ArcelorMittal Q4 2024 Earnings Report

ArcelorMittal EPS Results

• Actual EPS: $0.52
• Consensus EPS: $0.61
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: N/A

ArcelorMittal Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $15.15 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

ArcelorMittal Announcement Details

• Quarter: Q4 2024
• Date: 2/6/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 6, 2025
• Conference Call Time: 9:30AM ET

ArcelorMittal (NYSE:MT), together with its subsidiaries, operates as integrated steel and mining companies in the United States, Europe, and internationally. It offers semi-finished flat products, including slabs; finished flat products comprising plates, hot- and cold-rolled coils and sheets, hot-dipped and electro-galvanized coils and sheets, tinplate, and color coated coils and sheets; semi-finished long products, such as blooms and billets; finished long products consisting of bars, wire-rods, structural sections, rails, sheet piles, and wire-products; and seamless and welded pipes and tubes. The company also provides mining products, such as iron ore lumps, fines, concentrates, pellets, and sinter feeds; and coking coal. It sells its products to various customers in the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization, as well as distributors. The company has iron ore mining activities in Brazil, Bosnia, Canada, Liberia, Mexico, South Africa, and Ukraine. ArcelorMittal S.A. was founded in 1976 and is headquartered in Luxembourg City, Luxembourg.

ArcelorMittal Q4 2024 Earnings Call Transcript

Presentation

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Good afternoon, everyone. This is Daniel Fairclough from the Oslo Mittel Investor Relations team. Thank you for joining this call to discuss Oslo Mittel's performance and progress in 2024. Present on the call today, we have our CEO, Aditya Mittel and our CFO, Joanna Cristino. Before we begin, I would like to mention a few housekeeping items.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

As usual, we will not be going through the results presentation, which we published this morning on our website. However, I do want to draw your attention to the disclaimers on Slide 23 of that presentation. Following some opening remarks from Editur and Germino, we will move directly to the Q and A session. So, if you would like to ask a question, then please do press star one one on your keypad to join the queue. So, that instruction is star one one to join the Q and A queue.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

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

[Aditya Mittal, CEO at ArcelorMittal]

Thanks, Daniel. Welcome, everyone, and thank you for joining today's call. Before I ask Genvino to comment on our financial performance, I want to spend a moment reviewing the progress we have made against our priorities. First, I want to talk about safety. Across the company, our people are galvanized to improve our safety performance and achieve our goal of being fatality and injury free.

[Aditya Mittal, CEO at ArcelorMittal]

2024 saw the completion of the DSS Plus group wide safety audit and the recommendations which focus on our risk management processes and establishing detailed unit specific roadmaps developed from the audit will support our efforts to do so. Reflecting on our strategic progress in 2024, we have achieved a great deal. We have faced challenges. As we all know, the cycle has not been in our favor. Yet despite those headwinds, we have delivered resilient results.

[Aditya Mittal, CEO at ArcelorMittal]

$2,000,000,000 of investable cash flow generation in this environment speaks to the progress we have made as a company. This has allowed us to invest countercyclically and reward our shareholders at the same time. Everyone at ArcelorMittal should take pride in this. Growth is an increasingly important theme for ArcelorMittal. This year, we will start to see the benefits of the organic investments we have been making over the last few years.

[Aditya Mittal, CEO at ArcelorMittal]

The expected structural EBITDA impact from our portfolio of high return strategic projects now stand at 1,900,000,000 four hundred million dollars of this is due to be captured in 2025 with a further $600,000,000 due in 2026. Our recently completed projects, the Vega Coal Mill complex in Brazil, the new hot strip mill in Mexico and the one gigawatt renewable project in India are performing well. The fact that these projects are delivering new incremental EBITDA, we expected should instill confidence that our strategic CapEx will add significant structural earnings and cash flow benefits. Similarly, the assets that we have acquired in recent periods, including Pestem in Brazil, Texas HBI facility and the stake in Vallourec are all performing well, adding further structural earnings and cash flow growth. This growth supports higher shareholder returns.

[Aditya Mittal, CEO at ArcelorMittal]

Over the past four years, our dividend has grown at a compound rate of 16%, reflecting our confidence in the outlook of our company. On top of our dividends, we have returned significant cash through our buybacks, allowing us to reduce our share count by 37% over the last four years, a rate unmatched by any of our peers. Our policy and capital return intentions are clear. On the theme of decal, I want to highlight that our strong metals absolute carbon emissions today are approximately half the level of 2018. Much of this has been the result of our portfolio optimization and the steps that we have taken to shape our business around our most competitive assets.

[Aditya Mittal, CEO at ArcelorMittal]

As we move forward, we are determined to follow a transition pathway that is economic and ensures that we remain competitive. When it makes sense, we are making investments. The EF in Gihon and the revamp of our two EFs in Sistau are both good examples. These economic projects support our growing offering of low carbon solutions to our customers under our X CARB brand. It is critical that we see Europe make swift progress in providing a policy environment that appropriately incentivizes the further investments required to accelerate decarbonization in Europe.

[Aditya Mittal, CEO at ArcelorMittal]

As I conclude, my message is quite simple. We are a transformed business. We have the best talent. We have excellent market positions in all the attractive geographies, including a unique exposure to India and we have a reputation for quality and innovation that is unmatched by any of our peers. Our Tier one balance sheet is a strategic asset that underpins our consistent growth and continued value creation.

[Aditya Mittal, CEO at ArcelorMittal]

I would like to take this opportunity to thank all our employees, customers and the shareholders for placing your trust in us. With that, I will now hand it over to Genvino to talk more about our financial performance.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Thank you, Alicia, and good afternoon, everyone. We delivered a resilient performance last year despite the challenging market backdrop. EBITDA was $7,100,000,000 for the year, which translates to $130 of EBITDA per tonne shipped. This is almost double the level of previous cycle lows, showing that the business and its earning capacity have structurally transformed. The benefits of our optimized asset base and our relatively diversified exposures have also seen our results show significantly more stability than peers.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

This was particularly evident in the fourth quarter. Adjusted net income of $2,300,000,000 in 2024 represents a 4.4% return on the book value of Ebony, which now stands at $64 per share. Return on capital employed in 2024 was 6%. Considering where we are in the cycle, I believe both these figures are commendable. Moving on to cash flow.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

We generated over $2,000,000,000 of investable cash flow in 2024, bringing the total to $21,000,000,000 since 2021. Last year, we invested $1,300,000,000 in the high return strategic growth projects that Aditya described. We retired $1,700,000,000 to shareholders, including the repurchase of 6% of our outstanding shares. And we invested a net $600,000,000 in M and A, including, of course, our 28% stake in Valrec. Our performance provides strong evidence that Accelon Mito can deliver value through all aspects of this new cycle and is testament to the progress we have made in recent years.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

I believe this is reflecting the dividend increase to $0.55 per share. This is a 10% increase on last year's dividend and brings the total increase since 2020 to over 80%. Finally, on the outlook, we are forecasting slightly positive apparent demand growth and are well positioned to benefit from any recovery. We are confident we will continue to generate positive cash flow this year and beyond, which will continue to be allocated via our established capital return policy. With that, Daniel, I believe we can move to the Q and A.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thank you, Jim. We now, so we will take our first question from Efrem at Citigroup. Please go ahead, Efrem.

