3Q 2017 Financial Results

Transcription

1 3Q 2017 Financial Results 10 November

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 1

3 Safety is our priority Health & Safety Lost time injury frequency (LTIF) rate* Mining & steel, employees and contractors 3.1 Health & Safety performance LTIF rate of 0.67x in 3Q 17 vs. 0.72x in 2Q 17 and 0.84x in 3Q Improved LTIF rate of 0.74x in 9M 17 vs. 0.80x in 9M 16 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 Q 17 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 2 Beginning as always with a comment on our safety performance. Lost time injury frequency rate in 3Q 17 was 0.67x as compared to 0.72x in 2Q 17 and 0.84x in 3Q 16. The Company s efforts to improve its Health and Safety record remains focused on both further reducing the rate of severe injuries and preventing fatalities. We remain committed to the journey towards zero harm and ensure that all levels of the organization are focused on this primary objective. 2

4 Solid 3Q 2017 performance EBITDA: $1.9bn (-8.9% QoQ); 9M 17 $6.3bn (+36.4% YoY) Steel performance: impacted by negative price-cost effect supported by higher steel shipments (+1.0% QoQ) Mining performance: improvement primarily driven by higher seaborne iron ore reference prices (+12.7% QoQ) Net income: lower at $1.2bn vs $1.3bn in 2Q 17 EBITDA ($bn) and EBITDA/t ($/t) -8.9% +36.4% $98/t $89/t $72/t $98/t 2Q 17 3Q 17 9M 16 9M 17 Net debt ($bn) Net Debt: $12.0bn as of Sept 30, 2017 as compared to $11.9bn as of Jun 30, 2017; net debt $0.2bn lower than Sept 30, 2016 Sept 16 Dec 16 Jun 17 Sept 17 Note: QoQ refers to Q3 17 vs. Q2 17; YoY refers to 9M 17 vs. 9M 16 Solid 3Q 17 performance: EBITDA/t of $89/t 3 ArcelorMittal reported EBITDA of $1.9 billion for 3Q 17 as compared to $2.1 billion in 2Q 17 and $1.9 billion in 3Q 16. Our 3Q 17 steel performance was primarily impacted by a negative price-cost effect (largely a function of the lagged impact of price declines observed in the spot market in 2Q 17), offset in part by slightly higher steel shipment volumes QoQ. Our Mining business EBITDA improved in 3Q 17 as compared to 2Q 17 largely due to the benefit of higher iron ore seaborne reference prices (which increased +12.7%), offset in part by lower market priced iron ore shipment volumes (-3.9%). Net income of 3Q 17 was lower at $1.2 billion as compared to $1.3 billion in the prior quarter. Net debt of $12.0 billion as of September 30, 2017, is essentially stable as compared to June 30, The negative foreign exchange impacts on Euro-denominated debt (-$0.2 billion) was offset by the positive free cash flow. Net debt has declined by $0.2 billion over the past twelve months despite a $3.0 billion investment in working capital as well as foreign exchange headwinds (-$0.3 billion). 3

5 Steel: Contrasting steel performance 3Q 17 v 2Q 17 highlights Steel-only: EBITDA ($bn) and EBITDA/t ($/t) ACIS: EBITDA up +37.5% Positive pricecost effect & higher steel shipments (+3.2%) Brazil: EBITDA stable Higher steel shipments (+12.1%) offset by negative pricecost effect % 1.6 Europe: EBITDA down -9.9% Performance impacted by lower steel shipments (-3.3%) & negative price-cost effect partially offset by forex gains from Euro appreciation $83/t $73/t NAFTA: EBITDA down -24.7% Negative price-cost effect offset in part by higher steel shipment volumes (+4.3%) 2Q 17 3Q 17 3Q 17 steel-only EBITDA declined -11.7% QoQ 4 The next 2 slides will look at the drivers behind the operating performance improvement in a little more detail. Beginning first with the steel business. Overall, our steel-only EBITDA declined by 11.7% to $1.6 billion for the 3Q 17 primarily driven by an negative price-cost effect offset by a marginal increase in steel shipments (+1.0%). As a result, on a per tonne basis, steel-only EBITDA/t decreased to $73/t in 3Q 17 from $83/t in 2Q 17. ACIS performance improved, with a +37.5% increase in EBITDA QoQ, primarily driven by a positive pricecost effect (higher CIS prices) as well as higher steel shipments (+3.2%), primarily in the CIS. Brazil segment performance remained stable, with higher steel shipment volumes (+12.1%) offset by a negative price-cost effect (largely due to lower export prices). Europe EBITDA declined by 9.9%, driven by a 3.3% decline in steel shipments (this decline in shipments is notably less than the typical seasonal effect, reflecting supportive market conditions) and a negative pricecost effect partially offset by the foreign exchange gains following the appreciation of the Euro. Finally, NAFTA s EBITDA declined by 24.7% as a result of a negative price-cost effect offset in part by higher steel shipment volumes (+4.3%). 4

