Q1 2024 ArcelorMittal SA Earnings Call
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Moritz: Ladies and gentlemen, welcome to the ArcelorMittal first quarter 2024 conference call. I'm Moritz, the call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast.
Ladies and gentlemen, welcome to the Al Salomi told US first quarter 2024 conference calls I bought what's the chorus call operator.
Moritz: I'd like to remind you that all participants will be in a listen only mode and the conference is being recorded.
Moritz: Dentation would be followed by a question and answer session. You can retrofit for questions at any time by pressing star had one on your telephone cooperative assistance. Please press star and zero the conference must not be recorded for publication of our broadcast at this time, it's my pleasure to hand over to Daniel <unk> for Vice President IR. Please go ahead Sir.
Moritz: At this time, it's my pleasure to hand over to Daniel Fairclough, Vice President, IR. Please go ahead. Great. Thank you, Moritz.
Daniel Fairclough: Great. Thank you, Moritz. Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you very much for joining this call to discuss our performance for the first quarter of 2024. Leading today's call will be our Group CFO, Mr. Genuino Christino. Before we begin today's call, I would like to mention a few housekeeping items. As usual, we will not be going through the results presentation, which we published this morning on our website.
Daniel Fairclough: Great. Thank you Brad and good afternoon, everyone. This is Daniel Fackler from my mentor Investor Relations team. Thank you very much for joining this call to discuss our performance for the first quarter 'twenty 'twenty four leading today's call will be our group CFO, Mr. Jimmy No Christine.
Daniel Fairclough: No.
Daniel Fairclough: Before we begin today's call I would like to mention a few housekeeping items 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 number two of that presentation.
Daniel Fairclough: However, I do want to draw your attention to the disclaimers on slide number two of that presentation. As usual, Genuino will make opening remarks before moving directly to the Q&A session. So if you would like to ask a question, then please press star one on your keypad to join that queue. Now, James.
Daniel Fairclough: As normal Jamie will make some opening remarks before moving directly to the Q&A session. So if you would like to ask a question. Then please press star one on your keypad to join the queue.
James: Thank you Jeremy.
Genuino Christino: We'll keep my remarks brief and focus on three topics, safety, our strong financial performance, and the positive outlook for our business. Beginning with safety.
James: We will keep my remarks.
Genuino Christino: Brief and focus on three topics safety always show, our strong financial performance and the positive outlook for our business.
Genuino Christino: Across ArcelorMittal, our people are galvanized to improve safety and achieve our goals of being a fatality-free organization as quickly as we can. The third-part safety audit, which started at the end of December, is now well underway and on target to be completed in September. We believe and expect it to make valuable recommendations that, combined with the considerable efforts already underway, will enable us to deliver the safety results we are striving for.
Genuino Christino: Beginning with safety.
Genuino Christino: Across our seller Midtown our people, our galvanized to improve safety and achieve our goals of being fatality free organization as quickly as we can.
Genuino Christino: Did that bought safe to audits, which started at the end of December is now well underway and on target to be completed in September.
Genuino Christino: We believe and expect this to make valuable recommendations that combined with the considerable efforts already underway.
Genuino Christino: Neighbours to deliver the safety results, we are striving for.
Genuino Christino: Moving to our financial performance, as expected, our results in the first quarter improved following the end of the stocking that had impacted recent quarters. The first quarter saw a 5% improvement in our shipments and a positive price-cost effect, particularly in North America. I believe our EBITDA of $2 billion for this quarter is the highest in our industry. If I look at the last four quarters, we have generated EBITDA of $8.5 billion and adjusted net income of $4.7 billion.
Genuino Christino: Moving to our financial performance as expected our results in the first quarter improved following the end of the Destocking that had impacted on recent quarters.
Genuino Christino: First quarter saw a 5% improvement in our shipments.
Genuino Christino: And a positive price cost effect, particularly North America.
Genuino Christino: I believe our EBIDTA of 2 billion for this quarter is the highest in our industry.
Genuino Christino: If I look at the last four quarters, we have generated EBITDA of $8 5 billion and adjusted net income of $4 7 billion.
Genuino Christino: Our performance reflects the positive actions we have taken to optimize our business and upgrade our asset portfolio. Over the past four quarters, we have invested $1.6 billion in our strategic growth capex. We have led the market in offering the widest portfolio of green steel products, and we have returned the equivalent of 8% of our current market cap to shareholders through dividends and buybacks. Moving to the positive outlook for business.
Genuino Christino: Our performance reflects the positive actions, we have taken to optimize our business and high grade our asset portfolio overall.
Genuino Christino: Over the past four quarters, we have invested $1 6 billion can always strategic growth Capex we.
Genuino Christino: We have led the marketing offering the widest portfolio of Green steel products and we have redone the equivalent of 8% of our current market cap to shareholders through dividends and buybacks.
Genuino Christino: Moving to the positive both look fall business.
Genuino Christino: We continue to forecast higher steel consumption this year in our core market. Our envelope of strategic investments is running to plan. We will be commissioning the new high-added value capacity in Brazil soon. Likewise, our new 1 gigawatt renewable energy project in India will begin producing electricity in June.
Genuino Christino: We continue to forecast.
Genuino Christino: Steel consumption this year in our core markets.
Genuino Christino: Our envelope of the strategic investments are running to plan.
Genuino Christino: We will be commissioning the new high added value capacity in Brazil soon.
Genuino Christino: Likewise, our new one gigawatt renewable energy project in India, We will begin producing electricity in June.
Genuino Christino: In total, the projects within our strategic envelope are expected to add $1.8 billion to our EBITDA and, of course, will meaningfully add to our free cash flow capacity. Our process of portfolio optimization also supports my positive outlook. Having exited Italy and Kazakhstan last quarter, we have now also fully exited our mistaken enemy.
Genuino Christino: In total the projects within our strategic envelope I expected to add 1.8 billion, while we'd be too and of course, we will meaningfully add to our free cash flow capacity also.
Genuino Christino: Our process of portfolio optimization also supports my positive outlook.
Genuino Christino: Having exited in Italy in Kazakhstan last quarter. We have now also fully exited I always taken at EMEA.
Genuino Christino: At the same time, we have agreed to purchase a significant minority stake in Valorec, increasing our exposure to premium downstream products. With 80% of its EBITDA in the Americas and a focus on supporting the energy transition, BALOREC is well aligned with our strategy, and it's interesting even in a minority position. To conclude my remarks, our performance continues to provide evidence that ArcelorMittal can deliver value through all aspects of the steel cycle. We are investing in high-return projects, several of which will be concluded as we move through 2024.
Genuino Christino: At the same time, we have agreed to purchase a significant minority stake in <unk>.
Genuino Christino: Increasing our exposure to premium downstream products.
Genuino Christino: 80% of its a between the Americas and a focus on supports energy transition below rack is well aligned with our strategy and its interesting even in a minority position.
Genuino Christino: To conclude my remarks.
Genuino Christino: Our performance continues to provide evidence that oscillometer can deliver value through all aspects of this new cycle.
Genuino Christino: We are investing in high return projects several of which will be concluded as we move through 2024.
Genuino Christino: We are making clear strategic progress, upgrading our asset portfolio and investing for higher future profitability, and our buybacks are compounding the benefits for our shareholders. With that, Daniel and I will be ready to take your questions.
Genuino Christino: We are making clear strategic progress high grading, our asset portfolio and investing for higher future profitability and.
Genuino Christino: And our buybacks are compounding the benefits for our shareholders.
Speaker Change: With that Ah than me and I will be ready to take your questions.
Daniel Fairclough: Great. Thank you, Genuino. We will take the first question from Patrick at Bank of America. Go ahead, Patrick.
Daniel Fairclough: Great. Thank you Jimmy now we will take the first question from Patrick at Bank of America Go ahead Patrick.
Patrick: It's very much I've got two questions. Please the first one is just the $1 8 billion from and EBITDA from the strategic envelope Capex, how should we think about the phasing of that I know I know there are a lot of the projects starting up this year when will we see the majority of that impact I know sort of run rates.
Patrick: in EBITDA from the Strategic Envelope CapEx. How should we think about the phasing of that? I know a lot of the projects are sort of starting up this year. When will we see the majority of that impact? I know sort of run rates of 2026, 2035, 2036, but this year, next year, and 2026, what's the phasing like?
Patrick: 2026, so we have hockey sticks, but yeah. This year next year and spend 2026.
Patrick: And then the second question, please, just the idea behind buying the stake in Valorec. I mean, how would you answer the question, does it make sense for a listed company to have a significant but minority stake in another listed company when investors can allocate that or do that themselves? So, what's the thinking behind that stake? Thank you.
Patrick: What's the phasing like.
Patrick: And then the second question piece is just the idea behind buying this taken another ache.
Patrick: I mean, how would you answer the <unk>.
Patrick: Question is it doesn't make sense for a listed company to have a significant minority stake in another listed company when investors can can allocate that would do that themselves. So what's the what's the thinking behind that stake. Thank you.
Genuino Christino: Yeah, sure, Patrick. Thank you. So let me start with the first question, the EBITDA, the $1.8 billion. So, as you know, we are about to complete, and as I said in my opening remarks, the first two projects that we're going to be completing are the CodeMill expansion, the Vega expansion in Brazil, and the Renewable Project in India. And then by the end of the year, we should be completing all the projects as well.
Speaker Change: Yeah sure Patrick. Thank you. So let me start with the first question the EBITDA the 1.8 billion.
Genuino Christino: As you know, we're about to complete and as they as I said in my opening remarks. So the first two projects that were going to be completing as decoding cornmeal expansion Vega expansion in Brazil and in the renewable project in.
Genuino Christino: In India.
Genuino Christino: And then by the end of the year, we should be completing all the projects as well.
