Full Year 2017 Financial Results Lakshmi N. Mittal, Chairman and Chief Executive Officer Aditya Mittal, Chief Financial Officer

Transcription

1 Full Year 2017 Financial Results Lakshmi N. Mittal, Chairman and Chief Executive Officer Aditya Mittal, Chief Financial Officer 31 January 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 Material improvement in results, reflecting strengthening market backdrop Transformed balance sheet, with continued deleveraging bias 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 Reinstating base dividend with intention to increase capital returns Capital allocation policy to maximise value for shareholders * Free cash flow refers to cash flow from operations less capex 2 ArcelorMittal has achieved notable progress on multiple strategic fronts during 2017 and is increasingly well positioned to deliver sustainable value to its shareholders. Financial results showed material improvement over the same period of Demand in our core markets is growing, with healthy PMI readings. In recent years the Company has transformed its balance sheet. We delivered on our commitment to prioritise debt reduction, significantly strengthening our balance sheet and ending 2017 with the lowest level of net debt since the formation of the Company. Our year end Net Debt balance of $10.1 billion represented a multiple of 1.2x EBITDA. Importantly, and in line with our targets, the cash needs of the business have been limited to $4.4 billion. Although we invested $1.9 billion in working capital and a further $0.4 billion in premiums to buyback our bonds, we delivered healthy free cashflow. The Action 2020 plan continues to differentiate ArcelorMittal from its peer group. Action 2020 improvements contributed $0.6 billion to our 2017 EBITDA, bringing the cumulative benefit to $1.5 billion, half way to our target. 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. Whilst the Company s priority for surplus cash continues to be debt reduction, the Company is investing with focus and discipline to improve further returns for shareholders. During 2017, a number of projects were completed in support of our ongoing transition towards higher added value products. In addition, we were able to make progress with our asset portfolio including the proposed acquisition of ILVA, Italy s largest steel producer and proposed merger of our Long products business in Brazil with Votorantim. Finally, we are pleased to announce that given the improving performance and market outlook the Board proposes to reinstate the base dividend. Once it achieves net debt at or below its target of $6 billion, the Company is committed to returning a portion of annual FCF to shareholders.

4 Safety is our priority Health & Safety Lost time injury frequency (LTIF) rate* Mining & steel, employees and contractors 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 2017 was 0.78 incidents per million hours worked compared with 0.82 in 2016 and in marked contrast with the 3.1 recorded in 2007, the first year in which the Company recorded safety data after its formation. ArcelorMittal's performance is significantly better than the steel industry average of 1.0, the World Steel Association figure for 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..

5 Significantly improved results EBITDA +34.4% YoY to $8.4bn Steel shipments +1.6% YoY to 85.2Mt Marketable iron ore shipments +6.1% YoY Net income % YoY to $4.6bn Working capital investment of $1.9bn reflecting stronger markets Free cash flow* $1.7bn ($2.1bn excluding bond premia**) Net debt down to $10.1bn (despite $0.7bn FX headwind) Significantly improved results * Free cash flow refers to cash flow from operations less capex; ** includes one-time premium paid on early repayment of debt totalling $389m 4 ArcelorMittal reported EBITDA of $8.4 billion for 2017 as compared to $6.3 billion in Our 2017 performance was supported by 1.6% steel shipments growth to 85.2Mt, reflecting the growth in global steel demand, as well as +6.1% growth in iron ore marketable shipments. Mining marketable iron ore shipments fell short of targets due to operational issues, but we expect improvement in 2018 as these are resolved. Net income for 2017 improved significantly to $4.6 billion as compared to $1.8 billion in 2016 driven in part by improved operating performance and lower forex and tax impact. Importantly, and in line with our targets, the cash needs of the business have been limited to $4.4 billion. Although we invested $1.9 billion in working capital and a further $0.4 billion investment to buyback our bonds, we delivered positive free cashflow of $1.7 billion for the year. We also made notable progress in debt reduction as promised. Net debt of $10.1 billion as of December 31, 2017, was lower than $11.1 billion as of December 31, 2016 in spite of a $0.7 billion headwind from foreign exchange impacts.

