ArcelorMittal reports fourth quarter 2020 and twelve months 2020 results
On February 11, 2021, ArcelorMittal (MT) reported its financial results for Q4 and FY 2020, revealing a net loss of $0.7 billion, a significant improvement from a $2.5 billion loss in 2019. The company achieved $1.5 billion in free cash flow despite a challenging market, with steel shipments down 18.2% to 69.1 million tonnes. Operating income was $2.1 billion, up from a loss the previous year. ArcelorMittal's gross debt dropped to $12.3 billion, the lowest since the 2006 merger. The company also initiated a $500 million share buyback program and a proposed dividend of $0.30 per share.
- Achieved $1.5 billion in free cash flow despite an 18.2% decline in steel shipments.
- Operating income for FY 2020 was $2.1 billion, a substantial recovery from a loss of $0.6 billion in FY 2019.
- Initiated a capital return to shareholders with a $500 million share buyback and proposed a $0.30 per share dividend.
- Net loss of $0.7 billion in FY 2020 compared to a $2.5 billion loss in FY 2019, indicating ongoing financial challenges.
- Steel shipments decreased by 18.2% year-over-year, reflecting significant demand impacts from the COVID-19 pandemic.
- Sales fell by 24.6% to $53.3 billion due to lower steel shipments and prices.
Luxembourg, February 11, 2021 - 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 and twelve-month periods ended December 31, 2020.
2020 Key highlights:
- Health and safety performance: Protecting the health and wellbeing of employees remains the Company’s overarching priority; LTIF rate of 0.61x in 2020 vs. 0.75x in FY 20192
- Despite the challenging market environment that saw steel shipments decline in 2020 by
18.2% and a net loss of$0.7b n, the Company delivered$1.5b n of free cash flow (“FCF”, net cash provided by operating activities of$4.1b n less capex of$2.4b n less dividends paid to minorities of$0.2b n) - FY 2020 operating income of
$2.1b n4,5 vs.$0.6b n operating loss4,5 in FY 2019. FY 2020 EBITDA of$4.3b n with 4Q'20 EBITDA of$1.7b n (almost double 4Q'19 level) reflecting recovering fundamentals and providing good momentum into 2021; 4Q 2020 adjusted net income18 of$0.2b n vs. adjusted net loss of$0.2b n in 3Q 2020 - The Company ended 2020 with gross debt of
$12.3 billion and net debt of$6.4 billion , the lowest level since the 2006 merger, allowing the Company to transition to a new capital allocation policy prioritizing returns to shareholders - Repositioned its North American footprint through the completed sale of ArcelorMittal USA to Cleveland Cliffs, unlocking value and significantly reducing liabilities
- Reinforced its European footprint through the agreed investment by the Italian government in ArcelorMittal Italia (expected to be deconsolidated in 1Q 2021)
- ArcelorMittal sold its first certified green steel products9 to customers in December 2020, reflecting its leadership position in technology and innovation and commitments to decarbonize
Priorities & Outlook:
- Global climate change leadership: Whilst policy support remains crucial to the development of decarbonization in the steel industry, the Company is focused on progressing towards its 2050 net zero group carbon emissions target. A range of innovative technology options are advancing, including the Group’s first Smart Carbon projects (Carbalyst) to start production in Ghent, Belgium (in 2022) and first Hydrogen reduction project in Hamburg to start production (estimated 2023-2025)
- Cost advantage - New
$1.0b n fixed cost reduction program in progress to ensure that a significant portion of fixed cost savings achieved during the COVID-19 crisis is sustained; expected completion by the end of 2022 (savings from a FY 2019 base) - Strategic growth: The Company is focused on organic growth, cost improvement, product portfolio and margin enhancing projects in emerging growth markets, including: Mexico HSM project (completion expected in 2021); Brazil cold rolling mill complex project (recommenced, with startup targeted 2023); and Liberia phase II expansion (first concentrate targeted in 4Q 2023)
- Consistent returns to shareholders: The Company initiated its capital return to shareholders with a
$500m share buyback10 in 2H 2020 following the announced agreement to sell ArcelorMittal USA to Cleveland Cliffs. This process continues with a further$650m to be returned via a share buyback19 following the partial sell-down of the Company’s equity stake in Cleveland Cliffs announced on February 9, 2021. In addition, and in accordance with the new capital return policy, the Board proposes to restart the base dividend to shareholders at$0.30 /sh (to be paid in June 2021, subject to the approval of shareholders at the AGM in May 2021), and return$570m of capital to shareholders through a further share buyback program in 2021 - Recovery in steel shipments: Recovery in apparent steel demand (growth of +
