Luxembourg, February 8, 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 and twelve-month periods ended December 31, 2023.
2023 key highlights:
Health and safety focus: Protecting employee health and wellbeing remains an overarching priority of the Company; LTIF2 rate of 0.92x in FY 2023 and 0.70x in FY 2022. Performance in 2023 was severely impacted by the tragic Kostenko mine accident on October 28, 2023. The Company has commissioned dss+ to conduct a comprehensive independent Company-wide safety audit of its operations, to identify gaps and strengthen safety actions, processes and culture to help prevent serious accidents. Key recommendations to be published in September 2024
Healthy EBITDA and Free Cashflow: FY 2023 EBITDA of $7.6bn and EBITDA/tonne of $136/t, reflecting structural improvements to profitability. FY 2023 free cash flow (FCF) of $2.9bn7 ($7.6bn net cash provided by operating activities less $4.6bn capex (which includes $1.4bn strategic growth capex) and $0.2bn minority dividends) with 4Q 2023 FCF of $1.8bn ($3.3bn net cash provided by operating activities less $1.5bn capex)
Net income impacted by non-cash non-recurring items: Net income of $0.9bn includes a negative $2.4bn impact related to the disposal of the Kazakhstan operations6 and a $1.4bn impairment of Acciaierie d'Italia (ADI) in Italy16. Adjusting for these items, FY 2023 adjusted net income9 is $4.9bn. FY 2023 basic EPS of $1.09 (adjusted basic EPS9 of $5.78)
Financial strength: Net debt of $2.9bn at the end of 2023 (gross debt of $10.7bn, and cash and cash equivalents of $7.8bn) as compared to $2.2bn at the end of 2022. As of December 31, 2023, the Company had liquidity of $13.2 billion consisting of cash and cash equivalents of $7.8 billion and $5.4 billion of available credit lines13
Share repurchases driving enhanced value: Repurchased 45.4m shares in 202311, bringing the total reduction in fully diluted shares outstanding to 33% since the end of September 20208. Book value per share4 increased to $66 over the last 12 months ROE3 of 8.9%
Priorities:
Growth: following a period of optimization and strategic investment, the Company is on the cusp of a step change in profitability:
- Strategic investments are estimated to add approximately $1.8bn to EBITDA14,15 growth by the end of 2026. New projects expected to be commissioned in 2024 include: the cold rolling mill complex at Vega, additional capacity at Serra Azul mine and Barra Mansa (all in Brazil); the first phase of new Electrical Steels capacity in Europe; the first iron ore concentrate in Liberia; 1GW of renewable power capacity in India; and the new EAF at AMNS Calvert (US). In addition, the expansion of the AMNS India Hazira plant to ~15Mt capacity (Phase 1A) is progressing well and on track for completion in 2026 with Phase 1B Hazira capacity expansion to 20Mt planned; plans for expansion to 24Mt (including 1.5Mt long capacity) under preparation
- Decarbonized steel solutions: Existing capabilities in low-carbon metallics and EAF steel-making provide a unique competitive advantage as we offer an increasingly broad range of low-carbon intensity steel products to our customers. Our XCarb® recycled and renewably12 produced steel continues to resonate with our customers, most recently exemplified by contracts to supply Vestas and Schneider Electric. Our DRI/EAF projects are progressing through FEED; we have signed contracts for a new 1.1Mt EAF at Gijon which will decarbonize the Long business in Spain, allowing for production of rails and quality wire rods; and a signed Letter of Intent with EDF for a long-term agreement to supply low carbon emissions power for our key French operations
- Progressive capital allocation: The Company's defined capital allocation and return policy is working well, allowing the Company to develop and significantly grow its earnings capacity whilst consistently rewarding shareholders. The Board proposes to increase the annual base dividend to shareholders from $0.44/sh in FY 2023 to $0.50/sh (to be paid in 2 equal installments in June 2024 and December 2024), subject to the approval of shareholders at the 2024 AGM. In addition, the Company will continue to return a minimum 50% of post-dividend FCF to shareholders through its share buyback programs