6 2017 operating performance highlights EBITDA ($ billion) Europe: EBITDA +42.3% to $3.6bn Shipments +1.7% to 40.9Mt EBITDA per tonne +39.8% to $87/t BRAZIL: EBITDA +13.5% to $1.0bn Shipments +0.8% to 10.8Mt EBITDA per tonne +12.6% to $91/t NAFTA: EBITDA -0.9% to $1.7bn Shipments +2.6% to 21.8Mt EBITDA per tonne -3.4% to $78/t ACIS: EBITDA +51.4% to $1.0bn Shipments -1.3% to 13.1Mt EBITDA per tonne +53.4% to $78/t 34.4% FY14 FY15 FY16 FY to 2017 EBITDA by segment ($ billion) Mining: EBITDA +84.7% to $1.4bn Market-priced iron ore shipments +6.1% to 35.7Mt FCF breakeven level remains at $40/t CFR China 62% Fe FY16 NAFTA ACIS Europe Brazil Mining FY17 EBITDA impacted by improved ASP, steel volumes and Mining profitability 5 Turning to the operating performance of ArcelorMittal in Group EBITDA increased by 34.4% in FY EBITDA per ton increased to $99/t in FY 2017 from $75/t in FY Our steel performance improved with steel-only EBITDA up to $7.0 billion in FY 2017 as compared to $5.5 billion in FY Europe recorded a solid set of results with EBITDA at $3.6 billion, up +42.3% YoY primarily driven by +1.7% improvement in steel shipments, positive price-cost effect and ongoing Action 2020 cost improvement initiatives. ACIS profitability increased by +51.4% to $1.0 billion, driven mainly by improvements in the CIS operations. Action 2020 gains complemented improved operating performance and a positive price-cost effect. Brazil performance improved by +13.5% to $1.0 billion, primarily driven by a positive price-cost effect. NAFTA EBITDA declined by -0.9% to $1.7 billion driven largely by a negative price-cost effect and weakness in the long business offset in part by a +2.6% improvement in shipments. Results in our Mining business significantly improved by +84.7% to $1.4 billion, benefiting from higher iron ore prices (+22.3% YoY) and higher market priced iron ore shipment volumes (+6.1% YoY). The FCF breakeven level remains at $40/t (CFR China 62% Fe). We continue to expect to make further iron ore volume gains in 2018.

7 Delivering on Action 2020 Action 2020 impacted 2017 EBITDA by $0.6bn Volume improvements of $0.3bn and cost/mix $0.3bn Action 2020 cumulative EBITDA progress ( Target) ($billion) Europe: Transformation progressing well savings in procurement/ productivity on track. More integrated centrally co-ordinated approach, further reducing costs Enhanced use of digitalisation in the manufacturing process, supply chain and commercialisation NAFTA: Asset optimisation complete; savings from No 2 steel shop idling; headcount rationalisation; Calvert utilisation increasing to 88% Brazil: HAV mix improvement ACIS: Kazakhstan record steel production; Ukraine savings from new coke oven battery No Target Mining: Remained focussed on service, quality and asset reliability. FCF breakeven level of $40/t China CFR 62% Fe Action 2020 driving structural EBITDA improvement 6 Turning to Action 2020, which we initiated at the start of As you know, this is a strategic initiative to structurally improve the performance of our business. Detailed plans along 3 key improvement axes (cost, volume, mix) aim to return Group EBITDA to >$85/t level, representing a required EBITDA improvement of approximately $3 billion. The Company has made further significant progress during the course of Action 2020 improvements contributed $0.6 billion to our 2017 EBITDA, bringing the cumulative benefit to $1.5 billion. As you can see from the chart, we are approximately half of the way along the Action 2020 journey with all segments contributing to the progress. The savings in 2017 were achieved from a combination of volume ($0.3bn) and cost/product mix improvements ($0.3bn). Volume is a key component of Action 2020 (5Mt volume improvement, representing approximately 1/3 of the overall plan) and we expect to see more progress in this area in 2018, assuming market conditions remain favourable. The European Transformation program is progressing well with savings in procurement/ productivity on track. The division operates in a more integrated centrally co-ordinated approach, further reducing costs. Enhanced use of digitalisation in the manufacturing process, supply chain and commercialisation are achieving further savings. In NAFTA, Asset optimisation at Indiana Harbour is now complete. Savings are derived following idling of No. 2 steel shop and headcount rationalisation. While at Calvert, utilisation increased from 79% in 2016 to 88% in In Brazil structural costs initiatives are being implemented and benefited from higher volume and improved HAV mix. In ACIS: Kazakhstan produced records shipments; while Ukraine savings are from new coke oven battery No.6 and other PCI/energy related savings. In Mining, we remained focussed on service, quality and asset reliability.

