Daniel Fairclough – Vice President of Investor Relations Lakshmi N. Mittal – Chief Executive Officer Aditya Mittal – Chief Financial Officer Louis Schorsch – Member of the Group Management Board Bill Chisholm – Chief Operating Officer.

Michael Shillaker – Credit Suisse Jeffrey R.

Largey – Macquarie Research Bastian Synagowitz – Deutsche Bank AG Alessandro Abate – JP Morgan Chase & Company Carsten Riek – UBS Investment Research Seth Rosenfeld – Jefferies International Ltd Luc Pez – Exane BNP Paribas Alexander Hauenstein – MainFirst Bank AG Rochus Brauneiser – Kepler Cheuvreux Justine Fisher – Goldman Sachs Group Inc.

Chuck Bradford – Bradford Research Timothy Huff – RBC Capital Markets.

Good afternoon, and good morning, everybody. This is Daniel Fairclough from ArcelorMittal’s Investor Relations team. Thank you very much for joining us today on our conference call to discuss the Second Quarter 2014 Results. First, I'd like to remind you that this call is being recorded. We will have a brief presentation from Mr.

Mittal and Aditya, followed by a Q&A session. The whole call should last just about an hour, maybe just slightly over an hour. As a result we will be limited to two questions per analyst or investor. If you could respect that, we would appreciate it. (Operator Instructions) And with that, I will hand over call to Mr. Mittal..

Thank you, Daniel. Good day to everyone, and welcome to ArcelorMittal Second Quarter 2014 Results Call. I'm joined on this call today by all the members of the group management board. I am pleased to say that these results continue to demonstrate the underlying improvement in our operating performance and progress on our strategic objectives.

Despite a lower iron ore price and the continued operating difficulties in NAFTA. We delivered a 9% year-on-year improvement in underlying EBITDA this quarter, as well as a continued improvement in steel market conditions this reflects the benefits of our cost optimization processes and the expansion of our iron ore capacity.

Despite the improvement in our steel margins I think we could have done better this quarter, as I am somewhat disappointed by the performance of our NAFTA segment, but I expect this to improve in the second half. In terms of the outlook for our business, I remain cautiously optimistic.

We have seen a significant correction in iron ore prices for this year. But it would appear a near-term flow has been reached. The leading indicators for steel demand remain positive, in particular the indicators for our core markets of North America and Europe.

Although many emerging markets remain challenged, we remain confident that our shipments will increase around 3% in 2014. We have today adjusted our guidance framework to reflect the lower than anticipated iron ore price. To a great extent I think, the market has anticipated this and at the end of the day, that is the aim of our guidance framework.

Given the headwind from lower iron ore price, and the weather related impacts on NAFTA segment performance, I believe that it is very positive that we still expect EBITDA in 2014 to be higher than 2013.

This reflects our continued and focused efforts to strengthen the business through cost optimization and maximizing the potential of our mining assets. If I look to the next slide, on agenda I’ll begin today’s presentation with a brief overview of our second quarter results followed by an update of our recent developments.

I’ll then spend sometime on the outlook for our markets before I turn the call over to Adi. As usual, I will start with safety. The lost time injury frequency rate in second quarter was 0.87 times compared with 0.90 times in second quarter 2013. On the left hand we can see the clear progress we have made in recent years.

Reflecting our continued focus on this priority. As a company we remain committed to the journey towards zero harm. There are two focus areas in 2014, one contractor performance and the second continued to analyze the causes of 2013 fatal accidents and action on those causes.

Next, I will turn to the highlights of the second quarter 2014 results, as we can see on slide number 4. EBITDA for the second quarter of 2014 was $1.8 billion this includes the $90 million settlement of a U.S. litigation case.

Stripping this out, there was a clear 9% year-on-year improvement in our results despite the weaker iron ore price environment. The improvement is driven by several factors. Firstly, our steel shipments increased by 2.5% year-on-year with limited additional fixed costs.

Secondly, we had a record quarter in our mining business, iron ore production was run rating at over $66 million rate in second quarter. Market price iron ore shipments were 29% higher than the same period in 2013. Finally, we continued to read the benefits of our focused cost optimization efforts, not only in steel but also in our mining business.

The improved operating result together with lower depreciation and net interest charges supported and improved bottom line results. Net income in the second quarter was $0.1 billion up from a loss of $0.8 billion in the second quarter of 2013.

Moving to the balance sheet highlight, net debt decreased by $1.1 billion during the second quarter, so we’re again heading in the right direction towards our $15 billion medium-term target. Moving to Slide 5, I want to talk about the expansion of our steel margins.

On an underlying basis, steel EBITDA increased by $7 per ton compared to the same period of 2013. In fact, with the expectation – with the exception of Brazil, all steel segments demonstrated improvement during the second quarter.

In NAFTA, the impact of energy-related costs due to the severe weather at the beginning of the year, also affected our second quarter results. This is due to the weighted average inventory accounting metallurgy we employ under IFRS.

Despite this cost, as well as those related to planned and unplanned maintenance downtime, the NAFTA segment showed clear profitability improvements on underlying basis. Had we avoided the unplanned outage at Cleveland then performance would have been better. In Brazil we did see margins contract year-on-year.

Clearly, this reflects the weaker demand environment in particular automotive as well as the additional fixed costs incurred in anticipation of the restart of blast furnace number 3. Just to remind everyone, blast furnace 3 is oriented to produce glass for export. So the decision to restart has no link to domestic demand.

In Europe, I’m pleased to see the continued improvement in our results. EBITDA per tonne increased by $19 per year-on-year. Even allowing for volume impacts we can clearly see the continued benefits of our cost optimization efforts.

