arcelormittal q3 2008 results

Third quarter results 2008Third quarter results 2008

5th November 2008

Disclaimer

•Forward-Looking Statements This document may contain forward-looking information and statements about

ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “target” or similar expressions. Although ArcelorMittal’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holdersexpectations reflected in such forward looking statements are reasonable, investors and holders of ArcelorMittal’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements These risks and uncertainties include those discussed or identified ininformation and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier) and the United States Securities and Exchange Commission (the “SEC”) made or to be made by ArcelorMittal, including ArcelorMittal’s Annual Report on Form 20-F for the year ended December 31, 2007 filed with the SEC. ArcelorMittal undertakes no yobligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise.

1

Agenda

• Introduction and overview• Health and safetyHealth and safety• Environment and steel market• Industrial plan• Q3 results and financial plan• Divisional highlights• Guidance• Guidance

2

Introduction and overview

3

Introduction and overview

• Health & Safety – Frequency rate* down to 2.1

• Strong third quarter earnings supported by unique 3-dimensional strategy– EBITDA increased 6.6% to USD 8.6bn in Q3 2008 as compared to Q2 2008

• Solid financial structure – Net Debt** of USD 32.5bn resulting in a Net Debt/EBITDA ratio of 1.2x ***– Liquidity of USD 12bn

• Response to current economic environment– Adaptation of existing growth plan to reflect market conditions

I i t i t t f USD 4b t USD 5b th h dditi l SG&A i– Increasing management gains target from USD 4bn to USD 5bn through additional SG&A savings– Increasing voluntary production cuts to accelerate inventory reduction – Targeting USD 10bn Net Debt reduction by end of 2009 to increase financial flexibility

• Guidance EBITDA in Q4 08 reflecting increased voluntary production cutsEBITDA is expected to be in the range of USD 2 5bn USD 3bn– EBITDA is expected to be in the range of USD 2.5bn – USD 3bn

• Base dividend maintained in 2009– Base dividend maintained at 1.50 USD/share

4* Lost time injuries per 1,000,000 worked hours ** Net Debt is equal to long-term debt, net of current portion plus our payable to banks and current portion of long-term debt, less cash and cash equivalents, restricted cash

and short-term investments*** Based on last twelve months EBITDA

Health and Safety

5

Health and Safety

Steel frequency rate*

3.83.94.1

3.7

3.53.0 3.2

2.7

2.12.3

2.72.4

Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q108 Q208 Q308

Heath and safety performance progressively improving

6

Heath and safety performance progressively improving

IISI-standard: Fr = Lost Time Injuries per 1.000.000 worked hours

Environment and steel market

7

Historic production cuts in China as industry faces heavy lossesindustry faces heavy losses

Chinese and Asian spot price for HRC**Crude steel production in China (y/y change %)*

25

30

35

950

1150

5

10

15

20

350

550

750

-15

-10

-5

0

02 03 04 05 06 07 08

150Ja

n 02

Jan 0

3

Jan 0

4

Jan 0

5

Jan 0

6

Jan 0

7

Jan 0

8

HRC / China domestic FOB Shanghai (incl. 17% vat) $/t

J-02

J-03

J-04

J-05

J-06

J-07

J-08

HRC / East Asia import CFR $/t

8* Source: IISI** Source: SBB

Strong destocking to prompt price improvement before end of 2008

Rapid inventory reduction following production cuts in the US

C d t l d ti i th US ( / h %)* HRC N th A i d ti FOB US Mid t ill

production cuts in the US

Crude steel production in the US (y/y change %)* HRC – North America domestic FOB US Midwest mill $/short ton**

20

25

30

1000

1100

1200

5

0

5

10

15

600

700

800

900

000

-20

-15

-10

-5

J-02

J-03

J-04

J-05

J-06

J-07

J-08

200

300

400

500-02 -03 -04 -05 -06 -07 -08J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0 J-0


Destocking phase expected to be completed and prices to stabilise by end of 2008

Market expected to progressively stabilise in Europe

Crude steel production in EU 27 (y/y change %)* HRC S th E d ti E W k E /t**

stabilise in Europe

Crude steel production in EU-27 (y/y change %) HRC –South Europe domestic Ex-Works Euro/t**

