Facing the challenges

Transcription

1 Facing the challenges Whilst 2012 was a very difficult year, we have addressed the main challenges facing us. As a result we are in a stronger position, ready to provide excellent steel solutions to our customers. Lakshmi N Mittal Chairman and CEO of ArcelorMittal

2 Our strategy ArcelorMittal has a three-dimensional model that aims to reduce risk and deliver sustainability and growth: Geographical breadth we are the leading steel producer in the Americas, Europe and Africa and a top-four producer in the CIS. Product diversity we are leaders in automotive steel and we meet the needs of all key customer segments, encompassing a broad range of products to cater for developed and developing economies. Raw materials security we are one of the world s largest iron ore producers, having expanded iron ore production by around 50% since We are on track to expand our capacity by a further 50% by Our strategic priorities Health and safety remains our number one priority in all sites and at all levels of the business. Our Journey to Zero programme to reduce workplace accidents and occupational diseases has delivered five consecutive years of progress. Beyond our relentless focus on health and safety, we have a number of key strategic priorities, which are part of a defined roadmap to improve profitability and return on capital: Optimised operating footprint In line with reduced levels of demand, we have focussed on our operating footprint. This enables us to satisfy customer requirements more efficiently through the use of our most competitive assets. Cost efficiency Our four-year plan to reach US$4.8 billion of management gains was achieved ahead of schedule. Looking ahead, we have identified a further US$3 billion cost optimisation programme to be achieved by the end of Strong balance sheet With our balance sheet repositioned, we are focussed on meeting our medium-term net debt target of US$15 billion, and in an excellent position to manage upcoming debt maturities. Protect and leverage franchise businesses We are concentrating our investments to protect and expand our franchise businesses in attractive markets where we have a competitive edge, such as automotive, mining and Brazil. Maximised mining resources We continue to invest in our core growth projects in Canada and Liberia. We are leveraging our existing infrastructure to develop new iron ore capacity at incrementally lower cost.

3 Message from the chairman and CEO Dear shareholders, 2012 was another very challenging year for the steel industry. The priority for ArcelorMittal was to adapt our business to meet those challenges. Before I go into detail on the progress we have made, I would first like to update you on our health and safety results. We continue to make progress, with our lost time injury frequency rate improving significantly from 1.4 in 2011 to 1.0 in We had set ourselves a target of 1 by 2013 so to reach it a year early was a good achievement. Zero accidents remain our ultimate goal. As I mentioned, last year was a difficult year. Indeed, because of the convergence of a number of well-documented factors, it was the most challenging year we have experienced since The biggest single impact on our performance was the further deterioration of the European economy. We have been consistently adapting our business to the new economic environment since the onset of the crisis. But in 2012 we took further steps to respond to two main issues: production overcapacity and debt. The successful capital raise announced at the start of this year, combined with other measures, has taken us a significant way towards meeting our medium-term net debt target of US$15 billion. The closures or proposed closures we have made to shut down uncompetitive assets, mostly in Europe, will yield a more efficient footprint and have a positive impact on our business. Having addressed our weaknesses, we are now better able to focus on our strengths, for example on what we call our franchise businesses. These are businesses in attractive markets where the company has a competitive edge, such as automotive, sheet piles, mechanical tubing and wide and heavy hot-rolled for high-strength applications. The steels we are producing and developing in these businesses are cutting edge and we will prioritise investment here to ensure they grow and expand. Outside steel, mining is another important franchise business. We have been steadily growing iron ore shipments since 2008 and in 2012 made significant progress, in particular at ArcelorMittal Mining Canada which is on track to ramp up from 16 to 24 million tonnes of production capacity during the first half of Looking forward, although 2013 will continue to be challenging, we believe that the second half of 2012 will prove to have been the bottom of the cycle. The global outlook for economic growth is gradually improving, with a modest upturn expected through 2013, leading to stronger growth in In particular, the situation in the US and many emerging economies is positive. We are therefore cautiously optimistic and expect global steel demand to increase by around 3-3.5% this year. As you would expect, we continue to maintain a rigorous focus on cost and we have recently announced a new management gains target of US$3 billion, to be achieved by the end of In conclusion, I want to say that whilst 2012 was a very difficult year, we have addressed the main challenges facing us. As a result we are in a stronger position, ready to provide excellent steel solutions to our customers. Steel remains very relevant to the world we live in. Every day, our steel is being used in unique and diverse ways: from a solar energy project in the Indian Ocean to the largest infrastructure project in Europe. Steel really is as we say at ArcelorMittal - the fabric of modern life. Finally, we have moved our full annual review to for the first time this year, to enable a more user-friendly experience. I hope you take the time to visit the website, and that you will like it. Lakshmi N Mittal Chairman and CEO