I am also encouraged by the results for ACIS segment, the highest performance has been strong both in Kazakhstan and Ukraine. And this has been part offset the clearly South African results which was dragged down by poor demand and cost associated with maintenance.

Moving on to the development of our mining business in next slide number 6, this was another record quarter for our mining business. The group achieved its highest ever quarterly iron ore production of 16.6 million tonnes out which we shipped 10.5 million tonnes at the market price an increase of 29% year-on-year.

At ArcelorMittal Mines Canada, as you know, we completed our expansion from 16 million ton to 24 million ton last year and, in December, achieved a full run rate for both in-country production and shipments. During the second quarter, we shipped 6 million ton an increase of 1.9 million ton over the same period last year.

In Liberia, Phase one continues to run very well. So we are well placed to achieve 15% increase that forms a key part of our 2014 guidance. Higher volumes as well as focused efficiency efforts are driving lower unit cost. Again we are on well track to achieve our target of a 7% reduction in iron ore unit cost this year.

Looking to the future second phase expansion in Liberia is proceeding well. We have all the environmental permits in place and major equipment procurement is complete. Civil works have commenced at the mine and processing sites have been completed at the Buchanaon port. This expansion is on track for completion by end of 2015.

On slide 7, I’d like to take a moment to update you on some of progress we are making with our automotive franchise. We continued to enhance our ability to serve the growing automotive markets. Last quarter, we completed the acquisition of Calvert which we reported earlier. And the ramp-up is proceeding well.

In June, we achieved 83% utilization of the hot mill. In the past quarter we have integrated the slab supply from our mills in Brazil, Mexico and trials are underway to qualify these slabs with our customers. The slab process with slabs from CSA is very advanced.

This past quarter, we also started production at VAMA in China, as you know our – VAMA our joint venture for automotive steel in China. Initial capacity is 1.5 million tonne expandable to 2.3 million tonne making VAMA capable of supporting about 10% share of this fast-growing markets.

We expect to supply the first automotive coil before the end of the year. Next I will discuss our market outlook. The picture for our core market, Europe and North America continues to strengthen. We have again upgraded our demands forecast for these two markets which combined represent around two-thirds of our steel shipments.

In developed markets, manufacturing output expended during second quarter, and indicated point to continued growth in third quarter.

As you can see on the chart on the left side of this slide the ArcelorMittal shipment weighted global PMI has pullback slightly due to signs of weakness in some emerging markets, but it remains in positive territory and points towards continued growth and demand for steel. In the U.S. steel demand is growing strongly.

This reflects expansion in underlying demand and some mild restocking.

In second quarter manufacturing output grew 6.7% annualized supported by auto and machinery the beginning of a pick up in non-residential construction markets, steel demand is higher than we anticipated at the beginning of the year and we have raised our growth estimates for 2014 towards 6%.

And at the time of our first quarter results we had the forecast of between 3.5% and 4.5%. Moving to Europe, the euro zone manufacturing PMI has been above 50 now for full 12 months. While the indicators have signaled weaker growth during the second quarter, both business and consumer confidence in the region remains upbeat.

Some restocking together with an expected uptick in auto production and a moderate pickup in construction market supports an upgrade to our steel demand forecast. We now see demand growth between 3% and 4% and in Q1 results we had a forecast between 2% and 3%.

Moving to China manufacturing has rebounded during second quarter supported by the targeted government stimulus. However, the real estate market remains oversupplied both newly started construction and property sales have declined and this has negatively impacted steel demand.

But elsewhere there has been offsetting growth like auto is strong 10% year-on-year in June manufacturing is growing ship building has established and infrastructure investment continues to rebound. While we have trimmed our demand forecast slightly we still expect underlying steel demand to grow around 3% in 2015.

As compared to our range between 3% and 4% at the time of first quarter results. So we’ve slightly trimmed our forecast. Elsewhere we’re seeing an overall slowdown in the emerging markets, demand in the ACIS region is impacted by the crisis in Ukraine but our mills in the region are able to sell into the faster growing Middle East and African markets.

Brazil is also suffering from declining auto sales the World Cup effects, and weak investment prior to the elections in October. Overall we expect global apparent steel demand in 2014 to be towards the bottom of our range of between 3% and 3.5%.

But due to the strength in demand in our core markets we continue to expect ArcelorMittal shipment, a steel shipments to increase by around 3%. With this I will hand it over to Adit, who will discuss the financial results and guidance in more detail..

Thank you. Good afternoon, and good morning to everybody. I'm on Slide 10, where we show the EBITDA progression from Q1 to be underlying level Q2 of 1.853 the underlying figure excludes the $19 million class action lawsuit settlement in the U.S. as this charge will not reoccur in future periods.

Just walking through bridge very quickly as you can see additional 0.5 million tonnes of steel volume added 131 million ton – $131 million in terms of EBITDA. Selling prices declined in Europe but increase in NAFTA, ACIS in Brazil.

Input raw material prices also declined in the quarter but these benefits were completely offset by higher maintenance expenditure relating to planned and unplanned maintenance. In NAFTA an additional fixed cost associated with the planned restart of Tubarão blast furnace 3. So overall the price cost squeeze was neutral in the quarter.

In mining, market price shipments increased as we heard earlier to the record 1.2 million ton driven by seasonally higher shipments in Canada.

While benchmark iron ore prices declined during the quarter this impact was offset in part by an approximately 8% reduction in our mining cash costs inline with our target over 7% reduction this year as well as the impact of the lower freight costs.