Financial highlights (on the basis of IFRS1):
(USDm) unless otherwise shown | 4Q 23 | 3Q 23 | 4Q 22 | 12M 23 | 12M 22 |
Sales | 14,552 | 16,616 | 16,891 | 68,275 | 79,844 |
Operating (loss)/income | (1,980) | 1,203 | (306) | 2,340 | 10,272 |
Net (loss)/income attributable to equity holders of the parent | (2,966) | 929 | 261 | 919 | 9,302 |
Adjusted net income attributable to equity holders of the parent9 | 982 | 929 | 1,189 | 4,867 | 10,611 |
Basic (loss)/earnings per common share (US$) | (3.57) | 1.11 | 0.30 | 1.09 | 10.21 |
Adjusted basic earnings per common share (US$)9 | 1.18 | 1.11 | 1.37 | 5.78 | 11.65 |
Operating (loss)/income/tonne (US$/t) | (149) | 88 | (24) | 42 | 184 |
EBITDA | 1,266 | 1,865 | 1,258 | 7,558 | 14,161 |
EBITDA /tonne (US$/t) | 95 | 136 | 100 | 136 | 253 |
Crude steel production (Mt) | 13.7 | 15.2 | 13.2 | 58.1 | 59.0 |
Steel shipments (Mt) | 13.3 | 13.7 | 12.6 | 55.6 | 55.9 |
Total Group iron ore production (Mt) | 10.0 | 10.7 | 10.7 | 42.0 | 45.3 |
Iron ore production (Mt) (AMMC and Liberia only) | 6.2 | 6.7 | 7.5 | 26.0 | 28.6 |
Iron ore shipment (Mt) (AMMC and Liberia only) | 6.1 | 6.3 | 6.9 | 26.4 | 28.0 |
Weighted average common shares outstanding (in millions) | 830 | 838 | 865 | 842 | 911 |
Commenting, Aditya Mittal, ArcelorMittal Chief Executive Officer, said:
"In October last year we committed to commissioning an independent 3rd party global audit of all our safety related practices and actions. This audit is now underway and I am determined its findings and recommendations, combined with the considerable efforts we are already implementing across the Group, will make us a safer and ultimately accident free company. Every employee in ArcelorMittal is aligned in this goal.
"Turning to our financial performance, our results for the full year reflect the benefits of the structural improvements we have made to our cost base, asset portfolio and balance sheet in recent years. Despite the operating environment becoming increasingly challenging as the year progressed, our profitability per tonne is healthy and well above long-term averages. This highlights the enhanced sustainability we have built into the business, enabling us to generate healthy cash flow to invest for future growth and return attractive levels of capital to our shareholders.
"Looking ahead, there are early signs of a more constructive industry backdrop. This, alongside the progress we are making with our portfolio of strategic growth projects - several of which will complete this year - means the Company will continue to take important steps forward in its drive to be a stronger, more profitable, and of course safer, Company."
Safety and sustainable development
Health and safety
Performance in 2023 was severely impacted by the tragic Kostenko mine accident on October 28, 2023.
In December 2023, ArcelorMittal launched an independent 3rd party global audit that will look at every aspect of the Company's health and safety practices across the Group. ArcelorMittal's employees are united in their determination to become a zero fatality workplace and this audit will complement the considerable effort already being implemented across the organization to achieve this aim.
The Company-wide audit of safety practices by dss+ has now commenced and will support our pathway to zero serious injuries and fatalities. Recommendations are due to be published in September 2024 and the audit will cover:
- A comprehensive Fatality Prevention Standards audit for the 3 main occupational risks (crushed by vehicle, crushed by moving machinery & fall from height) leading to serious injuries and fatalities.
- Expert input into the CTO-led process risk management safety system that will include audits of its highest priority countries and assets (including strategic JVs).
- Assessment of all health and safety systems, processes, structures, capabilities, governance and assurance processes.
