Media Presentation. 11th February 2009

Transcription

1 Fourth quarter and annual results 2008 Media Presentation 11th February 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, 2007 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 How we ve adapted Current environment Financial highlights and Guidance Safe Sustainable Steel 2

4 Introduction and overview 3

5 Introduction and overview Health & Safety Continuing improvement in frequency rate Strong annual performance EBITDA of USD24.5 billion up 26% Net income of USD9.4 billion in 2008 Q performance EBITDA of USD2.8 billion, in line with guidance Net loss of USD2.6 billion due to USD3.1bn exceptional items* post tax Reinforced financial structure Strong cash-flow form operations resulting in a USD 6bn net debt reduction over Q Liquidity improved to USD13.4bn as compared to USD12bn at Q Strengthened industrial and financial plan Maintaining production cuts until completion of destocking Refocusing the USD5 billion management gains plan to exceptional market conditions USD2 billion expected to be achieved in 2009 Targeting a reduction of working capital rotation days by days during 2009, further reducing CAPEX to USD3 billion in 2009 and dividend reduced to 0.75 USD/share On track to achieve USD 10 billion net debt reduction from Q levels by end of 2009 Guidance for Q EBITDA is expected to be approximately USD1 billion due to full impact of price decline and production cuts *Post tax 4

6 How we ve adapted 5

7 Strategy to date 1. Value Plan Brownfield, value-added and mining expansions Merger synergies of more than USD 1.6bn captured at end of Q (ahead of schedule) Management gain plan achieved Result: Underlying profitability improved 2. Cost leadership EBITDA per tonne rising faster than industry average Cost advantage of 75 USDS/t Result: Unique capacity to generate free cash flow 3. Three Dimensional i Growth Value chain Geography Products Result: Growth financed by 85% free cash-flow 6

8 Maintaining production cuts until completion of destocking ArcelorMittal quarterly crude steel production (million tonnes) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q mt est. Estimated crude steel production Realised crude steel production ArcelorMittal capacity utilisation to remain between 55-60% during Q

9 Accelerating management gains plan to exceptional market conditions Adjusted management gains plan breakdown Management gains progress (USD billion annualized) 2.5 Specific fixed cost reduction program % 1.5 Adapted initial management gains plan 60% SG&A cost reduction program 20% Captured at Estimated at Targeted at 31/12/08 31/03/09 31/12/09 USD5 billion management gains targeted over 5 years 8

10 Reducing capital expenditure CAPEX plan (USD billion) Growth CAPEX Previous plan Grow th capex Maintenance capex Growth CAPEX to be limited to high return projects not adding capacity (Products or Value Chain) Maintenance CAPEX Reduction in maintenance CAPEX cost expected from engineering and equipment cost deflation as well as volume reduction e CAPEX reduced by a third compared to

11 Global SG&A VRS Programmes Programmes launched in November 2008 Implemented in Poland, France, Romania, Belgium, Germany, Spain, Mexico, Czech Republic, Brazil, Luxembourg, Canada, Italy, USA, Argentina, Austria, Netherlands, United Kingdom, China, Point Lisas, Costa Rica, Singapore and Kazakhstan 10

12 Current environment 11

13 Demand starting to improve in China Crude steel production in China (y/y change %)* J-02 J-03 J-04 J-05 J-06 J-07 J-08 Chinese and Asian spot price for HRC** 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 Jan 09 Increase in steel price with demand resulting from end of destocking * Source: IISI ** Source: SBB 12

14 Destocking nearly completed in the US Crude steel production in the US (y/y change %)* HRC North America domestic FOB US Midwest mill USD/short ton** J-02 J-03 J-04 J-05 J-06 J-07 J J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 Completion of destocking to result in improving apparent demand and price rise * Source: IISI ** Source: SBB 13

15 Prices stabilising 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 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 Production cuts and destocking expected to continue in Q1 * Source: IISI ** Source: SBB 14

16 Financial highlights 15

17 P&L highlights EBITDA to Net Income (USD million) EBITDA (USD billion) Depreciation & impairment ,808 1, Operating income Pre-tax Net Income 4Q Q Q Q Q 2008 EBITDA Earnings per share (USD) 4,443-3,466 Income from equity 386 Net interest, FOREX & Others** ,724 Minority -34 1,126-2, Exceptional item* Tax 4Q Q Q Q Q 2008 EBITDA of USD 2.8 billion in line with guidance *During the fourth quarter 2008, exceptional charges related to writes down of inventory and raw material supply contracts, and provisions for workforce reduction and litigation **Includes revaluation of derivative instruments 16

18 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 Gearing of 45% Net Debt (USDbn) - LHS Net Debt / EBITDA* (x) - RHS On track to achieve targeted USD10 billion net debt reduction by end of 2009 * Based on latest twelve months (LTM) EBITDA 17

19 Cash-flow highlights Free Cash-Flow (USD million) 1,642 1,445 2,808 1,427 Net financials, tax expenses and others Change in working capital* 5,877 CAPEX ,432 EBITDA Cash-Flow from operations A record free cash-flow Free Cash- Flow * Changes in working capital is defined as trade accounts receivable plus inventories less trade accounts payable plus prepaid expenses and less accrued expenses. 18

20 Guidance First Quarter 2009 Volume Volumes to remain at very low level as destocking continues Price Full impact of steel price decline expected EBITDA expected to be approximately USD 1 billion in Q1 Cost Costs to benefit from management gains but to remain at high levels during the quarter For 2009, tax rate expected to be less than 10% Q1 expected to be the trough in terms of profitability 19

21 Operating philosophy remains unchanged: SAFE SUSTAINABLE STEEL 20

22 Health and Safety Steel frequency rate* Policy, initiatives and actions Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Health & Safety policy launched just after merger Injury tracking and reporting database to monitor injuries, lost days and significant events in place Fatality prevention and process standards, and golden rules introduced Shop Floor auditing procedure rolled-out Annual Health and Safety awareness days held (March 2007 and March 2008) Global Health & Safety agreement signed with trade unions (June 2008) Journey to Zero initiative launched (September 2008) Frequency rate has been significantly cut since merger * IISI-standard: Fr = Lost Time Injuries per worked hours 21

23 Corporate responsibility Recently completed initiatives Workplace Workplace Investing in our people Continued roll-out of Journey to Zero safety initiative World Steel Association recognises ArcelorMittal l Dofasco with 2008 Safety & Health Excellence Recognition Award Environment Communitie s Governance Making steel more sustainable Flat Carbon Europe joins Sustainable Energy Europe campaign to share best practices in minimising flare losses and reducing CO 2 emissions Juiz de Fora unit in Brazil receives environmental management award for efficient industrial processes and undertaking number of valued environmental projects within the local community Enriching our communities Continued Community Engagement Guidance with global roll-out of training programme Inaugural ArcelorMittal Volunteer Work Day took place involving over 7,600 employees across 45 sites under the motto Small Actions, Big Results Underpinned by transparent governance New guidance in place for major units to establish local corporate responsibility governance structures, with the aim of making the business quicker to respond to issues Socially Responsible Investment roadshow presenting the Group s corporate responsibility strategy to investors across Western and Northern Europe ArcelorMittal remains fully committed to corporate responsibility 22

24 Q&A 23