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 in the first quarter of 2026. Leading today's call will be our Group CFO, Mr. Germino Cristina. Before we begin, I would like to mention a few housekeeping items as usual. We will not be going through the presentation that was published on our website this morning. However, I do want to draw your attention to the disclaimers on slide 20 of that presentation. Following opening remarks from Jen Wino, we will move directly to the Q&A session. So if you would like to ask a question, then please do press star 11 on your keypad to join the queue.

And with that, I will hand the call over to Jeremy now. Thanks, Daniel. Welcome, everyone, and thanks for joining today's call.

As usual, I will keep my remarks brief, and much of what I say will echo the messages from recent quarters. That reflects the consistency of our performance the clarity of our focus and the discipline with which we continue to execute our strategy. What we are delivering at the bottom of the cycle positions us very well for the near future, particularly as more favorable policy conditions translate into a stronger operating environment with improving margins and returns. Alongside the impact of our growth strategy, this supports the free cash flow outlook and the delivery of consistent capital returns to shareholders. But first, I want to address safety. Our multi-year safety transformation program is now delivering more consistent and improved outcomes across our organization. Leadership expectations are clearly defined, risk management practices are being applied more uniformly, and our focus on process safety has expanded across installation. Advanced analytics, including AI, are strengthening these efforts. For example, enabling early identification of workers entering hazardous areas and triggering path alerts and interventions that humans monitoring alone. Most importantly, this sustained focus on safety is translating to tangible improvements in performance across the group. We provide a more detailed account of this progress in the sustainability report published last week, which I encourage you to review for a fuller picture of how we are advancing our safety objectives. Now I want to focus this quarter on three key points. First and foremost, our results consistently demonstrate clear structural improvements. In the first quarter, we delivered a beta of $131 per ton. up $15 per tonne year-on-year and around 50% higher than our historical average margins. This clearly demonstrates the strengthening of our underlying earnings power over recent years. Importantly, this performance does not yet reflect the significantly stronger price environment seen in recent months, which we expect to be more fully evident in our second quarter results. Underlying free cash flow performance was robust. Excluding the seasonal working capital investment and in strategic group CapEx, underlying free cash flow was running at an annualized rate of over $2 billion. Again, considering where we are in the cycle, this represents a strong outcome. Consistent and disciplined execution of our strategy is driving improved performance and providing the capacity to continually invest with discipline and focus, and materially enhance the future earnings potential of Arsenal Midtown. This brings me to my second point, our compelling growth opportunities, which clearly set us apart from our peers. We are allocating capital to the highest return opportunities. This includes projects that are actively enabling the energy transition. expanding our iron ore mining capacity and adding new value added capabilities we recently approved an eaf investment in dunkirk the decision was enabled by the more supportive policy backdrop the cost visibility from a competitive long-term energy contract and the support of the french government our eaf projects are expected to deliver incrementally higher beta to provide an acceptable return on the capital deploy. So we have reflected Dunkirk together with the previously announced EIF projects in Sestal and Guihong into the expected EBITDA impact from strategic projects. This now stands at an incremental 1.8 billion from 2026 onwards. My final point is on the positive outlook, which is underpinned by trade policy. Given the change to trade policy, the steel sector today offers much more defensive characteristics, particularly in Europe, than it did in the past. More effective trade protections are leading to increasingly regionalized market structures, enabling domestic producers to recapture market share from unfairly subsidized imports. The biggest shift occurring in Europe. We are very pleased with the agreement achieved in the new tariff rate quota tool in Europe. As a result, we can expect this to be in effect from 1st of July, 2026. Together with Cibam, this underpins our positive outlook for our European business. We are seeing stronger customer engagement, higher order inquiries, and customers shifting more towards domestic supplies. This is apparent in the material improvement in steel prices and spreads since the start of the year. As a result, despite the volatility of energy markets caused by the conflicting era, we continue to expect our production and shipments to improve across all regions in 2026. And we should see a clear improvement in our EBITDA in all steel segments next quarter. As I conclude, the message is simple. We are consistently delivering structurally improved results while executing our strategy with discipline. Our high return growth opportunities differentiate us from our peers, as does our track record of capital returns through the consistent application of our policy. That framework has already delivered a 38% reduction in our share count and a doubling of the dividend over the past five years. At the same time, we have advanced the business strategically, enhancing resilience and structurally improving returns on capital, all achieved while maintaining a strong investment-grade balance sheet.

With that, Daniel, I believe we can begin the Q&A. Great. Thank you, Germino.

So we have quite a long list of questions already, so we will move to the first. which we'll take from Alan. Please go ahead, Alan.