[Ephrem Ravi, Managing Director at Citi]

Thank you. Three quick questions. Firstly, with the plant non green dilated plant in Calvert to commence end of 'twenty seven, Does that mean anything for the second year at Calvert either in terms of accelerating the timeline or delaying the terms in terms of project complexities, sequencing, etcetera? That's the first one. Secondly, on CapEx, firstly, on the strategic growth of $1,300,000,000 to $1,500,000,000 of the new projects also coming into the pipeline like the electrical steel plant, should we expect it to remain at these kind of levels beyond 2026 as well, as long as the balance sheet remains under geared and on the $300,000,000 to $400,000,000 of decarbonization CapEx after the Chairman's open letter in the FD?

[Ephrem Ravi, Managing Director at Citi]

Is it also right to think that it would remain for the foreseeable future at these levels unless there are major changes in the form of some regulatory support? And thirdly, a slightly pedantic question of the volume increase in Liberia from incremental 10,000,000 tons to 15,000,000 tons. Why is the EBITDA potential only increasing from by about 100,000,000 from three fifty million? Has the underlying assumption on the cost of pricing there changed as well? Thank you.

[Aditya Mittal, CEO at ArcelorMittal]

Okay. Hi, Efrem. It's nice to hear from you. So a lot of questions, but let me take a stab at them. So in terms of Calvert, Alabama, look, I think the first headline is that we are in the process of commissioning our brand new electric furnace.

[Aditya Mittal, CEO at ArcelorMittal]

This is the most technologically advanced electric furnace in The United States with Castor and Hot Strip Mill with the capability of producing exposed automotive grades. So in our mind, it is game changing, it is cutting edge, it's got a good cost base and then further strengthens our strong franchise that we have in the NAFTA region. We're building on that with the electrical steel announcement this morning that we made. This is going to be 100% owned by our store, Mittho. It's another world class cutting edge electrical steel facility for non grade oriented steels for the premium automotive demand requirements, with really good gauge capability and excellent quality characteristics.

[Aditya Mittal, CEO at ArcelorMittal]

We are also looking at a second EEF and your question was, does the electrical steel facility delay that? I don't believe it materially delays the second EEF. I think what we're focused on is commissioning the first EEF and then utilizing the resources that we have for the first EEF year and staffing the project for the second year. So that's fundamentally the plan. We're commissioning the first year, building another world class electrical steel facility in terms of electrical steels at Calvert and then we'll start on the second EEF.

[Aditya Mittal, CEO at ArcelorMittal]

In terms of the medium term CapEx and decob, fundamentally, it's a great question. Our focus remains to keep the overall CapEx envelope between $4,500,000,000 to $5,000,000,000 That's really the focus. And we have the ability to modify where we spend our CapEx, right? So you saw in the third quarter, we announced we are not going ahead with the Montlevard project in Brazil. Instead, we substituted that with the electrical steel project in Calvert, Alabama.

[Aditya Mittal, CEO at ArcelorMittal]

So similarly, I think you can expect developments like that where we see the market is changing or we can be more agile and dynamic in allocating where we want to invest our capital. And that also applies to DCUB. I'm not suggesting that all this growth CapEx will go into DCUB, but perhaps based on acceleration of policy regulation that we want, and in case that happens, we could have more than just $300,000,000 of DCUB CapEx per year. In terms of Liberia, look, that's a very good question. We have not changed our long term assumptions of iron ore and they remain conservative, especially compared to spot today.

[Aditya Mittal, CEO at ArcelorMittal]

The reason why you don't have the same delta, I mean, you have a similar delta in terms of volume growth, but the reason why it is slightly less is primarily because of quality considerations, right? The 5,000,000 tons is a DSO product, so there's a much lower FE than the Syncythea product that we will make. And so as we blend, we get some revenue uplift. So maybe to explain more clearly, today the concentrate can do 15,000,000 tons of concentrate and 5,000,000 tons of DSO. The original plan was we lose the 5,000,000 tons of DSO.

[Aditya Mittal, CEO at ArcelorMittal]

And now the new plan is that we blend it and we have a 20,000,000 tons incentive feed product. And so the delta is obviously there's a positive on the volume side, offset by some of the changes on the revenue side. So we can provide you with more detail on the math behind that.

[Ephrem Ravi, Managing Director at Citi]

Thank you. That's clear.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Thanks, Ekram. So, we'll move to take the next question from Patrick at Bank of America. Please go ahead, Patrick.

[Patrick Mann, Vice President at Bank of America Merrill Lynch]

Thanks very much for the question. And I'm sure you guys knew this was coming. If we saw kind of a reemergence of a threat of tariffs on Canada and Mexico from The U. S. How are you guys thinking about the potential impacts on Dofasco and Mexico?

[Patrick Mann, Vice President at Bank of America Merrill Lynch]

Thanks.

[Aditya Mittal, CEO at ArcelorMittal]

Sure. So, yes, Andrew, we're expecting this question to come. So thank you for asking it. Look, the high level first or the global perspective, and you guys all know this better than us, the significant global overcapacity. And so any action to tackle that is welcome.

[Aditya Mittal, CEO at ArcelorMittal]

We see similar actions underway in the European marketplace, similar in India. There have been actions already taken in Brazil. There's discussion for potentially some more. Nothing has really materialized. And we see similar issues in The United States.

[Aditya Mittal, CEO at ArcelorMittal]

In terms of specifically the tariffs against Canada or Mexico, we've been there before. I think if you remember in 2018, '20 '19 when February was imposed, there was tariffs that came from there was tariffs on Canadian steel and Mexican steel and roughly it costed us about $100,000,000 per quarter. But this was more than offset by revenue, right? So if you look at the revenue impact, it was far greater. I'm not suggesting that would happen again in this period of time, But clearly, one mitigating factor would be the revenue impact on some of these tariffs.

[Aditya Mittal, CEO at ArcelorMittal]

Secondly, I would just add that I talked about the Calvert EF. So you heard about that. So we have much more slabs which are domestically produced, which are melted and poured. So that's another mitigating factor. But fundamentally, I guess the last point I would make is that these discussions remain uncertain, what will end up happening.

[Aditya Mittal, CEO at ArcelorMittal]

But the fundamental focus that we have as an organization is really to strengthen the NAFTA trading block. We see a lot of inputs that are coming into Mexico and into Canada. And to the extent that the desire is fundamentally to strengthen NAFTA, that would be a net positive. And excuse me, Patrick, I got the names mixed up. So thank you for your question.

[Patrick Mann, Vice President at Bank of America Merrill Lynch]

No problem. Thank you, Aditya.

[Aditya Mittal, CEO at ArcelorMittal]

Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

So we'll move now to a question from Andrew at UBS. Please go ahead, Andrew.

[Andrew Jones, Analyst at UBS Group]

Just a follow-up on that tariff question. I guess just to spell out the actual volume flows into The U. S, can you just give us the numbers around what's coming from Mexico? Obviously, there's the largest slab volumes. Can you quantify that?