So, overall the mining price cost impact was negative $17 million moving along the bridge you can see a negative $17 million from others this largely represents the settlement of U.S.

litigation case which when we strip out we get the underlying EBITDA 18.52 Turning to slide 11, this shows our EBITDA through net results we will focused on the chart in the upper half of the slide it shows the bridge for the second quarter. As indicated earlier the depreciation was lower this quarter at $0.9 billion compared to $1.1 billion in Q1.

As you saw last quarter, we have undertaken an exercise to review the useful life of our assets. We have concluded that our maintenance practices have extended the lives of our plant and equipment. So, the depreciation periods have been adjusted accordingly.

This exercise is now largely complete and for full year we should anticipate the depreciation charge in the range of $3.8 billion to $4 billion. Moving to income from investments associates, and JVs, in Q2 our share of income was $118 million compared with an income of $36 million in Q1.

The improvement was driven by the better performance of our European investees, a $45 million dividend from Airdemir and more importantly, our share of the Calvert net results, representing $22 million in the second quarter Calvert did not have an impact on EBITDA line, but we can see the impact in our income from equity line, of $22 million.

Moving to net interest, net interest was lower by 10% in the quarter, following the maturity of our convertible bonds in 2Q. We should still expect the full year net interest expense to be approximately $1.6 billion. Foreign exchange and other net financing costs in the second quarter was $327 million as compared to $318 million for Q1.

The Q1 figure included the bulk of the $115 million settlement relating to our canceled iron ore project in Senegal. In Q2 there was some Senegal related cost but it also included non-cash gains and losses on a convertible bond as well as our hedging instruments which matured during the quarter.

Pleasingly we returned to positive net income of $0.1 billion for the second quarter compared with $0.2 billion loss in Q1 and in more significant loss in prior periods.

Next we turn to slide 12, showing EBITDA to free cash flow, during the quarter we had a seasonal release in operating working capital as a result location days decrease to 54 days from 61 days in Q1 and this reduce working capital requirements by about $0.9 billion.

This third bar shows, the combined impact of net financial cost, tax expenses including amongst other the Senegal settlement payment. Positive cash flow from operations of $1.5 billion combined with CapEx of $774 million resulted in positive free cash flow of $0.8 billion.

Turning to the next slide, we show a bridge which is slide 13; we show a bridge for the change in our net debt from Q1 to Q2. The main components of the debt decrease as discussed earlier is a $0.8 billion positive free cash flow.

M&A totaled $0.2 billion, primarily relating to the cash proceeds from the ATIC and steel cord business divestments and including the $45 million of debt transfered to the acquires. It was a slight positive impact on net debt from Forex as the Euro depreciated by 1% compared to U.S. dollar.

As a result of these movements net debt decreased by $1.1 billion, during Q2 to end the period at $17.4 billion. Clearly is that were not for the $19 million U.S. settlement and the Senegal settlement net debt would have been the further $240 million lower at the end of the second quarter. Finally, we will conclude with guidance.

Essentially our guidance framework is the same as it was at the start of the year that expanded steel volumes and cost optimization will support better steel margins. And our volume growth in iron ore will go someway in offsetting a weaker iron ore price.

That said the iron ore price has been weaker than our assumption, updating this assumption to $205 from $120 previously, clearly as an impact on the outcome of the framework.

Based on this revised iron ore assumption, we expect 2014 EBITDA in excess of $7 billion, I consider it positive that we’re still guiding to improve the EBITDA in 2014 versus 2013. Despite a $30 drop in iron ore and the headwind that our NAFTA business has faced.

To me this highlight the benefits of our ongoing focus on cost and the development of our franchise businesses including global automotive and maximizing the potential of our mining asset. This concludes our prepared remarks and we’re now ready for your question..

(Operator Instructions) With that we will take our first question which will be from Mike Shillaker of Credit Suisse. Go ahead Mike..

Yes, thanks a lot Daniel. First question is on the announcement of the Nimba project today.

Can you give us just some update or some facts in terms of the tonnage that you could produce, the timing of that, and the CapEx cost that that could actually incur, so we can get a sense of how meaningful that project could be? I think my second question, really, is on iron ore itself, as well.

If you look at the last few years, especially this year, we've got record steel output; $90-odd iron ore. And it kind of feels as though maybe the risks are still to the downside on iron ore, relative to a lot of work that people have done on cost curves and similar.

At what stage are you prepared, or do you think you need to pull back on iron ore CapEx? And what remedial action can you take on steel mills where you've got captive iron ore to take out costs quicker if you needed to, if iron ore actually comes in at $60, $70 a ton over the next couple of years, as opposed to the $90, which I think was consensus?.

Thank you Michael. We will not – but I will give you few details about Nimba. One in our opinion this is very strategic and unique opportunity for us, because it is just 40 kilometers away from our existing mining operations. It is a very high class iron ore, DSO, direct shipped ore, with over 63% efficient.

And this resource is over 900 million tonnes and this resource is stuck, because of infrastructure. At the whole Guinea iron resource is not making good progress, because we do not have infrastructure reliable to them.

And in this case one phase of Nimba is at 40 kilometers away they can – we can leverage our existing infrastructure of railways and the port, and we think that we will be able to leverage this infrastructure to create value for our for ArcelorMittal.

Now we are – seeking approvals from Guinea government for allowing us to use Liberian to evacuate the material. There is a bilateral between the two governments to let it happen. So, we really do not see.

But at this time, we are really looking to complete our existing projects in Liberia, and once we have finished, we will start seeing in much more detail. And then, we will come back and give you more information about the project costs. You can imagine that when the infrastructure facilities are available then the cost and it is a DSO.

Then, it will make a lot of sense and that cost will be really, really it would be around Tier 1 iron ore mines. The second question on the $90 million price today.

Clearly, in our projects which we are executing today, we have taken a much more conservative price estimates and we believe that based on that conservative price estimate, our existing projects are still viable and makes sense and create value for ArcelorMittal.