Yes, thank you for taking my question, Daniel, and good afternoon, everyone. A couple of questions from my side. You know, the usual question is probably a good place to start if you can walk us through the usual profit bridges, Q1 versus Q2, and where do you see the greatest deltas in prices and volumes, and how are your divisional costs evolving sequentially, including the CO2 cost implications in Europe? That's the first question. Thanks.

So I want to ask Daniel to start with the bridge. Daniel, do you want to kick it off? Yeah, sure. Thanks, Gemini. And it's a very simple bridge, which you've already alluded to, I think, in your opening remarks. You referenced that we expect all of the steel segments to improve in the second quarter relative to the first quarter. And the drivers behind that improvement are common across the segment. So it's a theme of improved volumes, and improved prices and so that's that's applicable to europe it's applicable to north america and it's applicable to uh to brazil yeah perhaps then i will uh add you know i mean the point on carbon costs is a lot i mean as as you know i mean we have uh the new benchmarks right from beginning of the year that's ETS 4.2, so I'm sure you know what it means in terms of reduction of free allowances, right? But I think what is important here, and we have in our results, is that now with CBAB, which so far, based on what we can see, is proving to be very effective, right? I mean, we see that prices since the introduction of CBAB has moved up by This year, just look at the index, almost 100 euros, right? And you don't see that yet in our results. You see, of course, the costs in Europe already, right, as we accrue the higher CO2 costs, but you don't see yet the benefits of CEBA. So, that should come, of course, from quarter two onwards.

Thank you. Thank you. And my second question is, if you're able to give us some qualitative color on the European customer behavior, how receptive are they to the new pricing frameworks, both CBAM and with the upcoming safeguard? And are you worried about inventory levels in Europe, or are you seeing any client retrenchment because of the Middle Eastern conflict? So any color you can give us on your customer profile in Europe today would be much appreciated. Thank you.

Yeah, well, I made some comments with my prepared open remarks, right? We are seeing more activity. The order book is good. So when I compare where we were last year, I would say the order book is stronger. We see customers trying to develop the relationships. So that is all supportive. That's good. So, and that's why, I mean, we feel, of course, confident to confirm the guidance that we discussed at the time of Q4 results, highest shipments in Europe, year on year, right? And I would expect our second half actually to be stronger than the first half, which is, as you know, unusual. Typically, our second half is weaker, but because of everything that we are discussing here, I would expect shipments in the second half to be actually stronger.

Yeah, so I think it's all moving in the right direction. Thank you very much. Thank you. Great. So we'll move now to take a question from Bastian at Deutsche Bank.

Hi, Bastian. Please go ahead.

Yeah, good afternoon, and thanks for taking my questions. My first one is also a follow-up, actually, on maybe your guidance, particularly on the steel production side in Europe specifically, which was, I guess, very low in terms of production in Q1, and you talked about the maintenance, but shipments were down quite a lot as well, which I guess one could say is a little bit surprising given the impact from CBAM we've seen already as well as maybe some withdrawal from imports. So I'm wondering how far we will see a real catch-up in the second quarter driving very strong year-on-year growth, and whether you would be able to even give a bit more detail on that. That would be great. That's my first question.

Yeah, sure, Bastian. Yeah, Bastian, you're right. So we are, of course, and as we discussed before, we had maintenance in some of our facilities, right? And we have just one or two days ago, we started one of our funders in Poland, and we continue to work on our funders in France and Spain. So we're going to be in a position to bring back the capacity as and when we see the demand, right? So as a result, the funders in Poland is already, we are ramping up that as we speak. I mean, inventories, and I have not really touched on it when I have, so I should do it now. I mean, we know that imports were quite elevated in Q4, right? We saw imports coming down in Q1, right? But evidence suggests that imports, at least at the beginning of Q2, are still elevated, right? So you still have players still trying, of course, to get materials here before the new TIQ starts from 1st of July. Having said that, we don't believe that inventories are too high. I mean, of course, they are higher than I would say normal levels, but not so high. So our expectation is that as the new TIQ comes into place, this inventory should normalize relatively quickly.

Okay. And in terms of what this means for, I guess, the overall cycle, I guess there are some players in the market which do expect that imports in the second quarter will basically go up before they fade in the second half. Is this the view you do share as well? And I guess what is your view, maybe particularly also on the pricing side, prices? have been very strong already, but is your view that Bailey comes third quarter, we will see further price dynamic most likely kicking in in Europe? Or will it take longer to maybe digest and work through, I guess, inventory overhang, whatever disruptions we could see?