Own personnel and contractors – Lost Time Injury Frequency rate
Lost time injury frequency rate | 4Q 23 | 3Q 23 | 4Q 22 | 12M 23 | 12M 22 |
NAFTA | 0.40 | 0.09 | 0.18 | 0.22 | 0.25 |
Brazil | 0.18 | 0.22 | 0.14 | 0.26 | 0.10 |
Europe | 1.45 | 1.25 | 1.14 | 1.30 | 1.11 |
ACIS | 3.22 | 1.49 | 1.07 | 1.43 | 0.74 |
Mining | — | 0.19 | 0.61 | 0.10 | 0.84 |
Total | 1.34 | 0.94 | 0.86 | 0.92 | 0.70 |
Sustainable development highlights:
- In Spain, on November 28, 2023, ArcelorMittal announced that contracts have been signed to build a new 1.1Mt EAF in Gijon. Once the EAF is operational (1H 2026), the site will be able to switch to producing low carbon-emissions steel for the long products sector, rails and wire rods, making the site highly competitive, in particular for sectors with stringent carbon criteria for public procurement contracts.
- In France, on January 15, 2024, a Letter of Intent was signed with EDF for the long-term supply of low carbon electricity to its French steelmaking sites in Dunkirk and Fos-sur-Mer (subject to final approvals for the DRI/EAF project in Dunkirk).
- ArcelorMittal has seen increasing demand for its low carbon steel – XCarb® recycled and responsibly produced steel.
- On November 15, 2023, Schneider Electric and ArcelorMittal announced a partnership to supply XCarb® recycled and renewably produced steel for Schneider Electric's electrical cabinets and enclosures.
- On January 16, 2024, Vestas and ArcelorMittal announced a low carbon partnership and the first project will use XCarb® recycled and renewably produced heavy plate steel for an offshore wind farm, built by Baltic Power in Poland.
- In India, AM/NS India published their Climate Action report and are targeting a reduction in their emissions intensity of 20% by 2030 (from 2021 levels).
- Over the course of 2023, ArcelorMittal has also progressed renewable projects in Argentina, India and Brazil, announced plans to build an industrial- scale direct electrolysis plant (Volteron™) and has been advancing smart carbon projects in Ghent and Dunkirk (Carbon Capture and Storage pilots and the Steelanol plant).
- Following the sale of the Company's assets in Kazakhstan (which represented approximately 16.5% of the Group's scope 1 and scope 2 carbon emissions), the Company no longer owns and operates coal mines.
Analysis of results for the twelve months ended December 31, 2023 versus results for the twelve months ended December 31, 2022
Sales for 12M 2023 decreased by -14.5% to $68.3 billion as compared with $79.8 billion for 12M 2022, primarily due to -13.5% lower average steel selling prices as shipments were relatively stable.
Impairment charges (other than related to the sale of operations in Kazakhstan) for 12M 2023 amounted to $0.1 billion, relating to the Long business of ArcelorMittal South Africa as compared to an impairment charge of $1.0 billion in 12M 2022 related to ArcelorMittal Kryvyi Rih (Ukraine).
Following the sale of the Company's steel and mining operations in Kazakhstan, the Company recorded a $0.9 billion non-cash impairment charge (including $0.2 billion goodwill), and recorded $1.5 billion cumulative translation losses (previously recorded against equity) through the profit and loss.
Operating income for 12M 2023 of $2.3 billion was lower as compared to $10.3 billion in 12M 2022 primarily driven by negative price-cost effect (predominantly on account of -13.5% lower average steel selling prices), impairment charges and impact on disposal of Kazakhstan operations as discussed above.
Income from associates, joint ventures and other investments (excluding impairment) for 12M 2023 was stable at $1.2 billion as compared to $1.3 billion for 12M 2022 supported by higher contributions from AMNS India and Chinese investees.
Impairment of associates, joint ventures and other investments amounted to $1.4 billion for 12M 2023, and related to the impairment of the Company's investment in Acciaierie d'Italia (ADI) following downward revisions to the expected future cash flows.
