Luxembourg, July 28, 2010
- ArcelorMittal (referred to as "ArcelorMittal" or the "Company") (MT (New York, Amsterdam, Paris, Brussels, Luxembourg), MTS (Madrid)), the world's leading steel company, today announced results
[1]
for the three months and six month periods ended June 30, 2010.
Highlights for the three months ended June 30, 2010:
-
Health and Safety frequency rate
[2]
marginally improved compared with Q1 2010
-
EBITDA
[3]
of $3.0 billion in Q2 2010, up 59% compared to Q1 2010
-
Net debt
[4]
decreased by $0.4 billion to $20.3 billion during Q2 2010 primarily due to foreign exchange impacts
Performance and industrial plan:
-
Capacity utilization increased to 78% in Q2 2010 from 72% in Q1 2010
-
$3.0 billion of annualized sustainable cost reduction achieved by the end of Q2 2010
Guidance for the three months ended September 30, 2010:
-
EBITDA expected to be between $2.1 billion - $2.5 billion
-
Capacity utilization is expected to decrease to approximately 70% due to seasonal slowdown
Stainless steel segment spin-off assessment
-
ArcelorMittal is assessing the spin-off of its stainless steel segment to its shareholders
Financial highlights (on the basis of IFRS
[1]
, amounts in USD):
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$21,651
|
$18,652
|
$15,176
|
$40,303
|
$30,298
|
|
EBITDA
|
3,002
|
1,888
|
1,221
|
4,890
|
2,104
|
|
Operating Income / (Loss)
|
1,723
|
686
|
(1,184)
|
2,409
|
(2,667)
|
|
Net Income / (Loss)
|
1,704
|
679
|
(792)
|
2,383
|
(1,855)
|
|
|
|
|
|
|
|
|
Iron
Ore
Production (Mt)
|
16.4
|
15.8
|
12.1
|
32.2
|
24.0
|
|
Crude Steel Production (Mt)
|
24.8
|
23.1
|
15.9
|
47.9
|
31.1
|
|
Steel Shipments (Mt)
|
22.8
|
21.5
|
17.0
|
44.3
|
32.9
|
|
EBITDA/tonne (US$/t)
|
132
|
88
|
72
|
110
|
64
|
|
Operating Income (loss)/tonne (US$/t)
|
76
|
32
|
(70)
|
54
|
(81)
|
|
Basic Earnings per share (USD)
|
1.13
|
0.45
|
(0.57)
|
1.58
|
(1.34)
|
Commenting, Mr. Lakshmi N. Mittal, Chairman and CEO, ArcelorMittal, said:
"The improved performance in the second quarter is in line with our expectations and reflects the continued slow and progressive recovery. Although the third quarter will be impacted by a combination of seasonal factors and the effects of the economic slowdown in China, underlying demand continues to show improvement. The challenge for the second half of the year will be to pass on the full extent of cost increases to our customers.
Separately, we are assessing the spin-off of our stainless division from the remainder of the group. We have confidence in the future of the stainless business and believe that the creation of a separately focussed company will create additional value for all shareholders."
Second quarter 2010 news conference (for media)
ArcelorMittal management will host a news conference:
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Date
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New York
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London
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Luxembourg
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Wednesday July 28, 2010
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4.30am
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9.30am
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10.30am
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The dial in numbers:
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Location
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Dial in numbers
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Replay numbers
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International number:
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+44 (0)20 7806 1953
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+44 207 111 1244
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UK
:
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020 7806 1953
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0207 111 1244
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USA
:
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+1 212 444 0412
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+1 347 366 9565
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France
:
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+33 (0)1 70 99 42 96
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+33 (0)1 74 20 28 00
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A replay of the conference call will be available for one week by dialing
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Language
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English
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Spanish
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French
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Access code
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4113241#
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6711459#
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4861697#
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Second quarter 2010 earnings analyst conference call
Additionally, ArcelorMittal management will host a conference call for members of the investment community to discuss the second quarter 2010 financial performance at:
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Date
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New York
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London
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Luxembourg
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Wednesday July 28, 2010
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9.30am
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2.30pm
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3.30pm
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The dial in numbers:
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Location
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Dial in numbers
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Replay numbers
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International number:
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+44 207 136 6284
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+44 207 111 1244
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UK
:
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0207 136 6284
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0207 111 1244
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USA
:
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+1 212 444 0413
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+1 718 354 1112
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A replay of the conference call will be available for one week by dialing
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Language
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English
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Access code
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9291324#
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The conference call will include a brief question and answer session with senior management. The presentation will be available via a live video webcast on www.arcelormittal.com
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, 2009 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.
