Highlights:
Health and safety: LTIF rate of 0.72x in 2Q 2017; 1H 2017 LTIF of 0.78x stable YoY
Operating income of $1.4 billion in 2Q 2017; 1H 2017 operating income of $3.0 billion, 38.1% higher YoY
EBITDA of $2.1 billion in 2Q 2017; 1H 2017 EBITDA of $4.3 billion, 61% higher YoY
Net income of $1.3 billion in 2Q 2017; 1H 2017 net income of $2.3 billion as compared to $696 million in 1H 2016
Steel shipments of 21.5 Mt in 2Q 2017, up 2% vs. 1Q 2017; 1H 2017 steel shipments of 42.5Mt, down 2.4% YoY. Steel shipments down 1.2% on a comparable basis
2Q 2017 iron ore shipments of 15.2Mt (-0.9% YoY), of which 9.5 Mt shipped at market prices (-1.2% YoY); 1H 2017 market price iron ore shipments at 18.1Mt; up 4.3% YoY
Net debt decreased to $11.9 billion as of June 30, 2017, as compared to $12.1 billion as of March 31, 2017 due to positive free cash flow[2] (+$0.6 billion) (despite investment in working capital) offset in part by foreign exchange losses (-$0.4 billion)
Key strategic developments:
Advancing our leadership position:
ArcelorMittal launched two new advanced high strength steel products Usibor® 2000 and Ductibor® 1000 to the market, furthering our industry leading offering to automotive customers; in addition, the new Jet Vapor Deposition line at Liege highlights ArcelorMittal’s technology leadership
Action 2020 progress ongoing: Transformation program in Europe progressing well; we are now operating from a more efficient, resized footprint and utilising enhanced digitalization of operations to drive productivity improvements and support maintenance excellence
Investing with focus and discipline:
ArcelorMittal selected to become the new owner of Ilva, a significant opportunity to create value for our shareholders by leveraging ArcelorMittal’s strengths to realise Ilva’s potential as a Tier 1 supplier to European and Italian steel customers. Additionally, ArcelorMittal Brasil S.A. announced the acquisition of Votorantim S.A. long steel businesses in Brazil[3] to strengthen the Company’s long product capability and product leadership
Strategic investments completed in line with the continuous shift towards higher added value products:
Completed slab yard expansion project at Calvert (US), and Galvaline investment at Dofasco (Canada), increasing our galvanised sheet capability; and commissioned the ArcelorMittal Krakow (Poland) hot rolling mill extension for increased HRC and HDG capacity
Balance sheet progress:
Net debt was lower by $0.8 billion YoY despite a $2.8 billion investment in working capital over the last 12 months reflecting improved market conditions;
S&P and Moody’s credit rating upgrades reflecting ongoing progress towards achieving our financial priority of an investment grade credit rating
Outlook:
Looking to the outlook, current market conditions are improved compared to twelve months ago with steel spreads currently at healthy levels. The demand environment is positive, as evidenced by the highest readings from the ArcelorMittal weighted PMI Index since April 2011, which suggests that steel shipments in 2H 2017 will be higher than would normally be suggested by seasonality alone.
The Company now expects that the cash needs of the business (excluding working capital and premiums paid to retire debt early of $0.2 billion (not included in previous guidance)) in 2017 to be approximately $4.6 billion (as compared to $5.0 billion previous guidance). Given the liability management exercise and lower average debt, we now expect interest expense to decline to $0.8 billion in 2017 (as compared to $0.9 billion from previous guidance and $1.1 billion in FY 2016). While capex expectation for 2017 remains at $2.9 billion (from $2.4 billion in 2016), the Company expects lower cash taxes and contributions to fund pensions and other cash expenses to be lower than previous guidance.
Given the improved market conditions, the Company now expects a full year 2017 investment in working capital of approximately $1.5 billion (as compared to previous guidance of approximately $1.0 billion).
Financial highlights (on the basis of IFRS[1]):
(USDm) unless otherwise shown 2Q 17 1Q 17 2Q 16 1H 17 1H 16
Sales 17,244 16,086 14,743 33,330 28,142
Operating income 1,390 1,576 1,873 2,966 2,148
Net income attributable to equity holders of the parent 1,322 1,002 1,112 2,324 696
Basic earnings per share (US$)[4] 1.30 0.98 1.13 2.28 0.88
Operating income/ tonne (US$/t) 65 75 85 70 49
EBITDA 2,112 2,231 1,770 4,343 2,697
EBITDA/ tonne (US$/t) 98 106 80 102 62
Steel-only EBITDA/ tonne (US$/t) 83 83 73 83 56
Crude steel production (Mt) 23.2 23.6 23.1 46.8 46.3
Steel shipments (Mt) 21.5 21.1 22.1 42.5 43.6
Own iron ore production (Mt) 14.7 14.0 13.5 28.7 27.6
Iron ore shipped at market price (Mt) 9.5 8.7 9.6 18.1 17.4
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:
"We have materially improved our financial performance in the first half of 2017, and continue to make important progress on our Action 2020 plan. The recently announced acquisition of Ilva represents a unique opportunity to create value for our shareholders. Looking ahead demand remains strong in our core markets supporting robust order books and healthy levels of steel spreads. However, it remains a matter of concern that we are not able to capture the full benefits of this demand growth due to continued high levels of imports. We continue to work towards achieving a comprehensive trade solution in response to unfair imports."
Ebitda right on target van de consensus ( 61 % hoger dan vorig jaar)
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EBITDA consensus estimates
Period Number of sell-side analysts participation EBITDA consensus average $ million
2Q 2017 23 $2,155
1H 2017 23 $4,386