8 Continuous innovation Jet Vapor Deposition (JVD) line : Jetgal JVD line is a breakthrough technology to produce Jetgal, a new coating for AHSS steels for automotive industry Steel remains material of choice New press hardenable steels (PHS) Usibor 2000 & Ductibor 1000 Bring immediate possibilities of 10% weight saving on average compared to conventional coated PHS produced by ArcelorMittal 3rd Generation AHSS products CR980HF & CR1180HF HF / Fortiform provide additional weight reduction due to enhanced mechanical properties compared to conventional AHSS Electric vehicles (EV) to favour lightweight designs (similar to traditional vehicles) EV employ AHSS to achieve range goals Electrical steels icare, 2 nd Generation Family of electrical steels for electrified powertrain optimization and enhanced machine performance, Save*, Torque** and Speed*** are specifically designed for a typical electric automotive application. Steel to remain material of choice for automotive - The mass-market Tesla Model 3 body and chassis is a blend of steel and aluminium, unlike the Tesla Model S which is an aluminium body (Source: Tesla website+) * Save (Steels with very low losses): Ideal for the efficiency of the electrical machine. Their key role is maximize the use of the current coming from the battery. ** Torque (Steels with high permeability): They achieve the highest levels of mechanical power output for a motor or current supply for a generator *** Speed (Steels for high speed rotors): Specific high strength electrical steels which maintain high level of magnetic performance. They allow the machine to be more compact and have a higher power density. 7 ArcelorMittal has consistently funded R&D despite the challenges we have faced in recent periods. We have a leading portfolio of products to help auto manufacturers reduce the weight of their vehicles. Our solutions offer a compelling combination of weight savings, strength, safety improvement and value. As a result, we are now in a position to offer the widest range of AHSS grades in the market. Jet Vapor Deposition (JVD) is a breakthrough technology for metallic coating of steel, developed by ArcelorMittal and now installed at Liege, Belgium. JVD offers significant advantages including exceptionally uniform coating and improved adhesion of the coating regardless of the steel grade. Recent product launches include Usibor 2000 and Ductibor 1000, our latest generation of press hardenable steels which are today commercially available in Europe and available for qualification testing in North America. Our first third-generation AHSS for cold forming, Fortiform, which was commercially launched in Europe in 2014, is now available in North America at Calvert and undergoing customer qualifications. Looking ahead, we remain positive about the outlook for Battery Electric Vehicles (BEVs), with the current portfolio of lightweight Body in White (BiW) solutions and electrical steels positioning the Company to take advantage of the growth in this emerging segment. This is best exemplified by the choice of several OEMs like GM, Tesla and Nissan to utilize a more affordable steel intensive solution for their mass market models (Bolt, Model 3 and Leaf respectively) (Source: Company websites, McKinsey). The engagement we have with our auto customers, traditional and non traditional, leaves us confident that steel will continue to be an important material for vehicles through electrification and beyond. Factors like safety will continue to be important and here steel has a strong competitive advantage, combined with flexibility and cost.