And we were expecting prices to fall, but like any other mining company we are also surprised that this fall has come sooner and like mining companies are more surprised about the fall in the coal price, which is much more cheaper than anyone expected.

In our iron ore case, we were expecting this price our projects are based on a much more innovative price. And our costs are going to be low, because we are always leveraging the existing infrastructure in our mines whether in Canada or Liberia. We are really not investing in a Greenfield infrastructure.

So, I am quite comfortable with our existing projects, even if the prices go further down.

While this expectation in the business that during the floor which could be sustainable? I do not know, but it is what everyone is saying and we have accordingly in the beginning of the year, we had a consensus of $120 million, market consensus and now with market consensus has changed.

So, we have revised our consensus market price forecast for the rest of the year. As far as the effective iron ore is concerned if you are right that if these prices continue to fall further, there is a pressure on these integrated plants with the own mines.

So, we are conscious of this, and we are working on how to further improve these – for the productivity of these plants, how to look at their cost structure, and how we can continue to still create value.

The good thing is that what Aditya said in his discussions about the margins, is the margins in the steel business which has improved, and last year we saw that the volatility in the iron ore price and the steel prices were also volatile and going along the iron ore price.

But this year, we are seeing that there is less volatility in the prices are stable relatively, and margins are improving. So, we hope that even for our integrated business, the steel prices remain stable for all our customers and our margins should improve in the steel business which should offset the lowering of the iron ore price.

So, we are prepared for those kinds of business scenarios and you can see that from our four businesses. Our guidance for this year is more than $7 billion in spite of a $30 million price reduction in iron ore.

We are giving now guidance, which is more than last year, and you can do your arithmetic or mathematic to calculate the effect headwind of this iron ore price and still we are giving $1 billion more guidance that means we are seeing that with our business plan, with our cost optimization, asset optimization, and with our product development and with our working on franchise business, we are creating value, which is offsetting half of the losses, which we could have incurred due to lower iron ore price..

Okay. It’s very comprehensive answers. Thank you very much..

Thanks Mike. And we will take the next question from Jeff Largey of Macquarie please. Go ahead Jeff..

Yes, hi good afternoon. Two questions, the first is, just looking at the performance of NAFTA, obviously you had a pretty material headwinds in terms of the adverse weather and the litigation charge – almost $450 million in the first half.

All else being equal, would you assume that that basically disappears for the second half of the year? Or, are you expecting any kind of seasonality in the third quarter, given the market? The market does look pretty strong.

And then, the second question was just is you could talk to what's happening in ACIS? Obviously, a pretty noticeable step-up in performance and I'm just trying to get a sense if this is the start of the turnaround or if we are actually just seeing some temporary gains from better pricing. Thanks..

Jeff, this is Lou Schorsch. Let me comment a bit on NAFTA. Clearly, we’re very disappointed in the results that we showed in the first half, and I think we talked about this at the first quarter earnings call, particularly the impact of the weather. And because the way we account for it, that was going to extend well into the second quarter for us.

So, that's a big of that. It is going away. Now I think the other points I'd make is we did have some significant outages in the second and third quarter. One that we'd been planning, really, for a couple years was a major repair about $70 million when the dust settles, of our number 7 blast furnace, which is the largest in our group at Indiana Harbor.

We also had an unexpected outage that to some degree was weather related, but anyway it should have been avoided, that cost us about $30 million at our Cleveland plant. So, we had some bad incidents, let's say, and we do think that those are will not be affecting us in the second half.

And if anything, I think we'd look at again it's hard to overstate the importance of this number 7 furnace to us, this has been I could say, limping along the last year and a half, or so, which we prepared for this major outage. That's going to give us probably about 1000 tonnes per day additional hot metal, as we bring that back on.

We brought it back on about seven days early. It's now more than halfway through the ramp up period. So, we think the asset condition is actually probably the best it's been in a couple of years for our operations in North America, and, knock on wood, expecting that we will be able to benefit from that in the second half.

We still see the market being quite strong. I think you saw the macro statistics from the US we’re seeing that in our market. The pricing differential versus the rest of the world is always a concern, but that’s been the case now for about a year. So, again, we’re optimistic that issues are behind us for the second half..

On ACIS, I’d like to take up this question. First of all, we are seeing the stability in operations in Kazakhstan, which is a good news and we are seeing the very positive signs in terms of cost performance and the volume, which is a good news, and I personally believe that we will continue to have a stable operations.

We have made a lot of improvements in many things in this business. In Ukraine, I really appreciate my team in Ukraine for in spite of the geopolitical crisis, they have been able to maintain the operations well. And in second quarter, even there is a period when we had a record production. So I think that this is a turnaround for ACIS.

However, there is still I'm concerned about South Africa, which has underperformed in terms of volume and the unplanned maintenance. However, there’s also something to look at the macro environment in South Africa which has not been helping. There has been a negative growth, and there is a negative sentiment in the country. There have been strikes.

There has been elections. So, that has also delayed the growth in this market. So, there has been a macro situation in South Africa and there has been also poor performance. And I'm hoping that – we appointed a new CEO, who has joined us, plus we are working on the team. My CTO team is fully on the job with this team.

And I hope that basically we will see also improvement in South Africa like we have seen in Kazakhstan and stability in Ukraine..

Great, thank you..

Thanks Jeff. We will take the next question from Bastian at Deutsche Bank..

Yes, good afternoon gentlemen and thanks for taking my questions. My first one is on Europe. I guess there has been a lot of skepticism on any improvement at the beginning of the year, but now as we can really see that some recovery is happening.

