Luxembourg, May 9, 2019 – ArcelorMittal (referred to as “ArcelorMittal” or the “Company”) (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, 2019.

Highlights:

• Health and safety: LTIF rate² of 1.14x in 1Q 2019
• Operating income decreased to $0.8bn in 1Q 2019 as compared to $1.0bn in 4Q 2018 and $1.6bn in 1Q 2018
• EBITDA of $1.7bn in 1Q 2019, 15.3% lower as compared to $2.0bn in 4Q 2018, primarily reflecting a negative price-cost effect; 1Q 2019 EBITDA down 34.2% YoY
• Net income of $0.4bn in 1Q 2019
• Steel shipments of 21.8Mt in 1Q 2019, up 7.9% vs. 4Q 2018 and up 2.2% vs. 1Q 2018
• 1Q 2019 iron ore shipments of 13.8Mt (stable YoY), of which 9.2Mt shipped at market prices (+0.4% YoY)
• Gross debt of $13.4bn as of March 31, 2019 as compared to $12.6bn as of December 31, 2018. Net debt increased to $11.2bn as of March 31, 2019 due to impact of IFRS 16¹² lease accounting ($1.2bn). Excluding IFRS 16 Leases impact, net debt would be $10.0bn as of March 31, 2019 as compared to $10.2bn as of December 31, 2018
• Maintaining an investment grade credit rating through the cycle remains ArcelorMittal’s financial priority, with a target to reduce net debt to below $7bn (previous target of $6bn adjusted to reflect the impact of IFRS 16)

Financial highlights (on the basis of IFRS¹):

Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Chairman and CEO, said:

“Our first quarter results reflect the challenging operating environment the industry has faced in recent months. Profitability has been impacted by lower steel pricing due to weaker economic activity and continued global overcapacity, as well as rising raw material costs as a result of supply-side developments in Brazil.

“We continue to face a challenge from high levels of imports, particularly in Europe, where safeguard measures introduced by the European Commission have not been fully effective. Although we are somewhat encouraged by the firmer price environment in China, this is not being reflected in Europe where in order to adapt to the current market environment we have recently announced annualized production cuts of three million tonnes in our flat steel operations. It is important there is a level playing field to address unfair competition, and this includes a green border adjustment to ensure that imports into Europe face the same carbon costs as producers in Europe.

“We remain focussed on our own initiatives to improve performance through delivery of our Action2020 plan. Generating positive free cash flow, demonstrating progress in our efforts to further strengthen our balance sheet and improve shareholder returns are the priority.”

Sustainable development and safety performance

Health and safety – Own personnel and contractors lost time injury frequency rate

Health and safety performance (inclusive of ArcelorMittal Italia (previously known as Ilva)), based on own personnel figures and contractors lost time injury frequency (LTIF) rate was 1.14x² in the first quarter of 2019 (“1Q 2019”).

Excluding the impact of ArcelorMittal Italia, the LTIF was 0.66x for 1Q 2019 as compared to 0.70x for the fourth quarter of 2018 (“4Q 2018”) and 0.62x for the first quarter of 2018 (“1Q 2018”).

The Company’s efforts to improve its Health and Safety record remain focused on both further reducing the rate of severe injuries and preventing fatalities.

Own personnel and contractors – Frequency rate²

Key sustainable development highlights for 1Q 2019:

• Recognized a Worldsteel Sustainability Champion for our achievements in safety, water, lifecycle analysis and social and environmental reporting.
   
• Announced preparations for an industrial scale pilot of hydrogen based steelmaking in Hamburg, Germany.
   
• Completed independent pre-audit against ResponsibleSteel – a multistakeholder standard due to launch at the end of 2019.
• On April 25, 2019, ArcelorMittal released a new film to mark its 13^th global health and safety day. The new film is designed to reinforce the critical importance of a safety-first approach at all times within the organisation. The film, which explores the day’s theme, “We always choose the safest way”, supports a day of activities designed to reinforce the Company’s safety culture. To watch the video, go to: https://corporate.arcelormittal.com/news-and-media/news/2019/apr/25-04-2019.

Analysis of results for 1Q 2019 versus 4Q 2018 and 1Q 2018

Total steel shipments in 1Q 2019 were 7.9% higher at 21.8Mt as compared with 20.2Mt for 4Q 2018 primarily due to higher steel shipments in Europe (+14.4%) due in part to the acquisition of ArcelorMittal Italia (following its consolidation from November 1, 2018) and NAFTA (+2.8%), offset in part by lower steel shipments in Brazil (-5.7%). Excluding the impact of ArcelorMittal Italia, steel shipments were 5.0% higher as compared to 4Q 2018.

Total steel shipments in 1Q 2019 were 2.2% higher as compared with 21.3Mt for 1Q 2018 primarily due to higher steel shipments in Europe (+8.0%) due in part to the acquisition of ArcelorMittal Italia and Brazil (+16.0%) due in part to the impact of the Votorantim acquisition following its consolidation as from April 2018, offset in part by lower steel shipments in NAFTA (-4.3%) and ACIS (-12.1%) which was impacted by operational issues in Temirtau, Kazakhstan. Excluding the impacts of the ArcelorMittal Italia and Votorantim acquisitions, steel shipments were 3.6% lower as compared to 1Q 2018.

Sales in 1Q 2019 were $19.2 billion as compared to $18.3 billion for 4Q 2018 and $19.2 billion for 1Q 2018. Sales in 1Q 2019 were 4.7% higher as compared to 4Q 2018 primarily due to higher steel shipments (+7.9%) and higher seaborne iron ore reference prices (+15.2%), offset in part by lower average steel selling prices (-3.1%) and seasonally lower market-priced iron ore shipments (-8.2%). Sales in 1Q 2019 were stable as compared to 1Q 2018 as the impacts of lower average steel selling prices (-3.1%) were offset by higher steel shipments (+2.2%) and higher seaborne iron ore reference prices (+10.8%).

Depreciation for 1Q 2019 was higher at $733 million as compared to $723 million for 4Q 2018. These charges now include the depreciation of right-of-use assets recognized for the first time within property, plant and equipment under IFRS 16 lease accounting, that were previously recorded in cost of sales and selling, general and administrative expenses. 1Q 2019 depreciation expense was higher than $711 million in 1Q 2018 primarily due to the impact of IFRS 16 partially offset by foreign exchange gains. As a result of IFRS 16 and the impact of ArcelorMittal Italia net of remedies depreciation expense for FY 2019 is expected to increase to approximately $3.1 billion.

Original Article: https://finance.yahoo.com/news/arcelormittal-reports-first-quarter-2019-050000552.html