Cautious optimism In recent years we have adapted our footprint to new demand realities, intensified our efforts to control costs and invested in our key franchise businesses. I am happy to report that these considerable efforts are yielding results. Lakshmi N Mittal Chairman and CEO of ArcelorMittal
Our strategy ArcelorMittal s success is built on its core values of sustainability, quality and leadership. Our strategy is to leverage four distinctive attributes: Global scale and scope Unmatched technical capabilities Diverse portfolio of steel and related businesses, particularly mining Financial capability Three themes Steel. We look to extend our leadership in attractive markets by leveraging our technical capabilities and our global scale. These are critical differentiators for sophisticated customers, such as those in the automotive, energy and infrastructure markets. In addition, we will further develop steel businesses that benefit from favourable market structures or geographies. Mining. We are working to grow our already world-class mining business by expanding our top-quality assets, by controlling cost and capital expenditure and by producing highly-valued products. Five key strategic enablers A clear licence to operate. Many of our businesses are located in regions in the early stages of economic development. We recognise that we have an obligation to act responsibly towards all stakeholders. Sustainability is one of our core values. A strong balance sheet. Our balance sheet currently constrains our flexibility for funding organic growth or acquisitions. Achieving the medium-term target for net debt of US$15 billion remains a critical objective. A decentralised structure. Our scale and scope give us a competitive advantage. They also bring the risk of inefficiency and diffuse accountability. Thus we favour a structure in which the responsibility for profit and loss is focused on business units aligned with markets. Active portfolio management. We have historically sought to strengthen the business through acquisition. That remains the case. But we are also willing to dispose of businesses that cannot meet our performance standards. The best talent. Our success will depend on the quality of our people, and our ability to engage, motivate and reward them. We will continue to improve our processes to attract, develop and retain the best talent. Operations. We strive to achieve best-in-class competitiveness. Operational excellence, including health and safety, is at the core of our strategy. We steadily optimise our asset base and have a commitment to continuous improvement.
Message from the chairman and CEO Dear shareholders, In recent years we have adapted our footprint to new demand realities, intensified our efforts to control costs and invested in our key franchise businesses. I am happy to report that these considerable efforts are yielding results. 2013 has been a year of progress. We have made strategic progress, we made progress on profitability and in strengthening the balance sheet. Our 2013 Ebitda was US$6.9 billion, an underlying improvement of 10.7% compared with 2012. We continue to have a medium term Ebitda per ton target of US$150 and whilst there is still a gap to close, we are moving in the right direction. Net debt reduction has been a priority and we ended 2013 with US$16.1 billion net debt. Our mediumterm net debt target remains at US$15 billion. We also continue to make progress on health and safety: the lost time injury frequency rate improved again, to 0.8 in 2013 from 1.0 in 2012. This was ahead of our own internal target. If the period since the onset of the crisis has been marked by adapting to the changed environment and creating a stronger company, now the imperative is to capture the opportunities from a recovery. Our strategy is to leverage four distinctive attributes that will enable us to capture leading positions in the most attractive areas of the steel industry value chain. These qualities are our global scale and scope; our unmatched technical capabilities; our diverse portfolio of steel and related businesses, particularly mining; and our financial capability. In 2013, we have continued to focus on the robust implementation of this strategy, and have made significant progress. In steel, the acquisition of ThyssenKrupp s rolling mill in Calvert, Alabama, with Nippon Steel & Sumitomo Metal Corporation was a milestone. This is one of the highest quality finishing lines in the world, in a strategic location providing significant opportunity in the growing NAFTA automotive steel and energy markets. The improvement in the overall economic situation also led us to restart selected steel growth projects. In Brazil, we restarted the first phase of our Monlevade project. In Dofasco, Canada, we restarted our project to expand and upgrade galvanising capacity by 2015. In mining, we increased capacity by 10 million tonnes in 2013, and we are on track to reach our 2015 capacity target of 84 million tonnes. The big 2013 achievement was the completion of the ArcelorMittal Mines Canada capacity expansion to 24 million tonnes. Our Liberia project is also delivering good results. Phase one shipments increased by over 150% in 2013, ahead of expectations, and phase two is ongoing. We also continue innovating in our products and processes. In 2013 we unveiled an innovative ultra-lightweight car door, demonstrating that a 27% weight and cost saving is possible, without compromising safety and structural requirements. In conclusion, I am very satisfied with the progress we are making. The actions we have taken over the past five years are yielding the right results. We have a competitive cost position in each region we serve and we are exposed to the areas with the biggest potential for demand recovery over the next five years. We have identified and are investing in our key franchise businesses. And we are continuing to meet the demands of our customers with the highest quality products. Lakshmi N Mittal Chairman and CEO