9 Business outlook remains favourable ArcelorMittal Global PMI* ArcelorMittal demand forecasts Latest data point Dec 17: US EU28 China Brazil CIS Global Ex China Global +1.5% to +2.5% +1.0% to +2.0% -0.5% to +0.5% +6.5% to +7.5% +2.0% to +3.0% +3.0% to +4.0% +1.5% to +2.5% Strong global economic fundamentals support further expected steel demand expansion in 2018 * ArcelorMittal estimates 8 Demand conditions in 2017 were favourable with global demand growth estimated at +3.2%. The ArcelorMittal shipment weighted global PMI at 56.2 in December 2017 is the highest for 6 years. It continues to indicate growth in demand for our steel. Looking to 2018, on the slide we show our forecasts for apparent consumption growth in our key regions. Our focus is on apparent rather than real demand since this is what will drive our shipments in Starting with the US, driven by ongoing demand in machinery and construction, ASC is estimated to grow +1.5% to +2.5% in 2018 (including pipes and tubes) (versus +1.3% in 2017 (excluding pipes and tubes)). In Europe, we expect underlying demand to continue to grow, supported by the strength of the machinery and construction end market, and overall demand is expected to be +1.0% to +2.0% in 2018 (versus growth of +1.5% in 2017). In Brazil, ASC is expected to grow by +6.5% to +7.5% in 2018 (an acceleration of growth versus +4.6% in 2017), as the economy starts to turnaround with improved consumer confidence and pick up in long products as construction recovers. In the CIS, ASC is estimated to grow +2.0% to +3.0% in 2018 (a moderation of growth vs +5.4% in 2017). In China, ASC grew by +3.5% in 2017, higher than our initial expectations. Overall demand is expected to remain close to this level in 2018 (between -0.5% to +0.5%), as the anticipated weakness in the real estate sector is expected to be offset in part by robust infrastructure and automotive end markets. Nevertheless, ex China ASC is expected to grow by approximately +3.0% to +4.0% in 2018, which supports global ASC growth of +1.5% to +2.5% in 2018 (as compared to growth of ~3.2% in 2017).

10 Capital allocation framework

11 Transformed balance sheet Net debt lowest since merger Positive momentum towards investment grade rating Net Debt ($bn) % Interest costs declined by ~56% since 2012 Maximising ability to translate EBITDA to FCF $3bn cumulative FCF since 2012 increases to $8bn adjusting for 2018F cash interest expense Debt adjusted FCF ($bn) FCF* Debt Adjusted FCF** Investment grade rating (through the cycle) remains the Group s primary financial objective * Free cash flow refers to cash flow from operations less capex; ** Debt adjusted FCF refers to historical FCF adjusted to reflect 2018 forecast interest expense of $0.6bn 10 Over the past six years, our net debt has been reduced by over half (from $21.8 billion to $10.1 billion). We have maintained strong liquidity and utilized our available cash to repay and prepay near and medium term bond maturities. The Group primary financial objective of an investment grade rating (through the cycle) has positive momentum. Following changes by Moody s and S&P in 4Q 2017, all three ratings agencies now have our rating on a positive outlook. Importantly, net interest costs have also been reduced significantly, declining by ~56% over the same period. When we adjust the historic FCF to reflect the forecast 2018 interest cost, the cumulative FCF generation since 2012 would have been ~$8 billion compared to $3 billion reported. This highlights the impact of deleveraging on our FCF potential going forward. Deleveraging remains the near term priority. A lower cost balance sheet will enhance our ability to translate EBITDA into free cash flow to generate value for our investors.