6 Mining: Profitability improved Solid performance: 3Q 17 EBITDA improved vs. 2Q 17 due to higher seaborne IO market prices (+12.7%) offset in part by lower market priced IO shipments (-3.9% QoQ) and lower market priced coal shipments Growth: Market priced iron ore shipments on track to grow ~10% in 2017 YoY Focus on quality: ongoing commitment on quality, service and delivery Cost focus maintained: FCF breakeven remains $40/t* EBITDA $m Marketable iron ore shipments (Mt) +7.2% % 6.8% Q 17 3Q 17 2Q 17 3Q 17 9M 16 9M 17 Mining profitability positively impacted by higher iron ore prices offset by lower shipment volumes * CFR China 62% Fe 5 Results in our Mining business improved with EBITDA increasing by +7.2% in 3Q 17 as compared to 2Q 17 due to higher seaborne iron ore market prices (+12.7%), offset in part by lower market priced iron ore shipments (-3.9% QoQ) and lower market priced coal shipments (-27.6%). Although market priced iron ore shipments decreased sequentially (driven by lower shipments in ArcelorMittal Mines Canada and Ukraine due to unplanned maintenance impacts), shipments for 9M 17 are up +6.8% and the Company remains on track to grow by approximately 10% YoY, with an acceleration expected during 4Q 17. ArcelorMittal s Mining segment strategy remains to focus on product quality to optimize value in use whilst maintaining cost discipline to ensure that we maintain free cash flow breakeven of ~$40/t (CFR China 62% Fe). 5 5

7 EBITDA to net results 3Q 17 EBITDA to net income analysis ($ million) BASIC EPS 3Q 17 Weighted Av. No. of shares (in millions) 1,020 (690) Includes gain on disposal of ArcelorMittal USA s 21% stake in Empire Mine and improved performance of Chinese investees offset by the recycling of cumulative forex losses incurred following the disposal of 50% stake in Kalagadi ($187m). Earnings per share $1.18 Includes mark to market gains on certain derivatives of $0.3bn and forex gains of $0.2bn partially offset by $0.2bn premium on the early bond redemptions 117 (205) 132 (73) 1,924 1,234 1,278 1,205 EBITDA D&A Operating income Income from investments Net interest expense Forex and other fin. result Pre-tax income Taxes and noncontrolling interests Net income Positive net income primarily driven by positive operating income 6 Reviewing some of the key elements of our waterfall from EBITDA to net income for 3Q 17. Starting with EBITDA we reported $1.9 billion whilst depreciation slightly increased to $690 million. As a result we had an operating income of $1.2 billion. Income from associates, joint ventures and other investments for 3Q 17 was $117 million. This figure reflects further improved performance of Chinese investees, and includes a gain on disposal of ArcelorMittal USA s 21% stake in Empire Iron Mining Partnership ($133 million) offset by the recycling of cumulative foreign exchange losses incurred following the disposal of ArcelorMittal's 50% stake in Kalagadi ($187 million). Net interest expense of $205 million in 3Q 17 reflecting ongoing savings due to debt reduction including early bond repayment via debt tenders and repayment at maturity on bonds. Foreign exchange and other net financing result includes a foreign exchange gain of $181 million (mainly on account of a 3.5% depreciation of the USD against the Euro). Net financing cost also includes $218 million of premiums accrued for early bond repayments (settled in October 2017), offset by non-cash mark to market gains on certain derivatives ($327 million), primarily mandatory convertible bond call options following the market price increase of the underlying shares. Net income for the quarter was $1.2 billion. 6