So, how far do you expect that to be sustainable beyond probably weaker, seasonally weaker Q3? And do you see a risk of a fall-back in margins in Q4? I guess your visibility into Q4 should be probably quite good already at this point. Maybe after before taking my second question..

Thank you, Bastian. I think we certainly remain constructive looking into the second half. Q2 was slightly weaker than Q1. We all notice that, but then, we saw better PMI numbers in July. We have seen improved business confidence as we close for the summer, both on a consumer side and on the business side.

And I think the June stimulus on the ECB is also going to help. So, as far as what we can see the visibility that we have today, we find that the environment in Europe is constructive. We’re actually upgraded our apparent steel forecast in Europe by almost 1%.

In terms of the business itself, I think the business should continue to do well in the second half. Clearly, the second half is normally seasonally weaker, due to the reline costs or maintenance costs we have in August and December is a weaker month.

But nonetheless, we remain constructive and we believe these results and this recovery is sustainable that has occurred in Europe..

Your second question Bastian?.

Yes, my second one is to follow-up again on Lou's comments regarding the US.

Could you just confirm what the actual total impact of weather has been i.e., has the change compared to the $150 million you had been guiding for in the last call? So, maybe quantify the total impact? Has that been I think around $270 million, just looking at all one of items and where those completely unwind in the third quarter?.

We talked about the impact in the first half of $250 million, $200 million in Q1 and $150 million in Q2. And in terms of one-time impacts, it's plus or minus I would use the $15 million number for Q2.

So, we did have higher costs in terms of the number 7 and Cleveland, but we did recover some of that and we postponed some maintenance, extended into Q3. So, I'd use the $50 million. The $200 million is a good number for the change that we should expect into Q3..

Plus obviously then the litigation charge of $90 million.

So, making close to $300 million in total?.

Yes. On an underlying basis, $200 million. On a reported basis $290 million..

And then I think that’s probably no reason why you should see worse trends that what some of your competition has guided for i.e., volumes should be stable to up, average price probably stable? So, I guess with the one-off items, we should be seeing a pretty steep jump in the third quarter already?.

Yes, I think the third quarter – of course, we're already well into it, and the bookings are even a further at least month or beyond for some of the downstream products. Again, I think the fourth quarter, that’s a bit open.

But the signals, as we all know, out of the US are generally very positive with the exception of that price differential I mentioned and normal fourth quarter seasonality. But it's shaping up currently for a relatively strong second half..

Okay, thank you..

Thanks, Bastian. We will move onto Alessandro of JP Morgan please..

Thanks, Daniel and good afternoon to everybody. Just a follow-up question on what Mr. Mittal has said about the lower volatility of iron ore price and the positive effect it is having on the margin expansion, just related to the good performance of Europe.

Do you see a kind of early sign of pricing power shifting back to the steel makers? Because there is still price in the falling iron ore price environment seems to be quite unusual for the volatility of the steel market at the moment.

And then, if you think that going forward, excluding the seasonal slowdown this is something that can actually stay? As soon as iron ore price stabilizes a bit more in terms of perception of the market, we might be seeing price going up, unless the demand falls off the cliff. The second one is on NAFTA. This is for Lou.

Everybody's a bit disappointed about the results; that's for sure.

Is there anything that you believe you could have done a little bit better? And also, what kind of impact this $1 billion management gains has actually had in H1? Or, if the impact was relatively limited, would the real impact you expect into H2, going forward? Because, you also upgraded your forecast for demand in 2014 for the US.

So, I guess that's if this management gain has actually an impact? As demand gets stronger, the impact should be better. Thank you..

I’ll address the Europe and the whole margin. So, I think just to reiterate some of the points that were made earlier. If you look at global EBITDA, on an underlying basis we did about $6.75 billion in 2013, and we are guiding to an EBITDA, which is in excess of $7 billion.

The headwind of iron ore is about $30 million and multiplied by our production level of 65 million tonnes provides a headwind, which is close to about $2 billion. So, how have we made this up? $0.5 comes from volume, that’s the 2% increase we spoke about, that steel volumes are roughly $300 million comes from the growth in mining volumes.

The remaining $1.2 billion, we believe is a combination of our asset optimization program, management gains, as well as a steel margin expansion. Is pricing power back? I don’t know if pricing power is back, but we clearly do see that we have the ability to increase margins in a falling raw material environment.

Pricing power is not back to the level where it should be, clearly. But the markets get better and I think this is normal for the global steel industry. We’ve always talked about how when capacity utilization was up, it matches margin expansion.

And that is why when we look forward on a five-year basis, when you talked about our global EBITDA target of $150 million. We did say that iron ore prices will fall. But we will offset that by volume expansion, margin expansion in steel, and mining volume expansion, AOP, management gains, and turnaround in ACIS.

And I think this year is a good example of how we're delivering on all those five aspects. Because we do have the progress in ACIS, we have the volume growth in both steel and mining. We have expansion in our steel margins, as well as delivering in terms of AOP and management gains..

Alessandro, when you say people are disappointed in the first half results, you can imagine the discussions within the company.

I think if you – it’s a very good question we ask ourselves, what could we have done better? If you look at the major thing that hit us, it really was this spike in energy prices particularly gas prices to a lesser extent power that hit us in basically February and March.

So, we have spent a lot of time and effort reevaluating the way we go to market there, the degree to which we should hedge in advance, how we can manage the basis risk, which was the biggest negative surprise. And I don't want to give specifics, but we have altered the way we are buying that input for next year.

It cost us a little bit more for the insurance, but we have taken that step. Now, on the other hand, this was a once in 50 year sort of severe weather environment and incident. So, you could also say, just eat it and move on. But we have changed the way we go to market – we are in the process of changing the way we go-to-market to purchase that input.

