Luxembourg, May 2, 2024 - ArcelorMittal (referred to as "ArcelorMittal" or the "Company" or the "Group") (MT (New York, Amsterdam, Paris, Luxembourg), MTS (Madrid)), the world's leading integrated steel and mining company, today announced results1 for the three-month period ended March 31, 2024.
1Q 2024 key highlights:
- Health and safety focus: Protecting employee health and wellbeing remains the overarching priority of the Company; the Company-wide audit of safety by dss+ is progressing and will support our pathway to zero serious injuries and fatalities; LTIF2 rate of 0.61x in 1Q 2024
- Recovering volumes and higher steel spreads supporting improved results: Scope adjusted steel shipments17 increased +5.0% in 1Q 2024 vs. 4Q 2023; 1Q 2024 EBITDA14 of $2.0bn (vs. $1.5bn in 4Q 2023) with EBITDA/t of $145/t in 1Q 2024 (vs. $110/t in 4Q 2023). Net income of $0.9bn in 1Q 2024 vs. net loss of $3.0bn (adjusted net income of $1.0bn8) in 4Q 2023
- Free cash flow impacted by seasonal working capital needs: a seasonal working capital investment ($1.7bn)22 together with capex ($1.2bn) in support of strategic growth projects19 led to a free cash outflow during the quarter of $1.4bn
- Financial strength: Net debt of $4.8bn at the end of the quarter (gross debt of $10.2bn and cash and cash equivalents of $5.4bn)12 compares to a net debt of $2.9bn at December 31, 2023. Over the past 12 months net debt has declined by $0.4bn despite strategic growth capex investments of $1.6bn and returns to shareholders totaling $1.7bn25. This highlights the strong underlying cash generating capacity of the business
Key developments towards strategic objectives:
- Organic growth: Capex in 1Q 2024 includes $0.4bn on strategic growth projects21, which are estimated to add approximately $1.8bn to the Company's EBITDA13 potential by the end of 2026; strategic projects to commence operations in 1H 2024 include Vega CMC (Brazil) and the 1GW renewables project in India; 2H 2024 projects include Calvert EAF (US), Serra Azul and Barra Mansa in Brazil, electrical steel in Europe and mine expansion in Liberia
- Asset portfolio: The Company has agreed to acquire a 28% stake in Vallourec for ~$1.1bn, increasing its exposure to the downstream value-added tubular market; targeting premium segments in the America's market, including a focus on energy transition solutions (CCS and hydrogen); transaction closing is subject to regulatory approvals and currently expected in 2H 2024
- Consistent shareholder returns: The Company has repurchased a further 22.5m shares10 in 1Q 2024, bringing the total reduction in diluted shares to 35% since September 30, 20207. This has contributed to an increase in the book value per share to $67/sh4 at the end of the quarter. The Company will continue to return a minimum 50% of post-dividend FCF to shareholders through its share buyback programs. The $0.50/sh base dividend for 2023 will be paid in 2 equal installments in June 2024 and December 2024
Financial highlights (on the basis of IFRS1):
(USDm) unless otherwise shown | 1Q 24 | 4Q 23 | 3Q 23 | 2Q 23 | 1Q 23 |
Sales | 16,282 | 14,552 | 16,616 | 18,606 | 18,501 |
Operating income/(loss) | 1,072 | (1,980) | 1,203 | 1,925 | 1,192 |
Net income/(loss) attributable to equity holders of the parent | 938 | (2,966) | 929 | 1,860 | 1,096 |
Adjusted net income attributable to equity holders of the parent8 | 938 | 982 | 929 | 1,860 | 1,096 |
Basic earnings/(loss) per common share (US$) | 1.16 | (3.57) | 1.11 | 2.21 | 1.28 |
Adjusted basic earnings per common share (US$)8 | 1.16 | 1.18 | 1.11 | 2.21 | 1.28 |
Operating income/(loss)/tonne (US$/t) | 80 | (149) | 88 | 136 | 82 |
EBITDA14 | 1,956 | 1,454 | 2,150 | 2,998 | 2,140 |
EBITDA /tonne (US$/t) | 145 | 110 | 157 | 211 | 148 |
Crude steel production (Mt) | 14.4 | 13.7 | 15.2 | 14.7 | 14.5 |
Steel shipments (Mt) | 13.5 | 13.3 | 13.7 | 14.2 | 14.5 |
Total Group iron ore production (Mt) | 10.2 | 10.0 | 10.7 | 10.5 | 10.8 |
Iron ore production (Mt) (AMMC and Liberia only) | 6.5 | 6.2 | 6.7 | 6.4 | 6.7 |
Iron ore shipment (Mt) (AMMC and Liberia only) | 6.3 | 6.1 | 6.3 | 6.6 | 7.4 |