8 EBITDA to free cash flow 3Q 17 EBITDA to free cash flow analysis ($ million) (801) 1,924 (360) 763 (637) 126 EBITDA 3Q 17 Change in working capital* Net financial cost, tax and others Cash flow from operations Capex Free cash flow Positive free cash flow * Change in working capital: cash movement in trade accounts receivable plus inventories less trade and other accounts payable 7 Moving to the waterfall from EBITDA to free cash flow. During 3Q 17, the Company invested $0.8 billion in operating working capital. The third bar shows the combined impact of net financial cost, tax and other items totalling $0.4 billion. Cash flow from operations remains positive (despite working capital investment), which together with capex of $0.6 billion has resulted in a positive free cash flow of $0.1 billion this quarter. 7

9 Net debt analysis Jun 30, 2017 to Sept 30, 2017 ($ million) Forex of $176m: Mainly driven by USD depreciation against the Eur -3.5% (126) Mainly disposal proceeds from Empire Mine* sale ($44m) ,884 (62) 80 11,971 Mainly dividends paid to Posco and Bekaert Net debt at Jun 30, 2017 Free cash flow M&A Dividend Forex and other Net debt at Sept 30, 2017 Net debt increase driven by forex loss offset by positive free cash flow *On August 7, 2017 ArcelorMittal USA and Cliffs Natural Resources ( Cliffs ) agreed that Cliffs would acquire ArcelorMittal USA s 21% ownership interest in the Empire Iron Mining Partnership for $133m plus assumptions of all partnership liabilities. The payment of the $133m will be in 3 equal instalments with the 1st payment in August 2017 ($44m), with the 2 subsequent payments to be received in August 2018 and The main components of the debt movement during the quarter were the positive free cash flow of $126 million, the first installment of disposal proceeds from ArcelorMittal USA s 21% stake in Empire Iron Mining Partnership ($44 million), dividend payment of $80 million to minority shareholders primarily for ArcelorMittal Mines Canada and Bekaert in Brazil, and negative impact of forex and other costs for $195 million. The combined result of these movements was a $0.1 billion increase in net debt to $12.0 billion at the end of the quarter. 8

10 Liquidity and debt maturity profile Liquidity at Sept 30, 2017 ($ billion) 8.5 Debt maturities at Sept 30, 2017 ($ billion) Other loans Commercial paper Bonds Cash maturities include $1.2bn of bonds originally maturing in 2022, 2039 and 2041 that were repurchased on October 16, Unused credit lines Liquidity at Sept 30, 2017 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 4.7 Yrs >2021 Ratings: S&P BB+, stable outlook Moody s Ba1, stable outlook Fitch BB+, positive outlook Positive trajectory towards target to achieve an IG credit rating * The 2017 maturities also include an additional $288 million of a borrowing base facility in South Africa, which matures in At Sept 30, 2017, the Company had liquidity of $8.5 billion, consisting of cash and cash equivalents of $3.0 billion and $5.5 billion of available credit lines. We have a manageable near term maturities schedule and have continued to reduced gross debt via active liability management. Looking at the maturity profile the 2017 maturities include $1.2 billion of bonds early repaid with settlement on October 16, 2017, originally maturing in 2022, 2039 and 2041 and there remains EUR 0.5 billion outstanding on our EUR 1.0 billion 2017 bond which is due in November The 2017 maturities also include an additional $0.3 billion of a borrowing base facility in South Africa, which matures in During 3Q 17 Fitch reaffirmed ArcelorMittal s rating at 'BB+, and also revised the outlook on the Company from stable to positive. We will continue to maintain a strong and healthy liquidity position and target an investment grade credit rating. 9

11 Cash needs of the business 2017 Working capital ($ billions) Cash needs of the business ($ billions) 3.5 Significant working capital release expected in 4Q 17 ~4.6 Pension & others 0.9 ~$2.0 Net interest 0.8 Capex 2.9 9M 17 4Q 17F FY 17F OWCR Investment OWCR Release OWCR Investment 2017 guidance* Cash needs of the business expected to be $4.6bn for 2017 * Excludes working capital and premium on early debt repayments 10 Key to our deleveraging is managing the cash requirements of the business. During the 9M 17, we have invested in working capital. The investment of $3.5 billion also reflects the improved market conditions in the 9M 17 and its impact on both our inventory and receivables (higher volumes and selling prices). Given the further improved market conditions, the Company now expects a full year 2017 investment in working capital of approximately $2.0 billion (as compared to previous guidance of approximately $1.5 billion). This implies a significant release of working capital in 4Q 17, in line with the Company s normal seasonal pattern. The Company continues to expect that the cash needs of the business (including capex, interest, pensions and other cash costs but excluding working capital and premiums paid to retire debt early) in 2017 to be approximately $4.6 billion. This is in line with guidance provided at 2Q 17 results. 10