Genuino Christino: So out of the $1.8 billion, and this is something that I believe we also discussed in our previous call, we already have the benefits of the hot strip mill that we implemented and developed in Mexico, right? So what is left to be added to our profitability is about $1.5 billion. So this year, because we're going to be in a ramp-up phase, you're not going to see really a significant improvement in 2024, although still some contributions from the two projects that we're going to be completing now in the first half.
Speaker Change: So out of the $1 8 billion and this is something that I believe we also discussed in the previous on previous call.
Genuino Christino: We already have the benefits of the hot strip mill that we implemented developed in Mexico right. So what is left to be added to our profitability, it's about $1.5 billion.
Genuino Christino: So D C here, because we're going to be a ramp up phase you don't want us you'd read a significant improvement in 2020 for still some contribution from the two projects that were going to be completing now in the first half.
Genuino Christino: Then moving forward, in 2025, we will start to see a meaningful contribution from this project. We believe that out of the $1.5 billion still to be captured, you're going to see something in the range of $500 million, and then another $500 million on top, in 2020-2026. And then what is left to be captured then in 2025 and onwards is basically as we complete the expansion of the first expansion of India and the Malabar project.
Genuino Christino: And then moving forward in 2025, we will start to see a meaningful contribution from the <unk> b.
Genuino Christino: We believe that out of the one 5 billion is due to be captured.
Genuino Christino: You're going to see something in the range of 500 million.
Genuino Christino: And then a lot of 500 million on top.
Genuino Christino: In 2000 2025 six.
Genuino Christino: And then what is left to be captured that in 2025 and onwards is basically as we complete the expansion of the first expected expansion of India and more about project. So that's our that's how we have seen the phasing of EBITDA.
Genuino Christino: So that's how we are seeing the phasing of the beta. To your second point on Valorec, your second question, Patrick, Valorec is a company that we have been following now for some time. It's a company that, as I said at the beginning, it's primarily present in regions in America, a region that is core to ArcelorMittal.
Genuino Christino: To your second point on Valor rack second questions. Patrick bottleneck is the company that we have been for me now for some time.
Genuino Christino: It's a company that is as I said at the beginning it's primarily present in reaching and in Americas. It's a region that is core to <unk>.
Genuino Christino: Arcelor Mittal, the eye involved or they wanted to grow all screen new energy transition.
Genuino Christino: They are involved, and they want to grow, also in the new energy transition. So it's something that we believe fits very well with our strategy; they are exposed to markets; they will give exposure to different markets. So that's why we are very excited, and we saw an opportunity here with the departure of Apollo. So we bought 28%. We are in the process of buying another 28% without paying any premium. So that's, in a nutshell, how we are seeing this develop.
Genuino Christino: So it's something that we believe fits very well with all of this strategy are exposed to markets. They will give us exposure to different markets.
Genuino Christino: So that's why we are very excited and we saw an opportunity here with the exit of a pole. So we bought 20 central we are in the process of buying 28% without being any premium.
Genuino Christino: Yeah. So that's a that's in a nutshell how are we are seeing this development.
Patrick: Thanks. Could I ask one clarification question quickly? So the uplift that comes from India, when you say, you know, the additional uplift... is that the Net Income Contribution from India, because that's what's included in Group EBITDA or, Indian Ibiza, if you know what I mean.
Speaker Change: Thanks could I can I ask one clarification quickie.
Patrick: So the uplift that comes from India. When you say you know the additional uplift is.
Patrick: Is that.
Patrick: The net income contribution from India, because that's what's included in group EBITDA or.
Patrick: Indian EBITA, if you know what I mean.
Genuino Christino: Yeah, absolutely. That's right. So that's for the JVs, as we have discussed extensively as well. It's really the net income, our share of the net income of these JVs, that we are adding to our EBITDA definition. Okay, thank you very much.
Speaker Change: Yeah, absolutely that's right. So that's for the JV is as we have discussed extensively as well it's really the the net income our share of the net income of this of.
Genuino Christino: The JV is that we are adding chipotle beta definition Patrick.
Patrick: Okay, thank you very much. Got it. Thank you.
Speaker Change: Thank you very much got it thank you.
Daniel Fairclough: Great, thanks. So we'll move on to the next question, please from Andrew at DBS. Thanks for watching. Bye.
Speaker Change: Great. Thanks, So we'll move onto the next question. Please from <unk> at UBS.
Andrew: Hi gents, thanks for taking the questions. We had a big CapEx hike from one of your major competitors in Europe, which I think pierces most of the market. Given the inflation we've seen in CapEx more broadly, but also with lengthening order books for DRI and EAF equipment, how do you still think about that original 10 billion figure that you talked about spending by 2030 on decarbonization? Is there any update around that? Should we be adding some sort of inflationary adjustment to that? That's my first question.
Andrew: Hi, gents, thanks for taking questions later.
Andrew: We had a big capex hike, so manav youll nature.
Andrew: Comparisons in Europe.
Andrew: I think surprised most of the market.
Andrew: Given the inflation, we've seen in Capex more broadly, but also a slight lengthening order books.
Speaker Change: May I ask a quick.
Andrew: How do you still think about that conventional 10 billion Zika that you talked about spending by 2030, all decarbonization is there any update around that.
Andrew: Should we should we be adding on.
Andrew: Some sort of inflationary adjustments to that that's my first question.
Andrew: Yeah.
Genuino Christino: Andrew, as we discussed, we also touched on this point in our previous call. I mean, we know where we are with our process, with our plans, so not a lot has really changed compared to what we discussed in Q4. We are proceeding with the engineering phase of our projects in Europe and in Canada, and we still believe that 10 billion is a good number for us to keep in mind.
Speaker Change: Hi, Andrew.
Speaker Change: Andrew as we discussed and we also touched on this point in our previous call. I mean, we are you know where we are with our process with our plans are so not a lot has really changed from what we discuss into before.
Genuino Christino: We are in the.
Genuino Christino: I proceeded with the engineering phase of our projects are in Europe, and and in Canada.
Genuino Christino: And and we still believe that it tended to be done is it's it's it's a good number for us to keep in mind of course as we complete the engineering, we will know more about the the overall capex will give us a high precision, but I'll focus of course is.
Genuino Christino: Of course, as we complete the engineering, we will know more about the overall capex, which will give us higher precision, but our focus, of course, is to make sure that we can stay within this envelope that we have, right? So we are looking at how we can re-engineer some of these projects. So at this point in time, the 10 billion remains our best number, and I would not really read too much into or try to compare what we are trying to do with competition in this case. I think there are differences in scope, uh, as well, so I think we are we believe that we are on target here to stay within the limits that we have set for us.
Genuino Christino: Two to make sure that we can stay within this envelope that we have right. So we are looking at how we can we can reengineer. Some of these projects. So at this point in time, the 10 billion remains.
Genuino Christino: Our best number.
Genuino Christino: And I would not really read too much into a well tried to compare what we are trying to do with competition. In this case I think their defenses and scope.
Genuino Christino: As well so I think we are we are we believe that we are on target to hit you just stay within the limits that we had set for ourselves.
Andrew: And just on the former ACIS division, could you talk us through what, you know, the dynamics being quarter-on-quarter, I mean, after taking out the Kazakhstan loss-making part, could you give us a ballpark for where the EBITDA sat in that division? You know, I know it's obviously included in OBBA now, but, you know, was that still significantly negative or close to breakeven? Let's get an idea as to, you know, how that EBITDA moved.
Speaker Change: Understood and just.
Andrew: Hum.
Andrew: The former Acs donation.
Andrew: Could you talk us through what.
Andrew: Dynamics being quarter on quarter Dr.
Andrew: Dr taking out the Kazakhstan Lossmaking, Todd could you give us a ballpark for that EBITDA.
Andrew: And that the patient.
Speaker Change: It's simply note that now.
Andrew: Well, you know without still significantly negative or close to breakeven <unk> Davis.
Andrew: How about EBITDA there.
Andrew: Okay.
Genuino Christino: You just don't need to tell me that. Sorry, I can hear you now, actually, but you are on mute for a second.
Andrew: You just don't meet Joanna.
Speaker Change: Sorry, I can hear you now actually but you tell me for a second.
Genuino Christino: Okay, sorry. So Andrew, our performance has improved in Ukraine and South Africa. South Africa, I'm sure you can see their own release. Ukraine, I think the developments that we have seen are positive. We have recently, now in April, started a second blast furnace. We are running the mining operations now at a higher capacity; we are actually getting closer to 80%. So the business that sits in segment orders was a bit neutral in quarter one, so an improvement as we were negative in Q4.
Genuino Christino: Okay.
Genuino Christino: So Andrew So our performance has improved in Ukraine, and South Africa, South Africa had a show you can see there on relieves.
Genuino Christino: Ukraine I think the developments that we have seen they are positive. We had recently now in April you started a second blast furnace.
Genuino Christino: We are running the mining operations now at the highest capacity, we actually getting closer to 80%.
Genuino Christino: So so the business.
Genuino Christino: It sits in segment orders was a bit.
Genuino Christino: Neutral in quarter, one so an improvement as we were negative in Q4.
Genuino Christino: And the negative number that you see this quarter in segment orders is coming primarily from stock margin eliminations, right? Without the stock margin eliminations, you would be seeing a better number there. So I think we are pleased with the evolution, quote unquote, for CIS, and it looks like it will be OK as the business continues to evolve. I think we're going to be hopeful to see a bit of continued improvement in Ukraine.
Genuino Christino: And the negative that you see this quarter in segment orders is coming primarily from stock margin elimination right now without the stock margin elimination that you would be seeing a better number there. So I think we are pleased with the the evolution quote unquote, a FTSE I S and.
Genuino Christino: And it looks it looks okay. As the business continues to evolve I think we're gonna be well we are hopeful to be.
Genuino Christino: To see it would be to continue to improve in Ukraine.
Andrew: Excellent. Okay, thanks very much.
Genuino Christino: Excellent.
Speaker Change: Thanks very much.
Andrew: Yeah.
Daniel Fairclough: Thanks Andy. So we'll move now to Tom at Barclays. Go ahead, Tom.