Well, Abbas, I mean, what we are seeing, I mean, we saw fast prices actually moving up during the quarter, right? Actually accelerating from beginning of the Iran war also in response, right, to cost pressures. So I think it's fair to say that imports in quarter two should still be high, right, as we discussed, because just it's normal, right? So players trying to get the materials here before the new TRQ. But again, it's not ideal, of course. We're going to need to work through that, but we don't expect that to really be uh or to take us to take the market long to absorb that and of course on the right uh and as you know we cannot comment right we can we we can i can only refer you to what we are seeing if you look at the index it's right i mean we have a nice not only price is increasing uh during the year but it spreads right so when you look at the spreads also evolving positively and also as a result of introduction of CBAM at the beginning of the year. I think we need to look at the European market. As we have always been saying, right, it is the combination of the two, CBAM and TRQ, that is very, very powerful here, right? And we have one piece, and we're going to have the second piece now from 1st of July.

Okay, great. Maybe a very quick one on India, which you didn't mention in your early second quarter indication. I guess we've seen decent performance actually in Q1. Prices also picked up, but then there is also the energy situation as well. So I guess what is the trajectory for India into the second quarter?

Yeah, it's also good. You're right. So because of the DRI, we are more exposed to gas in India. But as you know, I mean, we have, we are, fully hedged, Bastian. So, we don't expect cross-pressure coming from gas in India. So, yeah, fully hedged. And the price environment has also improved, which already benefited Q1, right? And we would expect also a good second quarter for our Indian operations.

Understood. Thanks so much to you, Nuno.

Thanks, Bastian. So we'll move to take the next question from Reinhardt at Bank of America. Hi, Reinhardt, please go ahead.

Hi, Daniel. Hi, Gino. Thanks for taking my question. First one, maybe just, you know, we've spoken a lot about inventories and it seems like it's creating a bit of an uncertain picture around, you know, when this domestic demand will kind of kick in. What are you seeing across the European steel industry in terms of capacity mobilization? outside of the actions that you've taken, do you think that the European industry is ready for the challenge of producing that additional volume?

Well, Ronald, I'm not going to talk much about what the competition is doing, right? I think what we have been saying very consistently is that ArcelorMittal is in a good position, right? to take our market share of the reduced imports. And we can do more, right? So to the extent that others cannot, so then we're going to be in a good position as we talked about. We have a lot of flexibility here. So we have the finances that we can bring back. We have the possibility to bring back slabs. We have more downstream capacity. So we're going to be in a good position here to make sure that the market is supplied that we don't have any shortages as a result of this change.

Understood. That's very clear. Thank you. Just maybe a second question on the Dunkirk EAF investment. Are you looking to do any kind of downstream additions there or to get any changes in your product mix maybe out of that capacity as you go through the capital allocation?

So, can you repeat the question? I'm not sure that I got it.

Yeah, sure. So, as you're converting over to EAF, are you looking to add any downstream investment as well? Any kind of finishing capacity as part of that project?

No, not really. We're going to be able to, of course, and that's why the capex can be reduced to some extent because we're going to be able to to still use some of the equipment there, right? And downstream will, of course, be intact. We're going to be able to... So basically what you're changing is the upstream, right? So instead of the blast furnace and the converters, you're going to have the EIF, the later furnaces, and then we're going to just follow the normal process of that plant. So we should be in a position to achieve the same mix, which in Dunkirk, as you know, it's quite high. quality high order book there, which we, of course, it's very important for us to protect. And that's exactly the idea here, that we should be in a position to produce the same grades as we can today with the brass furnace.

That's clear. Thanks a lot. I'll hand it over. Thanks, Reinhardt.

So we'll move now to take a question from Boris at Capo Chabrot. Hi, Boris.

Please go ahead. Hi, Daniel. Thank you for taking my question. The first question is about the new capacity restock at post in France and in Poland and plus the ES capacity in Spain. How much capacity are you bringing back with those new furnaces? And the second question would be on North America. Are you still facing the same headwind about the tariffs, Section 232? And can you share with us the expectations you might have for the coming renegotiation of the USMCA agreement?

Thank you.

Yeah, so we have a couple of questions. So the first one, the capacity in Europe. So all these furnaces, they are two plus million. So they are relatively large-sized furnaces. As I mentioned before, so we started the global already, and we are getting ready in force and also in Spain, right? And we will, of course, announce when we are ready to bring these furnaces back up. but we're just doing all the work so that we are in a position to restart them when we need them, right? In North America, look, I mean, the USMCA, I mean, it's early days. I think we have to wait to see really how it starts, right? It probably wouldn't be right for me to speculate. The only thing I can say is that we hope that the outcome will be one that we feel that we can operate as a single block. I think for us, for our business, what would be ideal is that we have Mexico, we have Canada, putting the same barriers against the imports, that we have similar protection as we have in the United States. And then the materials then can flow. So that's what I would say. I think we have to wait there, Loris.