Weighted average common shares outstanding (in millions) | 809 | 830 | 838 | 842 | 859 |
Commenting, Aditya Mittal, ArcelorMittal Chief Executive Officer, said:
"Across the Company our people are galvanized to improve safety performance. The 3rd party safety audit, which started at the end of December, is now well underway and on target to be completed in September. We expect this to make valuable recommendations that, combined with the considerable efforts already underway, will enable us to deliver the safety results we are striving for.
"On financial performance, the improved pricing environment combined with recovering volumes resulted in sequentially stronger quarterly results, which also now reflect the value contributed by our joint ventures.
"We have an exciting pipeline of growth projects underway, including the 1GW renewables project in India and Vega CMC in Brazil, both of which are expected to commence operations in the first half. Meanwhile the strategic stake in Vallourec will enhance our exposure to the attractive North American market in the value-added tubular market. We continue to progress with our decarbonization projects, conscious of the need to ensure these investments create value as well as reduce emissions.
"Maintaining our position as the lead supplier of low carbon steels is a clear priority and the planned ramp-up at Sestao, along with the new EAF in Gijon which will break ground imminently, will both have an important role to play. Meanwhile our XCarb® recycled and renewably produced steel will be on show to the world during the Paris Olympics, in both the Olympic and Paralympic torches and also the Spectacular which will be erected on the Eiffel Tower.
"Although overall economic sentiment remains subdued, we expect apparent steel demand ex-China to grow between +3% and +4% this year and are well positioned to benefit from this improvement."
Safety and sustainable development
Health and safety
The Company- wide audit of safety by dss+ is progressing and will support our pathway to zero serious injuries and fatalities. The audit will encompass the three pillars of fatality prevention standards, process risk management and governance. Key updates on the progress of the audit include:
- 30% Fatality Prevention Standards (FPS) audit are complete of sites above 150 full time equivalents (employees and contractors). Audits cover the three main occupational risks (injured by a machine that was not properly isolated or turned off, crushed by vehicle or moving machine, and falling from height) leading to serious injuries and fatalities
- 47% of process safety risk management assessments are complete. dss+ will observe and assess our Group CTO led assessments of the highest priority countries and assets.
- 83% of interviews held as part of top-to-bottom health and safety governance review. dss+ will assess all health and safety systems, processes, structures and capabilities; governance and assurance processes and systems and data management.
Key recommendations are due to be published in September 2024 when the audit is complete.
Own personnel and contractors – Lost Time Injury Frequency rate
1Q 24 | 4Q 23 | 3Q 23 | 2Q 23 | 1Q 23 | |
North America | — | 0.40 | 0.09 | 0.25 | 0.09 |
Brazil | 0.08 | 0.18 | 0.22 | 0.30 | 0.34 |
Europe | 1.28 | 1.50 | 1.50 | 1.51 | 1.19 |
Sustainable Solutions | 0.89 | 0.59 | 0.65 | 1.10 | 0.81 |
Mining | 0.16 | — | 0.19 | — | 0.24 |
Others | 0.76 | 3.08 | 1.45 | 0.60 | 0.61 |
Total | 0.61 | 1.34 | 0.94 | 0.73 | 0.64 |
Sustainable development highlights:
- Progressing the engineering of our DRI/ EAF decarbonization projects, across Europe and Canada, which is expected to be completed by the end of this year. For these projects, the Company is also working with country governments to have visibility of the energy costs and capacity. At the same time, the Company is piloting CCS projects in Belgium and France. All the steps that the Company is taking today support our strategy to achieve competitive decarbonization, aiming for our technology choices at each asset to maximize our competitive advantage and deliver an acceptable return on investment.
