end market exposures, the Company expects its steel shipments to increase further in 2015 as compared to 2014.
The Company expects Group EBITDA to be within the range of USD 6.5 billion to USD 7 billion for 2015. Overall, steel markets continue to grow, in particular for our high value added products; a forecast 4% to 5% increase in shipment volumes (approximately half of which follows the Newcastle reline completion and full year impact of the restart of BF 3 in Tubarao, Brazil) together with improved cost performance are expected to offset the impact of lower transaction prices and the impacts of translation.
Assuming current market conditions, in excess of one-third of the impact of lower iron ore prices on mining revenues will be offset by improved cost performance including the benefits of foreign exchange, energy and freight as well as higher volumes.
Additionally, the Company expects net interest expense to decline to approximately USD 1.4 billion and Capital expenditure to decline to approximately USD 3.4 billion in 2015. As a result, at the bottom end of the guidance range the Company would expect to be free cash flow.
While net debt is expected to follow a normal seasonal pattern, overall progress towards the medium term net debt target of USD 15 billion is anticipated during the course of 2015.
Source - Strategic Research Institute