Financial results For the six months ended 30 June 2018 Disclaimer - PowerPoint PPT Presentation

Financial results For the six months ended 30 June 2018

Disclaimer Forward looking statements This presentation includes forward-looking information and statements about ArcelorMittal South Africa (“AMSA”) and its subsidiaries that express or imply expectations of future events or results. Forward-looking statements are statements that are not historical facts. These statements include, without limitation, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, products and services, and statements regarding future performance. Forward-looking statements may, without limitation, be identified by words such as ‘believe,’ ‘expect,’ ‘anticipate,’ ‘target,’ ‘plan,’ and other similar expressions. All forward-looking statements involve a number of risks, uncertainties and other factors not within AMSA’s control or knowledge. Although AMSA’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of AMSA’s securities are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of AMSA, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements contained in this presentation. The risks and uncertainties include those discussed or identified in the filings with the Johannesburg Stock Exchange (the “JSE”) made or to be made by AMSA, including AMSA’s Annual Report of the year ended December 31, 2017 filed with the JSE. Factors that could cause or contribute to differences between the actual results, performance and achievements of AMSA include, but are not limited to, political, economic and business conditions, industry trends, competition, commodity prices, changes in regulation and currency fluctuations. Accordingly, investors should not place reliance on forward looking statements contained in this presentation. The forward-looking statements in this presentation reflect information available at the time of preparing this presentation and have not been reviewed and reported on by AMSA’s auditors and apply only as of the date they are made. Subject to the requirements of the applicable law, AMSA shall have no obligation and makes no undertaking to publicly update any forward-looking statements in this presentation, whether as a result of new information, future events or otherwise or to publicly release the result of any revisions to any forward-looking statements in this presentation that may occur due to any change in AMSA’s expectations or to reflect events or circumstances after the date of this presentation. No statements made in this presentation regarding expectations of future profits are profit forecasts or estimates. 2 Financial results for the six months ended 30 June 2018

Contents Overview Steel Operational Financial Outlook Questions market review review CEO CEO CEO Acting CFO CEO CEO Financial results for the six months ended 30 June 2018 3

Overview Kobus Verster

Safety Safety improvements • Proactive approach through more focused “safety by choice” programme • Safety retraining of employees and Fatalities contractors 1 (3) LTIFR • Intensified management visibility on shop 0.83 (0.62) floor TIFR 6.33 • Improvement in TIFR encouraging (7.49) LTIFR – Lost Time Injury Frequency Rate TIFR – Total Injury Frequency Rate Financial results for the six months ended 30 June 2018 5

Salient features Total Landscape Revenue Costs volumes 19% -6% • International steel prices remain strong 10% • Strong ZAR limits increase in realised local prices (+8%) Long EBITDA • Weak domestic market - ASC lowest in nine 17% Fixed cost 397% years (2.5mt) -8% (R2 121m) Flat 7% • Sales volumes up 10% • Liquid steel production up 8% • Total cost of production declined 6% HEPS Variable cost • R1.6bn EBITDA aided by cost reductions AOL 39% 103% -5% • All operating units EBITDA positive • Net debt decreased by R1.4bn • Sale of Macsteel International to strengthen balance sheet 6 Financial results for the six months ended 30 June 2018

Steel Market Kobus Verster

The industry - global Global steel output (mt) 900 • Global steel production increased by 4.3% to 874mt 800 700 • Asia market share remained at 69% growing 25mt despite plant closures and 600 544 546 563 559 552 539 551 558 579 587 605 environmental shutdowns in China 500 • Africa output increased by 500kt 400 300 200 59 60 60 61 56 55 56 55 58 58 59 54 54 54 51 51 51 51 51 49 52 51 100 73 71 76 69 75 66 71 67 86 82 88 0 2013 2014 2015 2016 2017 2018 European Union (15) Other Europe C.I.S. North America South America Africa Middle East Asia Source: WorldSteel 8 Financial results for the six months ended 30 June 2018

Macro backdrop South African GDP* growth • SA economy remains weak with GDP growth negative in Q1 18 -3.1% Trade -5.9% • Major steel consuming sectors in Electricity -0.5% -4.8% negative growth -6.4% Manufacturing -3.7% - Manufacturing -6.4% 0.9% Transport -1.6% - Construction -1.9% -1.9% Construction -1.3% - Mining -9% 1.1% Finances -1.2% 1.8% Government -0.6% 1.2% Personal Services -0.1% -9.9% Mining 12.8% -24.2% Agriculture 22.2% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% Q1 2018 Q1 2017 Source: StatsSA * Q1 2017 vs. Q1 2018 Financial results for the six months ended 30 June 2018 9

