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ArcelorMittal's (MT) CEO Lakshmi Mittal on Q2 2015 Results - Earnings Call Transcript


Daniel, you can start now.

Daniel Fairclough - Director of Investor Relations London

Thank you. Good morning and good afternoon, everybody. This is Daniel Fairclough from ArcelorMittal Investor Relations team. Thank you for joining us today on our conference call for the Second Quarter 2015 Results. First, I'd like to remind you that this call is being recorded. We are going to have a brief presentation from Mr. Mittal and Aditya, followed by a Q&A session. The whole call should last about one hour. [Operator Instructions]

And with that, I will hand over the call to Mr. Mittal.

Lakshmi Niwas Mittal - Chairman, Chief Executive Officer, President, Managing Director of Operations

Thank you. Good day to everyone and welcome to ArcelorMittal's second quarter 2015 results call. I am joined on this call today by all the members of the group management board and also Simon Wandke, who is the CEO of our Mining segment.

I will begin today's presentation with a brief overview of our second quarter 2015 results, followed by an update of our recent developments. I will then spend some time on the outlook for our markets before I turn the call over to Adit. He will go through the results in greater detail and provide an update on our guidance and targets for 2015.

As usual, I will start with Health and Safety. After a period of stability and inertia, we have broken new ground. The lost time injury frequency rate in the second quarter of 2015 was 0.68 times. This is the best frequency rate the group has ever achieved. As a Company, we are committed to safety. And I want to see further progress in this area as we continue our journey towards zero harm.

Turning to the second quarter highlights shown on Slide 4. We’ve reported EBITDA of $1.4 billion. This is essentially stable as compared to the first quarter of 2015. We have reported a net income of $200 million for the quarter, which compare favorably with the recent period. I am also pleased to see the continued positive free cash flow generation and ongoing progress on net debt which is almost $900 million lower than the level 12 months ago.

On the next slide, I want to spend a few more minutes on the performance of our steel business. Steel shipments of 22.2 million tonnes in the second quarter of 2015 were 3.4% higher than the same quarter of 2014. The standout segment is again Europe, where we continued to make good progress. EBITDA increased by 10.5% reflecting further improve market conditions as well as the results of our cost optimization efforts.

In local currency terms the improvement is even more pronounced at 22.7% year-on-year basis. The reported results for our NAFTA business have improved following the inventory write-downs, and onerous contract provisions booked in Q1. Looking at Brazil, our performance has remained resilient in the face of a challenging domestic market. Dollar margins have been squeezed, due to lower realized selling prices and aggressive competition in exports-led market, but this has to an extent been offset by higher shipments.

The performance of the ACIS segment has again been disappointing. Despite of our continued progress on operational improvements, market conditions have been very challenging, particularly in South Africa and Kazakhstan.

Moving to our Mining segment performance on Slide 6, iron ore production in the second quarter was 5.1% over the Q1 2015 levels. Market price shipments increased by 2.7% year-on-year. Mining segment profitability remained stable, relative to the first quarter. The lower iron ore market prices were offset by a seasonal pick and shipments and further improved cost performance.

Our performance at mines Canada is particularly notable. Following the expansion, this is now a world-class operation currently operating well above its nominal capacity of 24 million tonnes. We reported record iron ore shipments volume in June of 2.7 million tonnes, and 7 million tonnes for the second quarter.