Okay, thank you. And just the current headwind, that would be something like $150 million per quarter due to tariffs?

Yeah, there is no change there. The headwinds remain basically the same, Boris. Okay, thank you. Great, thanks, Boris. So we'll move now to take a question from Tristan at BNP Paribas. Hi, Tristan, please go ahead.

Yes, I have two questions, and thank you for taking them. The first one is a question on North America in Section 232. We've seen recently that there could be some relief for Mexican-Canadian producers to build new capacity in the U.S. to supply the auto market. Do you believe this could be retroactively applied to your first Calvert EIF, and if not, is that a consideration for the potential second one?

Yeah, Tristan, so I think it's important to be clear, right, so that today we are not receiving any tariffs released, right, and all imports into the U.S., including from Canada and Mexico, continue to pay Section 232 50% tariffs. I think we know our position on tariffs, which is very consistent. for over 20 years, we have been arguing that the global steel industry has been suffering from overcapacity and continuously pushing for fair trade, whether it's in the US, Brazil, Europe, Canada, or other parts of the world. So we do fully support the Section 232. But we also support being able to operate, as I was saying before, as one regional market across North America, and that there are no tariffs on steel that is melted and poured in Canada and Mexico. And as you know, we have been seriously considering the second year in Calvert as the U.S. is an attractive market to make steel. So, and in terms of potential tariff relief, as you know, tax has been now published, designed to stimulate additional investments in the U.S., and we are analyzing it. So, it's a lot of details. has now been published, and we're just going through that. And the answer is not really a clear yes. We still need to study it. And I just want to also just take the opportunity, as a lot has been written on this topic, I would actually like to also take the opportunity to confirm that we are contributing still to the White House ballroom. So approximately 600 tons have been delivered to date. As you know, we have a track record of both supplying strong, high-quality seals to U.S. customers and donating seals to iconic buildings and projects around the world that showcase its strength and flexibility. Just to give an example, when the Freedom Tower was one of the strongest seals in the world, they came to our facilities So we are pleased to add the White House to the list of iconic American buildings where our steel will stand strong for years to come. So we just need to wait a bit more. We're going to go through the details, and then we're going to be in a position to update everyone.

Okay. Okay. Now that's clear, but that's a potential thing to consider. My second question is on the green steel economics in Europe. I was a bit surprised to see that you were only targeting 200 million of EBITDA for your three EIF projects. Because if I understood correctly, Sestero in Spain is potentially adding another 1 million tons of new volumes. Giron is replacing 1 million tons and Dunkirk is replacing 2 million tons. That's close to 4 million tons of EF steel. It does not look like there are much productivity gains or green steel premiums baked into that. So maybe if you could discuss a little bit the high-level assumptions you're making, and perhaps the delta is on the cost base, and if you expect a big increase there from moving from BF to EF. Thank you.

Yeah. Well, Tristan, there are a couple of points there, right? I think it's just important to appreciate that we are talking about, we are just giving you the incremental EBITDA, right? So, and so it's incremental to what we are earning today. So, and as you know, the idea here is that we're going to be, except for Sestao, where we are really increasing capacity, in Dunkirk, we are, we're going to be replacing one fund. So we are not really looking to increase capacity. So what you have is really what is incremental. And then I think it's also important to take into account the amount of investments, right? And that's why we were so focused as a company to make sure that we have the right conditions, right? So that we can justify this investment. That's why the focus on making sure that we have visibility in terms of FEBA, visibility in terms of BINPOS, PRQ. We have visibility in terms of our energy contract, which we now have for this project, as you know. So I would encourage you also to look at what is the net amount of this context, right? And then in the case of Dunkirk, not only are you going to have the 50% support through the wide certificates, but we're going to also be in a position to avoid the reline of the funds that we're going to be replacing. So that's why in the end, we feel that we're going to be in a position to earn a return on our investment. And when it comes to the assumptions, we don't want to be too specific about it, Tristan. As you can imagine, this is also commercially sensitive. We have our teams going out and marketing already for the future, these contracts, the green steel. I mean, as you know, for some time, at least, we believe that this will be limited, right? And I think it's our teams out there, so we don't want to be talking too much about the assumptions here.