12 Disciplined capital allocation Robust balance sheet Invest in strengths Returns to shareholders Targeting $6bn net financial debt (NFD) Positive FCF* in all market environments** Investment grade metrics secure through the cycle Lower cost balance sheet Maximise FCF potential Position of strength to return capital to shareholders Investing in opportunities with focus and discipline To grow EBITDA and enhance future returns Grow FCF potential of the business Reinitiating base dividend at $0.10/share Capital returns to shareholders will increase to a portion of FCF once NFD target achieved Building the strongest platform for consistent capital returns to shareholders Deleveraging bias to continue until net debt target achieved * Free cash flow refers to cash flow from operations less capex ** Refers to the post merger period 11 Over the past 24 months we have transformed our balance sheet, reducing our net debt to EBITDA leverage ratio from over 3.0x to 1.2x. Free cash flow has been healthy and the allocation of this cash has become a major focus point for investors over the past 12 months. As such, the Company determined that it was appropriate to outline in more detail our policy and associated targets. Firstly the Company will continue to prioritize deleveraging and believes that US$6 billion is an appropriate net debt target that will sustain investment grade metrics even at the low point of the cycle. Achieving an investment grade rating will ensure a lower cost balance sheet and maximise the Company s ability to translate/convert EBITDA to Free Cash Flow. An investment grade balance sheet will support positive free cash flow in any market environment and ultimately provide the strongest foundation from which to make sustainable returns to shareholders. Given the progress made over the past two years both in terms of the Company s balance sheet situation and the industry fundamentals, the Company is in a position to invest not just in maintaining the asset base and our competitive position, but in 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 increase. In terms of returning cash to shareholders, the Board has agreed on a new dividend policy which will be proposed to shareholders at the AGM in May Given the current deleveraging bias, dividends will begin with a $0.10/share in 2018 (paid from 2017 results). Once it achieves net debt at or below its target, the Company is committed to returning a portion of annual FCF to shareholders. By waiting until we have achieved our net debt target before commencing more significant cash returns to shareholders, we expect that those returns can ultimately be more substantial and that shareholders will have greater confidence in the sustainability of those returns.

13 Focused investment Italy: Restore ILVA as leading Italian steel supplier Underperforming asset requiring turnaround Expanded product range with new HAV steel grades Synergies 310m of which 50m to benefit ArcelorMittal s existing operations 2018 investment of ~$300m for environmental capex (full year basis) Subject to regulatory approvals Capex in 2018 ($ billion) Primarily steel projects focusing on downstream optimisation in Europe and HAV in Canada & Europe Mexico: $1.0bn three-year investment for construction of a new 2.5Mt HSM High value return project improved HAV mix Capex investment of ~$350m in 2018 commenced Increase capability to serve domestic Mexican industry 2.8 FY carry over ILVA & Mexico Various strategic projects Forex FY18F Capitalising on high-return opportunities; Capex increasing to $3.8bn in There are attractive opportunities to deploy capital to increase the future returns of the business. The Company s progress on reducing net debt now means that we are also in a position to move forward and capture the best of these opportunities. As a result we are increasing capex in 2018 to $3.8 billion. There are 2 key projects behind this increase. Firstly, we are budgeting to spend approximately $0.2 billion at Ilva in 2018 as part of our multiyear plan of significant environmental capex as we seek to restore the asset to its full potential. Subject to regulatory approval capex investment will be initiated. Turning around this underperforming asset, expanding the product range with new HAV steel grades and capturing significant synergies presents a unique opportunity for ArcelorMittal to create value for our shareholders by leveraging our strengths. Secondly, in Mexico we have committed to a $1.0 billion investment for the construction of a new 2.5Mt hot strip mill. This is a high return opportunity given the attractive market dynamics in Mexico and favourable investment climate at Lazaro Cardenas. The project has commenced with construction expected to be completed in 2Q The Mexico capex impact in 2018 is approximately $350 million. Beyond these 2 key projects, we are also planning to spend a further $0.3 billion in additional strategic capex in This includes further investment to enhance downstream optimisation in Europe; capex at Dofasco and our European business to increase our high added value capacities to ensure we have the industrial capacity to supply our customers with the solutions we are developing, particularly in automotive. Strategic capex also includes investments to improve productivity and reduce costs across the steel business. The balance of spend is due to carry over of capex from 2017 and forex effects. The Company employs a rigorous gate keeping process ahead of any capital investments. Only projects that achieve the Company s 15% IRR hurdle rate are considered for investment.