- In Brazil, ArcelorMittal and Petrobras have signed a memorandum of understanding to assess potential business models for low-carbon fuels, hydrogen and its products, renewable energy production and CCS (carbon capture and storage). This follows a joint study to develop a CCS hub in the state of Espirito Santo.
- The Company has demonstrated the ability to produce a wide variety of different grades and types of XCarb® recycled and renewably produced11 products for a multitude of customer applications. Sales of our XCarb® product, which can have a carbon footprint of as low as 300kg CO2/t, reached 229kt in 2023, and are expected to more than double in 2024.
Analysis of results for 1Q 2024 versus 4Q 2023
Sales in 1Q 2024 were +11.9% higher at $16.3 billion as compared to $14.6 billion in 4Q 2023, reflecting higher average steel selling prices (+4.8%) and higher steel shipment volumes (+1.4%). On a scope adjusted basis (i.e. excluding Kazakhstan operations that were sold on December 7, 2023) 1Q 2024 steel shipments were +5.0% higher as compared to 4Q 2023.
The improvement in operating income in 1Q 2024 to $1.1 billion reflects higher steel shipments and a recovery in steel spreads (primarily due to an increase in steel prices).
EBITDA in 1Q 2024 increased by +34.6% to $1,956 million as compared to $1,454 million in 4Q 2023, primarily due to improved results in North America, Brazil, Europe and India and JVs offset by lower Mining segment results.
ArcelorMittal recorded net income in 1Q 2024 of $0.9 billion as compared to a net loss of $3.0 billion in 4Q 2023. This is lower than the adjusted net income8 of $1.0 billion in 4Q 2023 (which excludes the impacts of non-cash impairments and charges related to the sale of Kazakhstan operations) largely due to higher income tax expenses offset in part by the non-cash mark-to-market gain of $181 million on the Vallourec share price24.
ArcelorMittal's basic earnings per common share for 1Q 2024 was $1.16 as compared to a loss per common share of $3.57 in 4Q 2023 (adjusted basic earnings per common share8 of $1.18 in 4Q 2023).
Free cash outflow during 1Q 2024 of $1.4 billion22 was negatively impacted by a seasonal working capital investment of $1.7 billion together with capex of $1.2 billion in support of strategic growth projects19,20. This together with the $0.6 billion share buybacks offset in part by the sale of the 4.23% remaining stake in Erdemir (generating proceeds of $0.2 billion) mainly led to an increase in net debt to $4.8 billion at March 31, 2024 as compared to $2.9 billion at December 31, 2023. Over the past 12 months, net debt declined by $0.4 billion, despite a $1.6 billion investment in strategic growth capex and returns to shareholders totaling $1.7 billion during the period.
Analysis of operations14
North America
(USDm) unless otherwise shown | 1Q 24 | 4Q 23 | 3Q 23 | 2Q 23 | 1Q 23 |
Sales | 3,347 | 2,942 | 3,188 | 3,498 | 3,350 |
Operating income | 585 | 280 | 520 | 662 | 455 |
Depreciation | (120) | (157) | (125) | (127) | (126) |
EBITDA | 705 | 437 | 645 | 789 | 581 |
Crude steel production (Kt) | 2,180 | 2,185 | 2,122 | 2,244 | 2,176 |
- Flat shipments (Kt) | 2,245 | 2,028 | 1,938 | 2,046 | 2,208 |
- Long shipments (Kt) | 666 | 709 | 667 | 667 | 691 |
Steel shipments* (Kt) | 2,796 | 2,590 | 2,527 | 2,604 | 2,843 |
Average steel selling price (US$/t) | 1,042 | 948 | 1,043 | 1,116 | 994 |
* North America steel shipments include slabs sourced by the segment from Group companies (mainly the Brazil segment) and sold to the Calvert JV (eliminated in the Group consolidation). These shipments can vary between periods due to slab sourcing mix and timing of vessels. 1Q'24 481kt, 4Q'23 432kt, 3Q'23 393kt, 2Q'23 360kt and 1Q'23 474kt.
