Arcelormittal SA

Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you for joining this call to discuss ArcelorMittal's performance and progress during the third quarter and nine months of 2024. Leading today's call will be our Group CFO, Germino Cristino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which we published this morning on our website. However, I do want to draw your attention to the disclaimers on slide two of that presentation. As usual, Jean-Reno will be making some opening remarks before we move on to the Q&A session. So if you would like to join the queue to ask a question, then please do press star 1 1 on your keypad. Over to you, Jean-Reno. Thanks, Daniel, and welcome, everyone. As usual, I will keep my remarks brief. I want to focus on three key themes, beginning first with safety. Across AceloMittal, our people are galvanized to improve our safety performance and achieve our goal of being fatality and serious injury-free as quickly as we can. We recently announced that the DSS Plus Safety Audit has been completed, culminating a clear set of six recommendations. The audit took nine months and we went right from top to bottom of the company. As we now move to the implementation phase, there is considerable work underway to transform the recommendations into very specific work plans that are tailored to each business unit. These work plans will support us in our journey to zero fatalities and safety results we are striving for. Moving to our financial performance, I want to highlight the benefits of our diversification. Our resilient performance this quarter reflects the progress we have made to high grade our asset portfolio in recent periods. We have sold or exited several high cost assets, assets that are clearly struggling in the current environment. At the same time, we have added new assets to our portfolio that are well-positioned to create value, not just in good times, but in all market environments. And our results are a clear testament to this progress. Despite the evidently challenging market conditions, AceloMittal EBITDA per ton margin in the third quarter of $118 per ton compares very favorably with our long-term averages. A key part of our resilience is our diversification, diversification across products and markets and geographies. It is often underappreciated that North America is by far the biggest contributor to our EBITDA. We have the leading franchise business in Brazil, where demand this year is very strong, and this is supporting good momentum for domestic prices and margins. And of course, we are exposed to ingots, the fastest growing major economy globally. The defiscation means that relative to our peers, our results are showing more stability. My final theme is the strategic execution. Our defined capital location and returns policy continues to deliver value for our shareholders. We are consistently investing to grow and develop the earnings capacity of Assama Mitchell. Since 2021, we have generated $20 billion of investable cash flows. This has allowed us to fund our portfolio of high-quality organic projects, take advantage of the best inorganic opportunities, return almost $12.6 billion of capital to shareholders, all while maintaining a very strong balance sheet. We have so far commissioned three strategic growth projects. and all are performing well. Our Mexico hot street mill continues to deliver a better than expected contribution to our results. The new cold mill complex in Brazil delivered its first high-quality coated coil at the beginning of the quarter, and then in September, its first tones of Magnelis, ArcelorMittal's patented metallic-coated coil that offers unparalleled corrosion protection. And our one gigawatt solar wind project started supply of renewable energy to AM and SI India in September. But there is a lot more to come. As our presentation deck shows, we anticipate that our strategic growth projects will add a total of 1.8 billion of new EBITDA. One billion of this will come over the next two years. providing us with a significant boost on top of the anticipated cyclical recovery. And we continue to take advantage of our low valuation to our share buybacks. During the third quarter, we bought back another $280 million of stock. We have reduced the share count by almost 6% this year, bringing the total reduction to 37% over the past four years. As our presentation shows, our all-in cash yield remains very favorable for shareholders. Dividends and buybacks so far this year are $1.4 billion, and with another $200 million dividend payment due in the fourth quarter, the total yield so far this year is almost 8% of our current market capitalization. Returning significant capital to shareholders at the bottom of the cycle while continuing to invest in growth is clear evidence of the progress ArcelorMittal has made. To conclude my opening remarks, we are delivering resilient results and our performance continues to provide evidence that ArcelorMittal can deliver value to all aspects of the steel cycle. Our results, free cash generation and a strong balance sheet provides a strong platform for strategic growth projects. The projects delivered so far are achieving the results we anticipated, and there is a lot more to come. The projects we will be commissioning over the next two to three years will provide significant structural upside to our EBITDA and cash flows on top of any cyclical recovery. And all the benefits to our shareholders are being compounded by our continued share buyback. So with that, we are now ready to take your questions, Daniel. Great. Thank you, Jim. We know we have a queue of questions already. But just to remind everybody, if you would like to ask a question, please do press star 1 1 on your keypads to join the queue. So we'll move to the first question, please. And the first question we will take is from Ephraim at CIDI. Please go ahead, Ephraim.

Thank you. So three short questions. Firstly, on Calvert, obviously you've had this deal with Nippon. For how long would that deal be valid for, i.e. it could take a long time for the deal to get approved? And associated with that, the second EAF at Calvert, is that effectively on hold now? you know, till the whole transaction completes? Or is there a possibility that you can start it or start construction even if that deal is not completed? Secondly, on Mon Levade, I mean, obviously, you have put that project on hold as well. But the overall EBITDA of 1.8 billion from investments hasn't changed. So can you just give us a sense as to how big the EBITDA contribution from that was supposed to be?

um just so that we can get a sense as to how big or small uh that was sure let me start with the the last part of your question more about i think that's a good example of the discipline that we uh we want to make sure that we employ in all of our complex projects as you know this is a project that we started years ago. We started the project and we restarted the engineering. And as we completed the engineering work, we realized that the investments would need to be higher. Therefore, we felt that it was just prudent to put it on hold. And we do have options in Brazil to continue to develop the business in a less capex-intensive way. As you know, one of our projects, initially, the benefits expected with the project was $200 million. And you're right, you don't see a change in the overall $1.8 billion targets because we're going to be announcing soon new investments. that will basically offset malevolence. So that's why we are keeping the overall beta target the same. And then as we release Q4 results, we will talk more about the new investments. Regarding Calvert, so the focus right now is really on completing the first year, right? So everybody there in that facility is very much focused on that. Of course, we have the discussion, the deal with Nippon Steel that is dependent on them closing their transaction. But on our facility, everybody's focused on the projects, continue to service our clients. So nothing changed. So as you know, as we started the first year, a lot has already been done for seeing the second years. But at this point in time, we have not yet taken the decision to move ahead with that second EIF, although, of course, that's always something contemplated.