The industry – raw materials International raw material basket (Weight in % and spread in $/t) 400 100% AMSA AMSA Commodity International ($/t) (R/t) 80% 39% 39% 38% 300 43% 48% 50% 51% % change % change % change 60% 200 Iron ore -6% -1% -8% 40% 43% 43% 47% Hard coking 31% 32% 41% 31% +17% -14% -20% 100 coal 20% Scrap +32% +24% +15% 20% 20% 19% 18% 19% 15% 14% 0% 0 RMB total +10% +5% -3% 2015 2016 2017 2018 HRC China +26% +18% +9% Scrap Coking coal Iron ore Spread • Both coking coal and scrap prices increased over the review period • Scrap increased its weight in the RMB to 19% (H1 2017 = 15%) while coking coal now constitutes 43% • Thanks to a reduction of 6% in iron ore values, its weight has reduced to 38% • Raw materials now make up 48% of the total production costs compared to 49% in H1 2017 Note: The Raw Material Basket (RMB) represents the costs of the raw materials in a tonne of finished steel 10 Financial results for the six months ended 30 June 2018

The industry - domestic Primary carbon steel sales into the South African domestic market 134 Long product sales 3 000 57 91 72 Total steel sales 129 65 96 1 000 65 145 126 161 407 295 393 672 378 404 382 295 266 410 395 434 2 500 587 569 390 392 480 513 751 500 569 571 600 505 558 494 571 540 643 523 455 478 544 590 2 000 576 295 410 395 434 547 493 382 - 393 477 276 2013 2014 2015 2016 2017 2018 1 500 Long AMSA (kt) Long competitors (kt) Imports (kt) 1 800 Flat product sales 1 000 1 414 1 485 1 472 1 474 538 1 664 440 325 335 442 478 408 417 590 1 528 1 789 1 621 1 704 1 300 1 694 1 553 524 169 445 99 143 111 87 500 10 800 1 166 1 146 1 160 1 094 909 970 991 982 932 951 1 186 300 - 2013 2014 2015 2016 2017 2018 (200) 2013 2014 2015 2016 2017 2018 AMSA Competitors Imports Flat AMSA (kt) Flat competitors (kt) Imports (kt) Source: SAISI Financial results for the six months ended 30 June 2018 11

The industry - domestic Primary carbon steel imports into the South African domestic market 590 600 40% 800 30% 538 524 27% 35% 700 445 478 500 25% 25% 35% 35% 442 440 23% 30% 600 22% 22% 408 417 32% 22% 21% 31% 20% 400 20% 28% 500 25% 27% 27% 325 335 18% 26% 27% 16% 15% 400 15% 300 20% 22% 22% 751 15% 672 300 13% 12% 13% 590 587 571 569 15% 569 10% 11% 200 480 513 10% 9% 200 390 392 10% 7% 6% 6% 5% 100 100 161 5% 145 126 129 134 96 324 341 272 267 290 286 248 253 263 232 262 91 72 65 65 57 - 0% - 0% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Imports of primary steel (kt) Long Imports (kt) Imports of products containing steel (kt) Flat imports (kt) % of ASC Long imports % of long ASC Source: SAISI 12 Financial results for the six months ended 30 June 2018

The industry - domestic Primary carbon steel inventory levels in South Africa outside the primary steel producers 600 10 900 9 8.5 9.2 8.4 9.1 9 800 8 8.8 8.6 7.9 7.7 500 7.6 7.3 8.1 8.2 7.4 8.1 8 7.4 700 7.0 7.1 7.0 7 7.4 7.3 7.2 7.2 6.6 7.1 7.0 7 6.9 400 6.7 600 6 6.4 6.2 6.1 6.3 6.3 6 500 5 300 5 578 558 528 513 503 866 836 806 781 741 400 4 4 751 453 654 709 660 640 681 200 408 373 398 363 353 300 3 3 287 272 297 280 310 296 286 277 277 267 237 2 200 2 100 1 100 1 - 0 - 0 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Long Inventory (kt) Flat Inventory (kt) Inventory (kt) Weeks' consumption Long Weeks' consumption Flat Weeks' Consumption Source: SAISI Financial results for the six months ended 30 June 2018 13

Operational review Kobus Verster