Global Metals, Mining & Steel Conference 2015

Global Metals, Mining & Steel Conference 2015
Agenda
• Leadership
• Europe
• Strategic progress
• Outlook
1
Steel industry’s differentiating factors
• Local markets structure counts  key regional markets have consolidated
• Steel is not a homogenous commodity but a vast range of products
with varying degrees of technicality
• Steel consumers value (and reward) service, quality and innovation
• Zero incentive to build new capacity  value of installed capacity will
increase with demand
• China exports peaked?  negative for iron ore but positive for nonChinese steel producers
• Has sentiment bottomed?  a “free option” on improvement
Steel presents a differentiated opportunity to pure “commodity” metals
2
ArcelorMittal is the industry leader
•
Safety is the No1 priority
•
Steel is the primary driver of profitability
•
Supported by a sustainable iron ore business
•
Developed markets are core
•
Capacity to capitalise on demand recovery
•
Optimized asset base in Europe…
… with developing plans for the US
•
Primary position in global automotive
•
Balance sheet repositioned
Steel shipments 2014
Rest of World
Europe & NAFTA
ArcelorMittal positioned to benefit from demand recovery and own actions
3
Leader in steel for automotive
• ArcelorMittal is the leading global steel
solution provider to the global
automotive industry
S-In-Motion for Pickup Trucks: Launched 2014
• Unrivalled reputation for quality and
innovation
• Steel set to remain material of choice for
automotive
• Continued investment in R&D producing
award winning Automotive solutions
2015 Kia Carnival – 76% advanced high strength steel
• Focused investment to capture growth
opportunities:
• Calvert acquisition a break-through for
NAFTA automotive franchise
• JV VAMA in China
• Dofasco
The leading provider of steel solutions to the global automotive sector
4
Footprint optimization delivering results
• European footprint optimization launched in 2011
• Principal was to maintain market share whilst orientating capacity to most
competitive sites
• Focus on “core assets” to ensure lowest cost footprint achieved
• Savings through fixed cost removal with well loaded assets with stable
working points




Lower variable cost
Lower and more stable working capital requirements
Better service and quality
Reduce capex requirements
• >$1bn savings achieved through European footprint optimization
• Similar plans under development for US asset base
European asset optimization yielded $1 billion cost savings
5
Demand has improved
EU28 Apparent steel consumption (Mt)
150
+6%
148
146
144
142
0
2013
2014
2015F
Steel demand in Europe is recovering but remains well below pre-crisis levels
6
Spreads have improved
Spread between North Europe domestic HRC price and
international RM Basket*, €/t
+24%
208
220
178
2013
2014
1Q15
Steel prices have increased relative to underlying raw materials
* RM Basket in HRC = 1.6 X IO (delivered to China)+ 0.6 X HCC (delivered to China)+ 0.15 X Scrap ( HMS 1/2 80:20 / East Asia import)
Source: Platts, SBB, ArcelorMittal Corporate Strategy team analysis
7
Profitability has improved
ArcelorMittal Europe segment EBITDA ($mn)
+15%
+42%
616
2,304
420
1,621
2013
535
2014
1Q’13
1Q’14
1Q’15
Improving spreads are translating in to improving profitability
8
Sustainable iron ore business
• Centred around Mines Canada… a tier one operation
AMMC iron ore production (MMt)
AMMC concentrate cost index
-38%
+72%
30
23
15
2012
26
18
2013
2014
2015F
Stretch
target
2013
2014
2015F
ArcelorMittal Mining business to remain FCF positive at <50$/t iron ore
9
Improved cash conversion
• Capex down $1.7bn
• Net interest down $0.5bn
Capex expense (US$bn)
Net interest expense (US$bn)
-36%
-25%
4.7
1.9
3.5
1.8
3.7
1.5
1.4
3.0
2012
2013
2014
2015F
2012
2013
2014
2015F
Cash breakeven level transformed  FCF can improve rapidly with EBITDA
10
Balance sheet repositioned
Net debt (US$bn)
-6.9
 $2.8bn cash on hand at end Q1 plus
additional Eur400m and Eur500m
bond issued in April
23.6
18.0
18.5
16.6
15.0
 $6bn of committed undrawn liquidity
lines
– $2.5bn due April 2018
– $3.5bn due April 2020
1Q’12
1Q’13
1Q’14
1Q’15
Medium
term
target
Significantly reduced net debt and strong liquidity
11
Core market recovery to continue
•
EU28 Medium term ASC forecast
160
USA Medium term ASC forecast
116
April 2015 forecast
April 2013 forecast
April 2015 forecast
April 2013 forecast
112
155
108
150
104
145
100
140
0
2012
2013
2014
2015
2016
2017
2018
0
2012
2013
2014
2015
2016
2017
2018
Capacity to capture share of continued demand recovery in core markets
12
Takeaways
• ArcelorMittal is the leader in the differentiated steel
industry
• ArcelorMittal is the leader in steel for automotive and
will continue to invest to capture the opportunities
• The learning's of footprint optimisation in Europe will be
applied to the US asset base
• The demand recovery in Europe is driving improved
steel spreads and profitability
• Clear progress has been achieved on mining costs,
cash conversion and repositioning the balance sheet
• Positive outlook for core developed markets
13
Q&A
New ArcelorMittal IR app and contacts
Daniel Fairclough – Global Head Investor Relations
daniel.fairclough@arcelormittal.com
+44 207 543 1105
Hetal Patel – UK/European Investor Relations
hetal.patel@arcelormittal.com
+44 207 543 1128
Valérie Mella – European/Retail Investor Relations
valerie.mella@arcelormittal.com
+44 207 543 1156
Maureen Baker – Fixed Income/Debt Investor Relations
maureen.baker@arcelormittal.com
+33 1 71 92 10 26
Lisa Fortuna – US Investor Relations
lisa.fortuna@arcelormittal.com
+312 899 3985
We have released a new ArcelorMittal investor relations app. You should be
able to download the app from iTunes or on an android device (link below).
Here're the 2 links to download the product:
Android: https://play.google.com/store/apps/details?id=com.arcelormittal.ir
iOS: https://itunes.apple.com/in/app/arcelormittal-ir-app/id988354136?mt=8