Andrew: Thanks, Andy So we'll move now to Tom at Barclays Go ahead Tom.
Tom: Hi Daniel, hi Genuino, thanks for taking our questions. First one, Genuino, normally you give a very helpful breakdown just into Q2 for the sort of building blocks, region by region. If you wouldn't mind doing that again, just sort of pricing, volumes, raw materials, just sort of broad trends across North America, Brazil, Europe, and maybe India, please. That's the first one.
Daniel Fairclough: Hi.
Tom: Hi, Daniel Hi, Jeremy Thanks for taking my questions first one Jamie that normally you give them a very helpful breakdown I'm just into Q2, so that's sort of building blocks region by region. If you wouldn't mind doing that again, just sort of pricing.
Tom: Yes, raw materials, just sort of broad trends across North America, Brazil, Europe, and maybe India. Please.
Tom: The first one.
Genuino Christino: Sure, Tom; I will ask Daniel to give us an overview there.
Tom: Sure.
Tom: Ask Daniel to give us an overview of that.
Daniel Fairclough: Great. Thanks, Sharmina.
Genuino Christino: Great.
Daniel Fairclough: Thanks, Jamie So yeah, I think when we look at the second quarter I think the overall picture is very similar to the picture that we see for EBITDA in the first quarter.
Daniel Fairclough: So yeah, I think when we look at the second quarter, I think the overall picture is very similar to the picture that we see for EBITDA in this first quarter. But there are, of course, some moving parts within that picture. So I think the key themes across the segments, looking at North America, obviously, we will see the impact of recent price movements, but you're going to see relative stability there in terms of volumes.
Daniel Fairclough: There are of course, some some moving parts within that picture so.
Daniel Fairclough: I think the key themes across the the this the segments looking at North America, Obviously, we will see the impact to our recent price movements, but youre going to see.
Daniel Fairclough: Relative stability there in terms of volumes at Brazil.
Daniel Fairclough: In Brazil, we will see higher volumes, so that will help to offset price impacts there. I think the dynamics in Europe will see the benefit of lower costs coming through, and relatively stable pricing and volumes in Europe. And then, of course, on mining, it really depends where iron ore prices settle for the quarter, but we should see an improvement in volumes from a mining segment driven by Liberia. So to reiterate, I think the overall picture is very similar to the EBITDA picture for the first quarter, but there are some moving parts within the different segments.
Daniel Fairclough: We will see higher volumes, so that will help to offset a price impact there.
Daniel Fairclough: I think dynamics in Europe, we will see the benefit of lower costs coming through a relatively stable pricing.
Tom: And this is very clear, thank you. And then there is just one second question.
Tom: Volumes in Europe.
Tom: And then of course on mining and it really depends where iron ore prices settled for the quarter.
Speaker Change: But but we should see an improvement.
Tom: In volumes from our mining segment driven.
Tom: Driven by Liberia, and so to reiterate I think the overall picture very similar to the EBITA a picture for the first quarter a bit.
Tom: To add some moving parts within the different segments.
Tom: You've obviously printed net debt at $4.8 billion, but if we start factoring in the Valorec payment, which I guess is the second half of the year, that's sort of close to $6 billion pro forma. Could you just remind us the $7 billion net debt target? Is that a hard ceiling? Or is it a sort of year-end target? Are any covenants attached to that number? And as a result, you know, if you do start pushing towards $7 billion in net debt, would you rule out further M&A until you de-lever back down?
Speaker Change: Understood very clear thank you.
Tom: And then just a second question.
Tom: You, obviously printed net debt at $4 8 billion if.
Genuino Christino: Thank you.
Genuino Christino: If we start factoring, Nevada, rec payment, which I guess, the second half of the year, that's sort of close to 6 billion pro forma.
Genuino Christino: Just remind us the 7 billion net debt target. So is that a hard ceiling or is it a sort of year end targets.
Genuino Christino: Or any covenants attached to that number.
Genuino Christino: And as a result, even if you do start pushing towards 7 billion net debt would you rule out further M&A until you de lever back down. Thank you.
Genuino Christino: Yeah, Tom, so I think it's important also to see that the increase in net debt in Q1 is very seasonal. As I'm sure you saw, I mean, a significant investment in working capital, 1.7 billion.
Genuino Christino: Yeah. So I think it's important also to see that the increase of net debt in Q1 is very seasonal.
Genuino Christino: As you I'm sure you saw I mean, a significant investment in working capital of $1 7 billion that's basically.
Genuino Christino: That's basically, so despite the share buybacks that we completed, I think it would be relatively flat if it wasn't, of course, for the investment in working capital, which is good. It shows that we could increase volumes, prices, etc. So, things being normal, our expectation would be for the investments in working capital to reverse. We will see, of course, where we are at the end of the last quarter of the year in terms of prices and volumes. But things being equal, we would expect that to reverse, and that should continue then too.
Genuino Christino: So despite the share buybacks that we completed I think that would be relatively flat. If it wasn't of course for the investment in working capital, which is something good.
Genuino Christino: Those that are we.
Genuino Christino: We could increase volumes prices et cetera, so things are being normalized dictation would be for the.
Genuino Christino: Investments in working capital to reverse we will see of course, where we finally are at the end of the last quarter of the in terms of prices volumes, but.
Genuino Christino: Things being equal we would expect that to reverse that should continue then chu.
Genuino Christino: I leave us with the operational performance of the business, so our expectation is for the business to continue to generate good levels of free cash flow. I think it was an important target for the company when it was in the leveraging process. Today, our focus is more on making sure that we retain our investment grade rating and that we keep what we have, which is a strong balance sheet that provides us with the flexibility that we need to continue to execute our projects and our strategy, regardless of where we are in the cycle. So that's how we are seeing the $7 billion number tonne. I hope that clarifies things. Okay.
Genuino Christino: I'll leave us with the operational performance of the business. So always spectation is for the business to continue to generate good levels of free cash flow.
Genuino Christino: The $7 billion I think we discussed that already also in the past I think it was an important target for the company in many ways leveraging process.
Genuino Christino: Today I'll focus is more on making sure that we retain our investment grade rating.
Genuino Christino: So that we keep what we have which is a strong balance sheet that provides us the flexibility that we need to continue to execute our projects our strategy, regardless of where we are in the cycle. So that's how we are seeing the $7 billion number 10, I hope that clarifies.
Tom: Okay, that's very clear. Thank you. I'll turn it back.
Speaker Change: Okay. That's very clear thank you I'll turn it back.
Daniel Fairclough: Great. Thanks, Tom. So we'll move now to Bastian at Deutsche Bank.
Tom: Great. Thanks, Tom So we'll move now to Bastian at Deutsche Bank.
Bastian: Yeah, thanks. And good afternoon, everyone.
Bastian: Yes. Thanks.
Bastian: Good afternoon, everyone.
Bastian: So I've got a couple of questions. Maybe the first one is on the JV SEC segment, which I think performed quite strongly and was obviously up $60 million.
Bastian: I've got a couple of questions. Maybe the first one is on the JVZAC segment, which I think performed quite strongly and was obviously up 60 million. Yet, I guess the only two drivers that you're giving us declined by the same number, which suggests that the stronger performance was either driven by items below APTA in India, Calvert, or by Varma or any of the other units. So could you maybe give us a little bit more color on this and what the drivers were behind this, and also whether there was anything below APTA? And also, are there any items to keep in mind for the second quarter and onwards? That's my question.
Bastian: I guess, the only two drivers which are giving us declined by the same number which suggests that the stronger performance with EBIT driven by items below EBITDA.
Bastian: All of it or any of the other units. So could you maybe give us a little bit more color on this and what the drivers behind this.
Bastian: So whether there was anything below EBITDA and then also are there any items to keep in mind for the <unk>.
Bastian: Second quarter and onwards.
Bastian: My first question.
Bastian: Yeah.
Genuino Christino: So, Bastian, you're right. So, I mean, of course, we saw some decline in India. We saw an improvement in Calvert. But we, as you know, we have a number of other JVs; some of our JVs in Europe have improved, also in line with the improvement that you see in our division, the European division. Also, JVs in North America are also improving. So the decline that we saw in India, and you're also right, there is a little bit less income tax in India, deferred income tax, but that is not really the main driver. The offset is really coming from the other JVs, which we expect will continue to perform well as we move into the second quarter.
Speaker Change: So about xiaomi right. So I mean of course, we saw some decline in India, we saw an improvement in Calvert.
Genuino Christino: But it'd be a as you know we have a number of what the jv's some of our jv's in in Europe.
Genuino Christino: <unk> also in line with the improvement that you see in our division of European Division also Jv's in North America also improving so.
Genuino Christino: So the decline that we are we saw in <unk> in India and you're also right that there is a little bit less income tax also in India deferred income tax, but that is not really the main driver. The offset is really coming from the all the jv's that we expect will continue to perform well.
Genuino Christino: As we move into the second quarter.
Genuino Christino: Yeah.
Bastian: Okay perfect very clear. Thanks for that then my next question is coming back on the strategic projects and you're already at a couple of them, which are starting up this year. It's obviously quite a few so I'm wondering are there any ramp up costs in the second half, which we should be keeping in mind.
Bastian: Okay, perfect. Very clear. Thanks for that. Now, on the strategic projects, and you already singled out a couple of them which are starting up this year. There are obviously quite a few. So I'm wondering, are there any ramp-up costs in the second half which we should be keeping in mind?
Genuino Christino: Well, I think net-net, the projects that we're going to be starting now, they will add some EBITDA. Bastian, as I said, it's not going to be so significant in the first half because of the ramp-up, but net-net, we would expect to see a small positive in the second half of 2021.
Speaker Change: Well I think net net to the projects that we're gonna be starting now they will add some EBITA.
Genuino Christino: Boston.
Genuino Christino: As I said, it's not going to be so significant in the first half because of the ramp up but net net we would expect to see a small positive in 2000 in the second half of 2024.