12 Disciplined capital allocation focused on value driven strategic initiatives: Mexico HSM US$1.0 billion three-year investment commitment Construction of a new 2.5Mt hot strip mill Investments to sustain the competitiveness of mining operations Modernizing its existing asset base Enable full production capacity to be achieved and significantly enhance proportion of HAV mix Indiana Harbor Plant Will benefit from Lázaro Cárdenas designation as one of 5 new Special Economic Zones in Mexico In-line with Action 2020 plan ArcelorMittal Mexico: Current production 4Mt increasing to ~5.3Mt (2.5Mt flat; 1.8Mt long and 1Mt No. 3SP: semi-finished New #2 Caster slabs) 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) Roller straightener in pre-assembly stage Roller straightener in pre-assembly stage Mexico currently heavily reliant on imports of value-added steel; high growth expected 11 During 3Q 2017 ArcelorMittal announced a US$1 billion, three-year investment programme at its Mexican operations. This is a high return opportunity given the attractive market dynamics in Mexico and favourable investment climate at Lazaro Cardenas. The investment is focussed on building ArcelorMittal Mexico s downstream capabilities to meet the anticipated increased demand requirements from domestic customers currently heavily reliant on imports for value-added steel. The construction of the new 2.5Mt hot strip mill should allow the company to better realise ArcelorMittal Mexico s full production capacity of 5.3Mt as well as significantly enhance the proportion of higher margin products in its sales mix. The 30 month construction will begin this month, with completion scheduled in 2Q We will get into more detail on this project as part of our Action2020 update at our year end results. 11

13 Building long term shareholder value Unique global portfolio of competitive well-invested assets Industry leader in product and process innovation, supported by continuous investment in R&D and technology Transformed balance sheet, set to strengthen further as Company continues to prioritise an investment grade credit rating Ilva acquisition and Mexico hot strip mill are clear examples of value-driven strategic investments Action 2020 plan to structurally improve profitability ongoing Positive operating environment that supported improved 9M 17 results continues The world s leading global steel company positioned to deliver value to shareholders 12 To conclude. ArcelorMittal has a unique global portfolio of cost-competitive, well-invested assets. We are the Industry leader in terms of our product offering and in terms of our process innovation. This leadership position is supported by continuous investment in R&D and technology. Over the past 18 months we have transformed our balance sheet, and this will continue as the Company continues to prioritise an investment grade credit rating and the benefits to our shareholders that will go with it in terms of reducing the cost of our balance sheet to enhance our ability to translate EBITDA to free cash flow. Within the context of our disciplined capital allocation, the ILVA acquisition and our Mexican hot strip mill are a clear examples of investing in strategic growth opportunities. Our Action 2020 plan will ensure that we continue to make sustainable improvement versus the competition. And finally, demand in our core markets remains strong and the ArcelorMittal PMI was 55.1 in October, which is the highest we have seen since the first half of This strengthening market backdrop suggests that shipments in the final quarter should remain robust. 12

14 Appendix 13

15 Sustainable development - key to our resilience Embedding 10 sustainable development (SD) outcomes into the business gives us a long term view of risks and opportunities, and enables each business to prepare within their own stakeholder context. Having published our Annual Review 2016, 'Sustainable Progress, which describes our long-term outlook beyond 2020, we are listening to feedback and planning our final step in our three year journey towards integrated reporting. Customers increasingly expect us to reassure them on sustainability standards in their supply chain. Our leadership in driving multi-stakeholder sustainability standards for mining and steel production continues to be appreciated, particularly by automotive customers in Europe who are concerned about our supply chain for raw materials. Our work on mining certification standards is moving ahead strongly, with a roadmap for the IRMA standard to be market-ready by We have also been instrumental in evolving a partnership between IRMA and TSM, a similar standard in Canada. Pilots of the ResponsibleSteel standard are ongoing at three of our sites. Carbon reduction on the scale required by the Paris agreement remains a challenge for steel. A border adjustment on the carbon content of imported steel is needed to ensure fairer competition between European-made steel and imports to the European market. Importantly, the right policies would also incentivise us in our development of low-carbon steel technology. Our CDP climate score in 2016 was B and we have resubmitted for Ranked 1st for low carbon technology development in the Climate Disclosure Project s report on the steel sector Nerves of Steel Who s ready to get tough on emissions? Trend towards circular economy offers us opportunities, and naturally aligns with steel vs other materials. Our leadership in circular economy was recognised in VDBO s benchmark study We continue to be assessed by and included in a number of sustainability leadership indices: 14 Leadership in our response to long term trends 14 14

