After a mining accident that killed 46 people, ArcelorMittal sold its site in Kazakhstan at the beginning of December for a much lower price than expected. This resulted in a provision of $2.4bn, which weighed on the steelmaker’s balance sheet. Photo: Shutterstock

After a mining accident that killed 46 people, ArcelorMittal sold its site in Kazakhstan at the beginning of December for a much lower price than expected. This resulted in a provision of $2.4bn, which weighed on the steelmaker’s balance sheet. Photo: Shutterstock

Sales down by almost 15% by 2024, Ebitda halved, profits cut tenfold: in a difficult environment, ArcelorMittal has put its fundamentals in order when you look at the figures over five years... and looked after its shareholders with an increase in the dividend.

On Thursday morning, ArcelorMittal announced profits of less than one billion dollars ($919m) for 2023, ten times less than last year ($9.3bn), based on sales down 14.5% to $68.3bn. This was mainly due to provisions for withdrawing from Kazakhstan--which had been anticipated at $1.47bn-$1.7bn and have now been announced at $2.4bn--and to a provision of $1.4bn to cover cash flow problems at its Italian subsidiary, Acciaerie d’Italia. Ebitda, which measures operating efficiency, also fell sharply from $14.1bn to $7.6bn and debt also increased (from $2.2bn to $2.9bn).

“Our full-year results reflect the benefits of the structural improvements we have made to our cost base, asset portfolio and balance sheet over the past few years,” noted the steel giant’s CEO, Aditya Mittal. “Even though the operating environment becomes increasingly challenging as the year progresses, our profitability per tonne is healthy and well above long-term averages. This highlights the increased sustainability we have built into the business, allowing us to generate healthy cash flows to invest in future growth and return attractive levels of capital to our shareholders.”

“Looking ahead, there are early signs of a more constructive industrial environment. This alongside the progress we are making with our portfolio of strategic growth projects--several of which will be completed this year--means that the company will continue to make significant steps forward in its drive to become a stronger, more profitable and of course safer business,” Mittal stated on 8 February 2024.

Better financial indicators

Although the figures show the company’s difficulties in an annualised timeframe--steel prices fell from April to November before starting to recover--Ebitda remains higher than in the pre-covid period at €157 per tonne in the new definition (or €136 until now), as do adjusted net income at €4.9bn and free cash flow, which at €2.9bn shows the best financial health excluding 2021 and 2022 (and which is above all positive) since 2016. In the detail of this strategic figure, the €2.9bn figure is understood as “$7.6bn of net cash generated by operating activities less $4.6bn of capital expenditure (capex), including $1.4bn dollars of capital expenditure for strategic growth”. At 10%, the return on equity over 2019-2023 is identical to that for the 2017-2021 period and significantly higher than the five-year returns since 2014.

Strategic investments are expected to add around $1.8bn to Ebitda growth by the end of 2026. Scheduled for commissioning in 2024 are: the cold rolling complex at Vega, additional capacity at the Serra Azul mine and Barra Mansa (in Brazil); the first phase of new electric steel capacity in Europe; the first iron ore concentrate in Liberia; 1 GW of renewable energy capacity in India; and the new electric arc furnace (EAF) at AMNS Calvert (USA). In addition, the expansion of the AMNS India Hazira plant to a capacity of around 15m tonnes in its first phase is progressing well and is on track for completion in 2026 with the next phase. The expansion of capacity at Hazira (India) to 20m tonnes is planned, and plans for an expansion to 24m tonnes (including 1.5m tonnes of long capacity) are in preparation, the press release adds.

This news is all the more interesting given that the group expects steel consumption, excluding China, to grow by 3% to 4%. Capital expenditure in 2024 is expected to remain in the range of $4.5bn to $5.0bn (of which $1.4bn to $1.5bn are expected as capital expenditure for strategic growth).

A 14% increase in the dividend to $0.50 will be proposed at the annual general meeting in April.

Originally published in French by and translated for Delano

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