Bastian: Okay, understood. And then, also, coming back on working capital, do you expect to be done with the seasonal working capital build after the $1.7 billion which you've been building up in Q1? Or is there still more to go on that seasonal working capital cycle?
Bastian: Okay understood and then just lastly, you also coming back on working capital do you expect to be done with it seasonal working capital build after the $1 7 billion, which you've been putting up in Q1.
Speaker Change: Or is there still more to go on that working.
Speaker Change: Working capital cycle.
Genuino Christino: Well, as you know, Bastian Synagowitz, it's difficult to predict quarterly movements, right? But based on the visibility that I have today, yes, we would expect a small release already in quarter two. And then, as we discussed, as we know, Q4 is typically the quarter where we release also part of the seasonality of the working capital. So that's how we are seeing it. Okay.
Bastian: Well.
Speaker Change: As you know, but it's always difficult to predict quarterly movements right, but based on the visibility that I have today, yes.
Genuino Christino: We would expect a small.
Genuino Christino: Release already caught to Chew and then as we discuss and as we know Q4 is typically the quarter, where we release are also part of the seasonality of the working capital. So that's that's how we have seen.
Bastian: Okay, perfect. Thanks, Genuino.
Bastian Synagowitz: Okay perfect. Thanks.
Daniel Fairclough: Great, thanks Bastian. So we'll move now to Tristan at BMP.
Great: Great. Thanks, Bastian, So we'll move now to Justin at BMP.
Tristan: Yes, hi, thank you for taking my questions. The first one is just a quick follow-up on European decarbonisation. Could you give us a sense of when we should expect the update on the strategy in Europe, and I assume it's tied to the publication of the climate report. And I think you touched on that you're doing the engineering, so then could we expect some change in the scope, maybe some projects? you first announced maybe would not go through, or could that be really kind of different type of projects moving around in that publication?
Tristan: Yes, hi, Thank you for taking my questions. The first one is just a quick follow up on European Decarbonization.
Tristan: Could you give us a.
Tristan: A sense when we should expect the update on the strategy in Europe, and I assume it's tied to the publication of the climate report.
Tristan: And I think you touched on that you're doing the engineering. So then could we expect some change in the scope maybe some projects.
Tristan: Your first announce maybe will not go through what could it be really and it's different type of projects moving around.
Tristan: And that publication.
Tristan: Okay.
Genuino Christino: You're right, Justin. So we are in the process of completing our engineering, which we expect to complete by the end of this year. At the same time, our intention is also to publish our new climate report that we're going to be providing, then a complete update of the initiatives. In between, of course, we continue to be engaged with the various governments in Europe, trying to get some more visibility in terms of availability and costs of power, costs of hydrogen, potentially, which is going to be important in the decision-making process.
Speaker Change: Yeah, So yeah, you're right Jason. So we are we are in the process of completing our engineering.
Genuino Christino: Which we expect to complete by the end of this year at the same time. Our intention is also to publish our new climate report wherever you're going to be providing them a complete update of our of the initiatives in between of course, we continue to be.
Genuino Christino: <unk> engaged with the virus governments in Europe trying to get some more visibility in terms of the availability and costs of our.
Genuino Christino: Power.
Genuino Christino: Causes up hydrogen potentially which is going to be also important in the decision making process. So I think it's it would be premature now to too.
Genuino Christino: So I think it would be premature now to talk about change. We are not really changing what we have announced, and this process is continuing. And I'm sure we're going to be in a better position to update all of you later, as we complete the engineering and also some of the other discussions that are ongoing.
Genuino Christino: To talk about chains, we are not really changing what we have announced.
Genuino Christino: And.
Genuino Christino: This process is continuing and and I'm.
Genuino Christino: Shall we going to be in a better position to update all of you later as we complete the engineering and also some of the other discussions that are ongoing.
Tristan: All right, that's clear. Thank you.
Speaker Change: Alright, that's that's clear thank you.
Speaker Change: And my second question is on the U S growth.
Genuino Christino: My second question is on U.S. growth. First, maybe on the new Calvert NGO line, is there a reason you decided not to invest with your current JV partner in Alabama and is the goal now moving forward to really consolidate those growth opportunities rather than have them on the JV side? And also maybe a quick follow-up to that, the new DRI plan in Texas you're looking at or the new EF, what is the timeline to make those decisions to invest?
Speaker Change: First maybe on the new Calgary Engel.
Genuino Christino: Line is there a reason there you decided not to invest with your current JV partner.
Genuino Christino: Alabama.
Genuino Christino: Is the goal now moving forward to really consolidate those growth opportunities rather than it has been the JV side.
Genuino Christino: And also maybe a quick follow up to that the new tier I planning techs that you you're looking at wouldn't you yet.
Genuino Christino: What is the timeline the timeline to make those this decision to invest.
Genuino Christino: And regarding the DRI growth, I think some of your peers, when they looked at the Metallics project in the US, they were able to secure large DOE funding, which you've been able to acquire for the NGO line, but I was wondering if you were also in discussions for some subsidies there. Thank you. Sure.
Genuino Christino: And regarding the <unk> growth I think some some of your peers when they looked at metrics projecting in the U S. They've been able to secure large D O refunding.
Genuino Christino: Being able to quantify the NGL line, but I was wondering if you were also in discussions for some subsidies are there. Thank you.
Genuino Christino: Sure.
Genuino Christino: Sure. On the first part of your question, the electrical steel projects, I think this is really part of our broader strategy. So, as you know, we have a project in Europe, MARDIC, where we are also investing. And it's just important for our franchise business that we are capable of providing services to the market where we have our customers, the OEMs. So this is really an ArcelorMittal strategy, and that's why you see us doing it on our own.
Genuino Christino: On the first part of your question the Ah, let's recall steel projects I think this is really part of our brought us.
Genuino Christino: <unk>.
Genuino Christino: Justin So as you know we have a project also in Europe, Mardi, where we are also investing in.
Genuino Christino: And it's just important for our franchise business that we are capable of providing service to the market, where we have our customers. The Oems. So this is really.
Genuino Christino: Selling them at all the strategy and that's why you see us doing it on our own.
Genuino Christino: In terms of timing of the projects, I mean our intention; we are all very busy proceeding with, in some cases, pre-feasibility feasibility studies, and as soon as we are in a position to move ahead and we have the sign-off from our board, then we'll be updating everyone. I think at this point we just wanted to highlight what we have, what is keeping us busy at the moment, and we are very excited about the prospects of proceeding with some of these projects.
Genuino Christino: In terms of timing of the project. So I mean, our intention we are all very busy proceeding with a in.
Genuino Christino: In some cases pre feasibility feasibility studies and and as soon as we are in a position to move.
Genuino Christino: Move ahead, and we have the the sign off from our Board then we want to be updating everyone.
Genuino Christino: Thank you at this point, we just wanted to highlight what we have what keeping us busy at the moment.
Genuino Christino: And we are very excited about the prospects of proceeding with some of these projects.
Daniel Fairclough: Great, thanks Tristan. So we'll move now to a question from Max at Odo.
Genuino Christino: Great. Thanks, Carsten So we'll move now to a question from Mac said.
Max: Yeah, good afternoon. So my first question is about the outlook. So you confirmed your outlook for steel demand for the full year, and it's quite a relief because some forecasters have lowered the forecast on their own, but at the same time, your comments in the presentation are a bit subdued, yes. So is it fair to assume that you now think you would be more at the low end of this guidance rather than in the mid or in the top range? I mean, things have obviously changed for the past two months. Can you comment on that?
Max: Yes definitely.
Max: So my first question is on the outlook. So you confirmed your outlook for steel demand for the full year and it's.
Max: Quite a relief because some forecasters have lowered the.
Max: The forecast on their own but at the same time your comment since the presentation of it.
Speaker Change: Yes. So is it fair to assume that you'll know think you would be rather than the low end of these guidance right, though that in the middle and the top brands.
Max: I mean things that sense, obviously for the past two months can you comment on that.
Daniel Fairclough: You want to take this one, Daniel?
Speaker Change: You want to take this one day now.
Daniel Fairclough: Sure, thanks, Jimena. So I think you're right, we haven't made any change to our demand forecasts for the year. And, you know, neither are we signaling any sort of movement within the ranges that we've provided at the beginning of the year. So I think, generally, and so far, things are panning out as expected.
Daniel Fairclough: Sure. Thanks, Jeremy.
Speaker Change: So I think Ken.
Daniel Fairclough: Youre right, we havent made any change to.
Daniel Fairclough: Two our demand forecasts for for the year.
Daniel Fairclough: And.
Daniel Fairclough: Neither are we signaling any sort of movement within the ranges that we provided at the beginning of the yet so I think generally.
Daniel Fairclough: And I think, if you recall, a big feature of last year was de-stocking, particularly in the second half of the year. So a lot of the year-on-year growth that we anticipate in 2024 is a function of us not expecting a repeat of the de-stocking that occurred in 2023. And why do we have that belief? Why do we have that conviction? It's really because inventories in the system right now are clearly very low.
Daniel Fairclough: So far things are panning out per our expectation.
Daniel Fairclough: And I think if you recall.
Daniel Fairclough: A big feature of last year.
Daniel Fairclough: Was destocking, particularly in the second half of the year.
Daniel Fairclough: So a lot of the year on year growth that we anticipate in 2024.
Daniel Fairclough: As a function of us not expecting a repeat.
Daniel Fairclough: Of the destock that occurred.
Daniel Fairclough: In 2023.
Daniel Fairclough: And why do we have that belief why do we have that conviction and it's really because the inventories in the system right now are clearly very low and that's particularly the case in <unk>.
Daniel Fairclough: And that's particularly the case in Europe. So, you know, within our forecasts, what we're not doing is making very strong projections in terms of real demand improvement. It's much more a function of no repeat of the de-stock. And it's really, in our view, 2025 and heading into 2025 that we should really anticipate a stronger impact from a recovery in real economic activity.