Linking that back to management gains, I think that program is fully on track. Again, the way we look at that is we have a set of improvement initiatives based on a lot of internal benchmarking, input from the CTO group, best practices, et cetera. Moving people around, twinning operations from one business unit to another.

And most specific projects are all on track. Again, what hit us was more that incident set of incidents around input prices, particularly energy. And I would say if you look outside the US, the other operations within NAFTA have done quite well.

Now, obviously the biggest operation is within the US, but I think the fundamentals you see elsewhere are actually pretty positive. So, for all those reasons, I think we're committed to saying this is a one-time event. We have to absorb and we move on to a better second half..

Just a quick follow-up question, what's the run-rate you expect of the delivered to the Brazil to US in the second part of the year?.

From our own operations, you mean?.

The Brazilian slats, right..

From Tubarao. We're looking at eventually to be more than 4 million tonnes requirement. We have – currently, we're a little bit over 80% in terms of the production capability and we're ramping that up. And more than half of that will come from our own operations.

We’re still working on how that would be split between Mexico and Brazil and that depends a lot on cost, logistics, quality requirements, et cetera, with our Brazilian slats are being a bit better suited for automotive type applications. The Mexican slats, being a better suited for energy. Both of those are key target markets for Calvert.

So, I think a rough assumption would be about 1 million tonnes for each of those two operations. And, again, we're probably at 80% of that now through the rest of this year..

Thank you very much..

And maybe just to complete on Calvert, generally in the second quarter and for the rest of the year, we are producing at a level which is about 30% higher than last year. So, in terms of carbon steel, we should do almost 800,000 tonnes to 900,000 tonnes more than Calvert did in 2013..

Thank you, Aditya..

Thanks, Alessandro. So we will move to the next question please from Carsten. Carsten Riek with UBS..

Thank you very much, Daniel.

Two questions from my side, first one, is it possible to get a net booking capital split? How much was it actually down per division? Because I suspect that in NAFTA, actually, your net booking capital went further down given still the struggle you had in Cleveland and also because of the refurbishment of blast furnace number 7 in Indiana.

Second question I have, what makes it actually so confident that you could reach $100 per ton and iron ore in the second half? You're currently at about $95, $96. Because we doesn’t really need for that a bit of a positive impact from China and here you’re not particularly positive if I read you correctly. Thank you, very much..

In terms of working capital I think your sense is correct. In NAFTA, we didn’t really have a significant growth. More of the build occurred in Europe and some of our ACIS segment. But that's not a significant amount, so I would not read into that I think clearly in the third quarter, we will add a seasonal build in working capital, as we have.

And in the fourth quarter, we will have a release. And I think numbers this quarter are very similar to what we witnessed year-ago in the second quarter of 2013..

On the iron ore price, we believe that this adjusted guidance framework is appropriate given the year-to-date evolution of the iron ore price. The average price which we assume is under than $5 which means for the second half we’re assuming $100 compared to $95 to $97 today. And it’s also based on the market consensus which we have seen..

And I would just make maybe two more points there. So we get to a $100 because we see that in Q4 China normally restocks and clearly Q4 is a stronger market for the global steel business than Q3. So we would expect some pricing improvement, but that’s I don’t thing that’s important I think it was important at this point in time is that.

We have been able to offset to great degree the impact of the change in iron ore price through our actions in terms of AOP and management gains and margins. So, I think the guidance of in excess of $7 billion is what you should really think about and is there is a $3, $4 change in the iron ore price. I don’t think that will your guidance..

Okay. Fair point. Thank you very much..

Thanks, Carsten, we’ll move on to the next question please from Seth with Jefferies..

Good afternoon gentlemen. Seth Rosenfeld with Jefferies. Just a couple of quick follow up questions on outlook for European demand internal market outlook.

Briefly in comment on which of the end markets do you think are performing better now than what you expect at the beginning of this year? And certainly enlighted for deterioration in macro data, it's a bit surprising to hear your increased confidence in that region.

And then, secondly, if you can follow up with your outlook for seasonality going into the third quarter in Europe, wondering if you think that this further improvement in the fundamental demand outlook for Europe will somewhat offset normal Q3 weakness and if you think there's any risk of a further de-stocking going into the third quarter as a result of that.

Thank you..

Seth, I will do my best and answer most of your questions, but on a macro basis, automotive is doing the best in Europe. We see a real growth in the automotive sector, followed actually both by machinery and construction.

In the first half, apparent steel consumption grew by 5.6% already so, when you see the fact that we have upgraded our forecast, and if you've done 5.6% in the first half a small improvement in the second half will arrive at our guidance for the full year.

A real demand is also up, compared to previous forecasts and again driven by all of these sectors. And we see in various sectors in Europe, I mean, Germany published their July numbers for PMI, which was higher than you June. We see continued strong growth in Poland, in Spain. And Germany, as I mentioned.

There is some weakness that continues in southern Europe, but when we talk to our customer base, we see a level of confidence which is higher than normal. And therefore, we have upgraded our yearly forecasts..

Great, thank you.

And can you just comment on how you expect that to play out going into the third quarter and just back to be normal seasonality in terms of weakness in demand and volumes? Or, if you think that therefore there would be slightly more stable volumes than what you've seen in years past?.

So, we should be a little bit careful, because last year the second half is also very strong. So, it was less than the seasonal pattern, so seasonal pattern is normally - 10% first half, as I mentioned, was strong in Europe. So, I think you would expect to seasonal pattern I don’t think it would be better than the seasonal pattern maybe slightly.

And it won't be as good as the second half of 2013, which was much strong second half than the first half..

Great, thank you very much..