Okay, now that's very clear. Thank you.

Great, thanks, Tristan. So we'll move to take the next question, which I think will be from Ephraim.

Sorry, yes, Ephraim at Citi. Hi, Ephraim, please go ahead.

I'm just trying to understand the page 12 AMNS future growth optionality figures. There's 15 million tons from Hazira, 8 million tons from Andhra, which gives you 23. My understanding was that Hazira was after 15, there is an optionality of phase 2A to 18 and then phase 2B to 24. And then obviously the green field in Andhra is sort of separate. So is the phase 2 being delayed? Is that how we should sort of interpret that in favor of pushing ahead with the green field in Andhra in order to balance the balance sheet and skill sets?

I think you're right.

I mean, of course, we have to face it, right? And absolutely right. So we had in front of us the two options. And it continues to be an option for us, right, to take Hazira further. And that will most likely happen over time as well. But right now, yeah, that's the sequence that we see, right, which is we start Andhra. And yeah, and Hazira will remain an option for us, as well as after we complete this first phase in Andhra, we can go also for another phase there, right? So the 14 million tons vision for the Indian operations remain intact.

Thanks. And then you've said that obviously your current energy situation is manageable, hedging and supportive policies, frameworks for insulated margins. Can you give us a sense of timeline for that in terms of how long? Because, I mean, energy prices could remain high for six months, 12 months, two years. So if they remain, for how long would your hedging policies cover it? And at what point do you think you know, you and the industry will have to start thinking about, you know, energy surcharges in your steel.

Yeah. Well, specifically in India, we are, our program goes, it's a multi-year program, Efren. So I think we are in a good place there. So it's a multi-year and even in Europe for gas, we will also have a multi-year plan program. So I think, yeah, we are, as I said, I think we are in a good place.

Okay. Thank you.

Great. Thanks, Ephraim. So we'll move to the next question, which we'll take from Cole at Jefferies. Hi, Cole. Please go ahead.

Good afternoon. Thanks for taking my question. I'd just like a little bit of color on the metals, on iron ore, just the ramp up on volumes and how you see that into into the second quarter, just any color you can provide. And then I'd also just like to follow up on imports into Europe ahead of the trade barriers. I mean, we've seen a lot of logistics disruptions globally. Do you think that there's a possibility that everyone's expecting a lot of imports into Europe, but considering the supply chains, we just don't see them delivered in time or, you pulled back on some of those orders, just considering they might not meet the delivery dates. Just any thoughts on that? Thank you.

Yeah. So maybe I'll take this one, and then maybe you can comment on, I don't know. So you're right. So I think what we are seeing, of course, is at this point in time, what we are seeing is more a cost issue, right? We are seeing freight rates going up um and of course some of the uh the journey is also taking longer because of the conflict um but it's not it's not something that we believe should be delaying uh the arrival of uh of the materials so i think that's why we as we as we discussed we feel that second quarter should still end up with elevated levels of imports And as a final quarter and then from Q3 onwards, the new TRQ comes into play. And I would say that this window is now closed, right, as we are here almost beginning of May. The window to imports, they are basically under the existing safeguards regime are getting close to an end. And the fact that we don't have yet the quarters for the new GRQ and split by country, I mean, it makes it even a little bit harder for imports, right? So that's what we are seeing. Does anyone want to talk about the, I don't know? Yeah, sorry, Cole, would you mind just repeating that question?

Just a little bit of color on the iron ore question. production that you're expecting into 2Q and any of the phasing through the year, just so that we can think about that in the model?

Yeah, sure. Thank you. So we did have, obviously, a good start to the year in Liberia, another record production shipment quarter. Um, so I think as, as we, and that will just continue, uh, over the next three quarters. So we've, uh, we've signaled, uh, in our initial guidance at the beginning of the year that we expect to be at full capacity, um, and, uh, in, in the second half, uh, and to achieve, um, at least 18 million tons of, uh, of, of, of shipments. So, yeah, I would just be, that's how I would be factoring it into the model. some further improvement in the second quarter. I expect that we will navigate the rainy season through Q3. We continue to improve on our ability to navigate that. And then I would expect we should finish with a strong fourth quarter performance.

And then maybe just following up on Einar, you've been very clear that the energy situation is manageable across the rest of the business, but Are there any things we should be thinking about in iron ore costs just for diesel, et cetera, on the mining side?

I think the only thing I would call out is freight, right? I think the profitability of mining in Q2 will depend, of course, much more, of course, where price is finally lent and freight, right? So oil will have an impact as well, but based on what I see today, I would be more focused on prices and fruit.