Daniel Fairclough: Europe so.
Daniel Fairclough: You know what we then are forecast what we're what we're not doing is making very strong projections in terms of real demand improvement.
Daniel Fairclough: It's much more a function of no repeat of the destock.
Daniel Fairclough: And it's really.
Daniel Fairclough: <unk> 2025.
Daniel Fairclough: And heading into 2025 and that we should really anticipate that.
Daniel Fairclough: A stronger impact from.
Daniel Fairclough: A recovering real economic activity.
Max: Okay, understood. The second question is on the potential new tariffs in Brazil. There's a plan by the government to create a system of quotas and add 25% of rates beyond those quotas. Do you think it's a game-changer, or is... doesn't really make a difference for you at this stage as it's proposed?
Speaker Change: Okay understood second question is on the potential new tariffs in Brazil.
Max: Plant from by government to create this in terms of quarters.
Max: And at 25% of freight Subianto School does do you think it's a good fit.
Max: Doesn't really make a difference for you at this stage as it is proposed.
Genuino Christino: Yeah, sure. It's, of course, something new. Yes, you're studying the announcement. We clearly see it as positive, but at this point, it's difficult to say whether we're going to see meaningful improvements in terms of financial improvements, at least, but I think it's an important signal to the market that the government is watching the level of imports and is concerned about the level of imports in the country. So I would see that more as a signal at this point, and we will see what the impact that it will have on the overall level of imports in the country.
Speaker Change: Yeah sure. It's a it's of course, it's something you. Yes, you are studying the the announcements.
Genuino Christino: We clearly see as a positive.
Genuino Christino: At this point is it's difficult to say, whether we're going to see meaningful input.
Genuino Christino: Improvements in terms of financial improvements at least but I think it's an important signal to the market that the government is watching the level of imports is concerned about the level of imports in the country.
Genuino Christino: So I would see that more as a signal at this point and.
Genuino Christino: And we will see what.
Genuino Christino: What is the impact that it will have on the overall level of imports in the country for sure. This is not not going to really be visible.
Genuino Christino: For sure, this is not going to really be visible in the next couple of months, at least, but I think importers will be a little bit more concerned as we get close to the levels, to the quota levels, so I think that's how we are seeing it.
Genuino Christino: And the next a couple.
Genuino Christino: A couple of months at least.
Genuino Christino: But I think importers will be a little bit more concern as we get close to.
Genuino Christino: To the levels to the quota levels.
Genuino Christino: So I think it's.
Genuino Christino: And that's how we are seeing it.
Max: Okay, I'm sure the last one is on Liberia. You're still coping with some real issues there. Can you provide an update on where the solution is and when you expect it to be solved? And at the end of the day, I mean, isn't that a big risk for your expansion program there? I mean, if you are not able to ship what you produce, given that you have huge ambitions? By the end of this year, actually.
Speaker Change: Okay and just the last one is on Liberia, you'll still coping with some ratios there.
Max: Can you provide an update on where that is and when do you expect it to be soft and at the end of the damage isn't that a big risk on your expansion program. There I mean, if you are not able to ship what you what you produce oh.
Max: Huge ambitions.
Max: By the end of this year actually.
Genuino Christino: Yeah, the challenges today, primarily with the rail, fortunately, we had the collapse of the bridge, which is now being fixed. So we are back, and we can again transfer the materials from the mine to the port. It impacted significantly in quarter one, as you can see in our overall volumes. We will see a good improvement in the second quarter. We are investing to fix some of the structural issues that we had in the past with the rail, so that should be done and should not have any impact, really, on our expansion. We continue on track to finish the first phase of the project by the end of this year. So that is unchanged.
Speaker Change: Yeah. The challenge is today are primarily with the with the rail.
Genuino Christino: Washington, We had collapse of the bridge.
Genuino Christino: Which is now being.
Genuino Christino: Fixed. So we are we are we are back and we can again.
Genuino Christino: With the material from the mine to the port it impact us significantly in quarter, one as you can.
Genuino Christino: <unk> seen overall, our volumes, but we will see already a good improvement in the second quarter, we are investing to fix some of the issue structural issues that we had in the past with the rail so that should should be should be done and should not have any impact really on our expand.
Genuino Christino: <unk>.
Genuino Christino: We continue on track shoe.
Genuino Christino: To finish the first phase of the project by the end of this year.
Genuino Christino: So that is unchanged.
Speaker Change: Okay. Thank you.
Daniel Fairclough: Great, thanks. So we'll move now to a question from Timna at Wolfrison.
Genuino Christino: Great. Thanks, So we'll move now to a question from Timna at Wolfe Research.
Timna: Oh hey, thanks for taking my question. I wanted to just ask you, particularly about Calvert, a couple of things. One is that we were hearing from some domestic consumers that Calvert was having some operational problems, and we're just wondering if you can provide an update on any progress there. It's causing some consternation among people we talked to. Separately, if it were the case that Nippon would need to divest in order to meet CFIUS requirements, is ArcelorMittal interested in taking over the remaining stake? And I guess the final question is: any more detail on NGOs' opportunities, how that's progressing, and how you're seeing that project would be great.
Timna: Oh, Hey, thanks for taking my question.
Genuino Christino: Yeah, sure. So on the operational issues in Calvert, I think that's correct. You know, we did face some operational issues with our Code Roadmule in Calvert during the quarter. (Inaudible) We believe that this has been resolved now. So we are in dialogue with our customers, and we should see improvements as we speak. Second, point of your question regarding, um, so first of all, I think it's very difficult to comment on the whole process, but should Nippon be forced to divest, then, of course, we are biased; we would be biased. It would be the natural biome of this state. And regarding Anglo, really, I don't really have much to say, I cannot, we don't, we don't comment on, on, on, on, on M&A.
Timna: Wanted to just ask particularly about Calvert a couple of items. One is that we were hearing from some of that.
Timna: Okay. I'm sorry, maybe I've misheard you. Was it the new electrical seals project that you were referencing in your question?
Timna: Some of the domestic consumers that Calvert was having some operational problems and we're just wondering if you can provide an update on any progress there is causing some cause consternation among people. We talk to you separately. If it were the case that Nippon, but need to divest in order to meet.
Genuino Christino: Correct, it was not Anglo, it was NGOS, N-G-O-S, the non-green oriented, yeah. So sorry, can you repeat your question? What was your point? Oh, sure. I just wanted more detail on the cadence of the ramp-up or the, you know, discussions with customers, anything more you could provide on the non-grain-oriented expansion.
Genuino Christino: Requirements are for middle instead in and taking over that remaining stake.
Genuino Christino: Just that I guess the final question is any more detail on those opportunities, how that's progressing and how youre seeing that project would be great.
Genuino Christino: Yeah sure so on the operational issues and Calvert I think that's correct.
Genuino Christino: We did face some operational issues with all the cold rolled new in uncovered during the quarter.
Genuino Christino: Uh huh.
Genuino Christino: We believe that this has been resolved now so we are in dialogue with our customers.
Genuino Christino: It should be.
Genuino Christino: We should see improvements as we speak.
Genuino Christino: A second point of your question regarding.
Genuino Christino: So first of all I think it's very difficult to comment on the whole process, but.
Genuino Christino: Shouldn't upon be forced to divest then of course, we are bias we would be.
Genuino Christino: We would be the natural buyer.
Genuino Christino: Mistake.
Genuino Christino: And regarding Ungula really I don't really have much I can we don't we don't comment on M&A.
Speaker Change: So okay.
Genuino Christino: Yeah.
Genuino Christino: Sorry, maybe I misheard you.
Genuino Christino: Was it the.
Genuino Christino: The new electrical steels project that you were referencing in your question and I was I mistaken.
Genuino Christino: Correct, he wasn't that and go out and go Oh Oh.
Genuino Christino: So yes, so sorry can you repeat your question what was your point.
Genuino Christino: Oh, sorry to go into more detail on the cadence of the ramp up or that you know discussions with customers anything like can provide on the non grain oriented.
Genuino Christino: We all, I mean, first of all, I think we were excited by the fact that we got, of course, the confirmation from... the DOC. So we have the tax credits, which is an important part of the overall project. And as I said, we are now in the process of running our engineering as well, so that we can advance the project, and then we can take it to our board. And then, as soon as we are ready, we will provide more details in terms of timing and execution.
Genuino Christino: No.
Genuino Christino: Well I mean, so first of all I think we're excited by the fact that we got the of course a confirmation from.
Genuino Christino: D O C. So we have the tax the tax credits, which is an important.
Genuino Christino: Part of the overall project and as I said, we are now in the process of running all engineering as well so that we can advance. The project then we can take to our board and then as soon as we already are we.
Genuino Christino: We'll provide more details in terms of timing and and execution as we know with the grants. So we have a four year timeline that we have to complete this project to be able to secure the grant. So I think we have this deadline, it's a little bit yet a way, but I think it puts even more pressure.
Genuino Christino: As we know, with grants, we have a four-year timeline that we have to complete this project to be able to secure the grant. So I think we have this deadline. It's a little bit far away, but I think it puts even more pressure on all of us now to accelerate the analysis of the project.
Genuino Christino: All of Us now too.
Genuino Christino: Accelerate the the analysis of the project.
Timna: Okay. Very helpful. Thank you.
Speaker Change: Okay. That's helpful. Thank you.
Daniel Fairclough: Thanks, Timna. So we'll move now to Cole at Daphne's.
Speaker Change: Thanks, Tim and I said, well, maybe not to call at Jefferies.
Cole: Thanks for taking my question. I'd just like some color on the moving parts in the India JV into the second quarter. You've talked about the benefits of the returns from the energy projects, but what are the other moving parts in India? And then just to follow up on how you see scrap pricing developing from here, and maybe just talk about Europe as in the U.S. separately. Thank you.
Cole: Okay. Thanks for taking my question.
Cole: Some color on the moving parts in the India JV into into the second quarter, you talked about the benefits of.