4.5% to +5.5% is currently forecast in 2021 vs. 2020); steel shipments are expected to increase YoY (on a scope adjusted basis i.e. excluding the impacts of the ArcelorMittal USA sale and the deconsolidation of ArcelorMittal Italia12 (expected in 1Q 2021))
Financial highlights (on the basis of IFRS1):
| (USDm) unless otherwise shown | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Sales | 14,184 | 13,266 | 15,514 | 53,270 | 70,615 | |||||
| Operating income / (loss) | 1,998 | 718 | (1,535) | 2,110 | (627) | |||||
| Net income / (loss) attributable to equity holders of the parent | 1,207 | (261) | (1,882) | (733) | (2,454) | |||||
| Basic earnings / (loss) per common share (US$) | 1.01 | (0.21) | (1.86) | (0.64) | (2.42) | |||||
| Operating income/ (loss) / tonne (US$/t) | 116 | 41 | (78) | 31 | (7) | |||||
| EBITDA | 1,726 | 901 | 925 | 4,301 | 5,195 | |||||
| EBITDA/ tonne (US$/t) | 100 | 52 | 47 | 62 | 61 | |||||
| Steel-only EBITDA/ tonne (US$/t) | 58 | 23 | 32 | 35 | 42 | |||||
| Crude steel production (Mt) | 18.8 | 17.2 | 19.8 | 71.5 | 89.8 | |||||
| Steel shipments (Mt) | 17.3 | 17.5 | 19.7 | 69.1 | 84.5 | |||||
| Own iron ore production (Mt) | 15.3 | 14.8 | 14.8 | 58.0 | 57.1 | |||||
| Iron ore shipped at market price (Mt) | 10.6 | 9.8 | 9.6 | 38.2 | 37.1 | |||||
Commenting, Mr. Lakshmi N. Mittal, ArcelorMittal Executive Chairman, said:
“2020 was a year of enormous challenge as countries, societies and businesses across the world grappled with the disruption caused by the COVID-19 pandemic. The impact on the steel industry was significant, but I am very proud of the resilience and enterprise shown by our people across the business which enabled ArcelorMittal to deliver a solid operating performance in times of adversity. We have fantastic teams across our operations.
Indeed, 2020 was a milestone year for the Company. Achieving our
Initiatives are also underway to ensure that we take the lessons from our swift and comprehensive COVID-19 response actions and embed these across the business, with a target of delivering more than
The combination of our stronger balance sheet, targeted growth profile and competitive cost positioning underpin our commitment to delivering more consistent returns across the cycle. They also position the Company favorably to lead the industry’s transition to low-emissions steelmaking as part of our 2050 net zero commitment.
2020 was a year in which we saw further acceleration in the drive to decarbonize the global economy. We have identified two main routes to achieve net zero target by 2050, both leveraging one or more clean energy infrastructures – one that utilizes biomass/bioenergy with carbon capture utilization and storage and the other which harnesses green electricity to power a hydrogen-based direct reduced iron process. We will continue to trial and pilot both routes while simultaneously promoting the policies that are a crucial component of success if these technologies are to be scaled up and commercially viable in the long-term. Ahead of COP26 an increasing number of countries have now made net zero commitments – it is imperative these commitments are now accompanied by policy to enable success.
Although we must continue to navigate the COVID-19 challenge, I expect 2021 to be another year of progress for the Company, and look forward to working closely with Aditya our new CEO."
Sustainable development and safety performance
Health and safety - Own personnel and contractors lost time injury frequency rate
Protecting the health and wellbeing of employees remains the Company’s overarching priority with ongoing strict adherence to World Health Organization guidelines and specific government guidelines have been followed and implemented. We continue to ensure extensive monitoring, with stringent sanitary practices and social distancing measures at all operations, and have implemented remote working wherever possible and provided essential personal protective equipment to our people.
Health and safety performance (inclusive of ArcelorMittal Italia (previously known as Ilva)), based on own personnel and contractors lost time injury frequency (LTIF) rate was 0.93x in the fourth quarter of 2020 ("4Q 2020") as compared to 0.95x in third quarter of 2020 ("3Q 2020") and 1.25x in fourth quarter of 2019 ("4Q 2019"). Excluding the impact of ArcelorMittal Italia, the LTIF was 0.65x for 4Q 2020 as compared to 0.56x for 3Q 2020 and 0.84x for the 4Q 2019.
Health and safety performance (inclusive of ArcelorMittal Italia), based on own personnel and contractors lost time injury frequency (LTIF) rate was 0.92x for the twelve months of 2020 ("12M 2020") as compared to 1.21x in for the twelve months of 2019 ("12M 2019"). Health and safety performance (excluding the impact of ArcelorMittal Italia) for 12M 2020 was 0.61x as compared to 0.75x for 12M 2019.
The Company’s efforts to improve its health and safety record, aims to strengthen the safety of its workforce with an absolute focus on eradicating fatalities.