So, Daniel has asked me to clarify. It doesn't imply that the second half of 2014 will be lower than second half 2013, it will still be higher. But relative to the first half, I would expect the seasonal pattern, which is minus 10%, to occur..

Thanks, Seth. So I think with that we will move on to the next question from Luc Pez at Exane..

Hi, gentlemen, thanks for taking my questions, First of all, on Brazil, I noticed that you have been getting pretty dramatically the outlook there.

Could you maybe elaborate a bit more as to what you expect for H2? Any risk of de-stocking? And if you could split your comment between the long markets and the flat market? And second question with regards to Ukraine, if you could elaborate a bit more as to what are the risks your operation might be facing there? Thank you..

To comment a bit on the market conditions in Brazil, I think I'd start with the perspective that it's really relatively uncertain. I think we've had a lot of disruptions, if you will, connected with the World Cup that makes it difficult to see what the underlying things are.

But clearly, the economic activity in Brazil has been well below what the projections were in the first part of the year. I think we've seen a very severe cutback in automotive. The cutback has been much stronger in production almost twice the level in production as what we’ve seen in sales of our automotive. And that's driven by a couple of factors.

One is that some good chunk of production I think about 30% – from Brazil is exported and about 70% of that goes to Argentina. So, as the Argentina market has been weaker, that's affected automotive demand and production. I think in addition there's some credit issues and so on that it cut back on automotive.

If you look at the projections, though, of Anfavea, which is the automotive trade association in Brazil, they looking for about a 10% drop in production for the full year. The reduction in the first half of the year was, I think, 17.5%. So, that says more or less stable, maybe modest decline in the second half.

And I think that is our perspective for most markets there. Construction was, for the first half of the year, only down slightly, less than a point. It was down more in second quarter but, again, I think that could be related to World Cup events.

We see that market going forward as being relatively strong and of course that's our major market for the long products business, just as auto is such a critical market for the flat business..

:.

The second question, on Ukraine, as I said earlier geopolitical crisis continues to be of concerned to us. However, our operations are normal. And as I see the forecast from my team, this is a stable operating environment for the rest of the year, and stable market conditions.

However, as I said, that domestic shipment has been growth up because of the crisis in Ukraine. We think in itself that still I’m seeing that our shipments to Russia is normal, and the lower demand in Ukraine has been offset by higher exports to different countries.

While we are watching the situation really carefully while we are also watching and managing the supply chain issue carefully, we at this time seeing stable performance in Ukraine..

Maybe one quick follow-up, if I may? Are you benefiting anyhow from reduced export pressure coming from Russia in some of the Middle East market because of the geopolitical issues and sanctions that are maybe affecting some Russian companies?.

Yes, Mr. Mittal it is too early to comment on that, because these are very recent developments happening. And we will be seeing if any effect is felt in the market. As of now, markets are operating normally..

Thank you..

Great, thanks, Luc. We’ll move on to Alex with MainFirst Bank..

Thank you, hello everyone. I have two questions.

First, with regard onto the European flat steel price expectations over and post-summer, maybe you can comment here a bit potentially including some thoughts what is going on here with llba [ph] and how that might impact on the price environment? And the second question would be how much was the cost impact from the blast number 2 we start in Brazil during Q2 and is there anymore to come in Q3.

Thank you..

Blast furnace 3 impact in Brazil was $20 million. That occurred and I should not continue into Q3 and I think you can talk a little bit more about the prospects of second half..

Yes, I think we had some capital as well as some operating expenses related to the restart of that furnace. And I'd say in addition, this would be the first time we've been running all three furnaces in Brazil since 2008. so it’s been quite an extended period where we've been producing below the capacity there.

For most of that period, it was the smallest furnace, number two that was down. So, the OpEx associated with this was maybe a little bit higher than what you make normally expect, because we also had to work in the steel shop, for example and there will be some additional fixed cost that we have to bring on to operate these facilities.

So, for example we have a three-vessel steel shop we had been running at more or less two crew – operating two vessels. We move people around. All three were working, but now we need to crew up for the full capacity. So, we're going to have to add some people, as an example.

So, there will be some additional fixed cost ongoing, but the impact in terms of the actual start-up OpEx was slightly over $20 million that showed up in Q2..

And maybe just to supplement a bit, I think as a result of the start-up of the furnace and since we know the $20 million cost is showing up in Q3 we should do better in Brazil as well in Q3 and then into Q4 when we get the full impact of the slats that we export into the North American region.

Just moving on to our prices, I think as you know, we don't really talk about prices, I think we have talked generally about the margin environment in the steel business remains constructive and I think the same applies to Europe..

Great, thanks Alex we’ll move onto Rochus to Kepler please.

Rochus?.

Okay, sorry just a follow-up question on the guidance. Can you share with us your confidence for considerably better results than these $3.5 billion you shown on a reported level in the first half? I guess your second half is running against a negative seasonality you mentioned.

I guess the most positive thing factor you described is the swing in the NAFTA region. Could you please help us? What would be the second largest other element which is supporting your performance in the second half? That's the first question. The other one is again on your NAFTA performance.

I tried to reconcile your performance there and considering the effect from energy under $50 million considering the $90 million from litigation and considering the $50 million from your outages, but still I really don't get to the performance in the NAFTA region.

Are there any other cost effects, are there any major one-off items I need to consider to really get to the number there in the quarter, despite a good volume performance..

In Q2, we added roughly $300 million from the reported EBITDA number, on an underlying basis about $200 million and that I think it’s a good number for NAFTA. We can review later on, maybe offline, why you still feel that that is not the full potential of the business.

So, just maybe on a more macro basis, for the full year, when we look at first half versus second half, I think we had talked about iron ore. So, I won't get back into that clearly the biggest driver of increased EBITDA is NAFTA.