Cole: The returns from the energy projects, but you know what are the other moving parts on on India, and then just to follow up on.
Cole: How you see.
Cole: Scrap pricing developing from here and maybe just talk about Europe as in.
Cole: Separately. Thank you.
Genuino Christino: Yeah, India. I think it's good to see the performance of our JV in India. And thanks for asking the question.
Speaker Change: Yeah, India I think it's a it's good to see the performance of all would you be in England and thanks for asking the question and if you see in in Q1.
Genuino Christino: And if you look at Q1, for the first time, it's visible that we are making good progress with the bottleneck of our production. In India, you can see that we were running at higher levels at about 8 million tons, which we expect to continue at that rate. And so prices in India, so we don't really expect to realize prices in India. We don't really expect a lot of change. In Q1, we saw more exports from India, so in Q2, we would expect to see more volumes directed to the domestic market, which is also good news.
Genuino Christino: And for the first time, it's visible that we're making good progress would be the bottleneck of our production.
Genuino Christino: India as you can see that we're running at a higher level at about 8 million tons.
Genuino Christino: Which we expect to continue at that run rate.
Genuino Christino: And so prices in India.
Genuino Christino: So we don't be next back to the realized price in India, We don't expect a lot of change.
Genuino Christino: In Q1, we saw more exports from India. So in Q2, we would expect to see more volumes directed to the domestic market.
Genuino Christino: Which is also good news.
Genuino Christino: And then, as we know, coal prices have come down. So that should also, should also help. So that's what we have seen in terms of the moving parts. In terms of scrap, I think scrap has been relatively low. We are not really anticipating significant change at this point. I think you had a third point, Daniel; I don't know if you got that one.
Genuino Christino: And then Oh facility is also buying coal in the seaborne market. So as we know coal prices have come down so that should also.
Genuino Christino: That should also help.
Genuino Christino: So that's what we are seeing in terms of the moving parts.
Genuino Christino: In terms of the scrap.
Daniel Fairclough: I think scrap has been relatively low.
Genuino Christino:
Genuino Christino: And.
Speaker Change: You cannot read anticipating significant change at this at this at this point.
Genuino Christino: No, I would appreciate a repeat of that third point as well, Cole.
Genuino Christino: I think you had a third point I Daniel I don't know if you're if you've got that one.
Daniel Fairclough: No I would appreciate a repeat of that corn as well.
Cole: I was just asking the difference in scrap between the US and Europe, if you have got any differing views on scrap between those two regions.
Cole: Oh, no I was just asking the difference in scrap between the U S and Europe. If you have got any differing views on on scrap between those two regions.
Genuino Christino: Well, no, not really. I mean, what you tend to see in the scrap market, typically, it's an international market. So typically, you tend to see, maybe with some delays, but you tend to see, of course, it can be different depending on the grade. But typically, the more common grades, you're going to see prices moving more or less in line. So my comment on the script was that it's applicable in the US and Europe as well.
Cole: Well no not really I mean, what what what you tend to see the script market. It typically is.
Genuino Christino: It's an international market.
Genuino Christino: So typically you tend to see maybe with some delays, but you tend to see of course, it can be different dependent grades.
Genuino Christino: But typically can be the more common grades you're going to see prices moving more or less in line. So my comment on the.
Genuino Christino: On the script was it's applicable in U S and in Europe as well.
Speaker Change: Thank you.
Daniel Fairclough: Great, thanks Cole. So we'll move now to Moses at J.P. Morgan.
Genuino Christino: Great. Thanks, Karl So we'll move now to Moses at J P. Morgan.
Moses: Can you hear me well? Yes, we can. Thanks. Thank you for taking my question.
Moses: Hi can you hear me well.
Moses: Yes, we can.
Moses: Thank you for taking my questions. So the first one is just on guidance specifically for Europe, obviously retained the guidance there, but in your comments you do mention.
Moses: So the first one, just on guidance specifically for Europe, obviously, you've retained the guidance there. But in your comments, you do mention still no restocking activity. If we look here today, apparent consumption is tracking in Europe well below your guidance. So just really wanted to understand, I guess, what you think can at least improve here in Europe towards meeting the low end of your guidance, if you're already actually seeing some levels of restocking have been reported recently. And then within that, you commented again on China's steel exports. Just what are your expectations for China's steel exports into the second half of the year?
Moses: So the restructuring savings and if we look year to date.
Moses: I'm sure he's talking in Europe, well below your guidance. So just really wanted to understand.
Moses: I guess, what you think can at least improve here in Europe towards.
Moses: Meeting, even the low end of your guidance have you already actually seeing some levels of restocking that's been Hasnt been reported recently and then within that.
Moses: Just you commented again.
Moses: Steel exports.
Moses: Just what are your expectations for China steel exports into the second half of the year.
Daniel Fairclough: Sure. So I think maybe our analysis differs from your analysis, Moses, because I don't think we would share your conclusion that apparent demand year-to-date is lower year-on-year. I think as we move through this year, obviously, I repeat the earlier comments that we're just not expecting a repeat of the D-stock that weighed on apparent demand in 2023. So our overall assumption is that real demand is relatively stable year-on-year, but because there's no repeat of the destock, apparent demand will be higher this year than last, and of course, it's apparent demand that drives our ship. And then, in terms of Chinese exports, obviously, they are elevated, and they are back to the sort of highs that we've seen historically.
Speaker Change: Sure So I think.
Daniel Fairclough: Maybe I'll analysis.
Daniel Fairclough: Differs from from your analysis message because I don't think we would share your conclusion that apparent demand year to date is lower year on year.
Daniel Fairclough: I think as we as we move through this year obviously.
Daniel Fairclough: I repeat the earlier comments that we're just not expecting a repeat of the destock that weighed on apparent demand.
Daniel Fairclough: In 2023.
Daniel Fairclough: So.
Daniel Fairclough: Our overall assumption.
Daniel Fairclough: Is that real demand.
Daniel Fairclough: As relatively stable year on year.
Daniel Fairclough: But because there's no repeat of the destock at therefore apparent demand will be higher this year than last and of course, it's apparent demand which drives our shipments.
Daniel Fairclough: And then in terms of.
Daniel Fairclough: China exports, obviously, they they are elevated.
Daniel Fairclough: They are back to to.
Daniel Fairclough: To the sort of highest that we've seen historically.
Daniel Fairclough: So I think what we see domestically is a picture of demand which is being impacted by very weak domestic construction. However, strong infrastructure, so those two factors are really canceling each other out. So overall demand in China is moving sideways. It's not growing, but neither is it overall declining. However, production is very elevated, so that's placing pressure on the domestic supply-demand balance. Therefore, pricing spreads domestically are very weak, and that's unsustainable because when you look at the statistics and some of the published data, it shows the domestic industry, where the majority of participants are loss-making.
Daniel Fairclough: So I think what we see domestically.
Daniel Fairclough: Is a picture of a demand.
Daniel Fairclough: Demand, which is being impacted by very weak domestic construction.
Daniel Fairclough: The strong infrastructure. So those two factors are really at.
Daniel Fairclough: Canceling each other out so.
Daniel Fairclough: Overall demand in China is moving sideways, it's not great.
Daniel Fairclough: But neither is it overall declining however production is very elevated.
Daniel Fairclough: So that's placing pressure on the domestic supply demand balance therefore, our pricing spreads domestically.
Daniel Fairclough: Very weak.
Daniel Fairclough: And that's unsustainable because when you look at the statistics and some of the published data.
Daniel Fairclough: The domestic industry.
Daniel Fairclough: Which were the majority.
Daniel Fairclough: Juruti of participants at Boston, making.
Daniel Fairclough: So at some point, we would naturally expect either voluntary reductions in production or the government to step in and force production discipline. So we would expect change and that those domestic losses would not be sustained. So this level of exports, therefore, is not something that we would anticipate being a longer-term dynamic. But it is fair to say that it is having an impact on global market conditions. The fact that China, a loss making steel industry is expecting, is exporting such large quantities of steel is a good sort of evidence of unfair trade, that material is subsidized, it's been dumped into core markets, and it just reinforces the requirement for trade action to defend our core markets against those unfair trade actions.
Daniel Fairclough: So at some point, we would we would naturally expect either.
Daniel Fairclough: Voluntary reductions in production or the government to step in and force production discipline, So and we would expect change.
Daniel Fairclough: And that those domestic losses not sustained.
Daniel Fairclough: So this level of exports that four is not something that we would anticipate being.
Daniel Fairclough: Longer term dynamic.
Daniel Fairclough: But it is fair to say that Ted.
Daniel Fairclough: That is.
Daniel Fairclough: Is having an impact on global market conditions. The fact that China Lossmaking steel industry is expecting is exporting such large quantities.
Daniel Fairclough: Steel is as good sort of evidence of that.
Daniel Fairclough: Fair trade that materially subsidized as being dumped into into core markets and.
Daniel Fairclough: It just reinforces the requirement for <unk>.
Daniel Fairclough: So it's a trade action to defend our core markets against those unfair.
Daniel Fairclough: Trade actions.
Daniel Fairclough: Thank you so much for the clarification there, because if I just add a follow-up, obviously, we've seen a response from the likes of Brazil and the US against excess Chinese steel exports. What do you think Europe is missing or unable to do to also protect steel producers here from these volumes?
Daniel Fairclough: Thank you so much for the clarification that because it's just.
Daniel Fairclough: Obviously, we've seen a response.
Daniel Fairclough: From the likes of Brazil.
Daniel Fairclough: The U S against access kind of still.
Daniel Fairclough: Exports what do you think Europe is is is missing or unable to do to also protect.
Daniel Fairclough: Upstream producers came from.
Daniel Fairclough: These volumes.