Own personnel and contractors - Frequency rate
| Lost time injury frequency rate | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Mining | 0.68 | 0.35 | 1.27 | 0.61 | 0.97 | |||||
| NAFTA | 0.44 | 0.32 | 0.63 | 0.53 | 0.58 | |||||
| Brazil | 0.17 | 0.36 | 0.32 | 0.29 | 0.36 | |||||
| Europe | 1.35 | 1.04 | 1.06 | 1.08 | 1.00 | |||||
| ACIS | 0.59 | 0.66 | 0.83 | 0.61 | 0.69 | |||||
| Total Steel | 0.65 | 0.60 | 0.78 | 0.62 | 0.73 | |||||
| Total (Steel and Mining) excluding ArcelorMittal Italia | 0.65 | 0.56 | 0.84 | 0.61 | 0.75 | |||||
| ArcelorMittal Italia | 9.16 | 12.15 | 10.61 | 9.46 | 11.13 | |||||
| Total (Steel and Mining) including ArcelorMittal Italia | 0.93 | 0.95 | 1.25 | 0.92 | 1.21 | |||||
Key sustainable development highlights for 4Q 2020:
During 4Q 2020, the Company highlighted:
- The Company maintained its ‘A-’ CDP grade, putting it within the top quartile of all metal smelting, refining and forming companies and the top
10% of the steel industry. It was notable that the Company achieved A grade scores for climate governance, disclosure of climate related financial risk and opportunities, strategy and planning and emissions reduction initiatives. - The Company’s new Grade 80 steel was used for the first time in the USA in the 51-story Union Station Tower located at 320 S. Canal in Chicago. The superior 80 kip-per-square-inch strength of this steel enabled the design team to reduce the amount of steel used in the tower’s columns by almost
20% , which resulted in reduction to project costs and the embodied CO2 of the building. In addition, the column’s slimmer profiles allowed the developer-owner Riverside Investment and Development to offer more open space on upper floors to tenants. - ArcelorMittal continued to advance its leadership in providing sustainability solutions for the automotive sector, enabling lightweight yet stronger and safer vehicles. The Global Automotive division rolled out its latest e-mobility solution to customers in October 2020 with its S-in motion® Rear chassis solutions for electric vehicles, which enable carmakers to design vehicles with extended range and enhanced safety at reduced cost. ArcelorMittal Dofasco announced a
$24M CAD investment that will enable it to become the only Canadian producer of Alusi®-coated Usibor®. Alusi® coating is able to withstand high temperatures as well as being highly corrosion-resistant. The first product from this coating addition at the Hamilton hot dip galvanizing line no. 5 is expected in 2H 2022. This investment complements additional strategic North America developments announced previously, including a new electric arc furnace (EAF) at AM/NS Calvert in the US and a new hot strip mill in Mexico. - ArcelorMittal Long Products announced a collaboration with Vow subsidiary ETIA to build the first dedicated industrial scale biogas plant for the steel industry at Rodange, Luxembourg, with the aim of starting production in 2022. The plant will convert sustainable biomass into biogas to replace the use of natural gas at the plant’s rolling mill reheating furnace, so reducing CO2 emissions from the production of steel, including Rodange’s specialized grooved rails for major rail projects around the world.
- The Company has strengthened its Code for Responsible Sourcing to reflect its alignment with its 10 sustainable development outcomes, its commitment to the ResponsibleSteel standards and the expectations it has of its suppliers on their sustainability standards.
- Group-wide CO2 reduction 2030 target to be announced early 2Q 2021, reflecting segment by segment reduction plans.
Analysis of results for the twelve months ended December 31, 2020 versus results for the twelve months ended December 31, 2019
Total steel shipments for 12M 2020 were 69.1 million metric tonnes (Mt) representing a decrease of
Sales for 12M 2020 decreased by
Depreciation of
Net impairment gain for 12M 2020 amounted to
Net exceptional items for 12M 2020 were gains of
Operating income for 12M 2020 of
Income from associates, joint ventures and other investments for 12M 2020 was
Net interest expense in 12M 2020 was lower at
Foreign exchange and other net financing losses were
ArcelorMittal recorded an income tax expense of
ArcelorMittal’s net loss for 12M 2020 was
Analysis of results for 4Q 2020 versus 3Q 2020 and 4Q 2019
Total steel shipments in 4Q 2020 were 17.3Mt,
Sales in 4Q 2020 were
Depreciation for 4Q 2020 was lower at
Impairment expenses in 4Q 2020 were
Exceptional items in 4Q 2020 of
Operating income for 4Q 2020 was
Income from associates, joint ventures and other investments for 4Q 2020 was
Net interest expense in 4Q 2020 was lower at
Foreign exchange and other net financing losses in 4Q 2020 were
