First quarter 2009 Media Presentation 29th April 2009
Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words believe, expect, anticipate, target or similar expressions. Although ArcelorMittal s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier) and the United States Securities and Exchange Commission (the SEC ) made or to be made by ArcelorMittal, including ArcelorMittal s Annual Report on Form 20-F for the year ended December 31, 2008 filed with the SEC. ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise. 1
Agenda Introduction and overview Responding to the Crisis Enhanced industrial plan Steel market trends Q109 Financials Conclusion and Guidance 2
Introduction and overview 3
Introduction and overview Highlights Stable Health & Safety frequency rate Shipments of 16.0 million tonnes, down 6% compared to Q4 2008 EBITDA of USD 0.9 billion, in line with guidance Net loss of USD 1.1 billion due in part to USD 1.2 billion exceptional items* pre-tax Reinforced financial structure and maturity debt profile extended Pro forma liquidity** of USD 13.2 billion and net debt of USD 26.7 billion Refinancing of USD 6.3 billion forward start facilities and successful completion of USD 1.6 billion convertible bond Marketing update Potential for price increase during Q2 2009 and Q3 2009 across major markets and products Enhanced industrial and financial plan Continuing temporary production cuts in-line with reduced demand Industrial optimization measures implemented resulting in more than USD 6 billion of annualized temporary fixed cost reductions in Q1 09 and expected to result in more than USD 7.5 billion on an annualized basis in Q2 2009 Confirming management gains of USD 2 billion of sustainable SG&A and fixed cost reduction in 2009 Reiterating working capital rotation days target of 75-85 days during 2009 Re-affirming target to reduce net debt by USD 10 billion by the end of 2009*** Guidance for Q2 2009 EBITDA is expected to be between USD 1.2-1.5 billion * During the first quarter of 2009, the Company recorded exceptional charges amounting to $1.2 billion (pre-tax) primarily related to write-downs of inventory ** Pro forma liquidity includes USD 1.6 billion (EUR 1.25 billion) cash proceeds from convertible bond issued on April 1, 2009 *** From September 30, 2008 level 4
Health and Safety Steel frequency rate* 4.1 3.9 3.8 3.7 3.5 3.0 3.2 2.7 2.4 2.3 2.1 1.6 1.6 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q108 Q208 Q308 Q408 Q109 Steady heath and safety performance in Q1 2009 * IISI-standard: Fr = Lost Time Injuries per 1.000.000 worked hours 5
Responding to the Crisis 1. Implement Temporary Production Cuts Production cuts implemented immediately up to 50% Aligns supply with demand Accelerates inventory decrease Supports required de-stocking period 2. Identify and implement cost-saving measures VRS announced US$2 billion of sustainable SG&A and fixed cost reduction identified Capex reduced with focus on H&S and maintenance Voluntary salary cut taken by senior management up to 15% 3. Strengthen financial structure Diversify debt structure Re-finance debt structure Reduce net debt 6
Update on Implemented Measures Industrial Continuing temporary production cuts in line with demand Ensuring industrial optimization of production cuts All production suspension is temporary Financial Confirming management gains of $2 billion of sustainable SG&A and fixed cost reduction in 2009 Reduced annualised temporary fixed costs by $6 billion in Q1 2009 due to industrial optimization Reiterating working capital rotation days target of 75-85 days during 2009 Maintaining target to reduce $10 billion net debt by end of 2009 7
Enhanced industrial plan 8
Continuing temporary cuts in line with demand ArcelorMittal quarterly crude steel production (million tonnes) 35 30 25 20 15 10 5 Estimated crude steel production Realised crude steel production 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 ArcelorMittal capacity utilisation to remain at approximately 50% during Q2 2009 9
Implementing industrial optimization Concept of optimization Single unit steelmaker Multi-unit steelmaker 100% output Full Full Full Full Full Full Fixed cost per tonne base 100 100 100 100 100 100 100 Hot-Idle 60% output 60% Full Full Full Fixed cost base 100 * 95 100 100 100 25** 25** Average 70 Increase in fixed cost per tonne +58% +17% Due to its extensive industrial network, ArcelorMittal is in a unique position to adapt to a low volume environment and reduce temporary fixed costs * Assuming 5% cost reduction ** Assuming hot-idled plants operate at 25% full cost 10
Confirming management gains USD 5bn management gains plan breakdown (over 5 years) Management gains progress (USD billion annualized) 2.5 Fixed cost reduction 2009 20% 2.0 1.5 Management gains plan beyond 2009 60% SG&A cost reduction 2009 20% 1.0 0.5 0.0 Captured at 31/12/08 Captured at 31/03/09 Estimated at 30/06/09 Targeted at 31/12/09 On track to achieve USD 2 bn of sustainable SG&A and fixed cost reduction in 2009 11
