ArcelorMittal S.A. (MT) on Q2 2022 Results - Earnings Call Transcript
Daniel Fairclough: Welcome to ArcelorMittal's Second Quarter and First Half 2022 Analyst and Investor Call. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. I'm joined on this call by our CEO, Aditya Mittal; and our CFO, Genuino Christino. Before I hand over to Aditya, I would like to mention a few housekeeping items. Firstly, I want to refer everyone to the disclaimers on Slide 2 of the results presentation that we published on our website this morning. I'd also like to remind everybody that this call is being recorded and is scheduled to last up to 45 minutes. [Operator Instructions] And with that, I would like to hand over to Aditya for some opening remarks. Aditya Mittal: Thank you, Daniel. Good afternoon and good morning, everyone, and welcome to today's call. As you have read, we have reported very strong results for the first six months of the year, $8 billion net income and earnings per share of approximately $8.5. These numbers reflect the hard work and commitment of everyone at ArcelorMittal. Together, we are taking big steps to strengthen, grow and develop our business to position ArcelorMittal for its future as a leader in the decarbonized world. With this in mind, I'd like to update you on the acquisition of the Texas HBI plant we announced in April. The acquisition is now complete. The plant is achieving its rated capacity for the first time. EBITDA is run rating at $200 million, giving us confidence in our normalized projections of $130 million. The plant is very strategic for us for two reasons: First, it will provide a source of low-carbon high-quality metallics from a region that offers highly competitive energy and ultimately, competitive hydrogen. Secondly, this plant will supply the EF capacity we're building at Calvert and is a key component of our 12 million ton low CO2 highest-quality NAFTA sheet franchise. Our agreed acquisition of CSP in Brazil is similarly exciting. It's a world-class, well-invested modern facility connected to a deepwater port, plus we have important synergies. CSP is also an asset with fantastic potential. Like Texas for the U.S., the state of Serra in Northeastern Brazil is a focus for the development of renewable power and hydrogen in Brazil. It gets the most sun and has plentiful wind, both on and offshore. Massive investment has been committed to this region. So looking forward, I see real potential for CSP to be a globally competitive, low CO2 steelmaking hub. Just like AMNS India, I expect we will look back on the acquisition of Texas HBI and CSP very positively. They represent major milestone in ArcelorMittal's strategic development. Together, these acquisitions add $500 million to normalized EBITDA. This is in addition to our organic pipeline of approved projects that are expected to add $1.2 billion to normalized EBITDA. Lastly, while we're growing the business, we're also returning capital to shareholders. So far this year, we have generated $3.2 billion of free cash, 70% has been returned to shareholders and 30% invested in M&A. We're increasing the M&A commitment today, but this is balanced by our announcement to repurchase a further 60 million shares. This is the maximum amount under our existing authority. Our intention is clear. We will continue to return capital to shareholders whilst growing and developing our business. With that, we are ready to take your questions. A - Daniel Fairclough: Thanks, Aditya. So we do have a queue of questions ready [Operator Instructions] And we will move to the first question, please, from Alain at Morgan Stanley. Please go ahead, Alain. . : Daniel Fairclough: Great, Moses. I'm very conscious, Aditya and Genuino, we know that we've gone quite a chunk over time. So I think I'll draw things to a close there. Obviously, there's been a lot of ground to cover on the call today, some very exciting developments. And if anybody does have any follow-up questions, please do reach out to me. I'm, of course, available to address those. So otherwise, thank you very much for dialing in to today's call. Thank you for your interest and attention, and we all collectively wish you a very happy summer. Thank you. Aditya Mittal: Thank you. Genuino Christino: Thank you, everyone. Bye-bye.
ArcelorMittal's Financial Turnaround and Strategic Growth in Q1 2024
ArcelorMittal S.A. (MT:NYSE) Demonstrates Remarkable Financial Turnaround
ArcelorMittal S.A. (MT:NYSE), the global leader in steel and mining, has demonstrated a remarkable turnaround in its financial performance for the first quarter of 2024, as evidenced by its latest earnings report. The company reported a net income of $0.9 billion, a significant improvement from a net loss of $3.0 billion in the previous quarter. This recovery is attributed to an increase in volumes and higher steel spreads, which also led to an EBITDA of $2.0 billion, up from $1.5 billion. These figures are a testament to the company's resilience and its ability to navigate through challenging market conditions.
The company's strategic focus on health and safety, alongside its ambitious growth projects, has played a crucial role in its financial recovery. The ongoing company-wide audit by dss+ aims to achieve zero serious injuries and fatalities, highlighting ArcelorMittal's commitment to its workforce's well-being. This focus on safety does not only contribute to a positive working environment but also enhances operational efficiency and productivity, which in turn, supports financial performance. The strategic investments in growth projects, such as the Vega CMC in Brazil and the 1GW renewables project in India, are expected to significantly boost the company's EBITDA potential by the end of 2026. These projects, coupled with the acquisition of a 28% stake in Vallourec for approximately $1.1 billion, underscore ArcelorMittal's strategic approach to growth and its ambition to expand its footprint in the value-added tubular market.
ArcelorMittal's financial strength is further evidenced by its net debt position of $4.8 billion at the end of the quarter, reflecting a prudent approach to managing its growth investments and shareholder returns. The repurchase of 22.5 million shares and the announcement of a $0.50 per share base dividend for 2023 are indicative of the company's confidence in its financial stability and its commitment to delivering value to its shareholders.
Despite facing challenges such as a decline in gross profit growth by approximately 2.91% and a decrease in net income growth by around 3.19%, ArcelorMittal has managed to achieve notable revenue growth of 87.49% in the recent quarter. This growth is supported by higher average steel selling prices and increased steel shipment volumes, which have contributed to sales reaching $16.3 billion in the first quarter of 2024, an 11.9% increase from the previous quarter. The company's operations across North America, Brazil, Europe, and India, along with its joint ventures, have been instrumental in driving this improved performance.
Looking ahead, ArcelorMittal remains optimistic about the steel demand outlook, expecting apparent steel demand ex-China to grow between 3% and 4% in 2024. With capex for 2024 expected to remain within the $4.5-$5.0 billion range, a significant portion of which is allocated to strategic growth projects, the company is well-positioned to capitalize on the anticipated improvement in steel demand. This strategic focus on growth, coupled with a commitment to safety and sustainability, positions ArcelorMittal for further success in the coming years.