ArcelorMittal's net income for 12M 2023 was $919 million as compared to $9,302 million for 12M 2022. Adjusted net income9 for 12M 2023 was $4.9 billion as compared to $10.6 billion for 12M 2022.
ArcelorMittal's basic earnings per common share for 12M 2023 was $1.09, as compared to $10.21 for 12M 2022. Adjusted basic earnings per common share (excluding impairment charges and impact on disposal of Kazakhstan operations)9 for 12M 2023 was $5.78 as compared to $11.65 for 12M 2022.
Analysis of results for 4Q 2023 versus 3Q 2023
Sales in 4Q 2023 were -12.4% lower at $14.6 billion as compared to $16.6 billion in 3Q 2023 impacted by lower average steel selling prices (-5.1%) and lower steel shipment volumes (-3.0%).
Impairment charges (other than related to the sale of operations in Kazakhstan) for 4Q 2023 amounted to $0.1 billion related to the Long business of ArcelorMittal South Africa.
Following the sale of the Company's steel and mining operations in Kazakhstan the Company recorded a $0.9 billion non-cash impairment charge (including $0.2 billion goodwill) and recorded $1.5 billion cumulative translation losses (previously recorded against equity) through the profit and loss.
Operating loss for 4Q 2023 was $2.0 billion as compared to an operating income of $1.2 billion in 3Q 2023. The operating loss in 4Q 2023 was impacted by the impairment and impact on disposal of Kazakhstan operations (as discussed above), and also reflected a decline in steel spreads (primarily due to a decline in steel prices) and lower steel shipments.
Income from associates, joint ventures and other investments (excluding impairments) for 4Q 2023 was lower at $188 million as compared to $285 million in 3Q 2023, primarily due to lower contributions from European investees.
Impairments of associates, joint ventures and other investments were $1.4 billion for 4Q 2023, and related to the impairment of the Company's investment in Acciaierie d'Italia (ADI) following downward revisions to the expected future cash flows.
ArcelorMittal recorded net loss in 4Q 2023 of $2,966 million as compared to a net income of $929 million in 3Q 2023. Adjusted net income9 in 4Q 2023 was $982 million as compared to $929 million in 3Q 2023.
ArcelorMittal's basic loss per common share for 4Q 2023 was $3.57 as compared to an earnings per common share of $1.11 in 3Q 2023. Adjusted basic earnings per common share9 for 4Q 2023 was higher at $1.18 as compared to $1.11 in 3Q 2023.
Analysis of segment operations
NAFTA
(USDm) unless otherwise shown | 4Q 23 | 3Q 23 | 4Q 22 | 12M 23 | 12M 22 |
Sales | 2,942 | 3,188 | 2,923 | 12,978 | 13,774 |
Operating income | 280 | 520 | 331 | 1,917 | 2,818 |
Depreciation | (157) | (125) | (127) | (535) | (427) |
Exceptional items | — | — | 98 | — | 190 |
EBITDA | 437 | 645 | 360 | 2,452 | 3,055 |
Crude steel production (kt) | 2,185 | 2,122 | 2,025 | 8,727 | 8,271 |
Steel shipments* (kt) | 2,590 | 2,527 | 2,338 | 10,564 | 9,586 |
Average steel selling price (US$/t) | 948 | 1,043 | 1,021 | 1,024 | 1,215 |
* NAFTA 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. 4Q'23 432kt, 3Q'23 393kt, 4Q'22 272kt, 12M'23 1,660kt and 12M'22 1,173kt
Sales in 4Q 2023 decreased by -7.7% to $2.9 billion, as compared to $3.2 billion in 3Q 2023 primarily on account of lower average steel selling prices (-9.1%) offset in part by higher steel shipments (+2.5%).
Operating income in 4Q 2023 decreased by -46.3% to $280 million as compared to $520 million in 3Q 2023, due to a negative price-cost effect, primarily due to lower average steel selling prices.