16 Healthy demand environment ArcelorMittal weighted global manufacturing PMI* (latest data point: Oct-2017, 55.1) Stronger growth in world ex-china should support higher steel shipments in 2017 Source: *Markit. ArcelorMittal estimates; ArcelorMittal's Purchase Managers index (PMIs) (weighted by ArcelorMittal steel deliveries) 15 As already mentioned, the operating environment during 9M 17 has been positive. As you can see in the chart on screen, on a shipment-weighted basis, the ArcelorMittal PMI reading in October was 55.1 and has been around this level for the past couple of months. This is the strongest indicator of demand in the markets we are operating that we have seen since the first half of

17 Global steel demand forecasts Global ASC 2017 v 2016* US** EU28 China Brazil CIS Global +2.0% to +3.0% +0.5% to +1.5% +2.5% to +3.5% +2.0% to +3.0% +2.0% to +2.5% +2.5% to +3.0% Global apparent steel consumption forecast to increase by +2.5% to +3.0% in 2017 Healthy demand backdrop maintained in Europe and US China: Demand growth expected due to strength in automotive and machinery Brazil: Positive demand outlook with growth in automotive offset by ongoing weakness in construction CIS: Reflecting stronger economic growth in Russia Stronger global manufacturing growth should support higher steel shipments in 2017 Source: *ArcelorMittal estimates ** Excludes tubular demand 16. The Company s forecasts for global apparent steel consumption ( ASC ) remain as presented at the time of Q results with the balance of risks now to the upside global ASC is expected to grow by approximately +2.5% to +3.0%. By region: ASC in the US (excluding Pipe & tube) is expected to grow +2.0% to +3.0% reflecting higher construction and machinery demand offset by lower automotive production. In Europe, ArcelorMittal expects the pick-up in underlying demand to continue, driven primarily by strength of the construction and machinery markets, and apparent demand is expected at +0.5% to +1.5% in 2017 on top of around 3% growth in In China, ASC growth of +2.5% to +3.5% in 2017, primarily due to improved automotive and machinery. In Brazil, ASC is expected to grow by +2.0% to +3.0% in 2017 as the continued weakness in construction is partially offset by mild improvement in consumer confidence and automotive demand. In the CIS, ASC is expected to grow by +2.0% to +2.5% reflecting stronger economic growth in Russia 16

18 Trade case: Ongoing focus Anti-Dumping (AD) and Anti Subsidy (AS) duties are in place on all four flat product categories: CORE, CRC, HRC, and plate from key importing countries measures in place for five years US Anti-circumvention investigations initiated by the Department of Commerce (DOC) for CRC and CORE imports from China (through Vietnam) ongoing with provisional measures delayed (no specific date provided) and final measures expected 1Q 18 Section 232: April initiation of a national security investigation with respect to steel imports; deadline for the DOC report to be sent to Trump administration by mid January President then has 90 days to decide what action to take, if any Final AD duties on CRC imports from China & Russia Final AD duties on HRC and QP imports from China approved on Feb 10, 2017 by the EU council Europe AS AD on HRC imports from China Approved by the EU Council June 9, 2017, (duties aligned under the Lesser duty rule with the AD duties to final level from 18.1% to 35.9%) AD on HRC imports from four additional countries the European Commission announced in Oct 17 fixed AD duties on imports of HRC (duties from 17.6/t to 96.5/t) from Brazil, Iran, Ukraine and Russia (Serbia excluded) AD investigation started in December 2016 on imports from China of Corrosion resistant steel (HDG non-auto) - provisional measures imposed Aug 17 (duties from 17.2% to 28.5%) 17 17