[Andrew Jones, Analyst at UBS Group]

And any other products? And also, how much is going from the FASCO into The U. S? Anything from your report, Brazil? Just to give us some volume numbers would be helpful.

[Andrew Jones, Analyst at UBS Group]

And secondly, just on the electrical steel, can you just talk a little bit about the market for non grain orientated? Like how you see that growing in the coming years? What is there any of the supply coming down the pipe? How tight do you expect that market to be by the time this mill comes through? And can you just talk through a little bit of the market situation there, please?

[Andrew Jones, Analyst at UBS Group]

Thanks.

[Aditya Mittal, CEO at ArcelorMittal]

Okay, great. Thank you, Andrew. I'll talk about Electrical Steels and then I'll see if Janrina can provide you with any color on your volume requirements or volume question. In terms of the non grade oriented electrical steel market, noise as we call it, today the market is in deficit. Significant amount of the supply is through imports.

[Aditya Mittal, CEO at ArcelorMittal]

So if you look at our volume, it's about 150,000 tons. It basically covers the import volume. That's the first point. Second point I would make is that the market continues to grow. And we should not think of this as just electrical cars.

[Aditya Mittal, CEO at ArcelorMittal]

We should think of this as a market, which is electrical cars plus hybrids, because electrical steels go into both vehicles. And so there's still strong growth in hybrid vehicle demand, and we'll be catering to that. The third point I would make is that, yes, there are some announcements of new capacity, but you really need to look at that capacity and what is the capability of that capacity to deliver the high quality premium automotive material. And that I think is actually much shorter or much less than the overall market situation. So in that sense, I think we have a unique product offering with a very high quality capability and the market is there for our product.

[Aditya Mittal, CEO at ArcelorMittal]

Adrian Reno?

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Yes. Thank you, Rodrigo, and hi, Andrew. Andrew, as you know, we don't typically disclose the volumes that sort of close from Canada, Mexico, which in U. S. And vice versa.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

And that's why we are trying to be helpful by reconfirming the cost impact that we saw back then in 2018. When we look at the close today, they are similar, and that's why we continue to quote the $100,000,000 that Antieto talked about on the cost side. And then of course, we will see what happens on the other side of the equation, the revenue side.

[Andrew Jones, Analyst at UBS Group]

Okay, fair enough. Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Andrew. So we'll move now to the next question from Timna at Wolfe Research. Go ahead, Timna. Actually, I think Timna might have just dropped off the call now.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

So we'll move directly to the next question, which we will take from Tristan at Exane BNP. Go ahead, Tristan.

[Tristan Gresser, Analyst at BNP Paribas]

Yes. Hi. Thank you for taking my questions. I have two. First on the strategic projects.

[Tristan Gresser, Analyst at BNP Paribas]

So this year, you expect $400,000,000 EBITDA uplift from Vega, India and Liberia. But you also have three projects, I think, that were supposed to be ramping up now, Mardek, Parramansa, Cerro Azul. And now they're due to be completed in 2025. So first, can you explain a bit the delay and why you don't expect at least some contribution for those three projects this year already?

[Aditya Mittal, CEO at ArcelorMittal]

Thank you, Tristan. That's a very important question. So just on the high level overview, we have we expect about $100,000,000 of EBITDA contribution from these projects. And so instead of receiving that or getting that EBITDA contribution in 2025, that has been moved to 2026. And therefore, we expect $400,000,000 EBITDA uplift in 2025 and now we expect $600,000,000 uplift in 2026.

[Aditya Mittal, CEO at ArcelorMittal]

So these are three different projects. So Mardic is an electrical steam facility in Europe, which we are building. There were various reasons for delay. Predominantly, they had to do with equipment supply. And also I would say lack of experience in doing large scale projects, right?

[Aditya Mittal, CEO at ArcelorMittal]

In Europe, we have not been investing. So we had a project team and engineers, but there is a lack of experience. What we see is that when you have a project team which has done one project, the next project flows much more smoothly. In Sarazul, we ran into certain mining difficulties, which has delayed that project. And Varamanca again is similar issues as Mardek equipment as well as lack of project experience.

[Aditya Mittal, CEO at ArcelorMittal]

At the same time in Brazil, which is very interesting for us, the flat operation delivered the Vega project on time and on budget and that has ramped up in record time, actually faster than what we had anticipated or which was in our project approval process. So it's been very interesting learning for us, where we see similar geographies, similar teams perform differently. And as a result, we just in December, we have created a new global projects team. At the central level, there's an individual called Bart who is spearheading that to bring in our global expertise to bear, because we have the expertise. Fundamentally, our student knows how to do projects.

[Aditya Mittal, CEO at ArcelorMittal]

We have been delivering projects on time and on budget, but it's not uniform. And the task is really to bring that capability across the organization, so we don't have further projects which get delayed. So I hope that helps answer the question.

[Tristan Gresser, Analyst at BNP Paribas]

Yes, that's very clear. And maybe just a quick follow-up on that, on the projects. I don't see the doubling of HBI capability in Texas anymore in the release. Is that a project that you've definitively dropped or is it tied to decarb in Europe? So any comment there?

[Aditya Mittal, CEO at ArcelorMittal]

Yes. So it's a good question and I'm glad you asked it. I think the projects that we have put in our presentation are in the medium term pipeline. So they're not necessarily in the long term pipeline. We have a few others, like just to talk about Brazil for one, where we've talked about expanding our finishing operations, this is core rolling in Gaals.

[Aditya Mittal, CEO at ArcelorMittal]

We're also thinking that since we are slab long to do a hot strip mill and that's not in. So there are numerous examples in Liberia. We have a very good resource body, an excellent resource body where you can actually do more in Liberia. So the idea now is to hit 20,000,000 tons, judge where we are, figure out what is the economics based on the long term price of iron ore and then decide if we want to continue to grow. But those are all options that we have.

[Aditya Mittal, CEO at ArcelorMittal]

In Texas, I think what we have done is we have focused our efforts on Calvert right now. So you heard me talk about the projects in Calvert, the electrical steel line, the new EEF. So after all of that, we will reevaluate Texas. And you're correct, it's also linked to the progress on European decal. So it's not that it's not there in the foreseeable future, it's just not there in the medium term.

[Tristan Gresser, Analyst at BNP Paribas]

All right.

[Tristan Gresser, Analyst at BNP Paribas]

Thank you. And if I could just squeeze one more on projects. Just the NGL line in Calvert, it seems the scope of the project is much larger to just an electrical line that can be $400,000,000 CapEx. So I see the total CapEx is 1,200,000 I see it includes a coal rolling mill and other equipment. So can you explain the capacity of the other equipment and explain the rationale of the investment?

[Tristan Gresser, Analyst at BNP Paribas]

And does that replace existing capacity as well and how should we think about it?

[Aditya Mittal, CEO at ArcelorMittal]

So it's all incremental capacity. So there's no replacement. There's no co rolling mill line for non grain oriented steel products. So this is really electrical steam line. Perhaps you're comparing it to the Modic facility, which is roughly the amount you quoted a bit more than that, but let's use that as a reference.

[Aditya Mittal, CEO at ArcelorMittal]

So there are two or three key differences. The first and most important is The U. S. Is a greenfield site, right? So we have to do the full construction of the facility, including the whole building.