ArcelorMittal recorded an income tax expense of
ArcelorMittal recorded a net income for 4Q 2020 of
Analysis of segment operations
NAFTA
| (USDm) unless otherwise shown | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Sales | 3,196 | 3,329 | 4,020 | 13,597 | 18,555 | |||||
| Operating income / (loss) | 1,507 | 607 | (912) | 1,667 | (1,259) | |||||
| Depreciation | (61) | (126) | (152) | (449) | (570) | |||||
| Impairment items | — | 660 | (700) | 660 | (1,300) | |||||
| Exceptional items | 1,460 | — | (200) | 998 | (200) | |||||
| EBITDA | 108 | 73 | 140 | 458 | 811 | |||||
| Crude steel production (kt) | 4,180 | 4,432 | 5,261 | 17,813 | 21,897 | |||||
| Steel shipments (kt) | 4,134 | 4,435 | 5,029 | 17,902 | 20,921 | |||||
| Average steel selling price (US$/t) | 714 | 701 | 731 | 702 | 810 | |||||
NAFTA segment crude steel production decreased by
Steel shipments in 4Q 2020 decreased by
Sales in 4Q 2020 decreased by
Operating income in 4Q 2020 was
EBITDA in 4Q 2020 of
Brazil
| (USDm) unless otherwise shown | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Sales | 1,884 | 1,603 | 1,902 | 6,271 | 8,113 | |||||
| Operating income | 290 | 197 | 177 | 754 | 846 | |||||
| Depreciation | (49) | (55) | (63) | (224) | (274) | |||||
| EBITDA | 339 | 252 | 240 | 978 | 1,120 | |||||
| Crude steel production (kt) | 2,868 | 2,300 | 2,489 | 9,539 | 11,001 | |||||
| Steel shipments (kt) | 2,575 | 2,425 | 2,717 | 9,410 | 11,192 | |||||
| Average steel selling price (US$/t) | 702 | 625 | 628 | 634 | 679 | |||||
Brazil segment crude steel production increased by
Steel shipments in 4Q 2020 increased by
Sales in 4Q 2020 increased by
Operating income in 4Q 2020 of
EBITDA in 4Q 2020 increased by
Europe
| (USDm) unless otherwise shown | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Sales | 7,604 | 7,013 | 8,035 | 28,071 | 37,721 | |||||
| Operating loss | (447) | (342) | (649) | (1,444) | (1,107) | |||||
| Depreciation | (355) | (356) | (323) | (1,413) | (1,256) | |||||
| Impairment items | (331) | (104) | (28) | (527) | (525) | |||||
| Exceptional items | (146) | — | (456) | (337) | (456) | |||||
| EBITDA | 385 | 118 | 158 | 833 | 1,130 | |||||
| Crude steel production (kt) | 9,110 | 7,908 | 9,030 | 34,004 | 43,913 | |||||
| Steel shipments (kt) | 8,569 | 8,187 | 9,290 | 32,873 | 42,352 | |||||
| Average steel selling price (US$/t) | 695 | 651 | 654 | 655 | 696 | |||||
Europe segment crude steel production increased by
Steel shipments in 4Q 2020 improved by
Sales in 4Q 2020 were
Impairment charges for 4Q 2020 were
Exceptional items for 4Q 2020 were
Operating loss in 4Q 2020 was
EBITDA in 4Q 2020 of
ACIS
| (USDm) unless otherwise shown | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Sales | 1,477 | 1,400 | 1,632 | 5,507 | 6,837 | |||||
| Operating income / (loss) | 177 | 37 | (238) | 84 | (25) | |||||
| Depreciation | (89) | (82) | (105) | (332) | (364) | |||||
| Impairment | — | — | (102) | — | (102) | |||||
| Exceptional items | — | — | (76) | (21) | (76) | |||||
| EBITDA | 266 | 119 | 45 | 437 | 517 | |||||
| Crude steel production (kt) | 2,673 | 2,544 | 2,973 | 10,171 | 12,998 | |||||
| Steel shipments (kt) | 2,373 | 2,499 | 2,985 | 9,881 | 11,547 | |||||
| Average steel selling price (US$/t) | 511 | 465 | 460 | 464 | 517 | |||||
ACIS segment crude steel production in 4Q 2020 increased by
Steel shipments in 4Q 2020 decreased by
Sales in 4Q 2020 increased by
Operating income in 4Q 2020 was
EBITDA was
Mining
| (USDm) unless otherwise shown | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Sales | 1,499 | 1,200 | 1,105 | 4,753 | 4,837 | |||||
| Operating income | 579 | 382 | 185 | 1,411 | 1,215 | |||||
| Depreciation | (148) | (114) | (116) | (500) | (448) | |||||
| EBITDA | 727 | 496 | 301 | 1,911 | 1,663 | |||||
| Own iron ore production (Mt) | 15.3 | 14.8 | 14.8 | 58.0 | 57.1 | |||||
| Iron ore shipped externally and internally at market price (a) (Mt) | 10.6 | 9.8 | 9.6 | 38.2 | 37.1 | |||||
| Iron ore shipment - cost plus basis (Mt) | 5.2 | 5.0 | 5.8 | 19.8 | 22.2 | |||||
| Own coal production (Mt) | 1.1 | 1.2 | 1.4 | 5.0 | 5.5 | |||||
| Coal shipped externally and internally at market price (a) (Mt) | 0.6 | 0.6 | 0.7 | 2.7 | 2.8 | |||||
| Coal shipment - cost plus basis (Mt) | 0.6 | 0.6 | 0.7 | 2.4 | 2.9 | |||||
(a) Iron ore and coal shipments of market-priced based materials include the Company’s own mines and share of production at other mines
Own iron ore production in 4Q 2020 increased by
Own iron ore production in 4Q 2020 increased by
Market-priced iron ore shipments in 4Q 2020 increased by
Own coal production in 4Q 2020 of 1.1Mt decreased by
Market-priced coal shipments in 4Q 2020 were stable at 0.6Mt as compared to 3Q 2020 but declined slightly compared to 4Q 2019.