Financial highlights 2013 We have started the year in a stronger position than recent years and are cautiously optimistic about the prospects for 2014. We see a year of growth in global apparent steel consumption with a greater bias towards the core markets. Aditya Mittal CFO and CEO ArcelorMittal Europe, member of the Group Management Board Sales (US$ million) 2013 79,440 2012 1 84,213 Ebitda 2 (US$ million) 2013 6,888 2012 1 7,679 Steel shipments (million tonnes) 2013 84.3 2012 83.8 Operating income/(loss) (US$ million) 2013 1,197 2012 1 (2,645) Net (loss) (US$ million) 2013 (2,545) 2012 1 (3,352) Basic (loss) per share (US$) 2013 (1.46) 2012 1 (2.17)
2013 steel shipments by location (thousand tonnes) 3 Segment Total Flat Carbon Americas: 22,341 1 North America 18,127 2 South America 4,214 Flat Carbon Europe: 27,219 3 Europe 27,219 Long Carbon Americas and Europe: 22,370 4 North America 4,661 5 South America 5,478 6 Europe 11,247 7 Other 4 984 AACIS (Asia, Africa and CIS 5 ): 12,345 8 Africa 4,163 9 Asia, CIS and other 8,182 8 7 6 5 4 9 3 1 2 Own annual coal production (million metric tonnes) 6 2013 8.1 2012 8.2 2011 8.3 Own annual iron ore production (million metric tonnes) 6 2013 58.4 2012 55.9 2011 54.1 1 On January 1, 2013, in accordance with IFRS as issued by the International Accounting Standards Board ( IASB ), ArcelorMittal mandatorily adopted IFRS 10 ( Consolidated Financial Statements ), IFRS 11 ( Joint Arrangements ), IFRS 12 ( Disclosure of Interests in Other Entities ), IFRS 13 ( Fair Value Measurement ), the revision of IAS 19 ( Employee Benefits ) and IFRIC 20 ( Stripping Costs in the Production Phase of a Surface Mine ). Prior period 2012 information has been adjusted retrospectively for the mandatory adoption of these new standards and interpretations except for IFRS 13 which is applied only prospectively. The main effects for ArcelorMittal are related to the revision of IAS 19R which was applied retrospectively. Following the changes, the previously unrecognised actuarial gains and losses on pension liabilities are recorded in the statements of financial position in full against equity. It means that the previously unrecognised actuarial gains and losses are no longer recorded over time against profit and loss following the then allowed corridor approach. All future actuarial gains and losses will also be immediately recognised in other comprehensive income (OCI). In addition, for purposes of measuring the net financial cost on pension liabilities/assets, the expected rate of return on assets must be equal to the discount rate applicable to liabilities. 2 Ebitda is defined as operating income plus depreciation, impairment expenses and exceptional items. 3 Shipments originating from a geographical location. 4 Includes Tubular products business. 5 Commonwealth of Independent States. 6 Not including supplies under strategic long-term contracts.
Business overview ArcelorMittal is the world s leading steel and mining company, with a presence in more than 60 countries and an industrial footprint in over 20 countries. Guided by a philosophy to produce safe, sustainable steel, we are the leading supplier of quality steel in the major global steel markets including automotive, construction, household appliances and packaging, with world-class research and development and outstanding distribution networks. Through our core values of sustainability, quality and leadership, we operate responsibly with respect to the health, safety and wellbeing of our employees, contractors and the communities in which we operate. We are one of the world s five largest producers of iron ore and metallurgical coal and our mining business is an essential part of our growth strategy. With a geographically diversified portfolio of iron ore and coal assets, we are strategically positioned to serve our network of steel plants and the external global market. While our steel operations are important customers, our supply to the external market is increasing as we grow. ArcelorMittal 19, Avenue de la Liberté L-2930 Luxembourg Grand Duchy of Luxembourg T: +352 4792 3198 www.arcelormittal.com Photography: ArcelorMittal photo library; David Laurent/WILI.LU. Designed and produced by www.thoburns.com (United Kingdom). Copyright 2014 ArcelorMittal.
Highlights 2013 January ArcelorMittal is declared gold class within the steel sector in the 2013 RobecoSAM Sustainability Yearbook at the World Economic Forum in Davos. February ArcelorMittal Florange launches the first line in the world to produce extra-wide Usibor for the automotive industry. June ArcelorMittal unveils new ultra lightweight car door solutions offering up to 34 percent weight savings over existing steel car doors. July ArcelorMittal Brazil sites supply half the steel needed for 2014 FIFA World Cup, for a variety of buildings from stadiums, to train stations to giant aquariums. September ArcelorMittal maintains membership in Dow Jones Sustainability Index Europe. ArcelorMittal and Sider finalise a strategic agreement including an investment plan of US$763 million with a project to more than double the plant s production capacity from 1 million to 2.2 million tonnes per year by 2017. October The World Steel Association recognises ArcelorMittal s sites in Venezuela and Mexico for excellence in their health and safety programmes. November President Obama visits ArcelorMittal Cleveland facilities, where he meets employees at the hot dip galvanising line and gives a speech on the economy. ArcelorMittal acquires ThyssenKrupp Steel USA with Nippon Steel & Sumitomo Metal Corporation for US$1,550 million. The transaction was completed in February 2014. Photo: ArcelorMittal Orbit, London
December ArcelorMittal simplifies its organisation. The business will be managed according to regions, while maintaining the product specialisation within those regions, enabling them to have their own dedicated strategy and focus, while capturing synergies. Michel Wurth notifies his intention to retire from ArcelorMittal in April 2014. He will retain his links with the company as chairman of ArcelorMittal Luxembourg and, subject to approval at the annual general meeting, as a member of the ArcelorMittal board of directors. The ramp-up of expanded capacity at ArcelorMittal Mines Canada is completed with run-rate of 24 million tonnes.