First quarter 2009 Media Presentation. 29th April 2009

Transcription

1 First quarter 2009 Media Presentation 29th April 2009

2 Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words believe, expect, anticipate, target or similar expressions. Although ArcelorMittal s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier) and the United States Securities and Exchange Commission (the SEC ) made or to be made by ArcelorMittal, including ArcelorMittal s Annual Report on Form 20-F for the year ended December 31, 2008 filed 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. 1

3 Agenda Introduction and overview Responding to the Crisis Enhanced industrial plan Steel market trends Q109 Financials Conclusion and Guidance 2

4 Introduction and overview 3

5 Introduction and overview Highlights Stable Health & Safety frequency rate Shipments of 16.0 million tonnes, down 6% compared to Q EBITDA of USD 0.9 billion, in line with guidance Net loss of USD 1.1 billion due in part to USD 1.2 billion exceptional items* pre-tax Reinforced financial structure and maturity debt profile extended Pro forma liquidity** of USD 13.2 billion and net debt of USD 26.7 billion Refinancing of USD 6.3 billion forward start facilities and successful completion of USD 1.6 billion convertible bond Marketing update Potential for price increase during Q and Q across major markets and products Enhanced industrial and financial plan Continuing temporary production cuts in-line with reduced demand Industrial optimization measures implemented resulting in more than USD 6 billion of annualized temporary fixed cost reductions in Q1 09 and expected to result in more than USD 7.5 billion on an annualized basis in Q Confirming management gains of USD 2 billion of sustainable SG&A and fixed cost reduction in 2009 Reiterating working capital rotation days target of days during 2009 Re-affirming target to reduce net debt by USD 10 billion by the end of 2009*** Guidance for Q EBITDA is expected to be between USD billion * During the first quarter of 2009, the Company recorded exceptional charges amounting to $1.2 billion (pre-tax) primarily related to write-downs of inventory ** Pro forma liquidity includes USD 1.6 billion (EUR 1.25 billion) cash proceeds from convertible bond issued on April 1, 2009 *** From September 30, 2008 level 4

6 Health and Safety Steel frequency rate* Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q108 Q208 Q308 Q408 Q109 Steady heath and safety performance in Q * IISI-standard: Fr = Lost Time Injuries per worked hours 5

7 Responding to the Crisis 1. Implement Temporary Production Cuts Production cuts implemented immediately up to 50% Aligns supply with demand Accelerates inventory decrease Supports required de-stocking period 2. Identify and implement cost-saving measures VRS announced US$2 billion of sustainable SG&A and fixed cost reduction identified Capex reduced with focus on H&S and maintenance Voluntary salary cut taken by senior management up to 15% 3. Strengthen financial structure Diversify debt structure Re-finance debt structure Reduce net debt 6

8 Update on Implemented Measures Industrial Continuing temporary production cuts in line with demand Ensuring industrial optimization of production cuts All production suspension is temporary Financial Confirming management gains of $2 billion of sustainable SG&A and fixed cost reduction in 2009 Reduced annualised temporary fixed costs by $6 billion in Q due to industrial optimization Reiterating working capital rotation days target of days during 2009 Maintaining target to reduce $10 billion net debt by end of

9 Enhanced industrial plan 8

10 Continuing temporary cuts in line with demand ArcelorMittal quarterly crude steel production (million tonnes) Estimated crude steel production Realised crude steel production 0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q ArcelorMittal capacity utilisation to remain at approximately 50% during Q

11 Implementing industrial optimization Concept of optimization Single unit steelmaker Multi-unit steelmaker 100% output Full Full Full Full Full Full Fixed cost per tonne base Hot-Idle 60% output 60% Full Full Full Fixed cost base 100 * ** 25** Average 70 Increase in fixed cost per tonne +58% +17% Due to its extensive industrial network, ArcelorMittal is in a unique position to adapt to a low volume environment and reduce temporary fixed costs * Assuming 5% cost reduction ** Assuming hot-idled plants operate at 25% full cost 10

12 Confirming management gains USD 5bn management gains plan breakdown (over 5 years) Management gains progress (USD billion annualized) 2.5 Fixed cost reduction % Management gains plan beyond % SG&A cost reduction % Captured at 31/12/08 Captured at 31/03/09 Estimated at 30/06/09 Targeted at 31/12/09 On track to achieve USD 2 bn of sustainable SG&A and fixed cost reduction in

13 Avoiding Forced Redundancies Economic scenario brings an impact on our employees Priority is to avoid forced redundancies and protect jobs VRS programmes launched in November 2008 Good achievement to date, process ongoing Early retirement schemes introduced Flexible and rotating working schedules introduced Social unemployment measures implemented where required Salary cuts accepted at corporate level between 10 and 15% Close collaboration with all social partners, including unions, governments and employees Grateful for co-operation during this challenging period 12