Operating income in 4Q 2020 increased to
EBITDA in 4Q 2020 increased by
Liquidity and Capital Resources
Net cash provided by operating activities for 4Q 2020 was
Net cash used in investing activities during 4Q 2020 was
Net cash used in financing activities in 4Q 2020 was
On November 2, 2020, ArcelorMittal announced it had completed the share buyback program launched on September 28, 2020. By market close on October 30, 2020, ArcelorMittal had repurchased 35,636,253 shares for a total cost of
During 4Q 2020 and 4Q 2019, the Company paid dividends of
Outflows from lease payments and other financing activities (net) were
As of December 31, 2020, the Company’s cash and cash equivalents and restricted funds amounted to
As of December 31, 2020, the Company had liquidity of
As of December 31, 2020, the average debt maturity was 5.2 years.
Key recent developments
- On February 9, 2021, ArcelorMittal North America Holdings LLC, a wholly-owned subsidiary of the Company, announced an agreement to sell 40 million Cleveland-Cliffs common shares through a fully underwritten public market offering. The transaction is a part of a combined primary and secondary public offering of Cleveland-Cliffs’ shares. This divestment crystallizes additional proceeds from the transaction with Cleveland-Cliffs announced on September 28, 2020 and completed on December 9, 2020. The proceeds from the sale of Cleveland-Cliffs common shares will be used for a new share buyback program of ArcelorMittal common shares. Following the sale of 40 million of Cleveland-Cliffs common shares ArcelorMittal North America Holdings LLC will continue to hold approximately 38 million common shares in addition to shares of non-voting preferred stock redeemable at Cleveland-Cliffs’ option for approximately 58 million common shares or the equivalent value in cash.
- On December 23, 2020, ArcelorMittal Dofasco announced a coating addition to its No.5 Hot-Dipped Galvanizing Line in Hamilton, Ontario . With the investment, ArcelorMittal Dofasco will become the only Canadian producer of Alusi® Coated Usibor® (press hardenable steel for automotive structural and safety components). The total project cost is
$24M CAD and the first Alusi® Coated Usibor® product is expected to come off the line in 2H 2022. No.5 Line is planned to produce up to 160,000-tons of Alusi® coated steel. - On December 23, 2020, ArcelorMittal announced that it had signed a definitive agreement with Nippon Steel Corporation (‘Nippon Steel’) to build an electric arc furnace (‘EAF’) at AM/NS Calvert in Alabama, USA, a 50:50 joint venture between ArcelorMittal and Nippon Steel. ArcelorMittal first announced its intention to build an EAF at AM/NS Calvert on August 12, 2020. Construction of the 1.5Mt capacity EAF, which will cost c.
$775 million , will commence in 2021 and come onstream in the first half of 2023. The project will be funded by AM/NS Calvert. The plan includes an option to add further capacity at lower capex intensity. - On December 22, 2020, ArcelorMittal announced the extension of the conversion date for the
$1 billion privately placed mandatory convertible bond (MCB) issued on December 28, 2009 by one of its wholly-owned Luxembourg subsidiaries. This amendment to the MCB, which is mandatorily convertible into preferred shares of such subsidiary, was executed on December 22, 2020. The mandatory conversion date of the bond has been extended to January 31, 2024. The other main features of the MCB remain unchanged. The bond was placed privately with Credit Agricole Corporate and Investment Bank and is not listed. The subsidiary simultaneously executed amendments providing for the extension of the outstanding notes into which it invested the proceeds of the bond issuance, which are linked to shares of the listed company China Oriental Group Company Limited, which is held by an ArcelorMittal subsidiary. - On December 15, 2020, ArcelorMittal announced that the Company had entered into separate, privately negotiated exchange agreements with a limited number of holders of the Company’s
5.50% Mandatorily Convertible Subordinated Notes due 2023 (the “Notes”). Pursuant to the exchange agreements, the Company exchanged$246.8 million in aggregate principal amount of the Notes, for an aggregate of (i) 22,653,933 shares (all existing shares held in treasury) of ArcelorMittal common stock (i.e. the minimum conversion ratio under the Notes) plus (ii)$25.4 million (including accrued interest on the exchanged Notes up to, but excluding, the settlement date). The Company did not receive any proceeds from the delivery of such shares of common stock. Following completion of the exchanges, approximately$1.0 billion aggregate principal amount of the Notes remained outstanding. - On December 11, 2020, ArcelorMittal announced that it had signed a binding agreement (the 'Investment Agreement') with Invitalia, an Italian state-owned company, forming a public-private partnership between the parties13. The Investment Agreement will result in a recapitalization of AM InvestCo, ArcelorMittal’s subsidiary which signed the lease and obligation to purchase agreement for Ilva’s business. Invitalia will invest in AM InvestCo in two tranches:
- A first investment of
€400 million , which is expected to be made in the second half of February 2021; in return, Invitalia will receive shares in ArcelorMittal Italia with50% of the voting rights that, along with governance rights, will provide it with joint control over ArcelorMittal Italia (at which point ArcelorMittal Italia will be deconsolidated); - A second tranche (consisting of up to
€680 million in equity and a shareholder loan of up to€25 million ) is payable on closing of the purchase obligation of the former Ilva business units, which itself is subject to the satisfaction of various conditions precedent by May 2022. This second investment is expected to bring Invitalia’s shareholding in ArcelorMittal Italia to60% . ArcelorMittal would need to invest up to€70 million to retain a40% shareholding and equivalent voting rights.