[Aditya Mittal, CEO at ArcelorMittal]

In Mardic, we were able to utilize an existing building. So construction costs are quite expensive and that adds. Number two and importantly, the line in The U. S. Has even more capability than the line in Europe and that is a market function.

[Aditya Mittal, CEO at ArcelorMittal]

We see that The U. S. Market is moving to higher grades for this, primarily because of the SUV segment and other unique characteristics of the North American marketplace. And so you need more capable equipment, more equipment, more rolling capability and that obviously adds to cost. And the third is obviously construction costs, manpower costs, steel costs and other costs are higher in The U.

[Aditya Mittal, CEO at ArcelorMittal]

S. Than they are in Europe. So those are the primary three factors when you make your comparison on the electrical steel line in France and then versus the one that we're building in Alabama.

[Tristan Gresser, Analyst at BNP Paribas]

All right. That's very clear. Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Tristan. So we'll move now to our next question, which we will take from Alain at Morgan Stanley. Please go ahead, Alain.

[Alain Gabriel, Analyst at Morgan Stanley]

Thank you for taking my question.

[Alain Gabriel, Analyst at Morgan Stanley]

I have just one question. It's on the buyback program. You are in the final stages of completing your existing program, And do you expect a positive free cash by twenty five percent? Your share price is trading at a steep discount of fair value. What comes next?

[Alain Gabriel, Analyst at Morgan Stanley]

What are you thinking going forward? You do have a clear framework. But the question is, are you willing to also stretch your balance sheet to seize the opportunity at the moment? How should we

[Alain Gabriel, Analyst at Morgan Stanley]

think about it going forward? Thanks.

[Aditya Mittal, CEO at ArcelorMittal]

Okay, great. Thank you, Alain. So as you heard from us and as you saw from our release, we have done quite a lot in terms of returning capital to shareholders. We think we're unmatched by any peer. That's what we said.

[Aditya Mittal, CEO at ArcelorMittal]

So we have bought back 37% of the company. Since 2020, we have generated about $21,000,000,000 of cash and about $13,000,000,000 13 point 2 billion dollars has been returned to shareholders. So that's very, very significant. We've also increased our base dividend by $0.1 to $0.55 per share. That reflects the buybacks that we have done.

[Aditya Mittal, CEO at ArcelorMittal]

It also reflects the underlying resiliencebenefits of the growth projects that are underway in the company. So you can see that the direction of travel is very clear. We're very focused on returning capital to shareholders and I think we've done an excellent job in that over the last few years. Going forward, we believe our policy serves us very well, in which we take the free cash, subtract the minimum dividend and then half of the remaining free cash is returned as capital to shareholders. We think that allows the company to continue to grow, develop its business and also return a significant amount of capitalcash to shareholders.

[Aditya Mittal, CEO at ArcelorMittal]

So we're very comfortable with the policy that we have in place. Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Alan. So we'll move to the next question, which we'll take from Matt at Goldman Sachs. Please go ahead, Matt.

[Matt Greene, Head of European Metals & Mining Equity Research at Goldman Sachs]

Hi, good afternoon. I'm just I'm keen to get a better understanding on the rationale for the timing of this expansion in Liberia. Has your demand outlook for center feed changed or has this decision been taken to provide the infrastructure for flexibility and product spec in the future just given some of the pressures we're seeing on high grade iron ore currently? And then with the spend, are you upsizing the infrastructure to 20,000,000 tonnes or will this also now provide a more capital efficient pathway for that incremental 10,000,000 tons that you may consider in the future?

[Aditya Mittal, CEO at ArcelorMittal]

Yes. Thank you. Thank you, Matt. So let me just give you a high level. It will help explain, I hope, your concerns or your questions.

[Aditya Mittal, CEO at ArcelorMittal]

So we had a new mining team that joined under that leadership. I think the first thing that has been delivered and you guys must have all seen this is safe operations and record volumes in Q4 in mines Canada as well as strong volumes in Iberia in the fourth quarter. We expect that to continue. The team is doing a great job. And the second task that we asked them apart from safe and reliable operations was to relook at the Liberian project.

[Aditya Mittal, CEO at ArcelorMittal]

And the team that has joined was at Arsenal Middle a few years ago, so you can go through the names. And so they've come back and their thought process was that we should not stop the DSO product. So if you remember, the original project was that we have DSO is basically on our mine. We have 5,000,000 tons of volume of that presently in Liberia. We start as a concentrator and we stop the DSO.

[Aditya Mittal, CEO at ArcelorMittal]

So the net increase in volume is about 10,000,000 tons. So two things. Number one, the resource and reserve base is much greater, so we can run product for longer. And number two, we felt that the concentrate product doesn't have such a good market acceptability as Syntafeed. And so you bring the two ideas together and we felt that we could maintain a 20,000,000 tonne output mine versus a 15,000,000 tonne, which would require investments in port, infrastructure, rail, some blending capability.

[Aditya Mittal, CEO at ArcelorMittal]

And instead of doing just 15,000,000 tonne concentrate, we're now going to do more center feed and a little bit of DSO and a little bit of concentrate. And so that's really the new concept. In terms of capability beyond, right now, the investments are there for 20,000,000 tons. But when you make certain investments, the ability to expand capacity obviously is not as expensive because there's been a lot of work done on the port side, for example, as part of this 20,000,000 ton expansion. So I hope that helps answer your question, Matt.

[Matt Greene, Head of European Metals & Mining Equity Research at Goldman Sachs]

Thanks, Nishi. That's not clear. So really a margin driven decision, which makes a lot of sense. I have a couple others, if I may. Just on the Calvert EAF that you're commissioning, when can we expect that to reach full capacity?

[Matt Greene, Head of European Metals & Mining Equity Research at Goldman Sachs]

And you touched on sort of an earlier comment just on some slab being sourced domestically. Assuming the CAS up and running and you keep that domestic contract in place, how much are you importing into Calvert on the slab side? And then just on more broadly across the portfolio, we've seen in some of your key markets, particularly places like Brazil, just the FX depreciation. How should we be thinking about this in terms of cost tailwind, just given some of your raw materials, I guess, price in U. S.

[Matt Greene, Head of European Metals & Mining Equity Research at Goldman Sachs]

Dollars? Are you seeing much of a cost tailwind there? Thanks.

[Aditya Mittal, CEO at ArcelorMittal]

So in terms of Calvert, as I mentioned earlier and perhaps you were there, Matt, this is really producing automotive quality steels, exposed quality product. And so there's a qualification process with automotive. And that is normal, but that causes the ramp up to be slower. So we are anticipating roughly twelve months from today for full ramp up, full volume of that facility. In terms of the specifics of volume, I don't know if Jadwiro can provide you with more color.

