ArcelorMittal(MT) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The third quarter EBITDA per ton was $111, which is 25% above the historical average margin, indicating structural improvements in the company's financial performance [3][4] - Free cash flow for the first nine months was approximately $0.5 billion positive, despite nearly $1 billion invested in strategic growth projects [4][5] - The company expects to capture $0.7 billion in structural EBITDA improvement this year, with a medium-term impact of $2.1 billion remaining unchanged [4][5] Business Line Data and Key Metrics Changes - The company reported record levels of shipments at Calvert, contributing positively to North American operations despite challenges in Mexico [23][24] - The company anticipates normal seasonal improvements in European volumes and higher iron ore shipments from strategic projects in Liberia [20][21] Market Data and Key Metrics Changes - The company expects imports in Europe to decline by about 40%, allowing it to capture a larger market share [16] - Demand in India remains strong, while Brazil faces challenges from rising imports and low prices, although anti-dumping measures are expected to have a positive impact [62] Company Strategy and Development Direction - The company is focused on a three-year transformation program aimed at achieving zero fatalities and serious injuries, with progress already observed [3] - The company is actively enabling the energy transition by supplying steel for new energy systems and investing in high-quality electrical steels [7] - The company plans to continue implementing its capital return policies, having grown dividends at a compound rate of 16% over the past five years [7] Management's Comments on Operating Environment and Future Outlook - The outlook for the business has improved compared to three months ago, with expectations for healthier capacity utilization in the European steel sector [5][6] - Management expressed confidence in the ability to manage working capital effectively, anticipating a significant release in Q4 [51][52] - The company remains optimistic about the demand recovery in 2026, supported by lower interest rates and improving PMIs in Europe [12][28] Other Important Information - The company is undergoing budget discussions for 2026 and beyond, maintaining a CapEx range of $4.5 billion to $5 billion [27] - The company is committed to maintaining production in Ukraine despite challenges, focusing on managing high energy costs [63] Q&A Session Summary Question: What unusual or exceptional costs should be considered for 2026? - Management indicated that there are no significant changes expected regarding tariffs, and losses in Mexico are not anticipated to recur in 2026 [11][13] Question: How much can production be flexed in Europe if imports decline? - Management stated that they expect to supply the market effectively, with current capacity exceeding 31 million tons [16] Question: What are the moving parts for Q4 by division? - Key factors include seasonal improvements in European volumes, higher iron ore shipments, and expected lower pricing in North America [20][21] Question: How is the performance of Dofasco? - Dofasco remains profitable and is considered one of the best facilities globally [73] Question: What is the company's stance on capital allocation in Europe? - Management emphasized that a sustainable framework would allow for future investments in Europe [36] Question: What is the outlook for working capital in Q4? - A significant release of working capital is expected, driven by seasonal factors and operational adjustments [51][52] Question: How is the company managing tariff costs with automakers? - Management noted ongoing contract renewals with OEMs and a stable volume outlook for automotive [45] Question: What is the company's view on the situation in Brazil and India? - The company remains bullish on Brazil despite import pressures and is optimistic about strong demand in India [62] Question: What is the company's approach to CO2 emissions and free allocations? - Management indicated that they do not expect significant losses in free emissions allocations and highlighted the importance of CBAM for competitiveness [90][88]