1H 2018 Financial Results Lakshmi N. Mittal, Chairman and Chief Executive Officer Aditya Mittal, President and Chief Financial Officer

Transcription

1 (photo; steel construction in the City of London, June 2018) 1H 2018 Financial Results Lakshmi N. Mittal, Chairman and Chief Executive Officer Aditya Mittal, President and Chief Financial Officer August 1, 2018

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 latest Annual Report on Form 20-F on file 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 Positioned to deliver value Continued improvement in results, reflecting structurally improved industry backdrop and Action 2020 benefits Unique global portfolio of competitive well-invested assets Industry leader in product and process innovation Action 2020 continues to structurally improve profitability Investing with focus and discipline Investment grade balance sheet, progress towards net debt target to accelerate Base dividend reinstated with intention to increase capital returns once net debt target achieved Capital allocation policy to maximise value for shareholders 2 ArcelorMittal has achieved notable progress on multiple strategic fronts and is increasingly well positioned to deliver sustainable value to its shareholders. Financial results continue to evolve positively, with results for the first half of 2018 showing material improvement over the same period of This performance, the best first half since 2011, reflects positive demand, structurally higher utilisation rates, and the benefits of our own business improvement. The Action 2020 plan continues to differentiate ArcelorMittal from its peer group. Whilst we have already made significant progress on a number of key initiatives such as the Asset Optimization project in the US and the Transformation program in Europe, there is more to come. The business remains focussed on structurally improving costs, capturing the volume opportunities, and increasing the share of high added value products. In recent years the Company has transformed its balance sheet and has now achieved its financial priority of an investment grade credit rating following upgrades from all 3 rating agencies in We will continue to prioritise deleveraging until our net debt target is achieved. In the absence of further working capital investment, progress towards this target should accelerate. Whilst our bias for deploying surplus cash continues to be debt reduction, the Company is investing with focus and discipline to improve future returns for shareholders. During 2018, we continue to invest in projects to support our ongoing transition towards higher added value products. In addition, we expect to make progress with our asset portfolio including the proposed acquisition of Italy s ILVA and the strengthening of our Long products business in Brazil through the acquisition of Votorantim. Finally, given the improving performance and market outlook, the Company has resumed dividend payments to shareholders. Once it achieves net debt at or below its target of $6 billion, the Company is committed to increase capital returns to shareholders. 2

4 Safety is our priority Health & Safety Lost time injury frequency (LTIF) rate* Mining & steel, employees and contractors Health & Safety performance LTIF rate of 0.71x in 2Q 18 vs. 0.62x in 1Q 18 and 0.72x in 2Q 17 The Company s efforts to improve the Group s Health and Safety record will continue The Company is focused on further reducing the rate of severe injuries and fatality prevention Q18 2Q18 Our goal is to be the safest Metals & Mining company * LTIF = Lost time injury frequency defined as Lost Time Injuries per worked hours; based on own personnel and contractors 3 On our safety performance, the Lost time injury frequency rate (LTIFR) in 2Q 2018 was 0.71x incidents per million hours worked compared with 0.62x in 1Q 2018 and 0.72x in 2Q These levels are in marked contrast with the 3.1x recorded in 2007, the first year of our merger. ArcelorMittal's performance is significantly better than the latest steel industry average of 1.0x, as compiled by the World Steel Association. While this is encouraging, there is still more to do. We continue to roll out tailored safety programmes across the Group and maintain our focus on sharing learnings from serious occurrences to prevent serious injuries and fatalities. We remain committed to the journey towards zero harm and must ensure that all levels of the organization are focused on this primary objective. 3

5 Sustainable development - key to our resilience Sustainable Development is driven by our vision to make steel the material of choice for the low carbon and circular economy Product innovation (e.g. S-inmotion solutions for automotive) Contribution to low carbon and circular economy (e.g. LanzaTech project on Carbon Capture and utilisation) Drive the development of environmental and social certification schemes for steel and mining Leadership in response to long term trends 4 Our sustainable development has been driven by our vision to make steel the material of choice for the low carbon, circular and fair economy. Three years ago, we launched ten sustainable development outcomes for our business. These outcomes are designed to describe the business we need to become if we are to bring optimal long-term value to all stakeholders. They provide the framework to embed sustainable development across all our operations. In this context, there are three focus areas where we see the greatest opportunities for transformation: Firstly, product innovation. We will continue to innovate to provide solutions for our customers sustainable development needs. A great example of this is our S-in-motion suite of products for the automotive industry. Secondly, we are shaping our contribution to a low carbon and circular economy. This includes our LanzaTech partnership to convert carbon-containing gas from its blast furnaces into bioethanol (construction at Gent, Belgium began in June 2018); and it includes how we are designing our new headquarters in Luxembourg to showcase how steel buildings can be designed so that their steel components are re-usable. Thirdly, we are driving and influencing the development of credible environmental and social certification schemes for both mining and steel production to give our customers new levels of complete mine-tometal reassurance. 4