19 Key trade case update: EU & US Europe Flat, Long and Tubes Prod Exporter Status Timeline CRC HRC CRS (HDG non auto) QP Notes: AD China Russia AD China CVD China AD Iran, Ukraine, Russia & Brazil AD China AD China Definitive measures and retroactive implementation were voted in favour on July 7: China: 19.8% to 22.1%, Russia: 18.1% to 35.9% AD Provisional measures published on Oct 17 - duties from 13.2% to 22.6% AD final measures voted in favour on the10 th of Feb 2017 duties from 18.1% to 36.6% CVD China final measures approved 9 th June 2017 AD (5 Cs) Investigation started July 7, 2016; the European Commission announced in Oct 17 fixed AD duties on imports of HRC (duties from 17.6/t to 96.5/t) from Brazil, Iran, Ukraine and Russia (Serbia excluded) Initiation of investigation on the 22 nd of December 2016; Provisional measures imposed Aug 17 (duties from 17.2% to 28.5%) AD Provisional measures published on Oct 17 - duties from 65% to 74% AD final measures voted in favour on the 10 Feb 2017 same level as provisional measures Measures in place for the next 5 years Timelines provided are defined based on regulation maximum limits Provisional AD duties vs Rebar LF from Belarus published 19 Dec at 12.5% Provisional AD duties vs Seamless tubes (large diameter) from China published 11 th Nov from 45.4% to 81.1% US Flat Rolled Prod Exporter Status Timeline Core CRC HRC QP AD/CVD China India Italy Korea Taiwan AD/CVD Brazil China India Korea AD only Japan UK AD/CVD Korea Brazil AD only Australia Japan Netherlands Turkey UK AD/ CVD China Korea AD Austria Belgium Brazil France Germany Italy Japan South Africa Turkey Taiwan DOC final determination: CVD: China: %, India: 8% %; Italy: %; Korea: %; Taiwan de minimus (no duty imposed) AD: China %; India %; Italy %; Korea %; Taiwan: 3.77% ITC voted affirmative on all countries orders issued DOC final determinations: CVD: Brazil: 11.09%-11.31%; China: %; India: 10%; Korea: 3.91%-58.36% AD: Brazil:14.35%-35.43%; China: %; India: 7.6%; Japan: 71.35%; Korea: 6.32%-34.33%; UK: 5.4%-25.56% ITC voted affirmative on Brazil, China, India, Korea, Japan and UK orders issued ITC voted negative on Russia AD and CVD - no orders will be issued DOC final determination: CVD: Brazil: 11.09%-11.30%; Korea: 3.89% % AD: Australia: 29.37%, Brazil: 33.14% %, Japan: 4.99%-7.51%, Korea: 3.89%-9.49%, Netherlands: 3.73%, Turkey: 3.66%-7.15%, UK: 33.06% ITC voted affirmative on all AD and Korea and Brazil CVD orders issued; the ITC voted negative on Turkey CVD no order issued DOC final determinations for cooperating countries: CVD: China: %; Korea 4.31% AD: Austria: 53.72%, Belgium: 5.40%-51.78%, Brazil: 74.52%, China: 68.27%, France: 8.62% %, Germany: 5.38%-22.90%, Italy: 6.08% %, Japan: 14.79%-48.67%, Korea: 7.39%, South Africa: 87.72% %, Taiwan 3.62%- 6.95%, Turkey: 42.02%-50% ITC voted affirmative on all countries Brazil, S. Africa and Turkey orders issued 26 Jan 17; China order issued 20 Mar 17; all others issued May 26 Measures in place for the next 5 years Measures in place for the next 5 years Measures in place for the next 5 years Measures in place for the next 5 years 18 18

20 Action 2020 progress continues Europe: Transformation program progressing Operating from a more efficient resized footprint Enhanced digitalization of operations driving productivity improvements and supporting maintenance excellence US: footprint optimization ongoing Idled redundant operations including the #1 aluminize line, 84 HSM, and #5 continuous galvanizing line (CGL) No.2 steel shop (idled in 2Q 2017) Calvert ramp up ongoing: Capacity utilisation >90% Action 2020 EBITDA progress ($ billions) Target Action 2020 plan to sustainability improve EBITDA and FCF progressing 19 19

21 Deleveraging ongoing Our top financial priority is to recover our investment grade credit rating Net debt down by almost 45% over last 5 years Deleveraging remains the near term priority of surplus cash flow A lower cost balance sheet will further enhance our ability to translate EBITDA into free cash flow to generate value for our investors Net debt as Sept 30, 2017 ($ billion) -45% Net interest costs F ($ billion) Dec 31, 2012 Sept 30, 2014 Sept 30, 2015 Sept 30, 2016 Sept 30, 2017 FY 12 FY 16 FY 17F Deleveraging remains the priority for surplus cash flow