10

15

20

700

800

-5

0

5

400

500

600

-15

-10

J-02

J-03

J-04

J-05

J-06

J-07

J-08

200

300J-0

2

J-03

J-04

J-05

J-06

J-07

J-08


Production cuts and destocking expected to continue into 2009

Stainless steel market deterioration to continue

CR304 – European base price and alloy surcharge* CR304 – Asian and European total price*

7 000

4,900

5,900

6,900

5,000

6,000

7,000

1,900

2,900

3,900

Alloy surcharge

2,000

3,000

4,000

900

Jan 0

2

Jan 0

3

Jan 0

4

Jan 0

5

Jan 0

6

Jan 0

7

Jan 0

8

CR 304 - North Europe domestic base price delivered (USD/t)CR 304 - North Europe domestic total price delivered (USD/t)

1,000Ja

n 04

Jan 0

5

Jan 0

6

Jan 0

7

Jan 0

8

CR 304 - East Asia import CFR (USD/t)CR 304 North Europe domestic total price delivered (USD/t)

CR 304 - North Europe domestic total price delivered (USD/t)

11* Source: SBB

No market improvement expected before 2009

Industrial plan

12

Increasing production cuts to accelerate inventory reductioninventory reduction

AM Quarterly crude steel production (million tonnes) AM Planned production cuts in Q4 2008

32

Long Carbon

Flat Carbon America >35%

Flat Carbon Europe >30% 28

30

32

Flat Carbon EuropeLong Carbon ~30%

24

26

-9mtest.

Asia, Africa & CIS

Stainless steel

Asia, Africa, CIS

Stainless steel

>35%

~30% 18

20

22

Stainless steel

ArcelorMittal capacity utilisation to be voluntarily reduced below 65%

Stainless steel ~30%1Q

20062Q

20063Q

20064Q

20061Q

20072Q

20073Q

20074Q

20071Q

20082Q

20083Q

20084Q

2008

13

ArcelorMittal capacity utilisation to be voluntarily reduced below 65%

Accelerating and increasing management gainsmanagement gains

Management gains breakdown (USD billion)

6 0

0 5

1.0

4.0

5.0

6.0

3.54.0

5.0

0.9

1.2

0.5

2.0

3.0

0.6

1.5

2.3

0.6

0.8

0.0

1.0

Manpow erd i i

Energyi

Yield and qualityi

Input cost effect Other Initial AdditionnalSG&A i

New

Increasing management gains target from USD 4bn to USD 5bn through additional

productivity consumption improvement managementgains plan

SG&A savings managementgains plan

14

g g g g gSG&A savings over the next 5 years

Adjusting growth plan to market conditionsconditions

Products and value chain growth

39%Distribution AM3S Growth plan

2012*

50%AM3S

57%Steel

shipments 110mt

Value-added and speciality

products

+3% per year in

line with market

Value-added and speciality

products

46%

2007

Mining Iron ore

65%Iron ore

Growth plan adjusted

2007Medium/long term

Growth

15

Growth plan adjusted

Investment completed in 2008Main projects to be completed in 2008- Belgium-Liege (FCE): Restart of blast furnace no.6 of 1.2mt

leading to a 2.7mt capacity.- Argentina-Acindar (LC): Steel capacity increase by 300,000t.

Luxembourg Rodange (LC): Revamping of mill adding

Completed in Q1

Completed in Q3 C l t d i Q2

Status

√

√√

Growth plan

- Luxembourg-Rodange (LC): Revamping of mill adding 150,000t of sheet piles.

- Luxembourg-Differdange (LC): Revamping of electrical arc furnace adding 160,000t.

- Bosnia-Zenica (LC): Restart of 1mt integrated route.- South Africa-Vanderbijlpark (AACIS): Two additional direct

Completed in Q2

Completed in Q3

Completed in Q2√

√

√

Value chain and

South Africa Vanderbijlpark (AACIS): Two additional direct reduction kilns and de-bottlenecking adding 350,000t.