6 Significantly improved results in 1H 18 EBITDA +28.6% YoY to $5.6bn Steel shipments +1.3% YoY to 43.1Mt EBITDA progression ($ billion) +107% Marketable iron ore shipments +5.4% YoY to 19.1Mt 1H 16 1H 17 1H 18 Net income +31.5% YoY to $3.1bn Working capital investment of $3.1bn reflecting stronger markets Net income ($ billion) % 3.1 Net debt down to $10.5bn 1H 17 1H 18 Significantly improved results Note: YoY refers to 1H 18 vs. 1H 17 5 ArcelorMittal reported EBITDA of $5.6 billion for 1H 2018 as compared to $4.3 billion in 1H 2017, the highest level since Our 1H 2018 performance was supported by a 1.3% increase in steel shipments to 43.1Mt, reflecting the growth in global steel demand, as well as +5.4% growth in iron ore marketable shipments. Mining marketable iron ore shipments are on track for full year 2018 growth of 10% year on year. Net income for 1H 2018 improved significantly to $3.1 billion as compared to $2.3 billion in 1H 2017 driven in part by improved operating performance and lower tax impact offset in part by higher forex and other financing costs. Driven by the improving operating conditions, in particular the impact of higher selling prices and higher inventory prices, the Company invested $3.1 billion in working capital in 1H As a result, free cashflow for the first half of 2018 was not material. Nevertheless, net debt of $10.5 billion as of June 30, 2018, was lower by $1.4 billion as compared to $11.9 billion as of June 30, In the absence of a further price driven investment in working capital, progress towards the Group s net debt objective of $6 billion is expected to accelerate. 5

7 Improved steel segments performance YoY Steel-only EBITDA up +39.1% YoY primarily due to positive price-cost effect (PCE) and higher steel shipment volumes (+1.3%) 1H 18 steel-only EBITDA/t increased to $114/t from $83/t in 1H 17 1H 18 vs. 1H 17 highlights ACIS: EBITDA doubled YoY Positive PCE offset in part by lower volumes (-6.1%) (Ukraine planned and unplanned maintenance) Brazil: EBITDA +81.9% YoY Positive PCE and higher volumes (+9.6%) NAFTA: EBITDA +19.6% YoY Positive PCE and higher volumes (+3.0%) Europe: EBITDA +18.3% YoY Positive PCE and higher volumes (+2.6%) Steel-only EBITDA ($bn) and EBITDA/t ($/t) +39.1% $114/t $83/t 1H 17 1H 18 1H 17 to 1H 18 steel-only EBITDA ($bn) H 17 NAFTA Brazil Europe ACIS Others 1H 18 Note: YoY refers to 1H 18 vs. 1H 17 Steel-only EBITDA improvement across all segments 6 Overall, our steel-only EBITDA improved by +39.1% to $4.9 billion for 1H 2018 as compared to $3.5 billion in 1H 2017 primarily driven by a positive-price cost effect and an increase in steel shipments (+1.3%). On a per tonne basis, steel-only EBITDA/t of $114/t compares favorably with 1H 2017 level of $83/t. On a per tonne basis, the sharpest improvement was in ACIS which benefited primarily from a positive price-cost effect offset in part by lower steel shipment volumes (-6.1%) primarily due to planned and unplanned maintenance in Ukraine. Brazil benefited primarily from a positive price-cost effect and higher steel shipment volumes (+9.6%) despite the impact from a nationwide truck strike. NAFTA had solid performance benefiting from a positive price cost effect and higher steel shipment volumes (+3.0%). Finally, our Europe segment had solid performance driven largely by a positive price-cost effect and +2.6% increase in steel shipments. 6

8 Mining performance EBITDA ($m) Performance: 1H 18 EBITDA declined 18.1% YoY due to lower seaborne iron ore market prices (-5.7%) and lower market priced coal shipments offset in part by higher market priced iron ore shipments (+5.4%) % 654 Growth: Market priced iron ore shipments volume on track to grow ~10% in 2018 Liberia: Feasibility study launched to identify the optimal concentration solution in a phased approach for utilising Tokadeh ores; result expected by the end of 2018 Focus on quality: Strategy to maximise value in use through product quality, service and delivery Cost: FCF breakeven point maintained at $40/t* 1H 17 1H 18 Iron ore price ($/t)** -5.7% H 17 1H 18 Mining profitability positively impacted by higher shipments; focus on quality and cost * CFR China 62% Fe ** Index of spot market Iron Ore prices delivered to China, normalized to Qingdao and 62% Fe US $ per tonne Daily 7 Results in our Mining business declined YoY, with EBITDA decreasing -18.1% to $654 million from $799 million in 1H 2017, driven by lower seaborne iron ore prices (-5.7%) and lower market priced coal shipments offset in part by higher market priced iron ore shipments (+5.4%). In 2018 market priced iron ore shipment volumes are expected to grow by ~10% vs ArcelorMittal Liberia has moved ore extraction from its depleting DSO (direct shipping ore) deposit at Tokadeh to the nearby, lower impurity DSO Gangra deposit with planned production expected to increase to 5Mtpa in 2018 (from ~2Mtpa in 2017). Now that mining at the Gangra deposit has commenced, ArcelorMittal Liberia has launched a detailed feasibility study to identify the optimal concentration solution in a phased approach for utilising the significant lower grade resources at Tokadeh. The results of the feasibility study are expected by the end of Our Mining business strategy remains to focus on maximizing value in use through product quality, service and delivery and in order to maintain a FCF breakeven level of $40/t CFR China 62% Fe. 7 7