[Aditya Mittal, CEO at ArcelorMittal]

I think we don't really disclose volume. And I'll get him to answer the Forex question on this one.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Yes, sure. Hi, Matt. Matthew, the next question, the way we look at it, and you're absolutely right. So we saw a very significant FX volatility during this quarter. The Brazilian realized and depreciated significantly, but also the euros, it was across the board.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

As we know, I mean, it's still industry. It's primarily a dollar business. And so then what we normally see is that following a depreciation, domestic prices then should then be corrected to reflect the new exchange rates. And then unless that change is so significant that can impact the economies, it tends to be positive to our business, right, because your cost base in dollars then goes down, your revenues just adjust to the new exchange rates and then in the medium to long term, your business is just more profitable. So that's what we see that's what we typically see when we have significant devaluations.

[Matt Greene, Head of European Metals & Mining Equity Research at Goldman Sachs]

That's great. Thanks a lot for my questions.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Bart. So we will move to the next question, which I think we'll take from Dominic at JPMorgan. Please go ahead Dominic.

[Dominic O'Kane, Executive Director at JPMorgan Chase]

Thanks, Paul. I just have

[Dominic O'Kane, Executive Director at JPMorgan Chase]

a few questions. We're starting to see signs of green shoots on pricing in Europe and The U. S. And obviously some discussions around maybe some import restrictions coming in Europe.

[Dominic O'Kane, Executive Director at JPMorgan Chase]

So I was just wondering if you

[Dominic O'Kane, Executive Director at JPMorgan Chase]

could just maybe give us

[Dominic O'Kane, Executive Director at JPMorgan Chase]

a little bit more color on how you're seeing kind of orders evolving? That would be my first question. Second question, you mentioned your working capital optimization for 2025. I just wonder if you could put maybe put a quantum on that in terms of what you think is an optimal working capital carry forward number into 2025? And then final question, just we're getting a lot of questions incoming around Ukraine.

[Dominic O'Kane, Executive Director at JPMorgan Chase]

And so just as things stand today, could

[Dominic O'Kane, Executive Director at JPMorgan Chase]

you just maybe give us

[Dominic O'Kane, Executive Director at JPMorgan Chase]

a sense of how quickly you could return production back to the market and if it would come with an incremental cost, specifically CapEx?

[Aditya Mittal, CEO at ArcelorMittal]

Thank you. I'll answer Ukraine and then I'll get Jenerio to answer the rest. So in terms of Ukraine, it's obviously been very difficult for our employees and all of us actually to just watch what has happened to our people and to our facilities. As you know, we're operating at about 30% of its capacity. We are a breakeven on an EBITDA basis, but we are losing cash.

[Aditya Mittal, CEO at ArcelorMittal]

We have been losing cash since day one of the invasion and that's been that's amplified the difficulty. In terms of moving forward, clearly, we would hit cash breakeven assuming we double utilization rates. That's our expectation. So that would take the facility to about 3,000,000 tonnes. That's still at 60% of utilization rate.

[Aditya Mittal, CEO at ArcelorMittal]

So there's it's still less much less than where we were before. To go beyond that would require CapEx. At this point in time, I think it's a bit early to speculate on what that CapEx would be and how we would do it. I think it also depends on how quickly demand returns, what happens in terms of the rebuild plan and what type of piece is actually delivered. So I think I would leave you with a thought that we can quickly bring it back to cash breakeven to a $3,000,000 term rate.

[Aditya Mittal, CEO at ArcelorMittal]

Obviously, depending on prices and stuff like that, it could be even better than the cash breakeven. And then future steps, we would discuss and elaborate with all of you once there is more clarity. Jean Reno?

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Yes, sure. So let me start with Europe then. So in Europe, as we all know, there are important developments that we should see or know the conclusions very soon. One, an important one, of course, is the Antelope investigation against a few Asian countries. So that, of course, can be quite positive to the extent that it's confirmed.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Then a second piece that is also can be also very important is the review of safeguards that we also expect to be completed very soon. So and then what we see right now is the competitiveness of imports given where prices are in Europe, it's not so attractive. From our position, our order book for quarter one is almost it's basically completed. And I think everybody is looking forward for the trade actions that should potentially improve quite significantly the situation in Europe. In The U.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

S, I think the situation is we are starting to see also price announcements, which is good. We will see how it develops. In terms of working capital, I think what we are guiding is that based on what we can see today, current market conditions, we don't expect to invest in working capital in 2025. Our expectation is to see some release and we are not quantifying that amount right now. But at current market conditions, we should see some release.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

We are building inventories, slab inventories that will be used in one of our facilities in Europe that we're going to need to rely. So we are building that inventory that we will then, of course, release during the year. And as we know also in the first half of twenty twenty four, raw materials were more expensive. So we are still working through that. So that should also benefit working capital in 2025.

[Dominic O'Kane, Executive Director at JPMorgan Chase]

That's very clear. Thank you very much.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Dominic. So we'll move now to take the next question, which will be from Phil at KeyBanc.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Please go ahead, Phil.

[Philip Gibbs, Director & Equity Research Analyst at KeyBanc Capital Markets]

Hey, good afternoon. This is Jazen Wino, Daniel. Thanks for taking my question. On automotive in North America and Europe, just broadly, what are you seeing this year? What are you expecting in those markets and regions?

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Yes. Hi, George. So we are seeing more instability in North America, Phil. 20 20 4 was a year where it was relatively stable for us. We gained some market share.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

We were pleased with that. In Europe, we saw a decline in production, right, 6%, seven %. Some destocking that happened also in the fourth quarter. So the base case for Europe in 2025, it's a modest decline in production. That's the latest forecast.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

But there are some offsets. We have offsets in Brazil, where we continue to see an increase stability in North America and then a small decline in Europe.

[Philip Gibbs, Director & Equity Research Analyst at KeyBanc Capital Markets]

This is the second question, if I may. Calvert, you've talked about a lot today, a lot of good color, which we appreciate. Have there been any meaningful startup costs within the results associated with the commissioning of that mill?

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

So, Pia will let you know, I mean, this is the JV. So at this point in time, in quarter four, not really.

[Philip Gibbs, Director & Equity Research Analyst at KeyBanc Capital Markets]

Thank you very much.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Phil. So we'll move to the next question, which we will take from Bastian, Deutsche Bank. Please go ahead, Bastian.

[Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank]

Yes, thanks, and good afternoon to everyone. I've got two questions left, please. My first one is just on your European performance. I guess most of those would have been pretty amazed by your ability to preserve literally flat margins in Europe in a spot environment where hot oil coal spreads have come off by about $100 versus the last few quarters. So what exactly has allowed you to perform as well?

[Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank]

And has there been any benefits such as energy cost repayments or anything else which supported your cost performance here? And then also, can we expect your margins to already have reflected the low point in the cycle year, which I guess was the second half of last year? That is my first question.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Yes. Vashjana, we are actually very pleased with the performance of European business given the current market conditions. And I think what we did explain the performance is a very strong cost performance, right? The fact that if you look at our production numbers in quarter four compared to last year, you can see that there is a significant improvement. And of course, in the steel industry, when you are producing well, then, of course, your costs come down.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

I think we had a good performance also in terms of fixed costs, and that is supporting our results in quarter four and the whole of 2024. We had a much better year in terms of operations.

[Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank]

Okay, okay. Sounds good. And then just my second question is on your footprint. And I guess you've done a lot of changes here over the last few years. I guess the recent ones in terms of the service centers you've been closing in France, obviously were slightly smaller in nature.

[Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank]

But are there any further footprint steps which you're currently looking at more closely, be it either on the restructuring side, the divestments or be it also on the excretory side?

[Aditya Mittal, CEO at ArcelorMittal]

Thank you, Bastien. What was the last word of your sentence? Divestments

[Aditya Mittal, CEO at ArcelorMittal]

or

[Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank]

So, or basically acquisitions, I guess, I guess, is there anything meaningful you currently have on the radar in terms of restructuring or divestments or acquisitions?

[Aditya Mittal, CEO at ArcelorMittal]

Okay, great. Thank you. So in terms of Europe, just to provide a little bit more context. Fundamentally, as you know, there are three policy issues in Europe. The first is high energy prices, which is impacting the European steel industry.

[Aditya Mittal, CEO at ArcelorMittal]

The second is trade. If you look at four, five years ago, imports were 15%, now imports are 27%. And this is because the quotas and the safeguard keep on increasing while the currency of consumption has not. What are the actions that are being undertaken? One, there is an antidumping case.

[Aditya Mittal, CEO at ArcelorMittal]

The second is the safeguard measures themselves are being viewed. And the third, after trade is really climate regulation. And again, there is a lot of discussion on climate regulation that the C band needs to be fair and equitable to the domestic European state and the touch rate. Assuming those things pan out the way we would hope, I think the actions that we need to take to further improve the competitiveness and concentrate our operations and improve productivity, we will be more limited in nature. To the extent that those actions don't pan out, then clearly we will need to act to restore competitiveness to our business.

[Aditya Mittal, CEO at ArcelorMittal]

We know how to do it. We've done it in the past and then we've been embarking on such a strategy. So, I hope that answers your question on how we think about our European business and how we can maintain competitiveness going forward.

[Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank]

Okay, great. Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Thanks, Patience. So we will move to the next question, which we will take from Boris at Kepler Cheuvreux. Please go ahead, Boris.

[Boris Bourdet, Equity Research Analyst at Kepler Cheuvreux]

Hi. Thank you for taking my question. Maybe I have a follow-up on that one. Mr. Mittal, you've been very straightforward regarding these issues European the European footprint faces.

[Boris Bourdet, Equity Research Analyst at Kepler Cheuvreux]

How would you say that you have the feeling to have been listened by the European Commission? That's my first question. And second question would be on the Valverde stake. Today, you have 28%. It's a great asset.

[Boris Bourdet, Equity Research Analyst at Kepler Cheuvreux]

You put at a reasonable price. And now that you have some time, you've spent some time with the Valeoite team, how do you see the future there in terms of synergies? And why not buy the entire company? Thank you.

[Aditya Mittal, CEO at ArcelorMittal]

Sure. So in terms of your first question, yes, obviously, we have been listened to, but listening is not enough, right? There needs to be action. And that's what we are looking forward to, action in the first half of this year. There has been some action.

[Aditya Mittal, CEO at ArcelorMittal]

However, if you had noticed last week, the CSRG regulations were postponed and changed, so that's positive. But we need specific action to support the steel industry of Europe. Energy may take longer because it's a geopolitical issue, but clearly action on trade, which is under control of European regulators, as well as C band is critical. So there is no change in our thought process. We need this to continue our decaf journey.

[Aditya Mittal, CEO at ArcelorMittal]

We need this to continue to maintain all of our operations. And there is sympathy, but clearly we want to see the actions accomplished. In terms of value rec, you're right. It's a great company. It's a great asset.

[Aditya Mittal, CEO at ArcelorMittal]

The management team is doing a great job. We're very happy with our stake and at this point in time, we had no intentions of increasing it further.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Okay, great. Thank you, Boris. So we'll move to the next question, which we're going to take from Cole at Jefferies. Please go ahead, Cole.

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

Afternoon, thanks for taking my questions. I've got two my side. The first one is just on India. I'd love to get your thoughts on the current trends you're seeing in the market there and what are the key positives or potential negatives that you're seeing into 2025? And then the second question is a bit of

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

a longer one, but I'd love

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

to hear your thoughts how you think about it. Your Slide number two, you've been calling out for a while kind of structurally higher margins through the cycle and you've talked about your disposals of businesses and how you've repositioned. But should we think about this into the future that your new CapEx projects are more value over volume focused? This even at the bottom of the cycle being 130 EBITDA per tonne, is this kind of marking the new trough for you hopefully through the cycle? How do you think about that kind of value proposition going forward?

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

Thank you.

[Aditya Mittal, CEO at ArcelorMittal]

Okay. Great. Thank you. Let me talk about India. In terms of India, we had a great investor visit a few months ago where people could see that we have a very high quality asset with very engaged, passionate and committed team.

[Aditya Mittal, CEO at ArcelorMittal]

Our facilities are world class. They are coastal facilities with very good iron ore linkages. So we have a very, very strong foundation to build on. We are presently building on that. We are doubling the capacity, but it's not only just doubling the capacity.

[Aditya Mittal, CEO at ArcelorMittal]

We are investing upstream in terms of iron ore capability and pellet plants, but we're also investing downstream because we are in process of commissioning downstream automotive facilities, this core rolling mill lines, gallop lines. So there is a significant upgrade to the quality and capability of the mill. We're also bringing new products like Magnelas. In terms of the short term, the short term is difficult in India. The market is flooded with imports, like other parts of the world, because of the overcapacity that exists in the global steel industry.

[Aditya Mittal, CEO at ArcelorMittal]

What is the government doing? The government is evaluating safeguard action. We should hear the results of their investigation in the first quarter of this year. If you were to ask how confident are you that these safeguards would support growth, I'm quite confident. The reason why I'm confident is because India has a very clear strategic direction.

[Aditya Mittal, CEO at ArcelorMittal]

They call it Atmanir Bar Bharat, which basically translates into self reliance. The reason why we invested in the country in the first place was because of the shift in policy where the Indian government is very clear that they need to make steel domestically. Other competitors have spoken out loud that if appropriate safeguard action is not put in place, then it will be difficult for them to continue to expand and to cater to domestic demand. And therefore, I do believe that appropriate action will be taken. It will allow us to continue our growth plan and build on a very excellent foundation that we have in the country already.

[Aditya Mittal, CEO at ArcelorMittal]

In terms of your second question on structurally higher margins, look, the short answer is yes, because we are not really growing crude steel capacity, right? If you look at the projects that we're doing, they're all value add in nature, whether it's the electrical steel capability in Calvert or even vertical integration in mining supports our business as it lowers the overall see through cost of our product offering, whether it's all the downstream investments we are doing in Brazil. In Calvert also to the extent that we are growing EEF, we already have the finishing capability. So on a part time basis, the shipments are not really increasing. This is us moving upstream to capture more on the value, make it melted and poured in The U.

[Aditya Mittal, CEO at ArcelorMittal]

S, make it EF quality green steels for the marketplace. So fundamentally, the idea is exactly that structurally higher margins, which creates a much better quality business and a much better dynamic for us as we ride through the cycles of the steam industry.

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

And then maybe just to be helpful and keep the thread going here. Could you just remind us of some of the actions you've done maybe over the last five years that have improved the margins of the metal field business?