Sales in 1Q 2024 increased by +13.8% to $3.3 billion, as compared to $2.9 billion in 4Q 2023 primarily on account of higher average steel selling prices +9.9% and +8.0% increase in steel shipments, driven primarily by improved demand for flat products.
Operating income in 1Q 2024 increased by +108.9% to $585 million as compared to $280 million in 4Q 2023, due to a positive price-cost effect, primarily due to higher average steel selling prices and higher steel shipments.
EBITDA in 1Q 2024 of $705 million was +61.4% higher as compared to $437 million in 4Q 2023, due to a positive price-cost effect and higher steel shipments.
Brazil9
(USDm) unless otherwise shown | 1Q 24 | 4Q 23 | 3Q 23 | 2Q 23 | 1Q 23 |
Sales | 3,051 | 2,709 | 3,560 | 3,826 | 3,068 |
Operating income | 302 | 171 | 414 | 553 | 323 |
Depreciation | (94) | (77) | (87) | (105) | (72) |
EBITDA | 396 | 248 | 501 | 658 | 395 |
Crude steel production (Kt) | 3,564 | 3,533 | 3,669 | 3,732 | 3,052 |
- Flat shipments (Kt) | 2,137 | 2,402 | 2,328 | 2,363 | 1,740 |
- Long shipments (Kt) | 1,061 | 1,171 | 1,283 | 1,234 | 1,217 |
Steel shipments (Kt) | 3,180 | 3,562 | 3,599 | 3,583 | 2,937 |
Average steel selling price (US$/t) | 886 | 852 | 932 | 1,001 | 978 |
Sales in 1Q 2024 increased by +12.6% to $3.1 billion as compared to $2.7 billion in 4Q 2023, primarily due to a +4.0% increase in average steel selling prices and offset in part by -10.7% decline in steel shipments, impacted by shipment timing delays, a seasonal inventory build and lower domestic demand in Argentina. 4Q 2023 sales were impacted by translation impacts from the devaluation of the Argentinian peso.
Operating income in 1Q 2024 of $302 million was +76.7% higher as compared to $171 million in 4Q 2023, which had been impacted by the devaluation of the Argentinian peso.
EBITDA in 1Q 2024 increased by +59.8% to $396 million as compared to $248 million in 4Q 2023 mainly due to a positive price-cost effect (higher selling prices and lower costs), offset in part by lower steel shipments. 4Q 2023 was also negatively impacted by the devaluation of the Argentinian peso (approximately $80 million).
Europe
(USDm) unless otherwise shown | 1Q 24 | 4Q 23 | 3Q 23 | 2Q 23 | 1Q 23 |
Sales | 7,847 | 6,627 | 7,302 | 8,686 | 9,080 |
Operating income/ (loss) | 69 | (4) | 139 | 436 | 308 |
Depreciation | (274) | (287) | (278) | (270) | (263) |
EBITDA | 343 | 283 | 417 | 706 | 571 |
Crude steel production (Kt) | 7,604 | 6,540 | 7,398 | 6,827 | 7,680 |
- Flat shipments (Kt) | 5,302 | 4,570 | 4,483 | 5,049 | 5,468 |
- Long shipments (Kt) | 1,939 | 1,840 | 1,945 | 2,068 | 2,148 |
Steel shipments (Kt) | 7,236 | 6,407 | 6,425 | 7,114 |