About ArcelorMittal
ArcelorMittal is the world's leading steel company, with presence in more than 60 countries.
ArcelorMittal is the leader in all major global steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. With an industrial presence in over 20 countries spanning four continents, the Company covers all of the key steel markets, from emerging to mature.
Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and well-being of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment. It takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combat climate change.
In 2009, ArcelorMittal had revenues of $65.1 billion and crude steel production of 73.2 million tonnes, representing approximately 6 per cent of world steel output.
ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Brussels (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
For more information about ArcelorMittal visit: www.arcelormittal.com .
Enquiries
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Contact information ArcelorMittal Investor Relations
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Europe
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Tel: +352 4792 2652
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Americas
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Tel: +1 312 899 3569
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Retail
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Tel: +352 4792 2434
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SRI
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Tel: +44 203 214 2854
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Bonds/Credit
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Tel: +33 1 7192 1026
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ArcelorMittal Corporate Communications
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E-mail: press@arcelormittal.com
Tel: +352 4792 5000
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Giles Read (Head of Media Relations)
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Tel: +44 20 3214 2845
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Arne Langner
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Tel: +352 4792 3120
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Jean Lasar
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Tel: +352 4792 2359
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Lynn Robbroeckx
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Tel: +352 4792 3193
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United Kingdom
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Maitland Consultancy: Martin Leeburn
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Tel: +44 20 7379 5151
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ArcelorMittal second quarter 2010 results
ArcelorMittal, the world's leading steel company, today announced results for the three months ended June 30, 2010.
Corporate responsibility performance and initiatives
Health and safety - Own personnel and contractors lost time injury frequency rate
[2]
Total safety performance in steel and mining operations, based on own personnel figures and contractors lost time injury frequency rate, improved to 1.8 for the second quarter of 2010 as compared to 1.9 in the first quarter of 2010. Significant improvements in the safety performance of our mining operations, Asia Africa and CIS, and Distribution Solutions divisions (formerly known as Steel Solutions and Services) were offset by deterioration in the Flat Carbon Europe, Long Carbon Americas and Europe and Stainless Steel divisions.
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Own Personnel and contractors - Frequency Rate
|
|
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|
|
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Lost time injury frequency rate
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2Q 10
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1Q 10
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2Q 09
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6M 10
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6M 09
|
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Total Mines
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1.6
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1.8
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3.1
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1.7
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2.7
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|
|
|
|
|
|
|
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Lost time injury frequency rate
|
2Q 10
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1Q 10
|
2Q 09
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6M 10
|
6M 09
|
|
Flat Carbon Americas
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1.9
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1.9
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1.5
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1.9
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2.1
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Flat Carbon Europe
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2.5
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2.3
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1.4
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2.4
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1.6
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Long Carbon Americas and Europe
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2.1
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2.0
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2.1
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2.1
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1.9
|
|
Asia Africa and CIS
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0.6
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1.1
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0.7
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0.8
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0.8
|
|
Stainless Steel
|
3.0
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2.3
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0.5
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2.7
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0.6
|
|
Distribution Solutions
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2.4
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3.4
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4.7
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2.9
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3.9
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Total Steel
|
1.8
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1.9
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1.6
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1.9
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1.7
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|
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|
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Lost time injury frequency rate
|
2Q 10
|
1Q 10
|
2Q 09
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6M 10
|
6M 09
|
|
Total (Steel and Mines)
|
1.8
|
1.9
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1.8
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1.8
|
1.8
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Key initiatives for the three months ended June 30, 2010
-
ArcelorMittal published its third Group Corporate Responsibility report. The report demonstrates ArcelorMittal's continued progress toward its goal of delivering safe, sustainable steel, despite the challenges posed by the severe economic downturn.