9 Steel industry reform Several government initiatives to protect against global unfair trade Global steel industry operating at high rates of capacity utilisation More effort required in the ongoing government support to protect against global unfair trade Section 232 and provisional European safeguard measures in place insulate ArcelorMittal s core operations from unfairly traded imports There is still more to be done to thoroughly address the issue of global excess capacity 8 Actions taken by governments to address the threats of unfair trade must continue. The actions taken so far have acted as a catalyst for supply side reform and as a result the global steel industry is operating at higher rates of capacity utilisation. Whilst we are optimistic that the improvements achieved so far can be sustained there is more to do. The reality is that global excess capacity remains an issue, and the recent uptick in China s steel exports is something we are monitoring closely. Unfair trade, in particular where it is supported by government subsidies, must be thoroughly addressed so that the global steel industry can consistently achieve the required returns on capital invested. We welcome the provisional safeguard measures now in place in Europe which should help insulate the market from the risks of unfairly traded imports. It s imperative that, whilst these provisional safeguards are in place through January 2019, we continue to work towards a longterm solution posed by these risks. 8

10 Structural improvement: Action 2020 Europe: Transformation progressing well Savings in procurement/ productivity on track Enhanced use of digitalisation in the manufacturing process, supply chain and commercialisation NAFTA: Restoration of 80 hot strip mill and Indiana Harbour finishing ongoing expected completion end of 2018 Calvert utilisation 88% in 1H 18 Mining: Remain focussed on Product quality, service and asset reliability. FCF breakeven level of $40/t China CFR 62% Fe Action 2020 cumulative EBITDA improvement achievement vs. targets ($billion) Target Transformation of the business ongoing Action 2020 drives sustainable improvement 9 The Group s strategy to drive structurally higher returns through the delivery of Action 2020 continues; we now operate from a more efficient, resized footprint in Europe utilising enhanced digitalization of operations to drive productivity improvements and support maintenance excellence; strategic investments with the continuous shift towards higher added value products. In the US, the footprint optimisation at Indiana Harbour has progressed with the ongoing restoration of the 80 hot strip mill while Calvert operations are running at high utilisation levels. Our Mining operations remain focussed on value in use and improving product quality, service and asset reliability as well as tight focus on cost control. Action 2020 improvements contributed a cumulative benefit of $1.5 billion in 2016 and 2017, and we continue to make good progress in We still have more to achieve and the whole organisation remains very focussed on delivering the underlying projects and ensuring that we are in a position to take our share of improving demand. 9

11 Balance Sheet: deleveraging ongoing priority Net debt ($billion) Investment grade rating achieved from all 3 rating agencies* H 18 interest costs ~65% lower than 1H 12 Dec 31, 2012 Jun 30, 2014 Jun 30, 2015 Jun 30, 2016 Jun 30, 2017 Jun 30, 2018 Lower interest costs will ensure greater translations of EBITDA to FCF Net interest ($billion) % FY 18F Investment grade rating achieved from all 3 rating agencies * Investment grade credit rating upgrades: S&P in February 1, 2018, Moody s in June 22, 2018 and Fitch in July 13, Since December 31, 2012, our net debt has been reduced by over half (from $21.8 billion to $10.5 billion). We have maintained strong liquidity and utilized our available cash to repay and prepay near and medium term bond maturities. Following the recent upgrades from all 3 credit rating agencies in 2018 (S&P February 1, 2018, Moody s June 22, 2018 and Fitch on July 13, 2018) ArcelorMittal has now achieved its financial priority of an investment grade credit rating. Importantly, net interest costs have also been reduced significantly, declining by ~65% since Deleveraging remains our priority. A lower cost balance sheet will continue to enhance our ability to translate EBITDA into free cash flow to generate value for our investors. 10

12 Cash needs of the business Cash needs of business* in 2018 of $5.8 billion increase of $0.2 billion vs. previous estimate driven by: a) Lower CAPEX (decrease from $3.8bn to $3.7bn reflecting delay in anticipated ILVA capex) b) Other cash needs to increase by $0.3bn** due to expected increases in cash taxes driven by improved earnings Cash needs of business ($ billion) Taxes, pension and other** Net interest Capex Working capital requirements to be driven by market conditions 2018F previous guidance 2018F revised guidance ArcelorMittal remains focussed on controlling its cash requirements * Cash needs of the business defined as: capex, net interest, cash taxes, pensions and other cash costs but excluding working capital investment and exceptional items. (Exceptional items: In July 2018, as a result of a settlement process, the Company and the Federal Cartel Office reached agreement as to a 118 million ($146 million) fine to be paid by ArcelorMittal Commercial Long Deutschland GmbH ending the investigation as concerns the ArcelorMittal entities ** Estimates for cash taxes in 2018 have been updated to reflect latest consensus forecast (previous estimate based on 2017 taxable profit) 11 The Company expects cash needs of the business (excluding working capital investment and exceptional item of $0.2 billion relating to a one-time litigation expense) to total approximately $5.8 billion in This compares to our previous guidance of $5.6 billion. The main changes to this guidance are as follows: Capex is expected to total $3.7 billion (from $3.8 billion previously) largely reflecting the delayed completion of the ILVA acquisition; net interest is expected to be $0.6 billion (no change from previous guidance) reflecting the benefits of liability management exercises completed in 2017; other cash needs are now expected to total $1.5 billion (an increase from the previous guidance of $1.2 billion) due to expected higher cash taxes. 11