22 21 Balance sheet structurally improved Net debt* ($ billion) Average debt maturity (Years) Q Q Q Q 2017 Liquidity** ($ billion) Bank debt as component of total debt (%) % % 3Q Q Q Q 2017 Balance sheet fundamentals improved * Net debt refers to long-term debt, plus short term debt, less cash and cash equivalents ** Liquidity is defined as cash and cash equivalents plus available credit lines excluding back-up lines for commercial paper program 21

23 New ILVA a tier 1 steel asset ILVA is the perfect opportunity for ArcelorMittal Italy is the 2nd largest steel consuming country in Europe (Mt) Large scale, underperforming asset requiring turnaround 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 in Year 1 Next step is regulatory approvals Novi Ligure: Cold rolling mill to serve end-users 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 22 Moving to the topic of Ilva. As you will be aware from our press release and subsequent conference call, the Italian government announced in June that they will lease and then subsequently sell Ilva, Italy s largest integrated steel producer, to ArcelorMittal. This is an important strategic acquisition for us as Italy is Europe s second largest steel market and we do not have any primary steel-making facilities in the country. ILVA is a tier-1 asset with significant potential. Taranto is Europe s largest single-site steel making facility, very well positioned in terms of cost competitiveness. It is complemented by two high quality finishing facilities at Genova and Novi Ligure. ILVA has excellent turnaround potential and presents a unique opportunity for ArcelorMittal to create value for our shareholders by leveraging our strengths we have unique synergies and are in the best position to realise ILVA s potential as a Tier-1 steel asset. The acquisition of ILVA will have a limited impact on ArcelorMittal's balance sheet. For a minimum of 2 years we will be leasing the assets, with the annual leasing charge of 180 million effectively a down payment against the acquisition price of 1.8 billion. It should also be noted that the acquisition price includes 1 billion of net working capital. The capex associated with our investment will be spread over a number of years and we expect ILVA to be cash flow accretive (cash from operations greater than capex) by year 3 of ownership. We are now working on receiving regulatory approvals. The ILVA acquisition and the investments in our finishing capacity at Calvert, Dofasco and Poland are fully consistent with ArcelorMittal s financial policy to maximise long term shareholder value whilst maintaining a strong balance sheet. 22

24 Investments 23

25 Investments completed in 9M 2017 Furthering our downstream capabilities for automotive and industrial applications Calvert: Phase 2: Slab yard expansion Bay 5 Increase coil production from 4.6mt/pa to 5.3mt/pa (completed 2Q 17) Calvert: Slab Yard bay 5 Dofasco: increased shipments of galvanized sheets by ~130ktpy, along with improved mix and optimized cost (completed 2Q 17) Poland: Investment in the downstream operations: Increase of the HSM mill capacity by 0.9Mtpa (completed 2Q 17) Increasing the HDG capacity by 0.4Mtpa (completed 2Q 17) Dofasco galvanizing line HDG2 Krakow Continuous shift towards higher added value products 24 24

26 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, and logistics 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 25 25

27 AM/NS Calvert JV Investment in No.4 continuous coating line: Project completed 1Q 15: Increases ArcelorMittal s North American capacity to produce press hardenable steels one of the strongest steels used in automotive applications, Usibor, a type one aluminum-silicon coated (Al Si) high strength steel AM/NS Calvert capable of producing Ductibor, an energy-absorbing high strength steel grade designed specifically to complement Usibor and offer ductility benefits to customers Modifications completed at the end of 2014 and the first commercial coil was produced in Jan 2015 Roller table Slab yard expansion to increase Calvert s slab staging capacity and efficiency (capex $40m): Expand the HSM slab yard bays 4 & 5 with overhead cranes and roller table to feed the HSM production to 5.3mt/year of coils. Current HSM consists of 3 bays with 335kt capacity for incoming slabs (less than the staging capacity required to achieve 5.3mt target) Phase 1 completed 1Q 16: Slab yard expansion of Bay 4 & minor installations for Bay 5 increase coil production up to 4.6mt/pa Slab Yard bay 5 Phase 2: Slab yard expansion Bay 5 Increase coil production Calvert from 4.6mt/pa to 5.3mt/pa. Project completed in 2Q 17 HSM Phase Slab yard 1 slab Bay 4 yard Investment in Calvert to further enhance automotive capabilities 26 26