Thank you. Great, thanks, Carl.

So we'll move to the next question, which we'll take from Andy at UBS. Hi, Andy. Please go ahead.

Yes, thanks, James. I've got a few follow-ups to previous questions. Just on that potential tariff carve-out in North America, my understanding is it's based upon volumes sold just into the auto sector. So if you ship slabs from Mexico into Calvert, is it your understanding you'd potentially get some relief on those if they're then resold into auto? That's the first one. I've got a couple of modeling ones to follow.

Andy, as I said, I mean, we just got all these details, right? And the teams are busy going through that. So I don't want to anticipate the analysis. If you don't mind, I think we will address that with you next quarter. I'm sure we'll have more color and information to provide on that. Yeah. Okay. No worries.

And just a couple of modeling ones. On the Ukraine contribution, I mean, that was obviously a drag in the first quarter. Can you quantify that on EBITDA? And do you see anything changing into 2Q?

Yeah. Yeah, it was. Q1 was a challenging quarter for Ukraine, right? So energy prices, in particular, really very, very high. As we discussed before, so Ukraine, they have been managing relatively well, right? So in the whole of 2025, as we discussed, at EBITDA level, they managed to be basically neutral. Still pre-cash negative, of course, because of CapEx. Q1 EBITDA was negative as a result of the high energy costs. Energy has come down, which is good news. So we do expect to do better in the second quarter, right? But as we know, the situation remains very challenging. But at least on that front, we expect to do better. And that has been really one of the key drivers of the results.

Okay, that's clear. And just finally on Mexico, the operating issues that you had last year, there was a little bit of overspill into 1Q. How material was that? I think maybe in the fourth quarter, you called out 65 million hits. I mean, what was the equivalent number in 1Q? Was it material?

Yeah, so the evolution in Mexico is very good, right? We restarted the finance, which is producing long products. So we were not yet at full capacity in Q1 in long. So we're going to be at full capacity in quarter two. So I would expect our production and shipments in North America to continue to improve as we move forward, right? But it's no longer, of course, the same magnitude that we had in prior quarters. So I think it's a very good evolution. As we discussed at the time of Q4, you see profitability in North America, almost doubling, and we should continue to see progress going forward in the second quarter. But production is now up and running, and it's only now the full capacity of the furnace that you should see in quarter two. Okay.

That's fine. Thank you.

Thanks, Annie. So we'll move now to take a question from Timna to Wells Fargo. Hi, Timna.

Yeah, hey, thanks. I wanted to actually double-click, as the kids say these days, on North America just a bit more, if I could. I think we obviously, as you pointed out in the last response, seen a nice benefit. It was the biggest contributor to Q1 over Q4 from rising prices. You know, you have some locked up in annual contracts. Can you talk to us about how auto annual contracts fleshed out a bit or give us high level color on that? And then also, do you think that you could see the same order of magnitude in the U.S. into Q2 given the pace of price increases? And then also wanted some more color on how Calvert was ramping up.

Thanks.

Yeah.

So automotive, I mean, as you know, in the U.S., our contracts, they are really the negotiations happen throughout the year. It's a little bit more spread out compared to Europe. In Europe, we have a concentration really at the beginning of the year. In the U.S., it's more, I would say, more like, you know, 30% Q1, 30% from Q2, and then the rest is 25% with Q3. So I think we are doing well. And as you know, we don't really comment so much on the outcome of these negotiations. But I have to say that they are going live with our expectations. It's good. The ramp up at Calvert, the EIF is progressing. So in quarter one, we were a little bit running above already 20%, 25%. And we are progressing. We believe that by the end of quarter two, we should be at much higher levels. And we remain optimistic that we're going to be getting close to ending this ramp-up phase by the end of this year, Tina.

And then if I have... No, no, go ahead, Tina.

Oh, no, I just wanted to ask about if you would be able to quantify the extent of the price increase in Q1 over Q4, if that could be sustained given recent price strengths continuing into Q2?

Yeah, look, we're not going to be quantifying that, but I mean, I think you know very well how prices have picked up in the U.S. I mean, they continue to rise, and you should see that reflected in our results. Of course, I mean, we talked about the automotive, the annual contracts, and how much is is resetting, right?

So, yeah.

Okay. And one further one, if I could, please. We're hearing a bit about switching away from aluminum to steel. In the U.S., of course, it's a more extreme change in prices between the two. But even in Europe, to the extent that the BYDs are getting built and have more steel amount in them versus aluminum, So it'd be great to get any observations that you're seeing on switching away from aluminum to steel and automotive things.