- Mexico-Mining: Iron ore project of 2mt- Poland-Huta Warszawa (LC): New rolling mill of 650,000t- Italy-Piombino (FCE): New galvanising line of 310,000t

Completion expected in Q4

Completion expected in Q4Completed in Q2Completion expected in Q4

√and product growth

MGT i d

y ( ) g g ,- Kazakhstan-Temirtau (AACIS): New bar mill of 400,000t- Poland-Krakow(AM3S): New steel service centre of 450,000t

- France-Dunkerque (FCE): Continuous caster revamping.France Fos (FCE): Continuous caster revamping

Completion expected in Q4Completed in Q2Completed in Q1

Completed in Q1Completed in Q1

√√

√√

gains and other

- France-Fos (FCE): Continuous caster revamping.- Poland-ZKZ (LC): New Coke battery of 734,000t.- Mexico-Lazaro (FCA): CO2 absorption system 2nd phase.

Completed in Q1Completed in Q1Completion delay to 2009

√√

16

USD 1.8bn of CAPEX realised in Q3 and USD 5.5bn of CAPEX expected for 2008

Q3 results and financial plan

17

P&L highlights

EBITDA (USD billion)EBITDA to Net Income (USD million)+7%***

4.9 4.8 5.08.0 8.6

1,414

1,699FOREX & other**

Depreciation & impairment

Earnings per share (USD)

3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008

8,580

394

695

529386

414

Income from equity

Net interest

TaxNon recurring

item*

-34%***

2.10 1.72 1.69

4.202.79

5,4674,930

3,821

Minority

EBITDA increased 7% in Q3 2008 versus Q2 2008

3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008EBITDA Operatingincome

Pre-tax Netincome

18

EBITDA increased 7% in Q3 2008 versus Q2 2008

* USD 1,699m due to one-time impact of USA Labour agreement ** Includes revaluation of derivative instruments*** Compared to Q2 2008

Cash-flow highlights

Free Cash-Flow (USD million) Return to shareholders (USD billion)

1.32.1

0.5

1.8

0.7

Buy-backsDividends631

Net f inancials,

tax expenses

Net acquisition spending (USD billion)

0.5 0.5 0.5 0.5 0.5

3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008

8,580

5,388

expenses and others

4.22.5

1 41.7

2,561

803

1,758Change in w orking capital*

CAPEX

CAPEX

Free cash-flow negatively affected by USD 5.4bn increase in working capital

0.21.41.7

3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008EBITDA Cash-Flow

fromoperations

Free Cash-Flow

CAPEX

19

primarily due to price and cost increase * Changes in working capital is defined as trade accounts receivable plus inventories less trade accounts payable plus prepaid expenses and less accrued expenses.

Balance sheet highlights

Net Debt & Equity (USD billion) Net Debt (USD billion) and Net debt/EBITDA ratio (x)

25

30

35 2.0+1.84.4Minority

10

15

20

25

1.0

1.51.2x61.8

32.5

Shareholders' Equity

0

5

3Q2006

4Q2006

1Q2007

2Q2007

3Q2007

4Q2007

1Q2008

2Q2008

3Q2008

0.5Equity Net Debt

G i f 49%Net Debt (USDbn) - LHS Net Debt / EBITDA* (x) - RHS

Net Debt / EBITDA ratio reduced to 1 2x*

Gearing of 49%

20

Net Debt / EBITDA ratio reduced to 1.2x*

* Based on latest twelve months (LTM) EBITDA

Liquidity highlights

Credit line utilization at 30/09/08Liquidity & short term debt (USD billion)* Credit line utilization at 30/09/08Liquidity & short term debt (USD billion)*

10

12

14

1612.0

14.0

8.0

0

2

4

6

8

10

6.0Unsused credit line

4.2

Less than USD 600m of credit line expiring in next 12 months out of a total of USD 14bn

0Credit facilities Used

1.7

2.56.0Cash & Equivalent

ST & Others*

LT repayment

4.2

Liquidity in excess of debt coming due in next 12 months

next 12 months out of a total of USD 14bnLiquidity at 30/09/08 Debt due in Q4

21

…Liquidity in excess of debt coming due in next 12 months

*Excluding USD3.7bn of commercial paper

Gross debt maturity

Repayment schedule at 30/09/08 (USD billion)

4

6

8

10

4.7

7.8

4.1

7.9

4.4

0

2

2009 2010 2011 2012 2013 Therafter

Bond maturity profile LT Debt maturity (Loans) LT Debt maturity (Credit facilities) LT Debt maturity (other)