4 Financial highlights 2012 We are starting 2013 with a much stronger balance sheet, well on our way to achieving our medium-term net debt target of US$15 billion. Aditya Mittal CFO, member of the Group Management Board Sales (US$ million) , ,973 Ebitda 1 (US$ million) , ,117 Shipments (million tonnes) Operating income / (loss) (US$ million) 2012 (3,226) ,898 Net income 2 / (loss) (US$ million) 2012 (3,726) ,263 Basic earnings / (loss) per share (US$) 2012 (2.41)

5 2012 steel shipments by location (thousand tonnes) 3 Segment Total Flat carbon Americas: 22,291 1 North America 18,030 2 South America 4,261 Flat carbon Europe: 26,026 3 Europe 26, Long carbon Americas and Europe: 22,628 4 North America 4,578 5 South America 5,300 6 Europe 11,693 7 Other 4 1,057 AACIS (Asia, Africa and CIS 5 ): 12,830 8 Africa 4,542 9 Asia, CIS and other 8, Own annual coal production (million tonnes) Own annual iron ore production (million tonnes) Ebitda is defined as operating income plus depreciation, impairment expenses and exceptional items. 2 Excluding non-controlling interests. 3 Shipments originating from a geographical location. 4 Includes Tubular products business. 5 Commonwealth of Independent States.

6 Business overview ArcelorMittal is the world s leading steel and mining company. We have industrial operations in 20 countries worldwide and a presence in more than 60. We are the leader in all main customer segments - automotive, household appliances, packaging and construction. We are also one of the world s largest iron ore producers and a major producer of coking coal with a geographically diverse portfolio of mining assets. We employ around 245,000 people. With an annual achievable production capacity of around 119 million tonnes of crude steel, and a diversified production process, we are a highly efficient steel producer. Our industrial operations comprise flat and long steels and tubular products. In 2012, we produced around 88.2 million tonnes of steel compared with 91.9 million tonnes in Our mining business has a global portfolio of 16 operating units with mines in operation or under development. In 2012, we produced 55.9 million tonnes of iron ore and 8.2 million tonnes of coal (excluding supplies under strategic long-term contracts). ArcelorMittal 19, Avenue de la Liberté L-2930 Luxembourg Grand Duchy of Luxembourg T: Photography: ArcelorMittal image library; LLDC; wide.lu. Designed and produced by (United Kingdom). Copyright 2013 ArcelorMittal.

7 Highlights 2012 March After starting production in September 2011, ArcelorMittal Liberia ships its first million tonnes of iron ore. April A scoping study identifies the potential to use ArcelorMittal Mining Canada s existing infrastructure system and to increase annual production of iron ore concentrate to 30 million tonnes per year. May ArcelorMittal announces the sale of Skyline Steel and Astralloy, its steel foundation distribution business in NAFTA, to Nucor for around US$605 million on a debt free and cash free basis. June ArcelorMittal plans to increase its shareholding in the downstream automotive steel joint venture, VAMA (Valin ArcelorMittal Automotive) in China, from 33% to 49%. July The ArcelorMittal Orbit is a central focus of the London 2012 Olympic and Paralympic Games. ArcelorMittal is the first steel company to sponsor the Olympic and Paralympic Games. September ArcelorMittal ranks first in the steel sector of the Dow Jones Sustainability Index (DJSI). We appear in this leading index for the third consecutive year and are now a member of both DJSI World and DJSI Europe. October The US National Mines Association (NMA) presents ArcelorMittal Princeton s Mine no. 40 with a Sentinel of Safety Award for achieving 117,034 employee hours worked without a lost workday injury. December Nunavut Iron Ore increases its interest in Baffinland from 30% to 50%. ArcelorMittal will retain a 50% interest in the project as well as operator and marketing rights. ArcelorMittal reaches agreement with the French government regarding the future of its Florange plant. In October, ArcelorMittal Atlantique and Lorraine had announced its intention to permanently close the liquid phase in Florange, to concentrate efforts and investment on the site s high-quality finishing operations. ArcelorMittal announces the sale of its 48.1% stake in Paul Wurth Group to SMS GmbH for a total consideration of US$388 million. Photo: ArcelorMittal Orbit, London

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