Yeah. So when we look at the, I think you're right. I think this is, to be honest, it has been at least now a less of an issue. We continue to be very focused on that, showing the benefits of steel to our customers. I think we have been very successful there, Tina, as you know. So yeah, I think we continue to make improvements there. So it's not something that I would highlight to you as a big concern that we have at this point. But of course, we remain very focused on R&D, making sure that we have the right grades, we achieve what customers want. So we have successes. And so when we look at the level of intensity, steel intensity on average, we see relatively stability.

All right. Thank you. Thanks, Timna.

So we'll move now to a question from Tom at Barclays. Hi, Tom. Please go ahead.

Yeah, hey, thanks very much. Just one quick follow-up for me, just on Ukraine. You talked about obviously high energy costs having an impact in Q1. Are you seeing anything from CBAM impacting Ukraine? I guess one of your Ukrainian peers has called out CBAM as being, you know, quite a big disruptor for the Ukrainian seal going into Europe because I think it's not exempt at the moment. There's been a few articles saying maybe some order cancellations. Yeah, are you seeing any kind of impact there?

Yeah, I think there was an expectation that Ukraine would be exempted, right? And they are not. And we believe that it's right. There shouldn't be exemptions, right? At the same time, prices are increasing in Europe. So if you have the right cost base, of course, then it should be competitive. In our business, of course, we are focused in Ukraine. on the domestic market, right? And also selling pig to different parts of the globe.

There's good demand for pig, which we continue to sell.

Sorry, I didn't quite catch that. Did you say it shouldn't be or it should be exempt from CBAM?

It shouldn't be. It shouldn't be an exemption.

Shouldn't. Okay. So you're focusing more on the domestic market. And you would say there was some kind of earnings impact that I guess persists into Q2 if an exemption doesn't come through. Then just some questions, just on sort of buyback thoughts, really. I mean, I know your capital allocation policy hasn't changed. We haven't seen any buybacks for nearly a year now. If I look at your free cash over the last 12 months, it is positive. And I guess you're talking about earnings ramping up through the rest of the year. Is that sort of back on the cards potentially to restart that buyback program?

Well, I think you're right. So you know our policy, right? And we had, by the way, in Q1, our first quarterly dividend, which was paid. We remain very optimistic that we're going to be free cash flow positive this year. And then the policy will kick in. And based on the visibility that I have today, I see no reason why we would not go above the minimum 50%, as we have been doing in the last couple of years. And if I can remind everyone, the policies have been really great. I mean, we bought more than 38% of our stock. And I think we are close to restart that.

Okay, great. And sorry, you just said, I'm so optimistic, free cash flow positive this year, then the policy will kick in. Does that mean the policy only kicks in once you sort of see the full year numbers in, or is it more dynamic than that? You know, if you have good visibility, you could start sooner.

Yeah, you know, I mean, it is more dynamic.

Yep. Okay, appreciate that. Thank you. Great. So we have time for maybe two or three more questions.

So the first we will take from Max at Otto. Hi, Max. Please go ahead.

Yeah, good afternoon, James. So first question is, you published last week a sustainability report where you cut your carbon emissions objectives to minus 10% from minus 30% previously by 2030. I think the new objective is very dependent actually on Dinkirk being delivered on time in 2030. So my question is, what would be, in your view, a more realistic timeline for the 30% reduction? Is it the mid-30s, the late 30s, even beyond? And how should we think about the sequencing of the next EF projects in Europe? Are you waiting for Giron to be delivered and ramped up before potentially launching investments, or will it come perhaps even later?

Yeah. Do you want to start with this one, Daniel? Yeah. Thanks, Gemino. So I think you're right to observe the change to our 2030 target. We well flagged that, I think, in recent reports and communications. What's, I think, important to take away is that that 2030 target is based on the announced project. And so it's a number that we are confident we can achieve, and that's why we updated it. In terms of the timing of the next EAF projects, I think if you look at our communications and our messaging, we've also been quite clear that our EAF projects are going to be sequential. so we don't expect significant overlap on any of our blast furnace to eaf projects so the focus right now is completing gihan We've just announced Dunkirk and that will occupy us for the medium term. And then the intention and time is to obviously communicate on what the project that will then follow will be. Let's really focus on getting a smooth start to Dunkirk at this stage, and then we will update on the next project in due course.

Okay, and just a second and last one. It's about the German stimulus plan. So expectations in recent weeks have gone down, actually, amid the red tape, other priorities, perhaps, for the new German government. What's your latest view on the topic? You were quite vocal previously on it, saying that it could increase demand in Europe by around 2% per year over the next 10 years. Is that still your scenario? And when do you expect that to really kick in? Already in H2, 2026? So it's more of a story of 2027 or even 2028, based on your latest understanding.