13 Disciplined capital allocation Deleveraging remains our priority building the strongest platform for consistent capital returns to shareholders Robust balance sheet Targeting $6bn net financial debt (NFD) to ensure lowest cost balance sheet Maximise FCF potential Invest in strengths Investing in opportunities with focus and discipline Grow FCF potential of the business Returns to shareholders Base dividend reinstated Capital returns to shareholders will increase to a portion of FCF once NFD target achieved Capital allocation policy to maximise value for shareholders 12 Over the past 24 months we have transformed our balance sheet, reducing our net debt to EBITDA leverage ratio from 2.5x to 1.1x. Free cash flow has been healthy and the progress made has been acknowledged by the 3 main credit rating agencies who all upgraded our credit rating to investment grade this year. Our capital allocation policy, as first announced in January this year, clearly shows that we are very serious about reducing our net debt further. Our target is $6 billion which we feel is a level that will support an investment grade rating throughout the cycle and ensure our lowest cost balance sheet. At the same time, we are in a position to invest in the very best opportunities and projects that will increase EBITDA and enhance future returns. By investing in these opportunities with focus and discipline, the FCF potential of the Company is expected to continue to increase. This is important as we are committed to more material cash returns to shareholders once we ve achieved our net debt target. From a position of unqualified balance sheet strength, we expect that cash returns to shareholders can ultimately be more substantial and shareholders should have greater confidence in their sustainability. 12

14 Disciplined growth Prioritising deleveraging and balance sheet strength Brazil: Votorantim acquisition strengthens long products business in Brazil Minimal initial balance sheet impact from debt assumed Value to be created from significant synergies Italy: Restore ILVA as leading Italian steel supplier Acquisition cost spread over several years* India: Essar Steel; a high growth market Joint Venture with Nippon Steel ArcelorMittal to finance its share of the equity component of the JV finance structure Deleveraging is our priority creating the strongest foundation for sustainable returns Capturing the best opportunities for growth whilst maintaining strict balance sheet discipline * Purchase price of 1.8bn will be reduced by annual instalments of 180m for a minimum of 2 years 13 The Company employs a rigorous gate keeping process ahead of any capital investments. There are 3 key opportunities that we have identified. We are working to take advantage of those opportunities without significantly impacting our deleveraging progress. Firstly, we recently closed the acquisition of Votorantim which has significantly strengthened our long products business in Brazil and is well timed given the positive demand momentum and outlook for Brazil. The deal was made with minimal initial balance sheet impact from debt assumed and expect value to be created with compelling synergies with our existing business. Secondly, we have an agreement with the Italian government to acquire Ilva and this has been approved by the European Commission. The deal has been structured in a way that the acquisition costs are spread over several years. In the meantime, we will leverage our strengths and track record to turn around what is an underperforming business, expand the product range with new HAV steel grades and unlock significant synergies. Finally, in order to participate in the compelling steel demand outlook and high growth opportunities in India, we have submitted a bid with our JV partner Nippon Steel to acquire Essar Steel India. ArcelorMittal aims to mitigate its commitment by financing its share of the equity component of the JV finance structure. We remind you that these opportunities have been in progress for many years and our strategy has been consistent throughout. We have built ArcelorMittal through highly selective growth and turnaround opportunities, leveraging our strengths in our core markets and in further enhancing our products and solutions for our customers. Importantly, we are structuring them in a way that will not unduly delay our deleveraging progress which remains our priority

15 Transformation technologies: LanzaTech installation, Gent (Belgium) 150million project between ArcelorMittal & LanzaTech in Gent, Belgium, broke ground June 2018 Technology to potentially revolutionise the capture of BF carbon gas and convert it into bioethanol Licensed by LanzaTech, a proprietory microbe feeds on carbon monoxide to produce bioethanol, to be used as transport fuel or potentially in the production of plastics Annual production of bioethanol from this demonstration expected to reach around 80m litres, which will yield an annual CO2 saving equivalent to 600 flights from London to New York The new installation will create up to 500 construction jobs over the next two years and 20 to 30 new permanent direct jobs. Commissioning and first production is expected by mid-2020 Technology to potentially revolutionise the capture of BF carbon gas and convert it into bioethanol 14 ArcelorMittal is pioneering a new installation at Gent, Belgium, to apply LanzaTech carbon capture and utilisation technology to convert carbon-containing gas from blast furnaces into bioethanol reflecting our position as the industry leader. The 150 million project between ArcelorMittal and LanzaTech in Gent, Belgium, broke ground during June This is a partnership to build the first plant in Europe to use the waste gases from steelmaking to produce ethanol on a commercial basis. In the future, this bio-ethanol could be used in place of jet fuel, or even in the production of plastics and will displace 80% of the CO2 that would be emitted from the fossil fuel it could replace. The chemistry behind it is simple: steelmaking produces waste gas, which is usually burned off, and CO2 is produced as a result. Most steel plants use much of their waste gases to heat and power the production process. LanzaTech s pioneering new technology can recycle those waste gases and turn them into ethanol. This breakthrough earned LanzaTech the US Environmental Protection Agency s Presidential Green Chemistry Award, the top award of its kind in the country and a Circular Economy award at the World Environmental Forum. Annual production of bioethanol from this demonstration is expected to reach around 80m litres, which will yield an annual CO2 saving equivalent to 600 flights from London to New York. The new installation will create up to 500 construction jobs over the next two years and 20 to 30 new permanent direct jobs. Commissioning and first production is expected by mid