Daniel Fairclough: Yeah so it's obviously we in Europe do benefit from some quotas so we have a degree of protection in place compared to you know that period back in 2015-2016 where Europe had no such protections in place but I think you can certainly ask the questions around is there sufficient protection, could protection go further and you know and of course fundamentally because CBAM isn't yet being we're just in that transition phase of CBAM and we are still exposed to high carbon imports coming in to Europe without having to face the same cost that domestically produced tonnes face so I think we can we can all agree that there are further actions that could be taken or could be accelerated and we will continue to to lobby for that.
Daniel Fairclough: Yeah. So it's.
Daniel Fairclough: Obviously, we in Europe do benefit from.
Daniel Fairclough: For some quotas.
Daniel Fairclough: So we we have a degree of protection in place.
Daniel Fairclough: Compared to.
Daniel Fairclough: Did that period back in 2015 2016.
Daniel Fairclough: Europe had no no such protections in place, but I think you can send the asked the questions around is that sufficient protection could protect it shouldn't go further.
Daniel Fairclough: And of course fundamentally because C band isn't yet.
Daniel Fairclough: Being we're just in that transition phase of C band and we are still exposed to.
Daniel Fairclough: Hi, carbon imports coming in.
Daniel Fairclough: Without having to face the same cost that domestically produced tons face so.
Daniel Fairclough: I think we can we can all agree.
Daniel Fairclough: That there are further actions that could.
Daniel Fairclough: Could we take them all to be accelerated.
Daniel Fairclough: And we will continue to.
Daniel Fairclough: To lobby for that.
Moses: And then, just finally, if I may, just on value, Rick, investor feedback from our end or in our experience has really questioned the rationale for a minority stake versus buying back your own shares at perhaps an even cheaper multiple. So could you please just clarify the push-pull here between buying back shares versus a minority stake elsewhere? Of course, this is, you know, considering you have still bought 35% of the company's stock since September 2020. But what is the rationale for that number even being even higher?
Speaker Change: Thank you very much and then just finally, if I may just on value right.
Moses: That's the feedback.
Moses: From our angle or not experiences is really question.
Moses: The rationale between a minority stake versus buying back your own shares perhaps an even cheaper.
Moses: Notable so could you. Please just clarify the push pull in between.
Moses: Unlike shares versus a minority stake elsewhere.
Moses: Of course this is considering.
Moses: Still what 35%.
Moses: Since September 2020.
Moses: What is the rationale between that number and you can be even higher.
Genuino Christino: Yeah, I've been saying very consistently that what is important for us is to achieve the right balance, and what we mean by that is that our goal is to continue to develop the business, the ArcelorMittal business, and at the same time, reward our shareholders. And I think that's exactly what we have been doing with the M&A, with the strategic growth project. And Valorec fits well with this side of the equation.
Moses: You have been seeing very consistency is.
Genuino Christino: What is important for us is to achieve the right balance and what do we mean by that is that.
Genuino Christino: Our goal is to continue to develop the business Arcelormittal business.
Genuino Christino: And at the same time reward our shareholders and I think that's exactly what we have been doing with the M&A with the strategic growth projects and whether it fits.
Genuino Christino: Well with this side of the equation.
Daniel Fairclough: And then, of course, we have the return to shareholders, and as you said, 35% we have already done. And by the time we complete the existing program, we will, of course, depending on the jet price, but most likely, we're going to be very close to 40%. So I think that we are pleased with that because we want, you know, a couple of years from now, to look back and see that we have improved the profile of the business, that we have improved our capacity to generate free cash flow. And at the same time, reward our shareholders. So that's how we look at it. It's not that we are doing one at the detriment of the other.
Genuino Christino: And then of course, we have the return to shareholders and as you've said.
Daniel Fairclough: 35%, we have already done and by the time, we complete the existing program will be of course depend on the jet price, but most likely going to be very close to 40%. So I think.
Daniel Fairclough: That's a we are pleased with that because we.
Daniel Fairclough: We won from couple of years from now look back and see that we have been improved.
Daniel Fairclough: The profile of the business that we haven't improved our capacity to generate EBITDA and generate free cash flow.
Daniel Fairclough: And at the same time reward our shareholders. So that's how.
Daniel Fairclough: We look at it it's not that we are doing one a detriment of the order we are trying to do both in a balanced.
Daniel Fairclough: Balanced way.
Speaker Change: Understood. Thank you.
Myles: Great, thanks, so we'll move now to the last couple of questions first from Myles at UBS.
Speaker Change: Great. Thanks, So let me now to last couple of questions first from <unk>.
Myles: Myles at UBS.
Daniel Fairclough: Great, thanks a lot. Just maybe on a couple of follow-ups from previous questions.
Myles: Great. Thanks, Thanks, a lot I'm just maybe on a couple of follow ups from previous questions on the buyback.
Myles: On the buyback, should we assume that this is going to continue? I mean, you'll finish the current program, get to 40%, and then we should assume that there'll be another similar program down the line? Is it kind of the intention from sort of management and the family to continue the buyback kind of not just over the next sort of 12, 18 months but for the next kind of 2, 3, 4 plus years?
Myles: Should we assume that this is going to continue I mean, you'll finish that program get to 40% and then we should assume that there'd be another.
Myles: Timna program down the line. It is a kind of every intention from sort of managements in the family to continue the buyback kind of not just over the next sort of 12 18 months, but for the next kind of 234 plus years. That's the first question.
Myles: Yeah.
Genuino Christino: I think what is important here, Myles, is to... Thank you very much.
Speaker Change: Sure Myles I think what is important here my visits to our.
Genuino Christino: I understand that the our policies, it's going to continue right. We are we have a very clear capital allocation policy.
Genuino Christino: You know that well see.
Genuino Christino: 50% of free cash goes to shareholders, 50% or a minimum 50% I should say goes to shareholder and 50% can be retained by by the business. So the policy is not changing.
Genuino Christino: And we have all the intentions, of course, to complete the existing program by the timeline that we have outlined at the beginning. We remain confident that the business will continue to generate free cash flow. So as a result, then, to your point, when we complete this program and to the extent that we continue to apply this policy, then I think as investors and shareholders, you should have confidence that the company will continue to transfer 50% of free cash to shareholders.
Genuino Christino: And we have all the intentions of course complete the existing program.
Genuino Christino: By the timeline that we have outlined at the beginning.
Genuino Christino: We remain confident that the business will continue to generate free cash flow. So as a result, then.
Genuino Christino: Your point when we complete this program and to the extent that we will continue to apply. This policy then I think our investors our shareholders you should have confidence that the company will continue to transfer 50% of our free cash to shareholders, how we do it buybacks.
Genuino Christino: How we do it, buybacks, more dividends, this is, of course, something to be discussed later with the board, but the fundamental point is that 50% or, at least, 50% of the free cash will be returned to shareholders.
Genuino Christino: More dividend. This is of course something to be discussed later with the board.
Genuino Christino: But the fundamental point is that 50% of minimal 50% of the free cash will be returned to shareholders.
Myles: Okay, that's helpful. And then just on Varick, can you remind us, completion of the second half, and then the lock-up kind of clicks in, is it for six months after completion? So if there was an opportunity to take control, then you would have been able to do it six months after or twelve months after completion.
Speaker Change: Okay. That's helpful.
Genuino Christino: And then just on that right can you remind us so completions second half and then the lockup kind of clicks and is it for six months after completion so if.
Myles: There was an opportunity to take control then you have melted at six months after 12 months after the completion.
Genuino Christino: The completion of the transaction, we expect to complete the transaction most likely in quarter three. And as we said, we are very comfortable with our position. It's an important stake, we're going to be the reference shareholder of Valorex. We are happy with the minority position here, so that's how we are seeing it, Myles.
Speaker Change: Yeah completion, we expect to complete the transaction most likely in quarter, three and as we said.
Genuino Christino: We are we are very comfortable with our position.
Genuino Christino: It's an important we're going to be the reference shareholder Valerie.
Genuino Christino: We are happy with the minority position here.
Genuino Christino: So that's how we are seeing at our mines.
Genuino Christino: Okay.
Myles: But are you allowed, you're not allowed to buy for a certain period of time, isn't it, after... The deal is completed? Is that the right way of thinking about this one?
Myles: Are you allowed you're not allowed to buy for some period of time is not after.
Myles: The deal completes is that the right way to think so that is one.
Genuino Christino: Well, in France, as you know, you have a number of regulations. You have to pre-announce your intentions for the next nine months, which we did in our press release.
Myles: Well there is a process you know you have a number of regulations you have to pre announce your intentions for the next nine months, which we did.
Genuino Christino: So in our press release.
Speaker Change: Okay. Thank you.
Genuino Christino: Maybe just on Ukraine as well, obviously at some point, there's going to be a lot of demand for steel.
Myles: of demand for steel um, could you just, maybe, with the exit that the plant as it stands at the moment kind of give us a sense as to whether it can be fully ramped up over the next 12 months and, yeah, as we hopefully get to the end of the war? I mean, what sort of potential for steel demand could you see and and how will that be supplied if we look sort of medium term?
Myles: Could you just I mean, maybe with the exit the plants as it stands at the moment kind of give us a sense as to.
Myles: Whether it can be fully ramped up over the next 12 months and as we hopefully get to the end of the war I mean, what sort of potential for steel demand could you see and how will that be supplied.
Myles: So the medium term.
Genuino Christino: Well, we are already seeing some improvements in demand, domestic demand in Ukraine. That's why we have restarted the second line. So we're going to be running now for most of the second quarter at about... I would say 45-50% of capacity.
Myles: Yeah, well, we are already seeing some improvements in the demand domestic demand in Ukraine.
Genuino Christino: That's why we have restarted the second furnace. So we're gonna be running now and promotes of the second quarter at about.
Genuino Christino: I would say 45% of capacity I think we have the conditions to ramp up as and when we see conditions to do that right now one of the big challenges that we face in Ukraine is availability of power.
Genuino Christino: I think we have the conditions to ramp up as and when we see conditions to do that. Right now, one of the big challenges that we face in Ukraine is the availability of power, as we all know why. So that's today the main constraint that we hope that, of course, the Ukrainian government will continue to work to restore.
