Reinhardt van der Walt

Reinhardt Van Der Walt questioned the recent substantial dividend increase, asking if it signals a shift in ArcelorMittal's capital allocation strategy, particularly given a slight slowdown in share buybacks, or if it represents an overall increase in shareholder returns. He also sought more specific demand forecasts for the European market, beyond the 2% ex-China global guidance, given positive PMI and construction indicators.

Answer

CEO Aditya Mittal affirmed no change to ArcelorMittal's capital allocation framework, which dedicates 50% of free cash flow to shareholder returns and 50% to growth. He highlighted the success of the share buyback program and the confidence in increasing the dividend to $0.60 due to strong business performance and macro outlook. CFO Genuino Christino reiterated the policy's effectiveness and positive shareholder feedback, expecting 2026 to be a better year with continued free cash generation, and confirmed that buybacks would remain the preferred tool for returning cash. Regarding European demand, Mr. Mittal explained that global guidance was provided because trade policy now significantly drives shipment changes more than bare steel consumption. He cited positive medium-term dynamics in Europe, such as German infrastructure spending and increased defense spending, as factors contributing to a positive macro outlook.

Reinhardt Van Der Walt asked if the substantial dividend increase, alongside a slightly slower buyback pace, signals a shift in ArcelorMittal's capital return strategy or an overall increase in shareholder payback. He also requested a more specific demand forecast for the European market, given positive PMI and construction indicators.

Answer

CEO Aditya Mittal clarified that there is no change to the capital allocation framework, which remains 50% of free cash flow for shareholder returns and 50% for growth. He highlighted the success of the share buyback program and the confidence in increasing the dividend to $0.60 per share. CFO Genuino M. Christino added that the company exceeded its minimum policy for shareholder returns in 2025 and expects 2026 to be a better year for profitability and free cash generation, with buybacks remaining the preferred tool. Regarding European demand, Aditya Mittal explained that global guidance was provided because trade policy now significantly drives shipment changes more than bare steel consumption. He cited positive medium-term factors like German infrastructure spending and increased defense spending, encouraging analysts to model shipments based on trade policy changes.

Reinhardt van der Walt asked about ArcelorMittal's capital allocation strategy for Europe if proposed safeguard replacements are implemented, and the potential for Europe to become a significant area for future capital investment. He also asked about the costs required to bring additional European capacity to market.

Answer

CFO Genuino Christino explained that a clear framework allowing the European industry to earn its cost of capital would enable investment consideration, anticipating a gradual, multi-year journey. He detailed that increasing capacity would leverage fixed costs but also incur higher variable costs, including CO2 allowances and higher quality materials.

Reinhardt van der Walt of Bank of America Merrill Lynch asked whether the exited contracts were EBITDA or EBIT loss-making, inquired about the company's ERP visibility for ROIC optimization, and sought guidance on the CapEx outlook.

Answer

CEO Tony Smurfit confirmed the exited contracts were EBITDA loss-making. EVP & Group CFO Ken Bowles added that the company now has full P&L visibility at the individual entity level, with balance sheet visibility at the segment level being the next phase. Regarding capital expenditures, CEO Tony Smurfit stated that full guidance for the next five years will be provided in February as part of the new strategic plan, with a steer for next year's CapEx likely coming sooner.

Reinhardt van der Walt of Bank of America Merrill Lynch asked if the exited contracts were EBITDA or EBIT loss-making and if the company has the system visibility for ROIC optimization. He also inquired about the capital expenditure outlook for fiscal year 2026.

Answer

CEO Tony Smurfit confirmed the exited contracts were EBITDA loss-making. EVP & Group CFO Ken Bowles added that the company now has full P&L visibility at the entity level and is working on breaking out the balance sheet, which will enable plant-level ROIC analysis soon. Regarding CapEx, CEO Tony Smurfit stated that a full five-year strategic plan and guidance will be provided in February, with a potential steer for next year's CapEx coming earlier.