Arcelormittal SA

Hi, and good afternoon, everybody. This, as Swansea said, is Daniel Fairclough from the ArcelorMittal investor relations team. I'd like to welcome everybody to the fourth quarter and full year 22 analyst and investor call. I'm joined on this call today by our executive chairman, Mr. Mittal, our CEO, Aditya Mittal, and our CFO, Jamina Christina. Before I hand over to Mr. Mittal and Aditya, I would like to remind Everybody have a few housekeeping items. Firstly, I want to refer everybody to the disclaimers that you can find on slide two of the results presentation we published on our website this morning. I'd also like to remind everybody that this call today is being recorded and it's scheduled to last up to 45 minutes. And finally, to repeat Francie's instructions, if you would like to ask a question, then please do press star one on your telephone keypad and we will answer the questions in the order we receive them. And with that, I would like to hand over the call to Mr. Mittal to begin with some opening remarks. Thank you, Daniel. Good day, everyone. Thank you for joining today's call. I hope you are all keeping safe and well. I'll be very quick in my remarks. I would characterize 2022 as another year of progress for Arso Mittal. The results we have published today demonstrate the greater resilience of Arso Mittal when facing more challenging market environments. And I believe the worst conditions of this cycle have passed. As a company, we have achieved significant progress on many strategic fronts over the past 12 months, advancing our decarbonization plans, progressing with our investments to grow EBITDA, and at the same time, buying back over 10% of our equity. The progress is gratifying, and it's bound to be hard work, commitment, and dedication of all our people. I expect 2023 to be another good year for company and all our stakeholders. Adit. Thank you and welcome, everyone. In 2022, we have made clear progress in our three strategic priorities. The decarbonization of our footprint, the growth and development of our business, and capital returns to shareholders. On decarbonization, we have completed the acquisition of the HBI plant in Texas, allowing us to utilize low-carbon metallics and creating significant optionality for the future. We have acquired four scrap processors in Europe with a total capacity of 1.2 million tons. We have commissioned our 200 million euro CCU bioethanol project in Ghent, Belgium. We are progressing on our DRI EF plans in five countries, and our one gigawatt renewable project in India is advancing. On growth, we have now received CADE approval for the CSB acquisition, which we will complete this quarter, adding highest quality capacity at the bottom of the cost curve with the added benefit of access to growing sources of competitive renewables and hydrogen. We're also progressing our strong pipeline of high-return strategic APEX projects, including the newly announced electrical steel project in France. In total, these projects add $1.3 billion to a normalized earnings power. That assumes long-term steel spreads and long-term iron ore prices well below today's levels. So at today's levels, the impact on profitability would be even greater. We're making progress to realize the potential of our JVs, including the announcement of a major investment to double our capacity in India which is also supported by the recently acquired port and power assets. Our capital allocation and return policy is working very well. We're growing the earnings power of the business. We've bought back 30% of our equity since September 2020 and ended the year with record low net debt. In terms of outlook, we have seen some positive signs recently that suggest we're past the bottom of the current D-Stock cycle. The customer destock that we spoke of the last quarter has eased, and we've seen improvement in steel spreads from the unsustainable lows of the fourth quarter last year. We are forecasting apparent demand growth in all our core markets. We're well-placed to generate positive cash flow, and we'll continue to progress our decarbonization and growth agendas and capital returns programs. Genuino, can I now ask you to provide some more detail on our financial performance? Thank you, Aditya. In terms of our financial performance, 2022 was very much a year of two halves. For the first half, we operated in strong market conditions and delivered very strong levels of profitability. The second half of the year brought several challenges and saw a marked downturn in the market environment, and naturally, affected our profitability levels. Full-year EBITDA was $14.1 billion, of which $10.2 billion was generated in the first half and $3.9 billion in the second. But our results demonstrate clear resilience. At $100 per ton, the EBITDA in the fourth quarter was double the levels of the previous crisis environment. Considering the challenges posed by this talking and relatively high energy costs, this really validates the actions we have taken and the improvements we have made to our portfolio in recent periods. Free cash flow has also been very consistent. Over the past two years, we have generated $13 billion in free cash flow. It is this consistency that is allowing us to progress our strategy agenda, and as a little mention, we expect to continue to generate good levels of free cash flow in the year ahead. With that, I think we can move to your questions. Yes, thank you, Jermino. Thank you, Aditya. Thank you, Mr. Mittal. We have a queue of questions, and we will take the first in the queue, which is Alain from Morgan Stanley. Please go ahead.

Yes, thank you, gentlemen. And I have two questions from my side. The first one is on capital returns. I understand that your framework stipulates that only 100 million of buybacks are needed to meet your 50% of free cash flow target for capital returns, but your net debt has come in far below market expectations for Q4, and you still have an authorization to buy back almost 19 million shares. Any reason why you have decided against maintaining the buyback at full steam, given where your share price is today? That's my first question.

Thank you for the question. I'm glad you asked the question because we should clarify there is no change in our buyback policy or the speed at which we're implementing. We still have 19 million shares to acquire and which we will do. I think all we were highlighting in the results is that 100 million belongs to 2022 because that's 50% of our free cash flow that we've actually bought in January and the remainder will apply to the 2023 capital return policy.