EBITDA in 4Q 2023 of $437 million was -32.2% lower as compared to $645 million in 3Q 2023, primarily due to a negative price-cost effect, resulting primarily from lower average steel selling prices.
Brazil10
(USDm) unless otherwise shown | 4Q 23 | 3Q 23 | 4Q 22 | 12M 23 | 12M 22 |
Sales | 2,709 | 3,560 | 2,894 | 13,163 | 13,732 |
Operating income | 171 | 414 | 302 | 1,461 | 2,775 |
Depreciation | (77) | (87) | (60) | (341) | (246) |
EBITDA | 248 | 501 | 362 | 1,802 | 3,021 |
Crude steel production (kt) | 3,533 | 3,669 | 2,783 | 13,986 | 11,877 |
Steel shipments (kt) | 3,562 | 3,599 | 2,639 | 13,681 | 11,516 |
Average steel selling price (US$/t) | 852 | 932 | 1,036 | 939 | 1,114 |
Since its consolidation on March 9, 2023, ArcelorMittal Pecém has performed strongly, achieving full nameplate production and capturing synergies of ~$0.1 billion, double the pre-acquisition forecast.
Sales in 4Q 2023 decreased by -23.9% to $2.7 billion as compared to $3.6 billion in 3Q 2023, primarily due to a -8.6% decrease in average steel selling prices and translation impacts from the devaluation of the Argentinian peso.
Operating income in 4Q 2023 of $171 million was -58.6% lower as compared to $414 million in 3Q 2023 primarily due to a negative price-cost effect and the devaluation of the Argentinian peso as discussed above.
EBITDA in 4Q 2023 decreased by -50.4% to $248 million as compared to $501 million in 3Q 2023 due to negative price-cost effect and the negative impact of Argentinian peso devaluation (approximately $80 million).
Europe
(USDm) unless otherwise shown | 4Q 23 | 3Q 23 | 4Q 22 | 12M 23 | 12M 22 |
Sales | 7,990 | 8,894 | 10,077 | 38,305 | 47,263 |
Operating income/ (loss) | 11 | 160 | (10) | 1,104 | 4,292 |
Depreciation | (325) | (313) | (316) | (1,241) | (1,268) |
Exceptional items | — | — | — | — | (473) |
EBITDA | 336 | 473 | 306 | 2,345 | 6,033 |
Crude steel production (kt) | 6,630 | 7,475 | 6,956 | 28,827 | 31,904 |
Steel shipments (kt) | 6,507 | 6,538 | 6,802 | 28,071 | 30,182 |
Average steel selling price (US$/t) | 975 | 1,020 | 1,085 | 1,039 | 1,191 |
Europe segment crude steel production decreased by -11.3% to 6.6Mt in 4Q 2023 as compared to 7.5Mt in 3Q 2023 impacted by a reline of BF#A at Gent (Belgium) and planned maintenance of BF#2 at Bremen (Germany) both of which restarted in early December 2023 and coupled with production cuts at BF1 in Fos (France). Steel shipments were stable in 4Q 2023 as compared to 3Q 2023 primarily due to continued weak apparent demand driven by destocking and construction-related demand.
Sales in 4Q 2023 declined by -10.2% to $8.0 billion, as compared to $8.9 billion in 3Q 2023, primarily due to -4.4% decrease in average steel selling prices.
Operating income in 4Q 2023 of $11 million as compared to operating income of $160 million in 3Q 2023 mainly due to a negative price-cost effect.
EBITDA in 4Q 2023 of $336 million decreased by -28.9% as compared to $473 million in 3Q 2023, mainly due to a negative price-cost effect.
ACIS
(USDm) unless otherwise shown | 4Q 23 | 3Q 23 | 4Q 22 | 12M 23 | 12M 22 |
Sales | 1,199 | 1,389 | 1,229 | 5,422 | 6,368 |
Operating loss | (2,689) | (92) | (1,198) | (3,021) | (930) |
Depreciation | (62) | (71) | (65) | (278) | (369) |
Impairment items | (112) |