- A first investment of
Details of the updated industrial plan involves investment in lower-carbon steelmaking technologies, including the construction of a 2.5Mtpa EAF, which is expected to open in mid-2024, and the relining of BF #5, which is expected to begin production in 2024. This industrial plan, which targets reaching 8Mtpa of production in 2025 (crude steel production is limited to 6Mtpa until the environmental plan is completed), will become effective upon the closing of the first investment. It integrates a series of public support measures including ongoing government funded employment support and includes, for the period between 2021 and 2025, environmental capital expenditures of
- On December 9, 2020, ArcelorMittal announced that the sale of ArcelorMittal USA to Cleveland-Cliffs for a combination of cash and stock had been completed on such day. Under the terms of the sale, ArcelorMittal received
$505 million cash, 78 million shares of Cleveland-Cliffs common stock and non-voting preferred stock which is redeemable for approximately 58 million shares of Cleveland-Cliffs common stock or an equivalent amount in cash[1]. As agreed, Cleveland-Cliffs has assumed the liabilities of ArcelorMittal USA, including net liabilities of approximately$0.5 billion and pensions and other post-employment benefit liabilities (‘OPEB’)[2].
[1] Cleveland-Cliffs Inc.’s share price closed on September 25, 2020 (the last day of trading prior to the transaction announcement) at
[2] As a result of the transaction closing in December 2020, pension and OPEB liabilities with a carrying value of
A fundamental part of the Company’s response at the onset of the COVID-19 pandemic was to align costs to the lower activity level. The comprehensive measures taken to “variabilise” fixed costs were critical to protecting profitability and cash flows.
Throughout this period, the Company sought to identify and develop options for structural cost improvements to appropriately position the fixed cost base for the post-COVID-19 operating environment. These savings implemented are expected to limit the increase in fixed costs as activity and production levels recover, thus leading to lower fixed costs per-tonne. In total,
The Company has already implemented a footprint optimization, including the permanent closure of a blast furnace and steel plant in Krakow (Poland), the permanent closure of the Florange coke oven battery and the closure of the Saldanha facility in South Africa. Productivity and logistics are expected to provide approximately
Actions in repairs and maintenance are expected to provide approximately
These improvements will augment those achieved under the Action2020 program, which was superseded at the onset of the COVID-19 pandemic.
Capital return
Following the achievement of the Group’s net debt target, and in line with its previous statements, the Board has approved a new capital return policy. Going forward, the Company expects to pay a base annual dividend (to be progressively increased over time). After paying this base dividend,
This return is additional to the
Financial calendar for 2021
- General meeting of shareholders: May 4, 2021: ArcelorMittal Annual General Meeting
- Earnings results announcements: May 6, 2021: Earnings release 1Q 2021; July 29, 2021: Earnings release 2Q 2021 and half year 2021; November 11, 2021: Earnings release 3Q 2021
Outlook
Based on the current economic outlook, ArcelorMittal expects global apparent steel consumption (“ASC”) in 2021 to grow between +
Economic activity progressively improved during 2H 2020 as lockdown measures eased. Following a prolonged period of destocking, the global steel industry is now benefiting from a favorable supply demand balance, supporting increasing utilization as demand recovers. Given this positive outlook (and subject to pandemic-related macroeconomic uncertainties), the Company expects ASC to grow in 2021 versus 2020 in all our core markets. By region:
- In the US, ASC is expected to grow within a range of +
10.0% to +12.0% in 2021 (versus an estimated -16.0% contraction in 2020, when flat products declined by12.0% ), with stronger ASC in flat products particularly automotive while construction demand (non-residential) remains weak. - In Europe, ASC is expected to grow within a range of +
7.5% to +9.5% in 2021 (versus an estimated -10.0% contraction in 2020); with strong automotive demand expected to recover from low levels and continued support for infrastructure and residential demand. - In Brazil, ASC is expected to continue to expand in 2021 with growth expected in the range of +
6.0% to +8.0% (versus estimated +1.0% growth in 2020) supported by ongoing construction demand and recovery in the end markets for flat steel. - In the CIS, ASC growth in 2021 is expected to recover to within a range of +
4.0% to +6.0% (versus -5.0% estimated contraction in 2020). - In India, ASC growth in 2021 is expected to recover to within a range of +
16% to +18% (versus17.0% estimated contraction in 2020). - As a result, overall World ex-China ASC in 2021 is expected to grow within the range of +
8.5% to +9.5% supported by a strong rebound in India (versus -11.0% contraction in 2020). - In China, overall demand is expected to continue to grow in 2021 to +
1.0% to +3.0% (supported by ongoing stimulus) (versus estimated growth of +9.0% in 2020 which recovered well post the COVID-19 pandemic earlier in the year driven by stimulus).