-
ArcelorMittal announced three dust reduction system technology investments which will bring significant reductions in emissions and reduce effects on the environment. These include a euro7 million ($9 million) filter system for de-dusting of the sintering plant at ArcelorMittal Eisenhüttenstadt, Germany and a new dust reduction facility at ArcelorMittal Zenica, Bosnia & Herzegovina ($1 million). ArcelorMittal South Africa also launched a R220 million ($27 million) dust emission control system at the company's Vereeniging plant.
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ArcelorMittal, the ArcelorMittal Foundation, the National Fish and Wildlife Foundation, local officials and federal agency partners, recently announced 25 projects (in the United States and Canada) selected to receive a total of $7.6 million in funding through the "Sustain Our Great Lakes" program. The 25 selected projects will help protect, restore and enhance the ecological integrity of the Great Lakes and surrounding region in North America.
Analysis of results for the three months ended June 30, 2010 versus the three months ended March 31, 2010 and the three months ended June 30, 2009
ArcelorMittal recorded net income for the three months ended June 30, 2010 of $1.7 billion, or $1.13 per share, as compared with net income of $0.7 billion, or $0.45 per share, for the three months ended March 31, 2010, and a net loss of $0.8 billion, or $(0.57) per share, for the three months ended June 30, 2009.
Total steel shipments for the three months ended June 30, 2010 were 22.8 million metric tonnes as compared with 21.5 million metric tonnes for the three months ended March 31, 2010, and 17.0 million metric tonnes for the three months ended June 30, 2009.
Sales for the three months ended June 30, 2010 were up 16% at $21.7 billion as compared with $18.7 billion for the three months ended March 31, 2010, and up 43% as compared with $15.2 billion for the three months ended June 30, 2009. Sales were higher during the second quarter of 2010 as compared to the first quarter of 2010 due to higher volumes (+6%) and higher average steel selling prices (+9%) primarily driven by higher raw material prices.
Operating income for the three months ended June 30, 2010 was $1.7 billion, as compared with $0.7 billion for the three months ended March 31, 2010, and an operating loss for the three months ended June 30, 2009 of $1.2 billion.
Depreciation expense remained flat at $1.2 billion for the three months ended June 30, 2010, March 31, 2010 and June 30, 2009, respectively.
Impairment cost for the three months ended June 30, 2010 was $119 million and resulted from the sale of the Anzherkoye steam coal mine in Russia which was sold in July 2010. No impairments were recorded in the three months ended March 31, 2010.
Operating performance for the three months ended June 30, 2010 included a non-cash gain of $92 million relating to unwinding of hedges on raw material purchases as compared to an $89 million gain recorded in the three months ended March 31, 2010. Operating performance for the three months ended June 30, 2009 had been negatively impacted by exceptional charges amounting to $1.2 billion related to write-downs of inventory ($0.9 billion) and provisions for workforce reductions ($0.3 billion).
Income from equity method investments and other income for the three months ended June 30, 2010 resulted in a gain of $183 million, as compared to gains of $94 million and $11 million for the three months ended March 31, 2010 and June 30, 2009, respectively. The increase in the second quarter of 2010 resulted from improvements in the operating performance of our investees.
Net interest expense (including interest expense and interest income) decreased to $308 million for the three months ended June 30, 2010 from $355 million for the three months ended March 31, 2010, primarily due to the impact of exchange rate fluctuations and one-time interest savings resulting from the early retirement of outstanding debt securities in the United States. Net interest expense for the three months ended June 30, 2009 was $401 million.
During the three months ended June 30, 2010, the Company also recorded a gain of $555 million (compared to a $141 million gain in the first quarter of 2010) primarily as a result of mark-to-market adjustments relating to its convertible bonds issued in 2009.
Foreign exchange and other net financing costs
[5]
for the three months ended June 30, 2010 amounted to $479 million (primarily including a loss of foreign exchange $387 million on deferred tax assets), as compared to $188 million and $142 million for the three months ended March 31, 2010 and June 30, 2009, respectively.
Gains related to the fair value of other derivative instruments for the three months ended June 30, 2010 amounted to $34 million, as compared with losses of $8 million and $20 million for the three months ended March 31, 2010 and June 30, 2009, respectively.
ArcelorMittal recorded an income tax benefit of $0.1 billion for the three months ended June 30, 2010, as compared to an income tax benefit of $0.3 billion for the three months ended March 31, 2010. The income tax benefit for the three months ended June 30, 2009 was $1.2 billion.