Genuino Christino: Why.
Genuino Christino: So that's today the main constrain that Oh, we hope that of course, the Ukrainian government will continue to work to.
Genuino Christino: To restore.
Genuino Christino: And the potential sort of long term once the market, well, once the war, hopefully, comes to an end, I mean, what sort of demand do you reckon there could be in terms of the rebuild requirement? Have you done the kind of sums on that? Yeah, look...
Genuino Christino: And the potential sort of longer term once the market well once the war hopefully comes to an end.
Genuino Christino: Hmm.
Genuino Christino: What sort of demand do you reckon that could be in terms of the rebuild requirement have you done that kind of sums on that.
Genuino Christino: Yeah, look, I don't really have a number, Myles, but it's easy to conclude, right, that the demand will be very significant. [inaudible] And I think we're going to be, of course, in a good position to, as we are, the key player in that market to supply the domestic market, but we know, unfortunately, the demand for steel in, unfortunately for the country, will be very high. But I don't really have a number to provide to you at this point. Thank you.
Speaker Change: Yeah look I don't really have a number of miles, but I think I mean, it's it's it's easy to conclude right that there will be a the demand will be very significant.
Genuino Christino:
Genuino Christino: And I think we're gonna be of course in a good position to as well.
Genuino Christino: Uh huh.
Genuino Christino: A key a play in that market to supply the domestic market, but we know unfortunately, the demand for steel and unfortunately for the country of course.
Genuino Christino: It will be very high, but I don't I don't have a number needed to provide you at this point okay.
Speaker Change: Okay. Thank you.
Genuino Christino: Yeah.
Daniel Fairclough: I think the other thing that is worth reinforcing is that we do have the ability, once the domestic demand is there, to return to full capacity, so none of our capabilities have been impacted, and so we move now to a question from Max at Otto, so I guess a follow-up from Max at Otto. Yeah, just a
Genuino Christino: I think the just the other thing that is worth reinforcing is that are we.
Max: We do have the ability.
Daniel Fairclough: The domestic demand is that two to return to full capacity so no Nevada.
Max: <unk> ability to have been impacted.
Max: Okay. Thank you.
Max: And so we've now too.
Daniel Fairclough: A question from Max that are at autos, I guess, a follow up for Max at all there.
Max: Yeah, just a follow-up indeed on the value rack. Do you see any potential for synergies despite holding just... (inaudible)
Max: Just a follow up when you're done.
Max: Do you see some potential for synergies despite holding list.
Max: Less than 30% of our affairs and yet somehow you've already said that but if youre. If youre. If you like so much about the work right now to acquire a 100% of it.
Genuino Christino: Mark, I think we have addressed the stake and the fact that we are happy with the 28%, right? And at the end of the day, it's all about capital allocation, as we have been discussing. Regarding synergies, of course, it's early days; it's premature to talk about or try to quantify synergies. [inaudible] But I'm sure we're going to be assessing that. I can give you an example of where we already work together in Brazil.
Speaker Change: But I think we have a dress.
Genuino Christino: The steak and the fact that yes, we are happy with the 28% right.
Genuino Christino: And it's at the end of the day, it's all about capital allocation as we as we have been discussing.
Genuino Christino: Regarding our synergies of course, it's early days, it's only.
Genuino Christino: Pretty mature to talk about or tried to quantify the synergies.
Speaker Change: But for sure. Once we are we complete the transaction, we will engage in and tried to understand potential synergies between the two groups, but of course, we're going to be a.
Genuino Christino: It will need to be a win win for the different company shareholders.
Genuino Christino: But.
Genuino Christino: I'm Shelby when are we going to be.
Genuino Christino: Assessing that I can give you an example, where we already worked together in Brazil.
Genuino Christino: Valorec has a pelletizer in Brazil, and we use it through a toll agreement, so we send our iron ore and get pellets, pay a tolling fee, so that's just an example. So I'm sure we're going to be discussing possibilities, but again, provided that it is good for both companies and shareholders.
Genuino Christino: Well, our ACA has a pelletizing, Brazil and use it.
Genuino Christino: <unk>.
Genuino Christino: Through a toll agreement so we get about we send our iron ore and get pellets pay a fee.
Genuino Christino: Tolling fee. That's just an example, so I'm sure we are going to be discussing possibilities, but again.
Genuino Christino: Provided that it is good for both companies and shareholders.
Speaker Change: Thank you.
Daniel Fairclough: Great, so we have one more question, Genuino, which is another follow-up from Tristan at BN.
Speaker Change: Great. So we have one more question J Rena, which is another follow up from interest and that would be M. P.
Tristan: Yes, hi. Just a quick one on ex-CARB and the volumes there. I had this number in my mind of around 600,000 tons of volumes you were expecting before, but I'm not sure if that's still accurate. And you mentioned you did 230,000, so kind of a bit of a gap there. So does that mean demand is a bit slower than you expected first? Or maybe there's a difference between certificate-based volumes and more, let's say, pure forms of low-carbon steel? And you also mentioned some interests outside Europe, so I was curious about which geographies you refer to. Thank you. Yeah, thanks.
Genuino Christino: Yes, Hi, just a quick one on X a carb.
Tristan: Volumes there I had this number in my mind around 600000 ton of volumes you were expecting before but I'm not sure. If that's the that's still accurate.
Tristan: You mentioned you did 230000 units.
Tristan: It is a gap there so does that mean there is.
Tristan: Demand is a bit slower than what you expected first we're just maybe there is a difference between certificate based volumes and more let's say pure form or low carbon steel.
Tristan: And also you mentioned some interests outside of Europe. So I was curious too which geographies you referred to it.
Tristan: Yeah.
Daniel Fairclough: So you're right. Last year, we did 230,000 tons of X-carb sales, and we're anticipating that to double this year. So I don't think we're too far away from those projections. I think where we've seen good traction over the past 12 months has been within the X-carb, which is recycled and renewable. So those are our materials that are scrap-based, that are renewable power-based, that have good low levels of CO2 intensity. We're now offering a very broad base of those materials. So lots of different product categories, satisfying demand from many different end-user segments. So that is being driven, you know, driven by the automobile segment; it's being driven by the construction segment.
Genuino Christino: Yeah, thanks. Let me answer this question.
Speaker Change: Yeah. Thanks, So let me answer this question so you're right last year, we did it.
Genuino Christino: 230000 tons.
Speaker Change: Ex comp.
Genuino Christino: Sales and we're anticipating about two two to double this year. So I don't think we're too far away from from those projections.
Genuino Christino: I think where we've seen.
Genuino Christino: A good traction over the past 12 months has been within the X Cobb.
Genuino Christino: Cycles and renewables produced so that's our materials that scrap based.
Genuino Christino: Our renewable power based.
Speaker Change: Did that have.
Genuino Christino: Good.
Genuino Christino: Low levels of C O two intensity.
Genuino Christino: We would now offering a very broad base.
Genuino Christino: Oh.
Genuino Christino: Those materials.
Genuino Christino: Lots of different product categories.
Genuino Christino: Satisfying demand from many different end user segments.
Speaker Change: So that.
Genuino Christino: That is being driven being driven by autos being driven by.
Genuino Christino: Construction.
Daniel Fairclough: We can produce both flat and long products. If you look at our release today, Aditya is referencing Cestao, where that's a key pillar of X-Carve's offering in Europe. So I think the key message from us is that we are very much leading the market in terms of green steel products via the X-Carve brand. We have the widest portfolio in the marketplace, and customer demand is good. It is across the different end customer segments, and it's also not limited by the different geographies.
Genuino Christino: Segments, we can produce by flat and long products.
Daniel Fairclough: If you look at our release today did she was referencing in his quote.
Daniel Fairclough: Now why.
Daniel Fairclough: That's a key pillar.
Daniel Fairclough: Ex cop offering.
Daniel Fairclough: Europe so.
Daniel Fairclough: I think the key message from US is that we are very much leading the market in terms of green steel products via the ex Com brand.
Daniel Fairclough: We have the widest portfolio in the marketplace.
Daniel Fairclough: And customer demand is good it's across the different end customer segments.
Daniel Fairclough: And.
Daniel Fairclough: Also it is not limited by the by the different geographies. So.
Daniel Fairclough: So some exciting developments there, and we'll look forward to updating you on progress as we move through this. All right, thank you. Great, so I'll hand it back to you Genuino. That was our last question, so any concluding remarks from you?
Daniel Fairclough: Some exciting developments that and yes.
Daniel Fairclough: We'll look forward to updating you on progresses as well.
Genuino Christino: Move through this year.
Speaker Change: Alright, thank you.
Daniel Fairclough: Yeah.
Genuino Christino: Great. So I'll hand back to you Jimmy that that was the last question's for any concluding remarks.
Genuino Christino: Firstly, the whole ArcelorMittal organization is being guided to improve safety performance. Secondly, our results continue to demonstrate structural improvement, and there is more to come. We have been investing in a portfolio of high-return projects that will support high-ebit-time cash flow. And our ongoing buybacks are compounding the value-creating benefits to our shareholders.
Genuino Christino: I want to reiterate my messages from the beginning of the call.
Genuino Christino: Firstly, the whole Arcelormittal organization is galvanize to improve safety performance Secondly, our results continued to demonstrate structural improvements and there is more to come.
Genuino Christino: We have been investing in a portfolio of high return projects that will support higher EBITDA and cash flow and our ongoing buybacks are compounding the value creating benefits to our shareholders if.
Genuino Christino: If you need anything further, please do reach out to Daniel and his team. With that, I will conclude this call. Stay safe and keep those around you safe as well. Thank you.
Genuino Christino: If you need anything further please do reach out to Daniel and his team.
Genuino Christino: With that I will conclude this call stay safe and keep those around you safe as well. Thank you.
Moritz: Ladies and gentlemen, the conference is now over. Thank you for choosing CoralSkull and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Speaker Change: Ladies and gentlemen, the conference is now thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.
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