Tom Zhang

Tom Zhang asked for an outlook on ArcelorMittal's Q4 performance, focusing on moving parts by division, realized pricing, and volumes, and sought further color on North America's strong Q3 results despite Mexico outages and tariff costs.

Answer

Head of Investor Relations Daniel Fairclough outlined Q4 expectations including seasonal improvement in European volumes, higher iron ore shipments from Liberia, and seasonally weaker North America volumes with lower lagged prices. CFO Genuino Christino attributed North America's Q3 strength to record shipments at Calvert, strong Canadian operations, and a focus on cost reduction, despite Mexico's issues.

Tom Zhang pressed for more detail on why the Q3 tariff impact was expected to be minimal despite increased exposure. He also asked for color on the European market, including price trends, raw material costs, and potential inventory builds ahead of CBAM.

Answer

EVP & CFO Genuino Christino reiterated that active mitigation, including sharing costs with customers, was containing the tariff impact. He noted that European demand remains sideways but inventories are low. He highlighted that upcoming regulations like CBAM and revised safeguards are creating positive dynamics for domestic producers by making importers more cautious.

Tom Zhang of Barclays Capital pressed for more detail on the limited expected increase in tariff costs in Q3, considering the Calvert consolidation. He also inquired about the current state of the European steel market, including pricing trends, inventory levels, and the impact of upcoming regulatory changes like CBAM.

Answer

EVP & CFO Genuino Christino attributed the contained tariff impact to successful mitigation efforts, including cost-sharing with customers, despite the full consolidation of Calvert's import costs. Regarding Europe, he characterized demand as stable with low inventories, noting that upcoming CBAM and safeguard measures are creating positive uncertainty for domestic producers and that the company is awaiting key legislative action from the European Commission.

Tom Zhang from Barclays sought clarification on the North America outlook, asking if the 'largely neutral' tariff impact implies stable Q2 earnings and about other factors like pricing in Canada and Mexico. He also asked about European job cuts, potential changes to the upstream footprint, and if these actions are linked to EU policy on energy and trade.

Answer

Group CFO Genuino Christino stated that North American order books are healthy, with stable volumes and slightly higher average prices expected, though tempered by Canadian and Mexican pricing. He reiterated that the full tariff impact in Q2 will be offset at the Calvert JV level. Regarding Europe, Christino noted encouraging policy momentum and stated there are no plans to change the company's footprint, viewing the environment more positively than a few months prior.

Tom Zhang asked about potential catalysts to reverse the current unsustainable steel spreads and prices. He also requested clarification on the expected Q3 impact from the Mexico strike and the firmness of the target to release $1.6 billion of working capital in H2.

Answer

Executive Daniel Fairclough identified three potential catalysts for a price recovery: improved apparent demand, a market sentiment that prices have bottomed, and supply-side adjustments. Group CFO Genuino Christino affirmed the goal to reverse the $1.6 billion working capital investment in H2, primarily in Q4. Mr. Fairclough clarified the Mexico blockade's impact on Q3 volume and profitability would be similar to Q2.

Tom Zhang asked for details on a $40 million litigation expense not included in adjusted EBITDA (its nature and division), and clarification on why corporate costs were below guidance and the outlook for Q4.

Answer

Ian Johnston, CFO, explained the $40 million litigation represented final settlements on several long-standing commercial items, spread across different segments, with a positive outcome for Amrize. He noted Q3 corporate costs were below expectations due to staffing delays, and the previous estimate was at the higher end, expecting continued refinement.

Tom Zhang asked for details on a $40 million litigation not included in adjusted EBITDA, its division, and sought clarification on the lower-than-guided corporate costs for Q3 and expectations for Q4.

Answer

Ian Johnston, CFO of Amrize, explained the $40 million litigation was a final settlement for several long-standing commercial items, spread across different segments, with a positive outcome. He noted Q3 corporate costs were below expectations due to staffing delays, and the previous estimate was at the high end.

Tom Zhang of Barclays Capital questioned the market dynamics in Mexico, including infrastructure project delays and H2 recovery prospects. He also asked if the net debt guidance was conservative, potentially leaving room for additional shareholder returns.

Answer

CEO Miljan Gutovic expressed confidence in Mexico, citing the new administration's roadmap for infrastructure (energy, water, rail) and residential projects, with an acceleration expected in H2. CFO Steffen Kindler clarified the net debt guidance, noting it excludes major M&A and that after accounting for cash flow, dividends, and other items, the guided range is comfortable while allowing flexibility for further bolt-on acquisitions.

Tom Zhang of Barclays Capital questioned the market dynamics in Mexico and the seemingly conservative net debt guidance, asking if it allows for extra shareholder returns.

Answer

CEO Miljan Gutovic expressed confidence in a H2 acceleration in Mexico, driven by new infrastructure and residential projects. CFO Steffen Kindler clarified the net debt guidance is prudent, accounting for various cash outflows and leaving flexibility for further bolt-on acquisitions in H2.

Tom Zhang of Barclays Capital questioned the market dynamics in Mexico amid a perceived slowdown and asked if the balance sheet guidance was conservative, potentially allowing for additional shareholder returns.

Answer

CEO Miljan Gutovic stated there was no slowdown in Mexico, but rather a shift in project timing, with a strong infrastructure and residential pipeline expected to accelerate in H2. CFO Steffen Kindler explained the net debt guidance is stated before major M&A and provides flexibility for further bolt-on acquisitions in the second half.