Business context and reporting period
ArcelorMittal’s Form 20-F is an audited annual report for the fiscal year ended December 31, 2021, prepared under IFRS as issued by the IASB. It covers the integrated steel and mining group across five reportable segments: NAFTA, Brazil, Europe, ACIS and Mining. This is not a standalone fourth-quarter filing; the source provides annual results and selected quarterly market information, but not a complete Q4 income statement or cash-flow statement.
Comparisons require care: ArcelorMittal sold its U.S. operations in December 2020 and deconsolidated Acciaierie d’Italia from April 14, 2021, accounting for it thereafter as a joint venture. The company reported approximately 158,000 employees at year-end.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Sales | $76.6 billion | $53.3 billion |
| Gross margin | $19.2 billion; approximately 25.1% of sales | $4.1 billion; approximately 7.8% of sales |
| Operating income (loss) | $17.0 billion; approximately 22.2% of sales | $2.1 billion; approximately 4.0% of sales |
| Net income (loss) attributable to parent equity holders | $15.0 billion | $(0.7) billion |
| Basic earnings (loss) per share | $13.53 | $(0.64) |
| Net cash provided by operating activities | $9.9 billion | $4.1 billion |
| Capital expenditures | $3.0 billion | $2.4 billion |
| Cash and cash equivalents, restricted cash and other restricted funds | $4.4 billion | $6.0 billion |
| Gross debt / net debt | $8.4 billion / $4.0 billion | $12.3 billion / $6.4 billion |
| Gearing (net debt / total equity) | 7.8% | 15.9% |
Cash from operations less capital expenditures was approximately $6.9 billion before dividends and other investing or financing items. Operating cash flow included a $6.4 billion working-capital investment, principally reflecting higher raw-material prices and inventory levels. ArcelorMittal also had $5.5 billion available under its revolving credit facility at year-end. The $5.5 billion facility was fully undrawn.
Segment results (reported sales before intersegment eliminations) were:
| Segment | 2021 sales | 2021 operating income | 2020 operating income |
|---|---|---|---|
| NAFTA | $12.5 billion | $2.8 billion | $1.7 billion |
| Brazil | $12.9 billion | $3.8 billion | $0.8 billion |
| Europe | $43.3 billion | $5.7 billion | $(1.4) billion |
| ACIS | $9.9 billion | $2.7 billion | $0.2 billion |
| Mining | $4.0 billion | $2.4 billion | $1.2 billion |
Steel shipments were 62.9 million tonnes, down 8.9% as reported, but up 9.2% on the company’s comparable basis excluding the U.S. disposal and Italian deconsolidation. Average steel selling prices increased 54.2%. Mining-segment iron ore production was 26.2 million tonnes, down 7.5%; the average iron ore reference price was $159.9 per tonne, up from $109.0 in 2020.
Material changes versus the prior comparable period
Sales rose 43.7% and operating income increased to $17.0 billion from $2.1 billion, driven chiefly by higher steel prices, positive steel price-cost effects and higher iron ore prices. Parent-attributable earnings moved from a loss to substantial profit. Segment and shipment comparisons are materially affected by the U.S. sale and the change in accounting for Acciaierie d’Italia.
Net debt declined by $2.4 billion, while cash and restricted funds decreased by $1.6 billion. Operating cash flow increased, but the working-capital investment was a significant cash use. The company repurchased 170.9 million shares for approximately $5.2 billion and paid a $0.30-per-share dividend. It also repurchased $395 million principal amount of mandatorily convertible notes for $1.2 billion; $608 million principal amount remained outstanding at year-end.
Outlook, commentary, risks and unusual items
The company’s 2022 outlook, issued before Russia’s invasion of Ukraine, forecast global apparent steel consumption growth of 0%–1%, steel shipment growth of 3%, and strong operating income and cash flow. It expected a further working-capital investment in Q1 2022 and capital expenditures of approximately $4.5 billion. The outlook stated that the invasion’s impact was still being assessed and was not reflected in those forecasts.
In February 2022, ArcelorMittal announced a three-year $1.5 billion value plan focused on commercial and operational initiatives. The Board recommended a 2022 base dividend of $0.38 per share, subject to shareholder approval, and the company announced a $1.0 billion share-buyback program. These are plans or recommendations, not completed 2021 results.
Key unusual items included a $218 million impairment reversal for the Sestao facility and a $123 million provision for expected Serra Azul dam decommissioning costs. Financing costs included $163 million related to an adverse Sitrel arbitration decision and $61 million associated with the early MCN redemption. The company reported $2.6 billion of environmental, legal and other provisions, including a $492 million provision for emission obligations.
Principal risks include steel and raw-material price volatility, energy and freight inflation, price-cost lags, industry overcapacity and import competition, and execution and funding risks for major investment and decarbonization projects. The company’s 2030 emissions-intensity targets—25% globally and 35% in Europe—and 2050 net-zero commitment depend partly on technology, affordable clean energy and public-policy support. Other material exposures include $4.3 billion of guarantees for joint ventures and associates, $13.5 billion of purchase commitments and litigation and environmental contingencies.
Russia’s invasion of Ukraine led the company to idle steelmaking at Kryvyi Rih beginning March 3, 2022 to protect employees and assets. Ukrainian operations had produced 4.9 million tonnes of steel and 11.7 million tonnes of iron ore in 2021; related property, plant and equipment had a $2.3 billion carrying value at year-end. The duration and financial effects of the idling were uncertain in the filing.
Safety was a serious concern: 29 employees died at company facilities in 2021, and the lost-time injury frequency rate rose to 0.79 from 0.61. The filing also identifies cybersecurity, labor, environmental, tax, currency, joint-venture and legal risks. Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Reconcile the reported 2021 earnings and cash flow to the effects of the U.S. disposal, Acciaierie d’Italia deconsolidation, working capital and material one-off items.
- Review the full 2022 outlook and assess how Russia’s invasion, Ukrainian idling, sanctions, energy prices and logistics affect its assumptions.
- Check liquidity, debt maturities, the remaining MCNs, $4.3 billion of joint-venture and associate guarantees, and the conditions attached to the $5.5 billion revolving facility.
- Assess whether planned capital expenditures, decarbonization investments and the $1.5 billion value plan can be delivered on schedule, within budget and with expected government support.
- Review the status and potential cash impact of the Serra Azul dam obligations, other environmental provisions, tax disputes and material litigation.
- Confirm progress on safety performance, given the 29 fatalities and higher injury frequency rate, and evaluate the operational and financial consequences of Ukraine-related disruption.