The FY 2020 cash needs of the business (including capex, interest, cash taxes, pensions and certain other cash costs but excluding working capital movements) total
ArcelorMittal Condensed Consolidated Statement of Financial Position1
| In millions of U.S. dollars | Dec 31, 2020 | Sept 30, 2020 | Dec 31, 2019 | |||
| ASSETS | ||||||
| Cash and cash equivalents and restricted funds | 5,963 | 6,617 | 4,995 | |||
| Trade accounts receivable and other | 3,072 | 3,133 | 3,569 | |||
| Inventories | 12,328 | 12,327 | 17,296 | |||
| Prepaid expenses and other current assets | 2,281 | 2,094 | 2,756 | |||
| Asset held for sale7 | 4,329 | 6,069 | — | |||
| Total Current Assets | 27,973 | 30,240 | 28,616 | |||
| Goodwill and intangible assets | 4,312 | 4,195 | 5,432 | |||
| Property, plant and equipment | 30,622 | 31,326 | 36,231 | |||
| Investments in associates and joint ventures | 6,817 | 6,488 | 6,529 | |||
| Deferred tax assets | 7,866 | 8,052 | 8,680 | |||
| Other assets15 | 4,462 | 2,224 | 2,420 | |||
| Total Assets | 82,052 | 82,525 | 87,908 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Short-term debt and current portion of long-term debt | 2,507 | 3,776 | 2,869 | |||
| Trade accounts payable and other | 11,525 | 9,389 | 12,614 | |||
| Accrued expenses and other current liabilities | 5,596 | 6,036 | 5,804 | |||
| Liabilities held for sale7 | 3,039 | 5,642 | — | |||
| Total Current Liabilities | 22,667 | 24,843 | 21,287 | |||
| Long-term debt, net of current portion | 9,815 | 9,608 | 11,471 | |||
| Deferred tax liabilities | 1,832 | 1,928 | 2,331 | |||
| Other long-term liabilities | 7,501 | 8,510 | 12,336 | |||
| Total Liabilities | 41,815 | 44,889 | 47,425 | |||
| Equity attributable to the equity holders of the parent | 38,280 | 35,838 | 38,521 | |||
| Non-controlling interests | 1,957 | 1,798 | 1,962 | |||
| Total Equity | 40,237 | 37,636 | 40,483 | |||
| Total Liabilities and Shareholders’ Equity | 82,052 | 82,525 | 87,908 | |||
ArcelorMittal Condensed Consolidated Statement of Operations1
| Three months ended | Twelve months ended | |||||||||
| In millions of U.S. dollars unless otherwise shown | Dec 31, 2020 | Sept 30, 2020 | Dec 31, 2019 | Dec 31, 2020 | Dec 31, 2019 | |||||
| Sales | 14,184 | 13,266 | 15,514 | 53,270 | 70,615 | |||||
| Depreciation (B) | (711) | (739) | (802) | (2,960) | (3,067) | |||||
| Impairment items4(B) | (331) | 556 | (830) | 133 | (1,927) | |||||
| Exceptional items5 (B) | 1,314 | — | (828) | 636 | (828) | |||||
| Operating income / (loss) (A) | 1,998 | 718 | (1,535) | 2,110 | (627) | |||||
| Operating margin % | 14.1 | % | 5.4 | % | (9.9) | % | 4.0 | % | (0.9) | % |
| Income from associates, joint ventures and other investments | 7 | 100 | 20 | 234 | 347 | |||||
| Net interest expense | (88) | (106) | (140) | (421) | (607) | |||||
| Foreign exchange and other net financing loss | (270) | (150) | (117) | (835) | (1,045) | |||||
| Income / (loss) before taxes and non-controlling interests | 1,647 | 562 | (1,772) | 1,088 | (1,932) | |||||
| Current tax expense | (373) | (204) | (260) | (839) | (786) | |||||
| Deferred tax benefit / (expense) | 15 | (580) | 135 | (827) | 327 | |||||
| Income tax expense | (358) | (784) | (125) | (1,666) | (459) | |||||
| Income / (loss) including non-controlling interests | 1,289 | (222) | (1,897) | (578) | (2,391) | |||||
| Non-controlling interests (income)/ loss | (82) | (39) | 15 | (155) | (63) | |||||
| Net income / (loss) attributable to equity holders of the parent | 1,207 | (261) | (1,882) | (733) | (2,454) | |||||
| Basic earnings / (loss) per common share ($) | 1.01 | (0.21) | (1.86) | (0.64) | (2.42) | |||||
| Diluted earnings / (loss) per common share ($) | 1.00 | (0.21) | (1.86) | (0.64) | (2.42) | |||||
| Weighted average common shares outstanding (in millions) | 1,199 | 1,228 | 1,012 | 1,140 | 1,013 | |||||
| Diluted weighted average common shares outstanding (in millions) | 1,204 | 1,228 | 1,012 | 1,140 | 1,013 | |||||
| OTHER INFORMATION | ||||||||||
| EBITDA (C = A-B) | 1,726 | 901 | 925 | 4,301 | 5,195 | |||||
| EBITDA Margin % | 12.2 | % | 6.8 | % | 6.0 | % | 8.1 | % | 7.4 | % |
| Own iron ore production (Mt) | 15.3 | 14.8 | 14.8 | 58.0 | 57.1 | |||||
| Crude steel production (Mt) | 18.8 | 17.2 | 19.8 | 71.5 | 89.8 | |||||
| Steel shipments (Mt) | 17.3 | 17.5 | 19.7 | 69.1 | 84.5 | |||||