28 Dofasco (NAFTA) Cost optimization, mix improvement and increase of shipments of galvanized products: Phase 1: New heavy gauge galvanizing line (#6 Galvanizing Line): Completed construction of heavy gauge galvanizing line #6 (cap. 660ktpy) and closure of line #2 (cap. 400ktpy) increased shipments of galvanized sheet by 260ktpy, along with improved mix and optimized cost Line #6 will incorporate AHSS capability part of program to improve Dofasco s ability to serve customers in the automotive, construction, and industrial markets The first commercial coil was produced in April 2015 with ramp up ongoing Phase 2: Approved galvanizing line conversion to Galvalume and Galvanize: Restart conversion of #4 galvanizing line to dual pot line (capacity 160ktpy of galvalume and 128ktpy of galvanized products) and closure of line #1 galvanizing line (cap.170ktpy of galvalume) increased shipments of galvanized sheets by 128ktpy, along with improved mix and optimized cost. Project completed in 2Q 17 Expansion supported by strong market for galvanized products

29 Europe: ArcelorMittal Krakow (Poland) On July 7, 2015, ArcelorMittal Poland announced it will restart preparations for the relining of BF#5 in Krakow completed during 3Q 16. Further investments in the primary operations: The modernization of the BOF #3 Investment in the downstream operations includes: The extension of the HSM capacity by 0.9Mtpa (project completed in 2Q 17) Increasing the HDG capacity by 0.4Mtpa (project completed in 2Q 17) HRM Krakow HRM Walking beam furnace #2 HDG2 Krakow Investments in excess of 120m in upstream and downstream installations in Krakow

30 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 Erection of new furnace for Gent HDG expected completion in 1Q 18 Liège: 1st step of annealing line transformation (cooling zone) - completed 3Q 15 JVD 1st trial coils were produced in 3Q 16 Second step of annealing line transformation - completed 1Q 17 Remaining process optimizations & modifications on CAL expected completion in 2018 Top rolls of new direct flaming furnace - Liege New stand F1 in front of line Gent HSM Cooling water plant - Gent Investments to enhance UHSS capabilities 29 29

31 JVD a new, breakthrough technology for the metallic coating of steel Feb 2017, ArcelorMittal opened a new 63m production line - the Jet Vapor Deposition (JVD) line at its facilities in Kessales, Belgium JVD technology coats moving strips of steel in a vacuum chamber, by vaporizing zinc onto the steel at high speed prevents corrosion and improves durability Two new product families ArcelorMittal s range of metallic coatings: Jetgal : JVD zinc coating applied to steel grades for the automotive industry developed for steels including UHSS Fortiform Jetskin : JVD zinc coating applied to steel grades for industrial applications such as household appliances, doors, drums and interior building applications Multiple advantages including: A lower environmental footprint Ensures exceptionally uniform coating enhances the surface quality and makes welding easier for the customer Guarantees excellent adhesion of the coating, regardless of the steel grade, even for new UHSS steels currently under development Highly flexible process with ability to produce different coating thicknesses and to coat a variety of substrates regardless of their chemical composition The JVD process is unique and is the result of a breakthrough scientific development 30 30

32 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. Contribute to some of the most prestigious landmarks over the world (ie Manhattan skyline in New York) Aim to supply the most advanced structural steel products and solutions for construction and high rise buildings We are 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 Expected completion in 1Q 2018 Improving and growing high added value products Freedom Tower New York No. 3SP: New #2 Caster Roller straightener in pre-assembly stage Roller straightener in pre-assembly stage 31 31

33 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 4Q 18 AM Kryvyi Rih LF&CC 1 Site preparation for LF&CC 2&3 < > Entry section o Continuous Annealing Line Kryvyi Rih investments to ensure sustainability & improve productivity

34 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 critical capability at Burns Harbor to provide a sustained automotive footprint 33 33

35 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) Completion date of first modernization stage: Project completion expected in 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 Deliver reduced tensile strength variation, improved grain size and surface quality Long Products strategy to grow HAV grades

36 ArcelorMittal IR app and contacts Daniel Fairclough Global Head Investor Relations Hetal Patel UK/European Investor Relations Valérie Mella European/Retail Investor Relations Maureen Baker Fixed Income/Debt Investor Relations Lisa Fortuna US Investor Relations lisa.fortuna@arcelormittal.com We have released an ArcelorMittal investor relations app available for download on IOS or android devices 35