16 Steligence - the intelligent construction choice A radical new concept for the use of steel in construction Steligence is based on extensive scientific research, independently peer-reviewed Makes the case for a holistic approach to construction that breaks down barriers, encouraging collaboration between construction industry professionals Designed to resolve the competing demands of creativity, flexibility, sustainability and economics Delivers efficiencies, benefits and cost savings to architects, engineers, construction companies, real estate developers, building owners, tenants and urban planners Will facilitate the next generation of high performance buildings and construction techniques, and create a more sustainable life cycle for buildings Our new Headquarters building is designed to showcase the Steligence concept Social, economic and environmental benefits 15 In recent years steel has successfully competed against aluminium in the automotive business. This has come about due to an exceptional R&D effort that has transformed how the automotive business sees steel. Today, when we look at the construction industry, we see a similar opportunity. This industry, which is fundamentally the same for many years, is ready for change. And we are in a strong position to be the agent of that change, given the portfolio of products for construction that our industry-leading R&D teams have developed. Using this portfolio, we have developed a philosophy for the construction industry that is based on peer-reviewed science. Called Steligence, the concept proposes 10 proven benefits that, when taken together, have the potential to resolve the competing demands of creativity, flexibility, sustainability and economics that the construction industry struggles with. This is the reason why we are marketing Steligence as the intelligent construction choice. We successfully launched Steligence to the European construction industry last month in London, and we will roll it out at all relevant trade fairs from now on. Our marketing strategy is clear: we are aiming as much at the architects and engineers that influence our customers, as we are at the customers themselves. This deliberately challenges our previous marketing approach. Our new headquarters building in Luxembourg, which has been designed as a showcase for the Steligence concept, will be the flagship of that approach. 15

17 Industry leadership Industry awards for service, quality, technology, innovation leadership Honda R&D Americas Inc. awarded ArcelorMittal with its Excellence in Innovation Award. General Motors awarded ArcelorMittal's AM/NS Calvert with its Supplier Quality Award and ArcelorMittal with its Supplier Diversity Award The 2019 Acura RDX features a 50% increase in the use of UHSS steel over the previous model, including the first outer and inner door ring system. Ford ranked ArcelorMittal #1 amongst its five main suppliers for the seventh consecutive year Jaguar Land Rover awarded ArcelorMittal Europe a bronze Supplier Excellence Award, recognizing the high-quality of ArcelorMittal's products, our outstanding delivery performance Recent awards recognise ArcelorMittal as automotive steel leader 16 ArcelorMittal was recently recognized by key automakers Honda, General Motors, Ford Motor Company and Jaguar Land Rover - for excellence in developing and providing steel products and solutions for their vehicle brands. Honda R&D Americas Inc. awarded ArcelorMittal with its Excellence in Innovation Award, recognizing ArcelorMittal for its co-engineering efforts that led to the world s first inner and outer door ring system for the 2019 Acura RDX comprising of different grades of ArcelorMittal s patented press hardenable steel, Usibor General Motors awarded ArcelorMittal's AM/NS Calvert with its Supplier Quality Award, marking the sixth year for this prestigious recognition, given to specific manufacturing locations that meet or exceed a very stringent set of quality performance criteria and have achieved the cross-functional support of the entire GM organization. Ford announced that ArcelorMittal ranked #1 amongst its five main suppliers for the seventh consecutive year finishing #1 in six of the eight categories. ArcelorMittal provides a variety of steel grades for every Ford vehicle - Ford s cars, SUV s, trucks, including both exposed and unexposed applications. Jaguar Land Rover awarded ArcelorMittal Europe a bronze Supplier Excellence Award, recognizing the high-quality of ArcelorMittal's products, our outstanding delivery performance. These awards clearly emphasize the success we are having in supporting our automotive customers providing testament to our excellent design support and illustrating our commitment to both superior quality and supplier diversity. 16

18 Healthy demand environment ArcelorMittal Global PMI* (latest data point: Jun-2018, 53.9) Strong global economic fundamentals support further expected steel demand expansion in 2018 * ArcelorMittal estimates 17 As already mentioned, the operating environment during 1H 18 has been positive. The demand environment remains positive (as evidenced by the continued high readings from the ArcelorMittal weighted PMI) and steel spreads remain healthy. The ArcelorMittal shipment weighted global PMI remains at a healthy level of 53.9 in June It continues to indicate growth in demand for our steel. Together with the actions taken against unfair trade as well as the structural benefits of supply rationalization this should underpin a continued healthy operating environment in the remainder of 2018 and beyond. 17

19 Global steel demand for 2018 remains solid Global ASC 2018 vs. 2017* ArcelorMittal ASC demand estimates 2018 Global apparent steel consumption to grow by +2.0% to +3.0% in 2018 vs Healthy demand backdrop maintained in Europe and US US** +2.0% to +3.0% Revised up from +1.5% to +2.5% EU % to +3.0% Revised up from +1.0% to +2.0% China: Positive demand growth due to better than expected real estate demand, ongoing strength in machinery and automotive offset by slowdown in infrastructure Brazil: Demand slightly moderated to reflect impacts of nationwide truck strike and cautions sentiment ahead of elections CIS: Reflecting strong consumption, particularly a rebound in auto sales and production in Russia China Brazil CIS Global ex China Global +1.0% to +2.0% +2.0% to +3.0% +3.0% to +4.0% +2.0% to +3.0% Revised up from 0.5% to +0.5% +5.5% to +6.5% Revised down from +6.5% to +7.5% Revised up from +1.5% to +2.5% 2018 Global ASC growth expectation increased to +2.0% to +3.0%; positive outlook for 2018 Source: *ArcelorMittal estimates ** Includes tubular demand. 18 Reflecting the strength in the indicators we are increasing our global steel demand forecasts for Based on year-to-date growth and the current economic outlook, ArcelorMittal expects global ASC to grow further in 2018 by between +2.0% to +3.0% (up from +1.5% to +2.5% previous expectations). By region: In China, overall demand is expected to now grow by between +1.0% to +2.0% in 2018 (up from previous expectation -0.5% to +0.5%), as real estate demand continues to surprise on the upside and due to ongoing robust machinery and automotive demand offset in part by a slowdown in infrastructure. ASC in US is expected to grow +2.0% to +3.0% in 2018 (up from previous expectation of +1.5% to +2.5%), driven by demand in machinery and construction. In Europe, we expect underlying demand to continue to grow, supported by the strength of machinery and construction end markets, and overall demand is expected to be +2.0% to +3.0% in 2018 (up from +1.0% to +2.0% previous expectation). In Brazil, our 2018 ASC forecasts have been slightly moderated to grow in a range of +5.5% to 6.5% (from previous expectation of +6.5% to +7.5%) reflecting the impacts of the nationwide truck strike and more cautious sentiment ahead of the elections. In the CIS, ASC is expected to grow +2.0% to +3.0% in 2018, reflecting strong consumption, particularly a rebound in auto sales and production in Russia. World ex-china ASC is expected to grow by approximately +3.0% to +4.0% in