ArcelorMittal Condensed Consolidated Statement of Cash flows1
| Three months ended | Twelve months ended | |||||||||
| In millions of U.S. dollars | Dec 31, 2020 | Sept 30, 2020 | Dec 31, 2019 | Dec 31, 2020 | Dec 31, 2019 | |||||
| Operating activities: | ||||||||||
| Income /(loss) attributable to equity holders of the parent | 1,207 | (261) | (1,882) | (733) | (2,454) | |||||
| Adjustments to reconcile net income/ (loss) to net cash provided by operations: | ||||||||||
| Non-controlling interests loss / (gain) | 82 | 39 | (15) | 155 | 63 | |||||
| Depreciation and impairment items4 | 1,042 | 183 | 1,632 | 2,827 | 4,994 | |||||
| Exceptional items5 | (1,314) | — | 828 | (636) | 828 | |||||
| (Income) from associates, joint ventures and other investments | (7) | (100) | (20) | (234) | (347) | |||||
| Deferred tax (benefit) / expense | (15) | 580 | (135) | 827 | (327) | |||||
| Change in working capital | 925 | 1,072 | 2,600 | 1,496 | 2,197 | |||||
| Other operating activities (net) | (504) | 257 | (76) | 380 | 1,063 | |||||
| Net cash provided by operating activities (A) | 1,416 | 1,770 | 2,932 | 4,082 | 6,017 | |||||
| Investing activities: | ||||||||||
| Purchase of property, plant and equipment and intangibles (B) | (668) | (520) | (815) | (2,439) | (3,572) | |||||
| Other investing activities (net) | 262 | 34 | (936) | 428 | (252) | |||||
| Net cash used in investing activities | (406) | (486) | (1,751) | (2,011) | (3,824) | |||||
| Financing activities: | ||||||||||
| Net (payments) / proceeds relating to payable to banks and long-term debt | (1,506) | (270) | 126 | (2,395) | 1,262 | |||||
| Dividends paid to minorities (C) | (16) | (55) | (21) | (181) | (129) | |||||
| Dividends paid to ArcelorMittal shareholders | — | — | — | — | (203) | |||||
| Share buyback | (487) | (13) | — | (500) | (90) | |||||
| Common share offering | — | — | — | 740 | — | |||||
| Proceeds from Mandatorily Convertible Notes | — | — | — | 1,237 | — | |||||
| Lease payments and other financing activities (net) | (218) | (63) | (86) | (399) | (326) | |||||
| Net cash (used in) / provided by financing activities | (2,227) | (401) | 19 | (1,498) | 514 | |||||
| Net (decrease) / increase in cash and cash equivalents | (1,217) | 883 | 1,200 | 573 | 2,707 | |||||
| Cash and cash equivalents transferred (to) / from assets held for sale | 67 | (70) | — | (3) | 10 | |||||
| Effect of exchange rate changes on cash | 234 | 73 | 131 | 163 | (22) | |||||
| Change in cash and cash equivalents | (916) | 886 | 1,331 | 733 | 2,695 | |||||
| Free cash flow (D=A+B+C)17 | 732 | 1,195 | 2,096 | 1,462 | 2,316 | |||||
Appendix 1: Product shipments by region(1)
| (000'kt) | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| Flat | 3,462 | 3,779 | 4,325 | 15,422 | 18,261 | |||||
| Long | 807 | 746 | 819 | 2,884 | 3,260 | |||||
| NAFTA | 4,134 | 4,435 | 5,029 | 17,902 | 20,921 | |||||
| Flat | 1,324 | 1,047 | 1,553 | 4,722 | 6,328 | |||||
| Long | 1,268 | 1,393 | 1,176 | 4,740 | 4,918 | |||||
| Brazil | 2,575 | 2,425 | 2,717 | 9,410 | 11,192 | |||||
| Flat | 6,210 | 6,025 | 6,827 | 23,907 | 31,523 | |||||
| Long | 2,246 | 2,080 | 2,323 | 8,550 | 10,360 | |||||
| Europe | 8,569 | 8,187 | 9,290 | 32,873 | 42,352 | |||||
| CIS | 1,912 | 1,914 | 2,087 | 7,685 | 7,425 | |||||
| Africa | 458 | 585 | 890 | 2,190 | 4,112 | |||||
| ACIS | 2,373 | 2,499 | 2,985 | 9,881 | 11,547 | |||||
Note: “Others and eliminations” are not presented in the table
Appendix 2a: Capital expenditures(1)
| (USDm) | 4Q 20 | 3Q 20 | 4Q 19 | 12M 20 | 12M 19 | |||||
| NAFTA | 66 | 81 | 191 | 459 | 727 |
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FAQ
What were ArcelorMittal's financial results for 2020?
ArcelorMittal reported a net loss of $0.7 billion for FY 2020, an improvement from a $2.5 billion loss in FY 2019.
How much free cash flow did ArcelorMittal generate in 2020?
The company generated $1.5 billion in free cash flow in 2020.
What is the expected dividend for ArcelorMittal shareholders?
The company proposed a dividend of $0.30 per share, subject to shareholder approval.
What were the steel shipment figures for ArcelorMittal in 2020?
Steel shipments decreased by 18.2% to 69.1 million tonnes in 2020.
What is ArcelorMittal's stock symbol?
The stock symbol for ArcelorMittal is MT.
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