Profits attributable to non-controlling interests for the three months ended June 30, 2010 were $79 million as compared with $40 million for the three months ended March 31, 2010. Losses attributable to non-controlling interests for the three months ended June 30, 2009 were $62 million.
Capital expenditure projects
The following tables summarize the Company's principal growth and optimization projects involving significant capital expenditures.
Completed Projects
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Segment
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Site
|
Project
|
Capacity / particulars
|
Actual Completion
|
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FCA
|
ArcelorMittal Tubarao (Brazil)
|
Hot strip mill expansion project
|
Hot strip mill capacity increase from 2.7mt to 4mt / year
|
4Q 09
|
|
FCA
|
Volcan (Mexico)
|
Mine development
|
Production increase of 1.6mt of iron ore in 2010
|
4Q 09
|
|
FCA
|
ArcelorMittal Tubarao (Brazil)
|
Vega do Sul expansion plan
|
Increase in HDG production of 350kt / year
|
2Q 10
|
|
idth="32%">FCA
|
ArcelorMittal Dofasco (Canada)
|
Primary steelmaking optimization
|
Increase of slab capacity by 630kt / year
|
2Q 10
|
Ongoing (a) Projects
|
Segment
|
Site
|
Project
|
Capacity / particulars
|
Forecasted Completion
|
|
FCE
|
ArcelorMittal Dunkerque (France)
|
Modernization of continuous caster No.21
|
Slab capacity increase by 0.8mt / year
|
2H 10
|
|
-
|
Princeton Coal (USA)
|
Underground mine expansion
|
Capacity increase by 0.7mt
|
2H 10
|
|
AACIS
|
Liberia
mines
|
Greenfield
Liberia
|
Iron ore production of 15mt / year
|
2011 (b)
|
|
LCA
|
Monlevade (Brazil)
|
Wire rod production expansion
|
Increase in capacity of finished products by 1.15mt
|
2012
|
|
FCA
|
ArcelorMittal Mines Canada
|
Replacement of spirals for enrichment
|
Increase iron ore production by 0.8mt / year
|
2013
|
|
FCA
|
ArcelorMittal Dofasco (Canada)
|
Optimization of galvanizing and galvalume operations
|
Optimize cost and increase galvalume production by 0.1mt / year
|
2013
|
a) Ongoing projects refer to projects for which construction has begun and exclude various projects that are under development such as in India.
b) Iron ore mining production is expected to commence in 2011 with initial annual production of 1 million tonnes.
Projects through Joint Ventures
|
Country
|
Site
|
Project
|
Capacity / particulars
|
Forecasted completion
|
|
Saudi Arabia
|
Al-Jubail
|
Seamless tube mill
|
Capacity of 600kt of seamless tube
|
2012
|
|
China
|
Hunan
Province
|
VAMA Auto Steel JV
|
Capacity of 1.2mt for the auto market
|
2012
|
|
China
|
Hunan
Province
|
VAME Electrical Steel JV
|
Capacity of 0.3mt of electrical steel
|
2012
|
|
Iraq
|
Sulaimaniyah (Northern Iraq)
|
Rebar Mill
|
Rebar capacity of 0.25mt / year
|
2012
|
Analysis of segment operations for the three months ended June 30, 2010 as compared to the three months ended March 31, 2010
Flat Carbon Americas
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$5,135
|
$4,431
|
$2,766
|
$9,566
|
$5,984
|
|
EBITDA
|
1,075
|
574
|
176
|
1,649
|
263
|
|
Operating Income / (Loss)
|
819
|
326
|
(356)
|
1,145
|
(1,020)
|
|
|
|
|
|
|
|
|
Crude Steel Production ('000t)
|
5,854
|
5,679
|
3,332
|
11,533
|
6,831
|
|
Steel Shipments ('000t)
|
5,346
|
5,271
|
3,481
|
10,617
|
7,125
|
|
Average Selling Price (US$/t)
|
810
|
722
|
665
|
766
|
709
|
|
EBITDA/tonne (US$/t)
|
201
|
109
|
51
|
155
|
37
|
|
Operating Income (loss) /tonne (US$/t)
|
153
|
62
|
(102)
|
108
|
(143)
|
Flat Carbon Americas crude steel production reached 5.9 million tonnes for the three months ended June 30, 2010, an increase of 3% as compared to 5.7 million tonnes for the three months ended March 31, 2010.
