ArcelorMittal SA Q3 FY2024 earnings call

• Safety: ArcelorMittal is focused on improving safety performance, with a dss+ safety audit completed, resulting in six recommendations being implemented into specific work plans for each business unit.
• Financial Performance: Resilient performance due to diversification, having sold high-cost assets and added well-positioned assets. EBITDA per ton margin in Q3 was $118, favorable to long-term averages. North America is the largest EBITDA contributor, Brazil has strong demand, and diversification across products, end markets, and geographies is key.
• Strategic Execution: Defined capital allocation and returns policy delivering value to shareholders. Since 2021, $20 billion of investable cash flows generated, funding high-quality organic projects, inorganic opportunities, returning ~$12.6 billion to shareholders, and maintaining a strong balance sheet. Three strategic growth projects commissioned, including Mexico hot strip mill, Brazil cold mill complex, and 1 gigawatt solar wind project in India.

North America is by far the biggest contributor to ArcelorMittal's EBITDA. Brazil has strong demand this year supporting good domestic prices and margins. The company's performance reflects diversification across products, end markets, and geographies, with EBITDA per ton margin in the third quarter being $118 per ton, which compares favorably with long-term averages. Specific absolute revenue figures for each product segment were not provided in absolute terms with exact percentages, but diversification across these areas is highlighted as key to resilience.

• Anticipate strategic growth projects will add $1.8 billion of new EBITDA, with $1 billion coming over the next two years. - Continues to take advantage of low valuation through share buybacks, having bought back $280 million of stock in Q3 and reducing share count by almost 6% this year. - Target of $10 billion decarb spending by 2030 remains, with more color expected towards end of 2024. - Expect to generate strong free cash flow to continue share buybacks and support growth projects.

• Regulatory approvals: Uncertainty around approvals for deals like with Nippon Steel for Calvert, which could impact projects like the second EAF at Calvert. - Project delays: Monlevade project put on hold due to higher-than-expected investments, but new investments will offset its impact. - Geopolitical risks: Situation in Ukraine affecting production, with potential to impact volume and pricing if the situation stabilizes or worsens. - Market conditions: Uncertainties in global markets affecting steel demand and pricing, especially in regions like Europe with import concerns.

Q: On Calvert, how long the deal with Nippon Steel will take to get approved and if the second EAF at Calvert is on hold?

A: Deal with Nippon Steel is dependent on closing, and focus is on completing the first year at Calvert facility.

Q: On Monlevade, how big the EBITDA contribution was supposed to be?

A: Initial benefits expected from Monlevade project was $200 million, and new investments will offset its impact.

Q: On buyback, thoughts on next program?

A: Focus on completing existing buyback program first, then discuss next, with confidence in generating strong free cash flow to continue.

Q: On decarb spending, stand by $10 billion target?

A: Stand by $10 billion target by 2030, with more color expected towards end of 2024.

Q: On automotive business in Europe, pricing into next year?

A: Production in Europe lower due to destocking, but stable in Brazil, Argentina, and North America, with focus on margins from investments.

Q: On sustainable solutions business, update?

A: Decline in Q3 linked to seasonality, expect better in Q4, with 1 gigawatt renewable project adding ~$100 million next year to sustainable solutions.

Q: On decarb and pressing trigger, factors needed?

A: Need strong CBAM, level playing field, sufficient renewable energy and hydrogen availability.

Q: On Ilva, concern about supply growth?

A: Concern about high imports in Europe, priority to get imports under control.

Q: On working capital and CapEx in Europe?

A: Expect full unwind of $1.5 billion working capital in Q4, CapEx in Europe expected to not change significantly next year.

Q: On Europe M&A and South African assets?

A: Happy with current footprint in Europe, not contemplating change in South African assets.

Q: On North America volumes and tariffs?

A: Wait for outcome of investigations, options exist for material supply from Mexico, Brazil, etc.

Q: On Europe decarb and free cash flow?

A: Objective is sustainable business, potential investor in Europe with right conditions.

Q: On Mexico blast furnace?

A: Blast furnace not yet started, taking time for safe maintenance.

Q: On Brazil Vega CMC and Liberia concentrator?

A: Vega CMC ramping up, expecting 80% by year end, Liberia concentrator progressing with first concentrate end of year, ramping up expected next year.

Q: On Calvert deal financial implications and Vallourec synergies?

A: Wait for Calvert deal to close for financial implications, no specific synergies to report on Vallourec yet.

Q: On Ukraine capacity and market?

A: Running at ~40% capacity, historically ran north of 4.5 million tons pre-war, situation fragile with potential to ramp up but needing investments and stable conditions.