20 Positioned to deliver value Strategy delivering Industry outlook improving Investing with focus & discipline Transformed balance sheet Commitment to return cash to shareholders Continued improvement in results Reflects strengthening market backdrop and Action 2020 delivery Ex-China demand growth forecast to continue Global capacity utilization improving S232 and European safeguards insulating the business from unfair trade Leveraging strengths to grow returns Capitalizing on M&A opportunities whilst maintaining strict balance sheet discipline Net debt / EBITDA of 1.1x for 1H 18 Investment grade achieved Deleveraging to continue Dividends reinstated Commitment to increase capital returns to shareholders once NFD target achieved Building the strongest foundations for sustainable value creation Capital allocation policy to maximise value for shareholders 19 ArcelorMittal is positioned to deliver value. The execution of the Company s strategy, combined with improved industry fundamentals, and the strengthening market backdrop has resulted in improved results. There is more to come from our Action 2020 initiatives in the coming periods, particularly from volume and mix improvements. We have seen structural improvement in the global steel industry and demand growth. Healthy underlying market fundamentals are further protected by measures taken to safeguard the steel industry to insulate our core markets from unfairly priced imports. The Company continues to invest with focus and discipline to further improve returns for shareholders. In recent years, the Company has transformed its balance sheet. The Company is now investment grade rated and net debt to EBITDA is down to 1.1x. Deleveraging will continue as we target a net debt at or below $6 billion to support an investment grade rating at all points of the cycle. Given the improving performance and market outlook, the Company has reinstated a base dividend of $0.10 per share in 2018, paid in June 2018 from 2017 results. The Company is committed to an increase in shareholder returns once the Group s net debt target is achieved. Against the strengthening industry backdrop, ArcelorMittal will continue to deliver on its strategic priorities in order to build the strongest foundations for sustainable value creation. 19

21 Financial results 20

22 EBITDA to net results 1H 18 EBITDA to net income analysis ($ million) BASIC EPS 1H 18 Weighted Av. No. of shares (in millions) 1,016 Earnings per share $3.01 (1,423) Related to a provision taken in respect of a German cartel case that has now been settled* (86) (146) 242 (323) (564) 5,585 Related to impairment of Cariacica and Itauna plants in Brazil 3,930 Includes gains in Chinese investee and Calvert offset by $132m impairment of ArcelorMittal s investment in Macsteel (South Africa) (228) 3,285 3,057 EBITDA D&A Impairment Exceptional charge* Operating income Income Net interest from expense investments Forex and other fin. result Pre-tax income Taxes and noncontrolling interests Net income Positive net income primarily driven by positive operating income * In July 2018, as a result of a settlement process, the Company and the Federal Cartel Office reached agreement as to a 118 million ($146 million) fine to be paid by ArcelorMittal Commercial Long Deutschland GmbH ending the investigation as concerns the ArcelorMittal entities 21 21

23 EBITDA to free cash flow 1H 18 EBITDA to free cash flow analysis ($ million) (3,101) 5,585 (1,092) 1,392 (1,368) EBITDA Change in working capital* Net financial cost, tax and others Cash flow from operations Capex 24 Free cash flow Free cashflow negatively impacted by working capital investment * Change in working capital: cash movement in trade accounts receivable plus inventories less trade and other accounts payable 22 22

24 Net debt analysis Dec 31, 2017 to Jun 30, 2018 ($ million) Includes incremental debt acquired for Votorantim acquisition in Brazil offset in part by gain on forex driven by the USD appreciation by 2.8% against EUR Includes proceeds from disposal of Frydek Mistek, Czech Republic (24) (93) ,478 10,142 Dividends paid to Posco (AMMC) and ArcelorMittal shareholders Net debt at Dec 31, 2017 Free cash flow M&A Dividends Share buy back* Forex and other Net debt at Jun 30, 2018 Net debt increase driven by share buy back and dividend * On March 28, 2018, ArcelorMittal announced the completion of its share buyback program. ArcelorMittal has repurchased 7 million shares for a total value of approximately 184 million (equivalent $226 million) at an approximate average price per share of (equivalent $32.36) 23 23