Sales in the Flat Carbon Americas segment were $5.1 billion for the three months ended June 30, 2010, an increase of 16% as compared to $4.4 billion for the three months ended March 31, 2010. Sales improved primarily due to higher average steel selling prices (+12%) and marginally higher steel shipments (+1%).
EBITDA almost doubled to $1.1 billion, with EBITDA/tonne increasing by $92/tonne to $201/tonne. EBITDA improvement in the quarter was driven primarily from our North American operations including improved results of the mining operations.
Flat Carbon Europe
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$6,590
|
$5,875
|
$4,539
|
$12,465
|
$9,181
|
|
EBITDA
|
555
|
508
|
517
|
1,063
|
979
|
|
Operating Income / (Loss)
|
217
|
138
|
(418)
|
355
|
(602)
|
|
|
|
|
|
|
|
|
Crude Steel Production ('000t)
|
8,507
|
7,406
|
4,059
|
15,913
|
8,624
|
|
Steel Shipments ('000t)
|
7,540
|
6,856
|
4,974
|
14,396
|
9,788
|
|
Average Selling Price (US$/t)
|
776
|
757
|
797
|
767
|
817
|
|
EBITDA/tonne (US$/t)
|
74
|
74
|
104
|
74
|
100
|
|
Operating Income (loss) /tonne (US$/t)
|
29
|
20
|
(84)
|
25
|
(62)
|
Flat Carbon Europe crude steel production reached 8.5 million tonnes for the three months ended June 30, 2010, an increase of 15% as compared to 7.4 million tonnes for the three months ended March 31, 2010.
Sales in the Flat Carbon Europe segment were $6.6 billion for the three months ended June 30, 2010 an increase of 12% as compared to $5.9 billion for the three months ended March 31, 2010. Sales improved primarily as a result of higher steel shipments (+10%) and higher average steel selling prices (+3%).
EBITDA and operating results for the three months ended June 30, 2010 and March 31, 2010 included a non-cash gain relating to the unwinding of hedges on raw material purchases of $92 million and $89 million, respectively. EBITDA/tonne remained flat at $74/tonne.
Long Carbon Americas and Europe
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$5,476
|
$4,768
|
$4,045
|
$10,244
|
$7,861
|
|
EBITDA
|
704
|
485
|
327
|
1,189
|
595
|
|
Operating Income / (Loss)
|
435
|
222
|
(51)
|
657
|
(242)
|
|
|
|
|
|
|
|
|
Crude Steel Production ('000t)
|
6,015
|
5,738
|
4,857
|
11,753
|
8,804
|
|
Steel Shipments ('000t)
|
5,984
|
5,694
|
5,261
|
11,678
|
9,684
|
|
Average Selling Price (US$/t)
|
808
|
728
|
703
|
769
|
738
|
|
EBITDA/tonne (US$/t)
|
118
|
85
|
62
|
102
|
61
|
|
Operating Income (loss) /tonne (US$/t)
|
73
|
39
|
(10)
|
56
|
(25)
|
Long Carbon Americas and Europe crude steel production reached 6.0 million tonnes for the three months ended June 30, 2010, an increase of 5% as compared to 5.7 million tonnes for the three months ended March 31, 2010.
Sales in the Long Carbon Americas and Europe segment were $5.5 billion for the three months ended June 30, 2010, an increase of 15% as compared to $4.8 billion for the three months ended March 31, 2010. Sales improved primarily due to higher average steel selling prices (+11%) and higher steel shipments (+5%).
Operating performance improved in the second quarter of 2010 as compared with the first quarter of 2010 primarily due to improvements in our North American and European operations. During the second quarter of 2010, EBITDA/tonne increased by $33/tonne (+39%) to $118/tonne as compared to $85/tonne in the first quarter of 2010.