14 Positioned to deliver value Strategy delivering ~50% of Action 2020 delivered Transformed balance sheet Industry outlook improving Investing with focus & discipline Net debt / EBITDA down to 1.2x Deleveraging to continue Ex-China demand growth expected to continue Global capacity utilization improving Leveraging strengths to grow returns Building the strongest foundations for sustainable value creation Commitment to return cash to shareholders Dividends restarted Capital allocation policy to maximise value for shareholders 13 To conclude, ArcelorMittal has achieved notable progress on multiple strategic fronts during 2017 and is increasingly well positioned to deliver sustainable value to its shareholders. The execution of the Company s strategy has, combined with improved industry fundamentals, delivered healthy results. There is more to come from our Action 2020 initiatives in the coming periods, particularly from volume and mix improvements. In recent years, the Company has transformed its balance sheet. We delivered on our commitment to prioritise debt reduction, significantly strengthening our balance sheet and ending the year with the lowest level of net debt since the formation of the Company. This deleveraging bias will continue as we target a net debt of below $6 billion to support an investment grade rating at all points of the cycle. Whilst the Company priority for surplus cash continues to be debt reduction, the Company is investing with focus and discipline to further improve returns for shareholders. Given the improving performance and market outlook the Board proposes to reinstate the base dividend. 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.

15 Appendix The head of Audi s Lightweight Construction Centre is quoted as saying that There will be no cars made of aluminium alone in the future. Press hardened steel will play a special role in this development. If you compare the stiffness to weight ratio, PHS is currently ahead of aluminium.

16 Financial results

17 Cash needs of the business Cash needs of business ($ billion) 4.4 Taxes**, pension and other 0.8 Net interest 0.8 Capex F Cash needs* to rise in 2018: Increase of $1.2bn vs reflects a) higher CAPEX (increase from $2.8bn to $3.8bn largely reflecting Mexico project and anticipated ILVA capex) b) expected increases in cash taxes primarily on account of timing impacts Working capital requirements to be driven by market conditions 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 ** Estimates for cash taxes in 2018 largely reflect the taxable profits of

18 EBITDA to net results 4Q 17 EBITDA to net income analysis ($ million) BASIC EPS 4Q 17 Weighted Av. No. of shares (in millions) 1,020 Earnings per share $1.02 (747) Includes positive contribution from Calvert and Chinese investees Includes net losses on derivatives (pellet purchase agreement in US offset by MTM on MCB call options) offset in part by forex gain of $83m. Includes deferred tax asset of $275m in Luxembourg following expectation of higher future taxable profits. 2,141 (160) 125 (188) (261) 129 Related to impairment in South Africa 1, ,039 EBITDA D&A Impairment Operating income Income from investments Net interest expense Forex and other fin. result Pre-tax income Positive net income primarily driven by positive operating income Taxes and noncontrolling interests Net income 17

19 EBITDA to net results FY 17 EBITDA to net income analysis ($ million) BASIC EPS 2017 Weighted Av. No. of shares (in millions) 1,020 Earnings per share $4.48 (2,768) Includes gain from disposal of AM USA s 21% stake in Empire Iron Mining Partnership ($133m); improved performance of Calvert & Chinese investees, offset in part by a loss on dilution of Company s stake in China Oriental and the recycling of cumulative forex translation losses incurred following disposal of the 50% stake in Kalagadi ($187m). Includes forex gain of $0.5bn on account US depreciation of 13.8% against Euro; $0.5bn net non-cash market to market gain on derivatives offset by premiums on bonds ($0.4bn) 8,408 (206) 448 (823) (52) (439) Related to impairments in South Africa 5,434 5,007 4,568 EBITDA D&A Impairment Operating income Income from investments Net interest expense Forex and other fin. result Pre-tax income Taxes and noncontrolling interests Positive net income primarily driven by positive operating income Net income 18

20 EBITDA to free cash flow 2017 EBITDA to free cash flow analysis ($ million) (1,873) Includes $0.4bn bond premium (1,972) 8,408 4,563 (2,819) 1,744 EBITDA Change in working capital* Net financial cost, tax and others Cash flow from operations Capex Free cash flow Strong free cashflow generation * Change in working capital: cash movement in trade accounts receivable plus inventories less trade and other accounts payable 19

21 Net debt analysis Dec 31, 2016 to Dec ($ million) Forex of $715m: Mainly driven by USD depreciation against the Eur 13.8% (1,744) ,059 (72) 141 Mainly dividends paid to Posco (AMMC) and Bekaert 10,142 Net debt at Dec 31, 2016 Free cash flow M&A * Dividend Forex and other Net debt at Dec 31, 2017 Net debt reduction driven by positive free cash flow offset in part by forex *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