14 Steel market trends 13

15 Real demand growth expected to accelerate in China with loans and stimulus Crude steel production in China (y/y change %)* Chinese and Asian spot price for HRC** J-02 J-03 J-04 J-05 J-06 J-07 J-08 J J-02 J-03 J-04 J-05 J-06 J-07 J-08 HRC / China domestic FOB Shanghai (incl. 17% vat) $/t HRC / East Asia import CFR $/t J-09 Over production has put negative pressure on prices but some improvement is expected as real demand improves and capacity utilization rises above 90% * Source: WSA ** Source: SBB 14

16 Demand expected to improve in the near term Crude steel production in the US (y/y change %)* J-02 J-03 HRC North America domestic FOB US Midwest mill USD/short ton** Industry average cost 200 Potential for price increase as apparent demand improvescash J-04 J-05 J-06 J-07 J-08 J J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 * Source: WSA ** Source: SBB 15

17 Destocking progressing in Europe Crude steel production in EU-27 (y/y change %)* HRC South Europe domestic Ex-Works Euro/t** J-02 J-03 J-04 J-05 J-06 J-07 J-08 J J-02 J-03 J-04 J-05 J-06 Industry average cash cost J-07 J-08 J-09 Signs of price increase visible in some products and some markets * Source: WSA ** Source: SBB 16

18 Stainless steel market showing signs of improvement CR304 European base price and alloy surcharge* CR304 Asian and European total price* 6,900 5,900 4,900 7,000 6,000 5,000 3,900 2,900 Alloy surcharge 4,000 3,000 1,900 2, ,000 J-04 J-05 J-06 J-07 J-08 J-09 J-04 J-05 J-06 J-07 J-08 J-09 CR North Europe domestic base price delivered (USD/t) CR North Europe domestic total price delivered (USD/t) CR East Asia import CFR (USD/t) CR North Europe domestic total price delivered (USD/t) Nickel price and base price initiating recovery * Source: SBB 17

19 Q109 Financials 18

20 P&L highlights EBITDA to Net Income (USD million) EBITDA (USD billion) 883 Depreciation & impairment 1,118 Operating income Pre-tax Net Income Q Q Q Q Q 2009 EBITDA -1,063 Earnings per share (USD) 1,248 Exceptional item* -1,483 Income from equity -153 Net interest, FOREX & Others** ,221 Minority & Tax 1, Q Q Q Q Q 2009 EBITDA of USD 0.9 billion in-line with guidance * During the first quarter of 2009, exceptional charges primarily relate to write-downs of inventories ** Includes revaluation of derivative instruments 19

21 Balance sheet highlights Net Debt & Equity (USD billion) Net Debt (USD billion) and Net Debt/EBITDA ratio (x) Minority Shareholders' Equity x Equity Net Debt 0 4Q Q Q Q Q Q Q Q Q Q Gearing of 48% Net Debt (USDbn) - LHS Net Debt / EBITDA* (x) - RHS Re-affirming target of USD10 billion net debt reduction by end of 2009** * Based on latest twelve months (LTM) EBITDA ** From September 30, 2008 levels 20

22 Liquidity highlights Liquidity & short term debt (USD billion) Credit line utilization at 31/03/09 (USD billion) Convertible Unused credit lines Credit facilities Over 90% of credit facilities maturing 2012 Excess liquidity over short-term debt (USD billion) 5.7 Used Cash & equivalent Commercial paper** Short term & Others Long term debt Excess liquidity proforma Excess liquidity Liquidity* Debt due in Q Q Q1 2009* Debt due in quarter USD 13.2 billion liquidity in Q including proceeds of convertible bond * Pro forma liquidity includes USD 1.6 billion (EUR 1.25 billion) from convertible bond issued on April 1, 2009 ** Expected to be rolled-over 21

23 Gross debt maturity Repayment schedule at 31/03/09* (USD billion) H Therafter Bond maturity profile LT Debt maturity (Loans) LT Debt maturity (Credit facilities) LT Debt maturity (other) Refinancing initiatives Refinancing of USD 6.3 billion through new Forward Start facilities maturing in 2012*** Completion of convertible bond of USD 1.6 billion (EUR 1.25 billion) at April 1, 2009 Covenants for all bank facilities Net Debt/EBITDA** not greater than 3.5x No material adverse change clauses Improved debt. maturity profile * Not including USD 1.6 billion (EUR 1.25 billion) from convertible bond issued on 1/04/09 ** Based on last 12 months *** Of which USD 0.3 billion was completed after Q1 22

24 Conclusion and Guidance 23

25 Second Quarter 2009 Guidance Volume Volumes to increase slightly from Q Price Lower average steel price EBITDA expected to be between USD 1.2 billion and USD 1.5 billion Cost Cost benefit from management gains and raw material reduction Q expected to initiate profit recovery 24

26 Q&A 25