Q208 results presentation. July 2008

Transcription

1 Q208 results presentation July 2008

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 or the entities to which it is successor (including Mittal Steel Company N.V. ( Mittal Steel ), including Mittal Steel s Annual Report on Form 20-F 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 Performance and investment plan progress Environment and steel market Q2 results M&A and Guidance 2

4 Introduction and overview 3

5 Introduction and overview Second quarter earnings Sales of US$37,8 up 39% from Q207 EBITDA of US$8.0bn - up 51% from Q207 Net income of US$ 5.8bn up 114% from Q207 EPS of US$ 4.20, compared with US$1.97 Significant capital expenditure commitment USD 1.4bn of CAPEX in Q208 and USD 7.0bn CAPEX plan confirmed for 2008 High return to shareholders USD 0.5bn of share buy-back and USD 0.5bn of cash dividend paid during the quarter New M&A initiatives in line with 3 dimensional group strategy (geography, product, value chain) Continued drive to increase raw material self sufficiency First full Corporate Responsibility Report published Expected strong profit increase supported by solid steel market fundamentals EBITDA guidance to exceed USD 8.5bn in Q *Excluding $118 million of dividend to minority at subsidiaries 4

6 Performance and investment plan progress 5

7 Health and Safety Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q108 Q208 Heath and safety performance progressively improving IISI-standard: Fr = Lost Time Injuries per worked hours Steel frequency rate 6

8 Corporate Responsibility Recently completed initiatives Governance & Strategy Corporate Responsibility report: Taking responsibility for transforming tomorrow published Lewis B. Kaden elected as first Lead Independent Director to reinforce governance practices ArcelorMittal is continued entrant to the FTSE4Good Index Workplace Rolled out new safety standards, Golden Rules, and behavioural safety audit programme Signed Global Health and Safety agreement with trade unions Speak Up Leadership survey undertaken to measure overall managerial performance Environment Clean Energy and Carbon Fund launched July 2008 as part of the commitment to finding solutions fo climate change Climate change strategic committee established; chaired by GMB member Implementation level of environmental management certification increased to 82% (from 79% in 2007) Communities Community Engagement Guidance Manual developed and distributed to all major operations ArcelorMittal Kazakhstan held first quarterly review of stakeholder engagement plan Partnership with the international NGO, Habitat for Humanity, to build and rehabilitate houses Continuously improving approach to Corporate Responsibility 7

9 Investment plan Growth plan Value chain and product growth MGT gains and other Main projects to be completed in Belgium-Liege (FCE): Restart of blast furnace no.6 of 1.2mt leading to a 2.7mt capacity. - Argentina-Acindar (LC): Steel capacity increase by 300,000t. - Luxembourg-Rodange (LC): Revamping of mill adding 150,000t of sheet piles. - Luxembourg-Differdange (LC): Revamping of electrical arc furnace adding 160,000t. - Bosnia-Zenica (LC): Restart of 1mt integrated route. - South Africa-Vanderbijlpark (AACIS): Two additional direct reduction kilns and de-bottlenecking adding 350,000t. - Mexico-Mining: Iron ore project of 2mt - Poland-Huta Warszawa (LC): New rolling mill of 650,000t - Italy-Piombino (FCE): New galvanising line of 310,000t - Kazakhstan-Temirtau (AACIS): New bar mill of 400,000t - Poland-Krakow(AM3S): New steel service centre of 450,000t - France-Dunkerque (FCE): Continuous caster revamping. - France-Fos (FCE): Continuous caster revamping. - Poland-ZKZ (LC): New Coke battery of 734,000t. - Mexico-Lazaro (FCA): CO2 absorption system 2 nd phase. Status Completed in Q1 Completion expected in Q3 Completed in Q2 Completion expected in Q3 Completed in Q2 Completion expected in Q3 Completion expected in Q3 Completed in Q2 Completion expected in Q3 Completed in Q2 Completed in Q1 Completed in Q1 Completed in Q1 Completed in Q1 Completion delay to 2009 USD 1.4bn of CAPEX realised in Q2 and USD 7bn of CAPEX confirmed for

10 Environment and steel market 9

11 Cost increases to support price in China Chinese investment growth and steel production* Chinese and Asian spot price for HRC** J-02 J-03 J-04 J-05 Steel Production 3M y/y (%) J-06 J-07 Real Chinese total fixed Investment 3M y/y (%) J Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 HRC / China domestic FOB Shanghai (incl. 17% vat) $/t HRC / East Asia import CFR $/t Steel demand has remained strong in Q Energy shortage, Olympics and industry margin squeeze to limit rebound in steel production and export Cost inflation and export market to support domestic steel price * Source: China National Bureau of Statistics and IISI ** Source: SBB 10

12 Strong pricing environment in the US Crude steel production in the US (y/y change %)* J-02 J-03 J-04 J-05 J-06 J-07 J-08 HRC North America domestic FOB US Midwest mill $/short ton J-02 J-03 J-04 J-05 Industry cash cost J-06 J-07 J-08 Underlying and apparent demand remain weak but strong pricing environment due to reduced imports and low level of inventory * Source: IISI ** Source: SBB 11

13 Strong pricing environment in Europe Crude steel production in EU-27 (y/y change %)* HRC South Europe domestic Ex-Works Euro/t** Industry cash cost J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-02 J-03 J-04 J-05 J-06 J-07 J-08 Despite some weak local markets, underlying steel demand is still growing in Europe Stability in production, imports and inventory along value chain to support pricing * Source: IISI ** Source: SBB 12