Asia Africa and CIS ("AACIS")
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$2,560
|
$2,148
|
$1,715
|
$4,708
|
$3,366
|
|
EBITDA
|
483
|
275
|
273
|
758
|
457
|
|
Operating Income / (Loss)
|
338
|
133
|
20
|
471
|
2
|
|
|
|
|
|
|
|
|
Crude Steel Production ('000t)
|
3,885
|
3,684
|
3,227
|
7,569
|
6,130
|
|
Steel Shipments ('000t)
|
3,409
|
3,204
|
2,897
|
6,613
|
5,651
|
|
Average Selling Price (US$/t)
|
624
|
557
|
474
|
591
|
478
|
|
EBITDA/tonne (US$/t)
|
142
|
86
|
94
|
115
|
81
|
|
Operating Income (loss) /tonne (US$/t)
|
99
|
42
|
7
|
71
|
0
|
AACIS segment crude steel production was 3.9 million tonnes for the three months ended June 30, 2010, an increase of 5% as compared to 3.7 million tonnes for the three months ended March 31, 2010.
Sales in the AACIS segment were $2.6 billion for the three months ended June 30, 2010, an increase of 19% as compared to $2.1 billion for the three months ended March 31, 2010. Sales improved primarily due to higher average steel selling prices (+12%) and higher steel shipments (+6%).
Operating performance improved in second quarter of 2010 as compared with the first quarter of 2010, primarily due to improvement in our CIS operations. During the second quarter of 2010, EBITDA/tonne increased by $56/tonne (+65%) to $142/tonne as compared to $86/tonne in the first quarter of 2010.
Stainless Steel
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$1,537
|
$1,293
|
$974
|
$2,830
|
$1,920
|
|
EBITDA
|
191
|
149
|
17
|
340
|
12
|
|
Operating Income / (Loss)
|
119
|
71
|
(64)
|
190
|
(233)
|
|
|
|
|
|
|
|
|
Crude Steel Production ('000t)
|
588
|
546
|
387
|
1,134
|
704
|
|
Steel Shipments ('000t)
|
482
|
436
|
363
|
918
|
678
|
|
Average Selling Price (US$/t)
|
3,014
|
2,744
|
2,531
|
2,886
|
2,665
|
|
EBITDA/tonne (US$/t)
|
396
|
342
|
47
|
370
|
18
|
|
Operating Income (loss) /tonne (US$/t)
|
247
|
163
|
(176)
|
207
|
(344)
|
Stainless Steel segment crude steel production reached 588 thousand tonnes for the three months ended June 30, 2010, an increase of 8% as compared to 546 thousand tonnes for the three months ended March 31, 2010.
Sales in the Stainless Steel segment were $1.5 billion for the three months ended June 30, 2010, an increase of 19% as compared to $1.3 billion for the three months ended March 31, 2010. Sales improved primarily due to higher steel shipments (+11%) and higher average steel selling prices (+10%).
Operating performance improved in the second quarter of 2010 as compared with the first quarter of 2010. During the second quarter of 2010, EBITDA/tonne increased by $54/tonne (+16%) to $396/tonne as compared to $342/tonne in the first quarter of 2010.
Distribution Solutions
[6]
|
(USDm) unless otherwise shown
|
2Q 10
|
1Q 10
|
2Q 09
|
6M 10
|
6M 09
|
|
Sales
|
$3,999
|
$3,492
|
$3,435
|
$7,491
|
$6,789
|
|
EBITDA
|
187
|
57
|
(116)
|
244
|
(135)
|
|
Operating Income / (Loss)
|
142
|
4
|
(286)
|
146
|
(456)
|
|
|
|
|
|
|
|
|
Steel Shipments ('000t)
|
4,602
|
4,353
|
4,546
|
8,955
|
8,420
|
|
Average Selling Price (US$/t)
|
833
|
770
|
717
|
802
|
769
|
Sales in the Distribution Solutions segment were $4.0 billion for the three months ended June 30, 2010, an increase of 15% as compared to the three months ended March 31, 2010. Sales improved primarily due to higher steel shipment volumes (+6%) and higher average selling prices (+8%).
Liquidity and Capital Resources
For the three months ended June 30, 2010, net cash provided by operating activities was $0.4 billion, compared to net cash used in operations of $0.7 billion for the three months ended March 31, 2010. The cash flow from operating activities for the second quarter of 2010 included $2.3 billion of investment in operating working capital changes as compared to $1.7 billon in the first quarter of 2010. Despite the increase in activity levels, rotation days
[7]
decreased from 67 days in the first quarter of 2010 to 65 days in the second quarter of 2010. However, the reduction in rotation days during the second quarter was primarily due to foreign exchange. Cash used in other operating activities for the three months ended June 30, 2010 amounted to $27 million, consisting primarily of tax refunds, inflows from the True Sale of Receivables programs and reversals of exchange losses and the non-cash gains of $555 million from the marking to market of the convertible bonds and $92 million relating to hedges on raw material purchases.