25 EBITDA to net results 2Q 18 EBITDA to net income analysis ($ million) BASIC EPS 2Q 18 Weighted Av. No. of shares (in millions) 1,013 Earnings per share $1.84 (712) Includes forex losses of $309m: following the translation of the share capital from euro to USD the forex gain of $206m in 1Q 18 was fully reversed in 2Q (159) (390) 23 3,073 2,361 Includes gains in Chinese investee and Calvert offset by $132m impairment of investment in Macsteel (South Africa) 1,842 1,865 EBITDA D&A Operating income Income from investments Net interest expense Forex and other fin. result Pre-tax income Taxes and non-controlling interests Net income Positive net income primarily driven by positive operating income 24 24

26 EBITDA to free cash flow 2Q 18 EBITDA to free cash flow analysis ($ million) (1,232) 3,073 (609) (616) 1, EBITDA Change in working capital* Net financial cost, tax and others Cash flow from operations Capex Free cash flow Free cashflow negatively impacted by working capital investment * Change in working capital: cash movement in trade accounts receivable plus inventories less trade and other accounts payable 25 25

27 Net debt analysis Mar 31, 2018 to Jun 30, 2018 ($ million) (616) Dividends paid to ArcelorMittal shareholders Includes forex gain of $0.4bn: driven by USD appreciation against the Eur (+5.4%) less incremental debt acquired for Votorantim acquisition in Brazil ($0.2bn) 11,133 (17) 101 (123) 10,478 Net debt at Mar 31, 2018 Free cash flow M&A Dividend Forex and other Net debt at Jun 30, 2018 Net debt decrease driven by positive free cash flow and forex 26 26

28 Liquidity and debt maturity profile Liquidity at Jun 30, 2018 ($ billion) 8.6 Debt maturities at Jun 30, 2018 ($ billion) Other loans Commercial paper Bonds Cash Unused credit lines Liquidity at Jun 30, 2018 Liquidity lines: $5.5bn lines of credit refinanced and extended in Dec 2016; two tranches: $2.3bn matures Dec 2019 $3.2bn matures Dec Debt maturity: Continued strong liquidity Average debt maturity 4.9 Yrs Ratings*: S&P: BBB-, stable outlook Moody s: Baa3, stable outlook Fitch: BBB-, stable outlook Investment grade rated by all three rating agencies * Investment grade credit rating upgrades: S&P in February 2018, Moody s in June 2018 and Fitch in July

29 Investing with focus and discipline 28

30 ILVA a tier 1 steel asset ILVA is an excellent opportunity for ArcelorMittal Italy is the 2nd largest steel consuming country in Europe (Mt) Large scale, underperforming asset requiring turnaround and environmental improvements Significant cost improvement potential and synergies identified Opportunity to leverage AM strengths in R&D and product leadership and service Ilva will be re-established as a tier one supplier to European & Italian customers Minimal Balance sheet impact, EBITDA accretive Year 1 EC Merger clearance received: This approval is subject to the sale of an agreed package of remedy assets which is now underway Completion extended to Sept 15, 2018 to conclude with the new Italian government Novi Ligure: Cold rolling mill to serve endusers customers (e.g. packaging, white goods) Genova: Cold rolling, hot dip galvanising and tin plate capacities 97Mt Total European Flat Steel demand in 2015 Taranto Taranto: Integrated plant for production and sale of HRC, plates, pipes and tubes ILVA is a strong fit within ArcelorMittal s existing business & strategy Source: World Steel, Steel Statistical Yearbook 2015; Notes: *Iberia defined as Spain + Portugal 29 29

31 Disciplined capital allocation focused on value driven strategic initiatives: Mexico HSM US$1.0bn 3Yr investment commitment Construction of a new 2.5Mt hot strip mill Investments to sustain the competitiveness of mining operations Modernizing its existing asset base Expected capex of ~350m in 2018 In-line with Action 2020 plan Project completion expected in 2020 Current Status: OEM long lead equipment purchasing complete Indiana Harbor Fabrication proceeding Plant on schedule Site handover to OEM complete. Deep foundation works ongoing. OEM basic engineering 100% complete Detail engineering proceeding on schedule ArcelorMittal Mexico: Current production 4Mt increasing to ~5.3Mt (2.5Mt flat; 1.8Mt long and No. 1Mt 3SP: semi-finished New #2 slabs) Caster Vertically integrated with flat and long product capabilities ArcelorMittal Lazaro Cardenas s raw materials and slabs shipped through a dedicated port facility (Mexico s largest bulk handling port) Mexico currently heavily reliant on imports of value-added steel; high growth expected

32 Votorantim acquisition completed - creates new Brazil Longs market leader Consolidating the long products market in Brazil by combining Votorantim into our business with combined annual crude steel capacity of 5.1Mt. ArcelorMittal becomes long product market leader in Brazil absorbing 12% market share Combined businesses production facilities are geographically complementary, enabling higher service level to customers, economies of scale, higher utilization and efficiencies. ~$110m of identified synergies to drive value creation Barra Mansa Resende ArcelorMittal & Votorantim long businesses Minas Gerais Monelevade Juiz de Fora Rio de Janeiro Sao Paulo Piracicaba Combined operating footprint crude steel capacity (Mt) Votorantim 5.1MT ArcelorMittal ~$110m synergies Commercial Manufacturing Procurement Logistics SG&A Barra Mansa plant Resende plant Unique opportunity to strengthen AM s presence in one of the premier emerging markets