14 Stainless steel CR304 European base price and alloy surcharge* 6,900 5,900 4,900 3,900 CR304 Asian and European total price* 7,000 6,000 5,000 4,000 2,900 1,900 Alloy surcharge 3,000 2, Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 CR North Europe domestic base price delivered (USD/t) CR North Europe domestic total price delivered (USD/t) 1,000 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 CR East Asia import CFR (USD/t) CR North Europe domestic total price delivered (USD/t) Market entering a new de-stocking phase due to nickel price fall and rising imports Rapid base price decline expected to continue despite solid underlying demand growth * Source: SBB 13

15 Q2 results 14

16 P&L highlights EBITDA (USD billion) %* 8.0 Q versus Q Sales up 39% to USD37.8 bn EBITDA up 51% to USD 8.0bn Net Income up 114% to 5.8bn 2Q Q Q Q Q 2008 Earning per share (USD) %* 4.20 H versus H Sales up 31% to USD 67.6bn EBITDA up 35% to USD 13.1bn Net Income up 65% to USD 8.2bn 2Q Q Q Q Q 2008 EBITDA increased 35% from H versus H

17 Cash-flow highlights Return to shareholders (USD million) Buy-backs Dividends 2,107 1, Q Q Q Q Q 2008 Net acquisition spending (USD million) Q versus Q Cash-flow from operations increased to USD 4.2bn from USD 2bn despite USD 3.4bn increase in working capital requirement Yet, working capital cash conversion* days reduced by 1 days from 64 to 63 days CAPEX increased to USD 1.4bn from USD 1bn 5,435 4, ,679 1,408 2Q Q Q Q Q 2008 Total USD 1.1 billion returned to shareholders * All rotations based on Cash conversion cycle (CCC) = days of Accounts receivable plus days of Inventory minus days of Accounts payable. Accounts payable and inventory as a function of cost of goods sold and accounts receivable as function of sales. 16

18 M&A and Guidance 17

19 M&A transactions Geography Products Value Chain Main transactions - Acquisition of minorities of Acesita (43%) resulting in full ownership on the leading Brazilian stainless steel producer - Acquisition of 11.31% of Erdemir resulting in a 24.99% strategic participation in the leading steel producer in Turkey (5.37mt) - Acquisition of Unicon, a pipe producer in Venezuela (550,000t) - Acquisition of Bayou Steel, a US structural steel producer in (510,000t) - Acquisition of coal mines (3mt): Berezovskaya, Pervomayskaya and Anzherskoye in Russia - Acquisition of OFZ, a Slovak ferro-alloys manufacturer (150,000t) - Investment in CoAL and off-take agreement of coking coal under development (5mt) - Acquisition and merger of diverse distributors (Sweden, Austria, Brazil) - Acquisition of 19.9% of Macarthur, a PCI producer in Australia (3.6mt) - Acquisition of coking coal mines of Mid Vol (1.5mt) and Concept Group (0.8mt) in the US - Acquisition of scrap processors Rolanfer Recyclage in France (86,000t) and Bakermet in Canada (118,000t) Status Completed in Q2 Completed in Q2 Completed in Q2 Completion expected in Q3 Completed in Q2 Completion expected in Q3 Completed in Q2 Completed in Q2 Completed in Q2* Completed in Q2 and expected in Q3 Completed and expected in Q3 Other - Disposal of Sparrow Point steel plant (3.5mt) Completed in Q2 USD 5.1bn of transaction completed in Q2 *14.9% completed in Q208 18

20 Including major focus to enhance raw material self-sufficiency Iron ore production target to 2012 (mt) E 2010T 2012T Senegal Liberia Canada US Mexico Algeria Kazakhstan Bosnia Ukraine US (SC)* Brazil (SC)* South Africa (SC)* Further expansion plan potential under study in Ukraine, Liberia, Senegal and Mauritania to raise self-sufficiency level to 75%-85% by 2014/15 Recent mining initiatives ex-iron ore Acquisition of coking coal mines of Mid Vol and Concept Group (2mt) Acquisition of 12.6% of General Moly and off-take agreement for 6.6 million pounds of molybdenun from Mt Hope development project Acquisition of OFZ, a ferroalloys producer in Slovakia (150,000t) Acquisition of 16% of CoAL and off-take agreement for 5mt of coking coal under development 50/50 strategic equity partnership with Kalagadi to develop manganese mines (2.4mt) and a ferromanganese alloy plant (320,000t) MoU with Mozambique government for mining cooperation and acquisition of 35% of Black Gold Mining a coal exploration company Acquisition of 3 coking coal mines located in the Kemerovo region in Russia (3mt) Allocation of steam coal blocks in Jharkhand (83mt) and Orissa (84mt) Acquisition of 19.9% of Macarthur, a 3.6mt PCI coal producer Iron ore production* to reach 110mt by 2012 *Strategic contract included 19

21 Guidance for Q Expectation for 3rd quarter 2008 versus 2nd quarter 2008 Overall steel industry remains healthy due to balanced supply/demand situation ArcelorMittal well positioned to benefit on account of our global, diversified and integrated business model The company continues to identify opportunities for maximizing potential growth opportunities, particularly through brownfield opportunities in developing markets EBITDA for the third quarter expected to exceed US$ 8.5bn 2008 to be a strong year for the company Tax rate guidance for 2008 of 15% - 20% EBITDA to exceed USD 8.5bn 20

22 Q&A 21