Net cash used in investing activities for the three months ended June 30, 2010 was $0.8 billion, compared to $0.7 billion for the three months ended March 31, 2010. Capital expenditures increased to $0.6 billion for the three months ended June 30, 2010 as compared to $0.5 billion for the three months ended March 31, 2010. In addition the Company spent $117 million on various investing activities primarily relating to the purchase of the minority stake in ArcelorMittal Ostrava. The Company continues to expect capital expenditures to total approximately $4.0 billion in 2010.
During the second quarter of 2010, the Company paid dividends amounting to $309 million as compared to $282 million in the first quarter 2010.
At June 30, 2010, the Company's cash and cash equivalents (including restricted cash and short-term investments) amounted to $2.6 billion as compared to $3.8 billion at March 31, 2010. During the quarter net debt decreased by $0.4 billion to $20.3 billion as compared with $20.7 billion at March 31, 2010. Excluding the impact of foreign exchange net debt would have increased by $0.5 billion. During the quarter operating working capital (defined as inventory plus trade accounts receivables less trade accounts payables) increased by $1.2 billion to $14.1 billion as compared to $12.9 billion at March 31, 2010, due to higher activity levels and prices. Furthermore, the difference between the increase in operating working capital as appearing in the balance sheet and on cash flow statement is primarily due to foreign exchange.
The Company had liquidity of $12.8
[8]
billion at June 30, 2010, compared with liquidity of $14.5 billion at March 31, 2010, consisting of cash and cash equivalents (including restricted cash and short-term investments) of $2.6 billion and $10.2 billion of available credit lines. During the second quarter of 2010, the Company refinanced and extended the maturity of its $4 billion syndicated credit facility and increased this to $4.6 billion by signing two new three-year bilateral revolving credit facilities.
Update on management gains, fixed cost reduction program and capacity utilizatio
n
At the end of the second quarter of 2010, the Company had achieved annualized sustainable savings of $3.0 billion as compared to $2.9 billion as of the end of March 31, 2010, meeting its 2010 full-year target to achieve management gains of $3.0 billion of sustainable SG&A and fixed cost reductions. The Company has also achieved $3.9 billion ($1.8 billion at a constant dollar
[9]
) of annualized temporary fixed cost savings in the second quarter of 2010 resulting from industrial optimization in response to lower demand.
Capacity utilization increased to approximately 78% in the second quarter of 2010, as compared to approximately 72% in the first quarter of 2010.
Stainless Steel segment spin-off assessment
The Board of ArcelorMittal has decided to assess the spin-off of its stainless steel business from the remainder of the group subject to appropriate legal and tax analysis and regulatory approvals. Such a spin-off would enable the stainless steel business to benefit from better visibility in the markets, and to pursue its growth strategy as an independent company in the emerging markets and in speciality products including electrical steel.
Recent Developments
-
On June 30, 2010 the European Commission announced its decision concerning the investigation into alleged anti-competitive practices of European manufacturers of pre-stressed wire and strands steel products, including certain subsidiary companies of the ArcelorMittal Group. The total amount of the fines imposed by the European Commission's decision on companies of the Group is euro317 million. The European Commission investigation has been pending since 2002 and the alleged anticompetitive practices that it has examined date back to a period over 25 years ago. ArcelorMittal and its affected subsidiaries are currently reviewing the decision in detail and considering all available options. The deadline to file an appeal is mid-September 2010 and an appeal is under preparation. ArcelorMittal and its subsidiaries have cooperated fully with the Commission throughout the investigation.
-
On June 11, 2010, shareholders of ArcelorMittal Ostrava a.s. agreed at an Extraordinary General Meeting in Ostrava that ArcelorMittal would acquire the 3.57% of the company's shares that it does not already own. The price per share of 4,000 CZK offered by ArcelorMittal is based on an independent expert valuation of ArcelorMittal Ostrava a.s. and was agreed to be fair by the Board of Directors of ArcelorMittal Ostrava a.s. The total consideration for the minority share is 1,769,648,000 CZK (approximately $84 million). In January 2010, ArcelorMittal increased its stake in ArcelorMittal Ostrava a.s. to 96.43%, thereby enabling it to exercise its right to acquire all outstanding shares in ArcelorMittal Ostrava a.s.