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

Thank you.

[Aditya Mittal, CEO at ArcelorMittal]

Sure. There are many, many actions. I think the biggest one is how we have changed our portfolio, right? And so if you saw, we also announced that absolute carbon emissions are down 50%. So that reflects how our portfolio has shifted to higher quality assets, which are higher quality because of their cost position as well as their quality position in terms of car.

[Aditya Mittal, CEO at ArcelorMittal]

So that I think is the overarching theme. We have rounded out that asset base with very good acquisitions. So for example, Pestin in Brazil was built at a cost which is a 3x multiple of what we bought it for. It's a world class lab asset. It's really low cost, highest quality with multiple growth options.

[Aditya Mittal, CEO at ArcelorMittal]

So that's also another example of how we have upgraded our asset portfolio. We talked about valoracle, that's a great asset. It's delivering well. The stock has done well. It has a good return.

[Aditya Mittal, CEO at ArcelorMittal]

I expect it to have a good cash return as well as time goes by. So that's another example. The hot strip mill in Mexico is another very good example where we had a slab plant in Mexico that's a very strong market. We invested in the hot strip mill. It's a great hot strip mill and you can see that the profitability of Mexico, which is reflected in NAFTA, has fundamentally changed.

[Aditya Mittal, CEO at ArcelorMittal]

And this is for the domestic Mexican market. It's not for exports to The U. S. So these are a few of the examples. We obviously had our management gains program.

[Aditya Mittal, CEO at ArcelorMittal]

We did a lot of portfolio optimization in Europe and in other places. We don't talk a lot about the continuous improvement, the impact of the R and D and innovation in the company, but all of that translates through. And so that's why you can see that we continue to perform well. We continue to perform or perform at the highest level. I should say, I should outperform the competition in the regions in which we operate.

[Aditya Mittal, CEO at ArcelorMittal]

And that's fundamentally the dynamic of our business and our company.

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

Thank

[Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group]

you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Carl. Thanks, Aditya. So we're moving up against time here, but I think we've got time for another couple of quick questions.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

So we'll take the first from Timna at Wolfe Research. Please go ahead, Timna.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

Thank you. And sorry I dropped off earlier. So I just wanted to ask a few maybe quick ones. One is on the electrical steel in The U. S.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

The grain oriented steel is really the tight one. Is it possible that you also make that? Or are you just going to focus on non grain is one question? And the other one is probably not as quick, but on the growth forecast, people watch your forecast very closely, of course. You don't include what you think happens in China.

[Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC]

So I'd just like to get a little more of your thoughts about China since we've been dancing around this global oversupply. Do you think that they rectify that? Do you think exports could shrink this year? Just your thoughts there, please.

[Aditya Mittal, CEO at ArcelorMittal]

Sure. In terms of the electrical field facility, it is non grain. So that's our focus. And these are different markets, right? The Gold's product goes into transformers and electric grid.

[Aditya Mittal, CEO at ArcelorMittal]

The non grain basically goes into automotive. And the reason why that market has changed, I mean, non grain always existed, but the reason why it has changed is because of electric cars as well as hybrid vehicles. And the quality requirement that they have is very different from the usual, I should say, or the commodity type non grain electrical steels. This is really premium and there's a good price point. And equally important is it continues our franchise, right?

[Aditya Mittal, CEO at ArcelorMittal]

We are the leading automotive supplier in the NAFTA market, just to give the quality and technical capability that we have and this continues that franchise that we have as our ceramic mill. In terms of China, look, the high levels are that China is exporting 110,000,000 tons of steel. These are record levels. We saw this last in 2015, '20 '16, but fundamentally the company did well. We generated over $2,000,000,000 of investable free cash flow in spite of 110,000,000 tons of Chinese exports.

[Aditya Mittal, CEO at ArcelorMittal]

Going forward, I expect a lot of trade action to level the playing field, whether it's the U. S./NAFTA or Europe or Brazil or India, and perhaps the trade action spurs reduction in overcapacity or reduction of exports in China. That's really the base case, not so focused on what is happening in terms of China, but perhaps the trade actions force capacity rationalization. So I hope that provides you with the flavor of our thought process. Timna?

[Aditya Mittal, CEO at ArcelorMittal]

Great. Thanks. Okay. Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Thanks, Timna. So we'll move now to take the next question, which is from Max at Oder, and then we'll take one final question after that. Please go ahead, Max.

[Maxime Kogge, Equity Analyst at ODDO BHF]

Yes. Thank you for taking my questions. So good afternoon, all. First question is on the bridge from Q4 to Q1 EBITDA. Can you provide some insight on the moving parts?

[Maxime Kogge, Equity Analyst at ODDO BHF]

Traditionally, Q1 has better seasonality, higher volumes, especially in North America and Europe than Q4. So can we expect an uptick in EBITDA in Q1 versus Q4?

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

Yes, Max, let me take this one. So you're right. So going through the regions, starting with The U. S, our expectation is to see some better shipments. I mean, there has been normalized production in Mexico as well.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

So our expectation is for shipments to be higher. And then in terms of prices and costs, we expect to be relatively stable. In Brazil, we also believe that shipments should be relatively stable and prices and costs as well. In Europe, we do expect some positive also a volume pickup, but prices, as we know in Europe, they took longer to start to show some recovery. We will see our NRP slightly lower in Q1, higher volumes, slightly lower prices and relatively stable costs.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

On the mining side, we do expect another strong performance. We are expecting also volumes to improve, especially in Liberia and another strong performance in mines Canada.

[Maxime Kogge, Equity Analyst at ODDO BHF]

And second and last one is on the decarbonization agenda. So you've suspended your actions in Europe. But could you give us an update on Canada? Do you see the situation as sufficiently supportive to carry on with your decarbonization expenses there? I think you were planning to complete the transition from 2026 to 2028 or is it on track to do that?

[Aditya Mittal, CEO at ArcelorMittal]

Great. Thank you. So I would say suspended is a very strong word in terms of our Europe decaf plans. I would say that we are progressing. We have a electric furnace, which is coming on stream in Guihon, as well as we are revamping the furnaces in Cessau.

[Aditya Mittal, CEO at ArcelorMittal]

So we have some product coming out, both long and flat, which is decarbonized in nature. In terms of our plans, we are waiting for appropriate regulatory framework to continue on decarbonizing our existing European business. So I think I talked about this a lot in terms of energy, trade and C band. We need preconditions to continue that and to accelerate the decob journey in Europe. And I also mentioned that overall, we're cognizant of the CapEx envelope, the medium term CapEx envelope of 4.5% to 5%.

[Aditya Mittal, CEO at ArcelorMittal]

So we expect it to be within that envelope. In terms of Canada, it's a similar similar questions are there related to the regulatory environment, which are also connected to what happens with The United States, as well as what happens in the elections in Canada, which are forthcoming in 2025. So I don't expect significant progress in Canada till we have clarity on some of these questions that exist. So I hope that helps. I don't know if there's anything more, Jim, you know, you want to add on this question.

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

No, Adipa, I think you touched on everything.