1.8

• Standard & Poor’s – BBB+ (stable outlook)• Moody’s – Baa2 (stable outlook)

Commitment to strong investment grade ratingsCovenants for all bank facilities

Net Debt/EBITDA* not greater than 3.5xNo material adverse change clauses

• Fitch – BBB+ (stable outlook)No material adverse change clauses

Upgraded by S&P Moody’s and Fitch in the last 12 months

22

…….Upgraded by S&P, Moody s and Fitch in the last 12 months

*Based on last 12 months

A cost leader generating free cash-flow

HRC production cost with overhead EBITDA and free cash-flow (USD billion)p

Cash cost USD/tonne

1000

1200

EBITDAFree cash-flow*

( )

2008

600

800

3 0

4.1

Cumulative capacity m tonnes

ArcelorMittal weighted position 580 USD/t**

200

400

0.4

1.9

0.7

2.6

1.7

2.43.0

1.0

2.9

0.8

Cumulative capacity, m tonnes0

0 50 100 150 200 250 300 350 400 450 500 1Q2006

2Q2006

3Q2006

4Q2006

1Q2007

2Q2007

3Q2007

4Q2007

1Q2008

2Q2008

3Q2008

A unique free cash-flow track record

23Source: World Steel Dynamics, CRU monitor, ArcelorMittal analysis*Cash-flow from operation minus CAPEX** 9 months

A unique free cash flow track record

Strong potential of working capital releaserelease

Net Debt and working capital (USD billion) Net Debt increase (USD billion)

3535

0.8

8.5

15

20

25

30

35

15

20

25

30

35

22.8 21.4 24.0

0

5

10

15

30/09/2006 30/09/2007 30/09/2008

0

5

10

15

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 30/09/2006 30/09/2007 30/09/2008

Net Debt increase related to w orking capital increaseNet Debt excluding w orking capital increase

3Q2006

4Q2006

1Q2007

2Q2007

3Q2007

4Q2007

1Q2008

2Q2008

3Q2008

Net Debt (USDbn) Working capital (USDbn)

Current steel market deterioration expected to significantly reduce

The USD5.4bn increase of working capital during Q3… …expected to reverse in Q4 2008 and Q1 2009

24

p g yworking capital requirement

Focusing on net debt reduction

CAPEX plan (USD billion) M&Ap ( ) M&A • Less than USD 0.6bn outstanding

commitments

Base Dividend 2009

Growth CAPEX adjustment

Growth CAPEX realisedMaintenance CAPEX

Buy-back program

• Exceptional buy-back program basically l t d

• Base dividend maintained at 1.50 USD/share

2.42.9 2.5

1.52.0

completed• Annual buy-back program to be

implemented once debt reduction target achieved

2.1 2.2 2.5 3.0 3.0

2005 2006 2007 2008E 2009E

Targeting USD 10bn of Net Debt reduction by end of 2009 to increase financial flexibility

25

Targeting USD 10bn of Net Debt reduction by end of 2009 to increase financial flexibility

Divisional highlights

26

Flat Carbon Europe

Steel shipments (Mt) EBITDA (USD million)Average steel selling price (USD/t)

-16 9%*

+4.1%*

-15.1%*

7.809.88

8.21 1,8212,146

1 368

16.9%

8611,081 1,125

Q3 2007 Q2 2008 Q3 2008

1,368

Q3 2007 Q2 2008 Q3 2008Q3 2007 Q2 2008 Q3 2008

222 USD/t of EBITDA in Q3 2008

27• As from January 1, 2008, the operations of Annaba flat and Skopje previously reported in the AACIS segment have been transferred to the Flat Carbon Europe division. In

addition, the entire operations of Galati are reported within the Flat Carbon Europe division• Historical Q3 2007 figures have not been recast to reflect the new scope changes• Impact of scope changes in Q3 2007 compared to Q3 2008: shipments (+295kt) and EBITDA (-USD 13 million)