Well, I mean, to be honest, I mean, we don't see any significant change there.

I mean, when we look at the impact of the program, we start actually to see some activity, right? So I don't believe that the overall numbers that we talked about, they will change. I mean, at least that's not... the intelligence that we have. We will, of course, have to keep monitoring that, but I think we are progressing as the progress is happening there.

Okay, thank you. Great, good stuff.

So we do have time for two more questions, so we'll take the first from Dominic at J.P. Morgan. Hi, Dominic.

Hello, thanks for taking my question. Two quick questions. You've spoken and given us a lot of granularity on Europe. And again, just maybe coming back to the US, given how tight we see that market at the moment, do you think there's any possibility that you actually run harder than through Q2 than normal? So obviously, we often see a summer slowdown. Do you think there is potential that given the state of lead times that you may run harder than normal? And second question, just on any kind of obvious cash flow items we need to be aware of for Q2 modeling for the net debt bridge?

Dominique, so in the U.S., I mean, as you know, I mean, we are running our facilities full. I mean, Calvert, we have been running at high levels, and that will continue, right? So where you're going to see improvements in terms of production, shipments is going to be more really in Mexico and a little bit also in Canada. Right? And the focus in the U.S. for us right now is to ramp up the electric VIF, as we talked about. That will bring more results, so it should contribute to results. And the second part of the question, can you repeat that for me, please?

Just in terms of modeling for net debt into Q2, are there any ?

I would not, Daniel, I would not focus so much in quarter two, right? I mean, I guess my message is more really when I think about the year as a whole. As you know, we have, typically we will have a larger release of working capital in the second half that should continue to be the case despite all the improvements that we are discussing, we are seeing, right? And we explained that because we built some strategic inventories end of last year that we're going to be releasing. So despite all the good developments that we have seen in terms of prices, volumes in the second half, our expectation is that for full year, working capital should not really be consuming significant amount of cash, which should then support even more the free cash flow generation.

Is that helpful, Dominic?

So I think the focus there just to reiterate is, you know, normally the working capital movement in Q2, Q3 is not a major delta in the cash flow bridge. Where it is a major delta is normally Q1 and Q4. So normally we invest in working capital in the first quarter and this year has been no different. And then normally we see a nice release of working capital in Q4 and Q2, Q3.

Normally that's broadly a wash. Great. So I think we will now move to the last question, which we're going to take from Matt at Goldman Sachs.

Hey, Daniel. Thanks for squeezing me in. Look, I have one question on your Indian operations, perhaps in two parts. Generally, you mentioned costs are largely hedged. That's fine. But given India's reliance on gas imports primarily from the Middle East and some of your peers flagging shortages, could you outline where you're sourcing your gas from today and whether you've received any force majeure on future deliveries? And then just to follow up, given your use of gas-based DRI and captive power, what measures can you realistically take to manage gas availability or reduce gas intensity across the Indian operations. Thank you.

So I think we are in a good place there as well. I mean, we have different sources of gas. So we are not really dependent only on Middle East. So we are in a good place. So we have not had any first majora. So we have received all our gas. We have no indication we are, as we speak, in beginning of End of April, beginning of May, no indication of first major. So I think we are, as we discussed, I think we are in a good place there. So we are not expecting any disruptions because of availability. For sure on the price and also on availability, it's not something that we are overly concerned at this point.

That's great. Thank you.

Great. So I'll hand back to you, Jeremy, for any closing remarks. Yeah, so thank you, everyone. Before we close, let me briefly reflect on the key messages from today's discussion. First, our first quarter performance again demonstrates the structural improvement in the earnings power of Asala Mittal. Bargains are well above historical levels with the further benefits of more favorable policies still to accrue. Underlying free cash is annualizing at over $2 billion. Second, we have a clear and differentiated growth pipeline. Our strategic investments are supporting our results and materially enhancing our future EBITDA potential. Finally, the positive outlook for our business is underpinned by more supportive trade policy, especially for Europe. More effective trade protections are fostering a more regionalized market structure, providing a robust platform for higher capacity utilization and profitability and higher and more consistent returns on capital employed. Alongside the impact of our growth strategy, it supports the free cash flow outlook for ArcelorMittal and the delivery of consistent capital returns to shareholders. With that, I will close today's call, and if you have any follow-up questions, please reach out to Daniel and his team. Thank you again for joining us, and I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you.