-
On May 11, 2010, the Annual General Meeting of shareholders of ArcelorMittal held in Luxembourg approved all 13 resolutions on the agenda. 907,523,168 shares, or 58.14% of the Company's share capital, were present or represented at the meeting. All the resolutions on the meeting's agenda were adopted by the shareholders by an overwhelming majority. In particular, the shareholders acknowledged the expirations of the mandates of Mr. John O. Castegnaro, Mr. José Ramón Álvarez Rendueles Medina, and Mrs. Vanisha Mittal Bhatia as members of the Board of Directors. They re-elected Mrs. Vanisha Mittal Bhatia and elected Mr. Jeannot Krecké as members of the Board of Directors, both for a three-year term. Mr. Jeannot Krecké has been co-opted by the Board of Directors to join the Board on January 1, 2010 in replacement of Mr. Georges Schmit who resigned from the Board of Directors on December 31, 2009.
-
On May 11, 2010, the Company issued its corporate responsibility report for the 2009 financial year: Our progress towards Safe Sustainable Steel. The report demonstrates the Company's continued progress against its goals of delivering safe, sustainable steel, despite the challenges posed by the most severe economic downturn in recent memory.
-
On July 22, 2010, ArcelorMittal announced that an interim arrangement has been reached with Sishen Iron Ore Company Limited (SIOC) in terms of a pricing agreement in respect of the supply of iron ore to ArcelorMittal's production facilities in South Africa. ArcelorMittal and SIOC have agreed a fixed price of $50 per ton of iron ore for lump material, which is for delivery to the Saldanha plant, and $70 per ton for both lump and iron ore fine material delivered to ArcelorMittal's inland plants. In terms of the interim supply agreement, ArcelorMittal will continue to purchase the annual 6.25 million tonnes of iron ore under the standard payment terms, which is consistent with the disputed supply agreement. ArcelorMittal will continue to pay the transport costs. There will be no escalation in the prices agreed for the duration of the interim period, which commenced from March 1, 2010 and will expire on July 31, 2011. Any iron ore in addition to the maximum monthly amount will be purchased by ArcelorMittal at the then prevailing spot calculated export parity price.
As announced previously, ArcelorMittal imposed a surcharge on its domestic sales to compensate for some of the iron ore cost increase. In view of the interim agreement, ArcelorMittal will, with effect from August 1, 2010, charge a single all-in price, reflecting the higher cost of iron ore, rather than a separate surcharge, as had been charged previously. ArcelorMittal customers have been informed of this revision in its commercial policy. The extra amount that is now due and payable to Kumba exceeds the funds that were raised as the surcharge over the last few months and, therefore, these accumulated surcharge funds and the shortfall will be paid over to Kumba.
For further information about some of these recent developments, please refer to our website www.arcelormittal.com
Third quarter of 2010 outlook
Third quarter 2010 EBITDA is expected to be approximately $2.1 - $2.5 billion. Shipments are expected to be lower and capacity utilization is expected to decline to approximately 70% due to seasonal slowdown. Average selling prices are expected to remain stable and operating costs are expected to increase as compared to the second quarter of 2010 due largely to higher raw material prices.
ArcelorMittal condensed consolidated statements of financial position
|
In millions of U.S. dollars
|
|
June 30, 2010
|
December 31, 2009 [10]
|
June 30, 2009 [11]
|
|
ASSETS
|
|
|
|
|
|
Cash and cash equivalents and restricted cash
|
|
$2,578
|
$6,009
|
$7,263
|
|
Trade accounts receivable and other
|
|
7,366
|
5,750
|
6,228
|
|
Inventories
|
|
19,458
|
16,835
|
16,818
|
|
Prepaid expenses and other current assets
|
|
4,193
|
4,213
|
4,623
|
|
Total Current Assets
|
|
33,595
|
32,807
|
34,932
|
|
|
|
|
|
|
|
Goodwill and intangible assets
|
|
15,720
|
17,034
|
16,804
|
|
Property, plant and equipment
|
|
54,715
|
60,385
|
60,400
|
|
Investments in affiliates and joint ventures and other assets
|
16,713
|
17,471
|