Avoiding Forced Redundancies Economic scenario brings an impact on our employees Priority is to avoid forced redundancies and protect jobs VRS programmes launched in November 2008 Good achievement to date, process ongoing Early retirement schemes introduced Flexible and rotating working schedules introduced Social unemployment measures implemented where required Salary cuts accepted at corporate level between 10 and 15% Close collaboration with all social partners, including unions, governments and employees Grateful for co-operation during this challenging period 12
Steel market trends 13
Real demand growth expected to accelerate in China with loans and stimulus Crude steel production in China (y/y change %)* 40 30 20 10 0 Chinese and Asian spot price for HRC** 1150 950 750 550-10 -20-30 -40 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 350 150 J-02 J-03 J-04 J-05 J-06 J-07 J-08 HRC / China domestic FOB Shanghai (incl. 17% vat) $/t HRC / East Asia import CFR $/t J-09 Over production has put negative pressure on prices but some improvement is expected as real demand improves and capacity utilization rises above 90% * Source: WSA ** Source: SBB 14
Demand expected to improve in the near term Crude steel production in the US (y/y change %)* 60 40 20 0-20 -40-60 J-02 J-03 HRC North America domestic FOB US Midwest mill USD/short ton** Industry average cost 200 Potential for price increase as apparent demand improvescash J-04 J-05 J-06 J-07 J-08 J-09 1200 1100 1000 900 800 700 600 500 400 300 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 * Source: WSA ** Source: SBB 15
Destocking progressing in Europe Crude steel production in EU-27 (y/y change %)* 50 40 30 20 10 HRC South Europe domestic Ex-Works Euro/t** 800 700 600 0-10 500-20 -30-40 -50 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 400 300 200 J-02 J-03 J-04 J-05 J-06 Industry average cash cost J-07 J-08 J-09 Signs of price increase visible in some products and some markets * Source: WSA ** Source: SBB 16
Stainless steel market showing signs of improvement CR304 European base price and alloy surcharge* CR304 Asian and European total price* 6,900 5,900 4,900 7,000 6,000 5,000 3,900 2,900 Alloy surcharge 4,000 3,000 1,900 2,000 900 1,000 J-04 J-05 J-06 J-07 J-08 J-09 J-04 J-05 J-06 J-07 J-08 J-09 CR 304 - North Europe domestic base price delivered (USD/t) CR 304 - North Europe domestic total price delivered (USD/t) CR 304 - East Asia import CFR (USD/t) CR 304 - North Europe domestic total price delivered (USD/t) Nickel price and base price initiating recovery * Source: SBB 17
Q109 Financials 18
P&L highlights EBITDA to Net Income (USD million) EBITDA (USD billion) 883 Depreciation & impairment 1,118 Operating income Pre-tax Net Income 8.0 8.6 5.0 2.8 0.9 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 EBITDA -1,063 Earnings per share (USD) 1,248 Exceptional item* -1,483 Income from equity -153 Net interest, FOREX & Others** -585-2,221 Minority & Tax 1,158 1.69 4.20 2.79-1.93-0.78 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 EBITDA of USD 0.9 billion in-line with guidance * During the first quarter of 2009, exceptional charges primarily relate to write-downs of inventories ** Includes revaluation of derivative instruments 19
Balance sheet highlights Net Debt & Equity (USD billion) Net Debt (USD billion) and Net Debt/EBITDA ratio (x) Minority 3.7 35 30 2.0 Shareholders' Equity 51.8 26.7 25 20 15 10 1.3x 1.5 1.0 5 Equity Net Debt 0 4Q 2006 1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 0.5 Gearing of 48% Net Debt (USDbn) - LHS Net Debt / EBITDA* (x) - RHS Re-affirming target of USD10 billion net debt reduction by end of 2009** * Based on latest twelve months (LTM) EBITDA ** From September 30, 2008 levels 20
Liquidity highlights Liquidity & short term debt (USD billion) Credit line utilization at 31/03/09 (USD billion) Convertible Unused credit lines 13.2 1.6 7.6 15 10 5 0 13.3 Credit facilities Over 90% of credit facilities maturing 2012 Excess liquidity over short-term debt (USD billion) 5.7 Used Cash & equivalent 4.0 4.8 2.1 1.1 1.6 Commercial paper** Short term & Others Long term debt 15 10 5 9.5 8.4 Excess liquidity proforma Excess liquidity Liquidity* Debt due in Q2 09 0 Q4 2008 Q1 2009* Debt due in quarter USD 13.2 billion liquidity in Q1 2009 including proceeds of convertible bond * Pro forma liquidity includes USD 1.6 billion (EUR 1.25 billion) from convertible bond issued on April 1, 2009 ** Expected to be rolled-over 21
Gross debt maturity Repayment schedule at 31/03/09* (USD billion) 9 8 7 6 5 4 3 2 1 0 8.2 5.4 3.8 4.1 2.5 1.9 2H09 2010 2011 2012 2013 Therafter Bond maturity profile LT Debt maturity (Loans) LT Debt maturity (Credit facilities) LT Debt maturity (other) Refinancing initiatives Refinancing of USD 6.3 billion through new Forward Start facilities maturing in 2012*** Completion of convertible bond of USD 1.6 billion (EUR 1.25 billion) at April 1, 2009 Covenants for all bank facilities Net Debt/EBITDA** not greater than 3.5x No material adverse change clauses Improved debt. maturity profile * Not including USD 1.6 billion (EUR 1.25 billion) from convertible bond issued on 1/04/09 ** Based on last 12 months *** Of which USD 0.3 billion was completed after Q1 22
Conclusion and Guidance 23
Second Quarter 2009 Guidance Volume Volumes to increase slightly from Q1 2009 Price Lower average steel price EBITDA expected to be between USD 1.2 billion and USD 1.5 billion Cost Cost benefit from management gains and raw material reduction Q2 2009 expected to initiate profit recovery 24
Q&A 25