22 Liquidity and debt maturity profile Liquidity at Dec 31, 2017 ($ billion) 8.3 Debt maturities at Dec 31, 2017 ($ billion) Other loans Commercial paper Bonds Cash Unused credit lines Liquidity at Dec 31, 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 4.6 Yrs >2023 Ratings: S&P BB+, positive outlook Moody s Ba1, positive outlook Fitch BB+, positive outlook Positive trajectory towards target to achieve an IG credit rating * The 2018 maturities in other loans include an additional $298 million of a borrowing base facility in South Africa, which matures in

23 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, restricted cash and short-term investments (including those held as part of asset/liabilities held for sale); ** Liquidity is defined cash and cash equivalents plus available credit lines excluding back-up lines for commercial paper program 22

24 Sustainable development - key to our resilience Embedding 10 sustainable development (SD) outcomes into the business gives us long term view of risks and opportunities. We intend to publish our third step towards integrated reporting in April 2018 an integrated assessment of sustainable development within the ArcelorMittal group business in the short, medium and long term Customers increasingly expect us to support their sustainability ambitions. We have made good progress in 2017 with multiple stakeholders towards a comprehensive third-party certification system (ResponsibleSteel ) to reassure steel customers of social and environmental standards in their supply chains. We are preparing a number of European sites to comply. We are assessed and included in a number of sustainability leadership indices: Leadership in our response to long term trends 23

25 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). DOC affirmative preliminary determination announced Dec 6, Importers will be required to post cash deposits for potential AD/CVD duties. Final determination expected 1Q 18 Section 232: April initiation of a national security investigation with respect to steel imports; DOC report sent to Trump administration on January 11, 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) final duties against China announced Dec 17 (duties from 17.2% to 27.9%) 24

26 Investments

27 Investments completed in 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 26

28 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 1Q 18 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 27

29 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 Freedom Tower New York No. 3SP: New #2 Caster Roller straightener in pre-assembly stage Improving and growing high added value products One Bank street construction: October 2017, U.K One Bank street after completion in

30 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 29 29

31 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 30

32 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) Detailed engineering for the installation of the new equipment is expected in 1H 2018 Full project completion expected in Investment features and benefits: New independent stands with motors & drives avoiding material twisting Modernized finishing blocks for improvement of final product diameter tolerance New state of art air & water cooling system with accurate process control Project implementation will result in increased production of high quality wire rod for demanding applications. Long products strategy to grow HAV grades 31 31

33 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 initiated during late 4Q 2017 Investments to sustain the competitiveness of mining operations Modernizing its existing asset base Estimated ~$350m capex in 2018 Enable full production capacity to be achieved and significantly enhance proportion of HAV mix 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 semi-finished 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) Mexico currently heavily reliant on imports of value-added steel; high growth expected 32 32

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

35 Macro highlights

36 Global steel demand for 2017 Global ASC 2017 v 2016* ArcelorMittal ASC demand estimates 2017 Global apparent steel consumption increased by +3.2% in 2017 US** 1.3% Healthy demand backdrop maintained in Europe and US EU28 1.5% China: Positive demand growth due to strength in automotive and machinery China 3.5% Brazil: Positive demand with growth in automotive offset by ongoing weakness in construction CIS: Reflecting stronger economic growth in Russia Brazil CIS Global 3.2% 4.6% 5.4% 2017 ASC growth of +3.2%; positive outlook for 2018 Source: *ArcelorMittal estimates ** Excludes tubular demand. ASC growth in 2017 in the US including pipes and tubes of +6.1% 35