[Maxime Kogge, Equity Analyst at ODDO BHF]

Okay. And perhaps at a higher level regarding decarps, you think that because you are kind of more cautious both in Canada or in Europe, but despite that, are you still thinking that decarbonization is economically viable? Or are you facing some constraints that perhaps you were not expecting a few years ago when you launched this initiative?

[Aditya Mittal, CEO at ArcelorMittal]

Yes, sure. So I think the key word or the key thought to take away is economic decarbonization. Clearly, we believe it is important for the global steel industry and for us to decarbonize. There's no two ways about that. However, it has to be economic for industry, otherwise how are we going to afford it and maintain output and maintain jobs, right?

[Aditya Mittal, CEO at ArcelorMittal]

It's not possible. And what has changed in the last few years is that the pace of policy regulation has slowed down. There has not been the type of action that we had expected. On top of it, specifically in Europe, you have seen an energy crisis unfold, which has also delayed how you decarbonize. Because when you decarbonize, what are you doing?

[Aditya Mittal, CEO at ArcelorMittal]

You're fundamentally substituting coal with natural gas and electricity. And as you know, in Europe, natural gas has gone through the roof and so has electricity. And coking coal as a global commodity has not had that same price action that the other two have had. And so it makes it very difficult to move forward without an appropriate regulatory framework. So that's how I would describe it.

[Aditya Mittal, CEO at ArcelorMittal]

So the focus of the company is economic decub. It doesn't mean we're not doing anything. I mean, we've done a lot, right? 50% of absolute emissions are down from 2018. Share of EES is going up from 18% to 25% in the last six years.

[Aditya Mittal, CEO at ArcelorMittal]

The money that we have spent on decaf is generating EBITDA. And most importantly, our product offering in the marketplace of XCAR products, which is fundamentally then zero green steel, continues to increase, right? It's doubling now. And so I think we are in a good position when it comes to our customers. We're in a competitive position in our business when it comes to our cost base.

[Aditya Mittal, CEO at ArcelorMittal]

And just to underline this theme, we have the capability whether it's people or technology or knowledge to decarbonize. We just need the appropriate policy framework to make it economically viable.

[Maxime Kogge, Equity Analyst at ODDO BHF]

That's very clear. Thank you.

[Aditya Mittal, CEO at ArcelorMittal]

Thank you.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. Thanks, Max. So we're going to try and squeeze in one final follow-up question from Tristan, BNP Exane. So please go ahead.

[Tristan Gresser, Analyst at BNP Paribas]

Yes. Thank you for taking the follow-up. Just on the steel action plan, when you talk about the things you need to see in Europe, the CBAM fix, more trade support, other industry have pushed also regarding the timeline of a certain regulation like the ETS phase out. Do you believe that is something on the table at the moment? Do you need to see that?

[Tristan Gresser, Analyst at BNP Paribas]

And lastly, just a quick update on South Africa, given there's been a lot of headlines that would be helpful as well. Thanks. Thanks again.

[Aditya Mittal, CEO at ArcelorMittal]

Sure. Look, in terms of regulation, our focus is CBAM and trade to the extent that the freelancers, I think that's what you're talking about, get extended. That's net positive for the competitiveness of the European steel industry. However, that is not necessarily a precondition. The precondition is really appropriate trade action and appropriate Sea Bank policy.

[Aditya Mittal, CEO at ArcelorMittal]

I think those preconditions are much more than just about decaf. They're also about the viability, sustainability of the European business. So perhaps that's why we have much more focus on those two initiatives. And you're right, the Mario Draghi report on the new Green Industrial deal has really kickstarted a process within the European Commission, within European governments to re examine. I think events in The U.

[Aditya Mittal, CEO at ArcelorMittal]

S. Have accelerated all of that discussion. And clearly, I think the question was asked, are they listening? Yes, of course, they're listening. Key and most important is the actions that they take.

[Aditya Mittal, CEO at ArcelorMittal]

In terms of South Africa, look, the headlines are around the long business. And then if you look at the long business in South Africa, it's a good operation, it's a good facility. It has been challenged by a scrap imbalance. So what has happened over the years is there is an export tax on scrap. And because there is an export tax on scrap, many millers who are utilizing scrap are much more competitive because scrap is very cheap in South Africa relative to other metallics and integrated operation on Newcastle has become uncompetitive.

[Aditya Mittal, CEO at ArcelorMittal]

And that is not a story of yesterday. It's a story that has been going on for the last few years. And we've been working with the government to try and make that facility competitive and we have realized we can't. There's not enough support, there's not enough conditions, there's no change in the scrap regulations and therefore we've taken the decision to shut it down. The other business, the flood business remains viable.

[Aditya Mittal, CEO at ArcelorMittal]

So this remains a continuing discussion with the South African government to ensure that the overall AMSA remains viable, healthy and competitive. I don't know, Jim, is there anything else you wanted to add?

[Genuino Christino, Executive VP & CFO at ArcelorMittal]

No, I think that's a very good summary, Dieter. And then of course, South Africa is a listed company. The release results today, you can also see the earnings release that is you have more information there, but that's fundamentally where we are in this process.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

Great. So that was our last question.

[Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance at ArcelorMittal]

So I'll hand back to you, Dieter, for any concluding remarks.

[Aditya Mittal, CEO at ArcelorMittal]

Okay, great. Thank you. Let me just reiterate some of our key messages. I hope you have appreciated that our performance demonstrates that we are a transformed company. I know there were a few questions on that, on our cycle through see through EBITDA of $130 As I said before, I passionately believe we have the best talent in the steel industry and we are harnessing this talent to outperform the competition.

[Aditya Mittal, CEO at ArcelorMittal]

If you look at our numbers on a region by region basis, we do really, really well. We have a very strong balance sheet that allows us to continue to grow in a counter cyclical fashion, and has allowed us to return capital to shareholders. Looking to the medium and longer term, the outlook for our business is clearly positive. We're well positioned to capture demand in growth markets through strategic investments in India, Brazil and The U. S.

[Aditya Mittal, CEO at ArcelorMittal]

These are all very exciting opportunities for us. With that, I will close today's call and I look forward to speaking with you soon. Thank you.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Daniel Fairclough, Head of Investor Relations & VP of Corporate Finance
• Aditya Mittal, CEO
• Genuino Christino, Executive VP & CFO

Analysts

• Ephrem Ravi, Managing Director at Citi
• Patrick Mann, Vice President at Bank of America Merrill Lynch
• Andrew Jones, Analyst at UBS Group
• Tristan Gresser, Analyst at BNP Paribas
• Alain Gabriel, Analyst at Morgan Stanley
• Matt Greene, Head of European Metals & Mining Equity Research at Goldman Sachs
• Dominic O'Kane, Executive Director at JPMorgan Chase
• Philip Gibbs, Director & Equity Research Analyst at KeyBanc Capital Markets
• Bastian Synagowitz, Equity Research - Global Coordinator at Deutsche Bank
• Boris Bourdet, Equity Research Analyst at Kepler Cheuvreux
• Cole Hathorn, Senior Vice President- Equity Research Analyst at Jefferies Financial Group
• Timna Tanners, Managing Director - Equity Research at Wolfe Research, LLC
• Maxime Kogge, Equity Analyst at ODDO BHF