* Compared to Q2 2008

Steel Services and Solutions


-24.9%*+14.0%*+14.4%*

3.52

5.69

4.27390

342999

1,1901,361

Q3 2007 Q2 2008 Q3 2008

153

Q3 2007 Q2 2008 Q3 2008Q3 2007 Q2 2008 Q3 2008


28• As from January 1, 2008, the operations of ArcelorMittal wire drawing activities previously reported within the Long Carbon Americas and Europe segment have been

transferred to the AM3S division.• Historical Q3 2007 figures have not been recast to reflect the new scope changes• Impact of scope changes in Q3 2007 compared to Q3 2008: shipments (+113kt) and EBITDA (-USD 25 million)• Total shipments for the group are calculated as the sum of the shipments of steel producing segments. AM3S shipments are not consolidated


Long Carbon Steel


-17.4%*+16.2%* +5.7%*

2,2582,137

5.66

8.106.69

801

1,0831,258

1,080

Q3 2007 Q2 2008 Q3 2008Q3 2007 Q2 2008 Q3 2008

801

Q3 2007 Q2 2008 Q3 2008


29• As from January 1, 2008, the Long Carbon Americas and Europe segment include the operations of Annaba long, Sonasid, Zenica, global pipes and tubes business

previously reported in the AACIS segment, and Mittal Canada flat previously reported in the Flat Carbon Americas segment. The wire drawing businesses has beentransferred to the AM3S segment.

• Historical Q3 2007 figures have not been recast to reflect the new scope changes• Impact of scope changes in Q3 2007 compared to Q3 2008: shipments (+1,048kt) and EBITDA (+USD 161 million)


Stainless Steel


-15.7%*-7.9%*

0.43

0.580.49

249

390

225

-36.2%*

4,182 4,299 3,960

Q3 2007 Q2 2008 Q3 2008

225

Q3 2007 Q2 2008 Q3 2008Q3 2007 Q2 2008 Q3 2008


30


Asia, Africa and CIS


+25.1%* +18.1%*

5.26

3.883.34

1,6351,385

935

-14.0%*

641855

1,070

Q3 2007 Q2 2008 Q3 2008

935

Q3 2007 Q2 2008 Q3 2008Q3 2007 Q2 2008 Q3 2008


31• As from January 1, 2008, the pipes and tubes business has been transferred to the Long Carbon Americas and Europe division. In addition, the operations of Annaba long,

Sonasid and Zenica have been transferred to Long Carbon Americas and Europe segment and the operations of Annaba flat and Skopje to the Flat Carbon Europesegment.

• Historical Q3 2007 figures have not been recast to reflect the new scope changes• Impact of scope changes in Q3 2007 compared to Q3 2008: shipments (-1,145kt) and EBITDA (-USD 86 million)


Flat Carbon Americas


-7.0%** +44.8%*+25.2%*

707881

1,1032,435

1 682

6.89 7.40 6.88

707

Q3 2007 Q2 2008 Q3 2008

1,682

1,104

Q3 2007 Q2 2008 Q3 2008Q3 2007 Q2 2008 Q3 2008


32• As from January 1, 2008, Mittal Canada and pipes and tubes businesses from Dofasco have been transferred to the Long Carbon Americas and Europe division.• Historical Q3 2007 figures have not been recast to reflect the new scope changes• Impact of scope changes in Q3 2007 compared to Q3 2008: shipments (-311kt) and EBITDA (-USD 37 million)

* Compared to Q2 2008 ** Compared to Q2 2008. Excludies Sparrows Point, which was sold Q2 2008, shipments decreased from 7.138mt in Q2 2008 to 6.878mt in Q3 2008 (down 3.6%)

Guidance

33

Guidance for Q4 and FY 2008

ArcelorMittal EBITDA*ArcelorMittal EBITDA*

USD19.4bn

USD24.2-24.7bn

USD16bn USD14.9bn USD15.3bn

USD19.4bn

Due to increased voluntary production cuts, EBITDA expected to be between USD 2 5bn and USD 3bn in Q4 2008

2004 2005 2006 2007 2008 Guidance

34

between USD 2.5bn and USD 3bn in Q4 2008*Proforma 2004, 2005 and 2006

Q&A

35

arcelormittal q3 2008 results

Economy & Finance

jstrong destocking

bn usd

n n n n n n nja

bn net debt reduction

forwardlooking information

nn n n nnnjaja

bn base dividend

bn response