37 Global ASC rates Global apparent steel consumption (ASC)* (million tonnes per month) China Developing ex-china Developed (latest data point: Dec 2017) US and European apparent steel consumption (ASC)* (million tonnes per month) 19 US EU (latest data point: Dec 2017) Global ASC -3.9% in 4Q 17 vs. 3Q 17 Global ASC +2.6% in 4Q 17 vs. 4Q 16 Global ASC +3.2% in 12M 17 vs. 12M 16 China ASC -5.9% in 4Q 17 vs. 3Q 17 China ASC +1.7% in 4Q 17 vs. 4Q 16 China ASC +3.5% in 12M 17 vs. 12M 16 * Source: AISI, Eurofer and ArcelorMittal estimates; ** includes pipes and tubes US** ASC -5.2% in 4Q 17 vs. 3Q 17 US** ASC +6.3% in 4Q 17 vs. 4Q 16 US** ASC +6.1% in 12M 17 vs. 12M 16 EU ASC +2.9% in 4Q 17 vs. 3Q 17 EU ASC +1.6% in 4Q 17 vs. 4Q 16 EU ASC +1.5% in 12M 17 vs. 12M 16 Global ASC improvement of +3.2% 2017 vs

38 Construction markets in developed market United States 2017 housing permits increased to 3.9% from 2.0% in 2016, boding well for residential construction in Although non-residential construction spending slowed in 2Q 17-3Q 17, it showed signs of recovery in 4Q 17. Architecture Billings Index (ABI) for 2017 came in strong, with 10 out of 12 months reading >50 and 4Q 17 at Continued uncertainty over the ability of the new administration to pass an infrastructure bill means the pick-up in infrastructure spending delayed until 2019 Europe European construction accelerated to an estimated 3.5% in 2017 from 1.8% in Growth in construction was led by Eastern European countries, particularly Poland and Hungary, with both growing double digits. Overall, construction activity in 2017 was supported by the fastest GDP growth in a decade at 2.5% yoy. Eurozone construction PMI now >50 for 14 months US residential and non-residential construction indicators (SAAR) $bn* Residential Non residential (latest data point: Nov 2017) Eurozone and US construction indicators** 65 Architecture Billings Index (USA) Eurozone construction PMI (latest data point: Dec 2017) * Source: US Census Bureau; ** Source: Markit and The American Institute of Architects Construction growth accelerating in

39 China overview China GDP growth slowing gradually after a modest tightening of monetary conditions, as the government seeks to control financial risks but valuing stability, no major policy change Non-financial corporate debt remains an issue (>150% of GDP), mainly SOE s therefore the government will continue to focus on capacity cuts of heavy industry to improve profitability and reduce environmental concerns Despite slowing as expected in 3Q 17, real estate sales and new starts growth rebounded in Nov/Dec, potentially leading to stronger real estate demand in ASC to be broadly stable with machinery helped by rising exports due to strong global demand and without a drag from declining construction Chinese exports down over 30% in 2017; we expect production cuts to constrain exports in the short term Inventories lower than usual due to policy restricted output China construction % change YoY, (3mth moving av.)* 100% 80% 60% 40% 20% 0% -20% (latest data point: Nov 2017) -40% Crude steel finished production and inventory (mmt) Steel inventory at warehouses (RHS) Steel inventory at mills (RHS) Finished steel production (LHS) Residential floor space sold (6 month lag) Residential floor space started (Latest data point: Dec 2017) China ASC demand grow 3.5% in 2017; more stable in 2018 with growth of -0.5% to +0.5% * Source: China National Bureau of Statistics, China Real Estate Index System (via Haver) and ArcelorMittal estimates; Source: NBS, CISA, WSA, Mysteel, ArcelorMittal Strategy estimates 38

40 Regional inventories German inventories (000 Mt)* 2,200 2,000 1,800 1,600 1,400 1,200 Germany flat stocks Months Supply (RHS) (latest data point: Jun 2017) US service centre total steel inventories (000 Mt) (latest data point: Dec 2017) 13,000 12,000 USA (MSCI) 11,000 Months Supply (RHS) 10,000 9,000 8,000 7,000 6,000 5, Brazil service centre inventories (000 Mt) 1,400 Flat stocks at service centres Months Supply (RHS) (latest data point: Dec 2017) 1, China service centre inventories** (Mt/mth) with ASC% (latest data point: Dec 2017) Flat and long % of ASC (RHS) 50% 40% 1, % 20% 10% % * Last source updated Jun 2017 ** Source: WSA, Mysteel, ArcelorMittal Strategy estimates Inventory trends 39.

41 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 The ArcelorMittal investor relations app is available for download on IOS or android devices