ArcelorMittal(US:MT)2021-03-07 16:00Financial Performance - ArcelorMittal reported sales of $53.3 billion for the year ended December 31, 2020, a 24.6% decrease from $70.6 billion in 2019, primarily due to lower steel shipments and an 8.7% decrease in average steel selling prices [454]. - Operating income for 2020 was $2.1 billion, a significant recovery from a loss of $627 million in 2019, driven by cost reduction measures in response to the COVID-19 pandemic [449]. - Cost of sales for 2020 was $49.1 billion, down from $68.9 billion in 2019, attributed to lower steel shipments and cost reduction initiatives [456]. - Net income attributable to equity holders of the parent was a loss of $0.7 billion for the year ended December 31, 2020, compared to a loss of $2.5 billion in 2019 [516]. - Net financing costs decreased to $1.3 billion for the year ended December 31, 2020, down from $1.7 billion in 2019 [508]. Steel Production and Shipments - Steel shipments decreased by 18.2% to 69.1 million tonnes in 2020 compared to 84.5 million tonnes in 2019, with a comparable decline of 15.8% when excluding certain asset sales [451]. - Crude steel production decreased by 18.7% to 17.8 million tonnes in 2020 compared to 21.9 million tonnes in 2019, primarily due to production adjustments in response to demand fluctuations [463]. - Steel shipments fell by 14.4% in 2020, totaling 17.9 million tonnes, reflecting lower market demand during the year [465]. - Crude steel production for the Europe segment decreased 22.6% to 34.0 million tonnes for the year ended December 31, 2020, compared to 43.9 million tonnes in 2019 [481]. Average Steel Selling Prices - Average steel selling price decreased by 8.7% for the year ended December 31, 2020, with a 14.7% decrease in the first half and a 1.8% decrease in the second half of 2020 compared to the respective periods in 2019 [452]. - Average steel selling prices decreased by 13.4% in 2020, averaging $702 per tonne, down from $810 per tonne in 2019 [466]. - Average steel selling prices decreased 5.8% for the year ended December 31, 2020, compared to 2019, with a decrease of 11.2% in the first half of 2020 [485]. Segment Performance - Sales in the NAFTA segment dropped by 26.7% to $13.6 billion in 2020, driven by lower average steel prices and reduced shipments [468]. - Operating income for the NAFTA segment was $1.7 billion in 2020, including a $1.5 billion gain from the sale of ArcelorMittal USA [469]. - In Brazil, sales decreased by 22.7% to $6.3 billion in 2020, primarily due to a 6.7% drop in average steel prices and a 15.9% decrease in shipments [476]. - Sales in the Europe segment were $28.1 billion for the year ended December 31, 2020, a 25.6% decrease compared to $37.7 billion in 2019, driven by a 5.8% decrease in average steel selling prices and a 22.4% decrease in steel shipments [487]. Cost Reduction and Operational Efficiency - The company achieved a reduction in fixed costs through various measures, including labor cost savings and reduced maintenance expenses, which were critical for protecting profitability during the pandemic [450]. - The company implemented several cost reduction measures in response to the pandemic to ensure operational sustainability in the first half of 2020 [497]. - The company plans to focus on structural cost improvements to better position itself for the post-COVID-19 operating environment [450]. Mining Segment Performance - In 2020, ArcelorMittal's mining segment generated $1.4 billion in operating income, reflecting strong performance despite overall challenges in the steel market [449]. - Iron ore production for the year ended December 31, 2020, was 58.0 million tonnes, an increase of 1.6% compared to 57.1 million tonnes in 2019 [502]. - Operating income for the Mining segment was $1.4 billion for the year ended December 31, 2020, an increase from $1.2 billion in 2019, driven by higher iron ore reference prices [507]. Debt and Cash Management - As of December 31, 2020, ArcelorMittal's cash and cash equivalents amounted to $6.0 billion, an increase from $5.0 billion as of December 31, 2019 [519]. - Total debt as of December 31, 2020 was $12.3 billion, down from $14.3 billion as of December 31, 2019 [519]. - Net debt decreased to $6.4 billion as of December 31, 2020, from $9.3 billion at the end of 2019 [519]. Future Outlook - The company expects global apparent steel consumption (ASC) to grow between 4.5% to 5.5% in 2021, recovering from a contraction of 1.0% in 2020 [565]. - In the U.S., ASC is projected to grow by 10.0% to 12.0% in 2021, following a 16.0% contraction in 2020 [565]. - The company expects capital expenditures to increase to $2.8 billion in 2021, aligning broadly with 2019 levels [539]. Leadership and Governance - Lakshmi N. Mittal serves as Chairman and CEO of ArcelorMittal, recognized for integrating numerous acquisitions across North America, South America, Europe, South Africa, and the CIS [575]. - The company has a strong focus on sustainable development, with board members actively participating in various global councils and initiatives [577]. - The board of directors includes a diverse group of individuals with expertise in various sectors, enhancing the company's strategic decision-making capabilities [577]. Remuneration and Incentives - The company reported a total remuneration of $148,422 thousand for long-term incentives in 2020, a significant increase from $89,933 thousand in 2019 [599]. - The short-term performance-related bonus decreased to $935 thousand in 2020 from $3,198 thousand in 2019 [599]. - The remuneration policy aims to attract and retain high-quality executives by ensuring competitive base salaries and benefits [619].