33 Europe: UHSS Automotive Program Upgrade of capabilities to produce new steels Fortiform grades offer a 20% weight saving on identified application Commercial benefits of additional ~400kt UHSS (Ultra High Strength Steel) The project is executed in several sub projects in Gent cluster (Liège and Gent plants): Gent: Upgrade of Gent HSM completed end 2016 New furnace for Gent HDG erected, project commissioned in 2Q 18 Liège: JVD 1st trial coils were produced in 3Q 16 Second step of annealing line transformation - completed 1Q 17 Remaining process optimizations & modifications on CAL Top rolls of new direct flaming furnace - Liege New stand F1 and F2 grond level Gent HSM Top view Furnace with turning tower Gent HDG Investments to enhance UHSS capabilities 32 32

34 ArcelorMittal Differdange: Investing in Grey mill/ Modernization of rolling mill ArcelorMittal Differdange Grey Mill (Luxembourg) ranks among the leader for heavy and jumbo beams. It produces a unique portfolio of heavy sections used in some of the most prestigious landmarks over the world (i.e. Manhattan skyline in New York) Aim is to supply the most advanced structural steel products and solutions for construction and high rise buildings Project includes installing the largest straightener in the world for sections in Luxembourg Investment features: new cooling bed; new cold saw; new gag press; Customer benefits: Indiana Harbor Plant improved service in terms of lead time and reliability highest quality for the most demanding grades & largest sizes thanks to improved straightness and surface quality Roller straightener in pre-assembly stage Freedom Tower New York No. 3SP: New #2 Caster Project completed in 2Q 2018 Roller straightener in pre-assembly stage One Bank street construction: October 2017, U.K One Bank street after completion in 2018 Improving and growing high added value products 33 33

35 Kryvyi Rih - New LF&CC 2&3 Facilities upgrade to switch from ingot to continuous casting route; additional billets capacity of 290kt/y Industrial target: Step-by-step steel plant modernization with state-of-art technology: Product mix development Supportive target: Cost reduction Billet quality improvement for sustaining customers Better yield and productivity Project completion expected in 2019 Construction site of LF&CC 2&3 < > Entry section o Continuous Annealing Line Kryvyi Rih investments to ensure sustainability & improve productivity

36 Indiana Harbor - USA Footprint Indiana Harbor footprint optimization project : Current configuration uncompetitive structural changes required across all cost elements #1 aluminize, 84 hot strip mill (HSM), #5 continuous galvanizing line (CGL), and steel shop No.2 now idled; all planned asset consolidation now complete Planned investments totalling ~US$200m: New caster at No.3 steelshop installed & commissioned 4Q 16 Restoration of 80 hot strip mill and IH finishing ongoing Project completion expected in 2018 No. 3SP: New #2 Caster Indiana Harbor Plant 80 HSM: 5 Walking Beam Furnace No. 3SP: New No. 3SP: #2 Caster New commissioning Downcomer ArcelorMittal USA progressing with a footprint optimization project at Indiana Harbor 35 35

37 Investing in ArcelorMittal Poland Sosnowiec Wire Rod Mill modernization Sosnowiec is a double strand rolling mill located in Sosnowiec, Poland. The investment will introduce new and innovative techniques for the production of high quality wire rod for high demanding applications (automotive app., steel cords, welding wires, cold heading screws, suspension springs, special ropes) Investment features and benefits: Splitting of intermediate mill stands with new motors & drives avoiding material twisting Modernized finishing blocks for rolling speed increasing up to 100m/s New state of art air distribution system and ring distributor New water boxes with accurate process control Outcome: Reduced tensile strength variation, improved grain size and surface quality Scope of equipment to be installed in WRM Sosnowiec in 2018: New guiding equipment for finishing blocks, new water boxes (traversing type), new laying heads (new type), new fans for air cooling conveyors, new air distribution system for fans, new automation control system for water boxes and fans (water and air cooling) Project completion expected in Long Products strategy to grow HAV grades

38 Burns Harbor - New Walking Beam Furnaces Burns Harbor Hot Mill - New Walking Beam Furnaces: Install 2 latest generation walking beam furnaces, including recuperators & stacks, building extension & foundations for new units Benefits associated to the project: Hot rolling quality and productivity Sustaining market position Reducing energy consumption Project completion expected in 2021 AM USA expands surface capability at Burns Harbor to provide a sustained automotive footprint 37 37

39 Dofasco Hot strip mill Modernization Dofasco Hot strip mill: Coiler Modernization Project: Replace existing three end of life coilers with two state of the art coilers and new runout tables. The strip cooling system will be upgraded and include innovative power cooling technology to improve product capability. Benefits of the project will be: Improved safety. Increased product capability to produce higher value products. Cost savings through improvements to coil quality, unplanned delay rates; yield and improved energy efficiency. Project completion expected in 2020 Investments to modernize strip cooling & coiling flexibility to produce full range of target products

40 ArcelorMittal Vega: strengthening our position in Brazilian value added flat steel market 3 year investment to expand rolling capacity increase hot dipped / cold rolled coil capacity and construction of a new 700kt continuous annealing line (CAL) and continuous galvanising line (CGL) combiline Project scope Investment to sustain ArcelorMittal Brazil growth strategy in cold rolled and coated flat products to serve domestic and broader Latin American markets Strengthening ArcelorMittal s position in automotive and construction through Advanced High Strength Steel products (AHSS) New CAL and CGL combiline to address a wide range of products Indiana and Harbor applications Optimization of current facilities Plant to maximize site capacity and competitiveness; utilizing comprehensive digital and automation technology Project completion expected 2021 No. 3SP: New #2 Caster New CAL/CGL line Growing high added value products in one of the most promising market

41 Macro highlights 40