ArcelorMittal S.A. (NYSE:MT) Q4 2022 Earnings Call Transcript February 9, 2023

Company Representatives: Lakshmi Mittal - Executive Chairman Aditya Mittal - Chief Executive Officer Genuino Christino - Chief Financial Officer Daniel Fairclough - Vice President, Investor Relations

Operator: It's now my pleasure, and I would now like to turn the conference over to Daniel Fairclough, Vice President, Investor Relations. Please go ahead, sir.

Daniel Fairclough: Thank you, Francie. Hi and good afternoon everybody. This as Francie said is Daniel Fairclough from the ArcelorMittal Investor Relations team. I'd like to welcome everybody to the Fourth Quarter and Full Year '22 Analyst and Investor Call. I'm joined on this call today by our Executive Chairman, Mr. Mittal; our CEO, Aditya Mittal and our CFO, Genuino Christino. Before I hand over to Mr. Mittal and Aditya, I would like to remind everybody of a few housekeeping items. Firstly, I want to refer everybody to the disclaimers that you can find on slide two of the results presentation we published on our website this morning. I'd also like to remind everybody that this call today is being recorded, and it's scheduled to last up to 45 minutes. And finally, to repeat Francie's instructions . And with that, I would like to hand over the call to Mr. Mittal to begin with some opening remarks.

Lakshmi Mittal: Thank you, Daniel. Good day, everyone. Thank you for joining today's call. I hope you are all keeping safe and well. I'll be very quick in my remarks. I would characterize 2022 as another year of progress for our ArcelorMittal. The results we have published today demonstrate the greater resilience of ArcelorMittal when facing more challenging market environments, and I believe the worst conditions of this cycle have passed. As a company we have achieved significant progress on many strategic fronts over the past 12 month. Advancing our decarbonization plans, progressing with our investments to grow EBITDA and at the same time buying back over 10% of all equity. The progress is gratifying, and it's down to the hard work, commitment and dedication of all our people. I expect 2023 to be another good year for the company and all our stakeholders. Adit?

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Aditya Mittal: Thank you, and welcome everyone. In 2022 we have made clear progress in our three strategic priorities: The decarbonization of our footprint; the growth and development of our business; and capital returns to shareholders. On decarbonization we had completed the acquisition of the HBI plant in Texas, allowing us to utilize low-carbon metallics and creating significant optionality for the future. We have acquired four scrap processors in Europe with a total capacity at 1.2 million tons. We have commissioned our €200 million CCU bioethanol project in Ghent Belgium. We are progressing on our DRIEA plant in five countries and a 1 gigawatt renewable project in India is advancing. On growth, we have now received approval for the CSP acquisition, which we'll complete this quarter, adding highest quality capacity at the bottom of the cost curve, with the added benefit of access to growing sources of competitive renewables and hydrogen.

We're also progressing our strong pipeline of higher return strategic CapEx projects, including the newly announced Electrical Steels project in France. In total, these projects add $1.3 billion to a normalized earnings power. That assumes long term steel spreads and long term iron ore prices well below today's levels. So at today's levels, the impact on profitability would be even greater. We're making progress to realize the potential of our JVs, including the announcement of a major investment to double our capacity in India, which is also supported by the recently acquired port and power assets. Our capital allocation and return policy is working very well. We're growing the earnings power of the business. We bought back 30% of our equities in September 2020 and ended the year with record loan net debt.

In terms of outlook, we've seen some positive signs recently that suggests we have passed the bottom of the current destock cycle. The customer destock that we spoke of the last quarter has eased, and we've seen improvement in steel spreads from the unsustainable lows of the fourth quarter last year. We are forecasting apparent demand growth in all our core markets. We're well placed to generate positive cash flow and will continue to progress our decarbonization and growth agendas and capital returns program. Genuino, can I now ask you to provide some more detail on our financial performance.

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