So, we have on an underlying basis one-time effects of $400 million $350 million is just the weather and then $70 million is the planned and unplanned maintenance costs that does not repeat. And so, that the biggest positive and plus some positives coming from our Brazilian business. Offsetting that is seasonal weakness.

Most pronounced obviously in Europe. But overall, volumes are slightly more muted in the second half than the first half. And slightly higher maintenance costs in some other places in August we do planned maintenance. So, that, I think is how I think about it.

If you want to get more specific into mining, clearly we have more mining volume pick-up, which should offset the fact that overall first half pricing is higher than second half.

So, on a very macro basis, this is how we look at our business, and that is why we talked about a framework guidance based on the new assumption of iron ore of EBITDA in excess of $7 billion..

Okay, fair enough..

Great, thanks. We’ll move onto the next question which is from Justine Fisher of Goldman Sachs please..

Good morning..

Good morning..

Good afternoon, sorry. The first question I have is just on the ongoing CapEx and related to the iron ore business.

I know you guys mentioned in the press release and you said this before that you don’t intend to ramp up any major steel growth CapEx or dividends until you hit the $15 billion net debt target, but it seems as though you may be willing to expand an iron ore. Obviously, the Liberia project was started before.

But you've been talking about after that looking at the Nimba expansion. Possibly we're reading in the press about bids on additional iron ore projects.

So, is there a reason that given the state of the iron ore market, which is pretty weak right now that the company might decide to pursue additional iron ore CapEx before you hit that $15 billion net debt target and is there something that would make the company say look we really need to get the $15 billion.

Let's just stop these growth projects until we get the balance sheet back to that target..

Okay, Justine. In terms of the overall CapEx and M&A, I'll come to your specific question, but just to refresh everyone else's memory on the call, we're focused on number one product you remains to achieve a medium-term net debt target of $15 billion to that time, we don’t intend to increase either dividends or CapEx and that applies.

Secondly, in terms of acquisitions, I think when we were doing the Calvert deal for the last 12 months to 18 months there was a lot of discussion on each quarterly conference call on what was the impact on your sheet? How will you mitigate it? What will you do? And clearly, we could not as transparent as we would want to be, as it was a competitive process.

But what you see in terms of Calvert as we spent $258 million in Q1 and in the second quarter we have announced divestments which exceed the cash acquisition costs of Calvert. So, M&A is a cash inflow to cash positive in the first half of this year.

And therefore I think we have demonstrated we can make strategic moves and maintain M&A on a cash flow basis and I think that's a safe assumption and that is what we are focused on.

In terms of your specific questions on mining, I think earlier on in the call we talked about how our long-term price forecast of iron ore is lower than today's market in any case. And the projects that we have are very attractive in that price environment. And we're delivering on those projects.

I don't see that our mining CapEx is actually increasing, I think actually it's decreasing as a significant majority of the project we wanted to do have been completed in Canada and Liberia, we have phase two. Nimba is post-that. And so I don't see us increasing our CapEx until we hit $15 billion.

The project that we’re doing within our CapEx envelope of $4 billion create tremendous value. So, I think it would be value-destroying for the company to stop these CapEx projects, whether it is Liberia or expansion in Brazil long or automotive franchise and focus on reducing net debt.

The $15 billion target is not imposed from the outside; it's something that we think is prudent, as ArcelorMittal. And we recognize that target and we’re focused on that at the same time we think we should maintain the CapEx projects that we have..

Okay. Thanks. And then, my second question is also on the iron ore front. You had mentioned the beginning of the call that you would consider on ways that you’re integrated mill operations integrated into raw materials to cut iron ore costs there.

Can you give us some colors to how that might be done? And then, if we think about some of the long-term contracts you have, I know that Cliffs contract expires at the end of 2015, is there a way that the company could meaningfully reduce iron or costs to improve the steel business margins despite the decline in the iron ore business margins from renegotiating contracts like that?.

In some of the integrated plants, the cost of mining is down due to – we are hoping to reduce our iron ore costs. For example Ukrainian has devalued by more than 50%, and it helps us to reduce our cost in this integrated environment. So, that is one way we are reducing the cost of the iron ore mines in this integrated environment..

Yes, I think just to supplement – Bill can add further – we were focused on a total iron ore mining cost reduction of 7% this year and the second quarter we already at 8% and as all companies are doing, we are looking at costs very aggressively and Bill can provide more details..

Yes, indeed, Aditya. Firstly, we get some benefit on the cost from the growing volumes. So, that's firstly something that we get that. In addition to that, we’re getting benefits from the mine frame. There's some optimization that's taking place in Canada and we get benefit from making up the P5.

In Liberia, the more drilling we're doing there is also giving us benefits on the mine planning strip ratio. In addition to that we have focused program on procurement. So we’re looking at global categories, we’re getting benefits on tires and contract negotiations there.

We’re focused on debottlenecking, improving the maintenance, which is also giving us benefits. And that is the mine in Canada, along the rails as well. So, there is a number of programs. We're doing zero based organizational work. So, we're taking out a couple of layers in some operations.

So there's a whole variety of programs that we're focused on tried to improve the cost position..

And maybe I would like to add two small points. The Cliff contract is end of 2016. And the second point, I would just say is that as always proof is in the pudding. We can see that in the integrated business we ACIS, our profitability has improved in spite of the fact that there's a $30 reduction in the value of our – in the price of iron ore.

So, I think that strategy is working, and I would expect the same going forward. .

Great thanks..

Daniel Fairclough:.

:.

I've got a question about advanced high-strength steel.

What’s the timing of the adoption in China, and also in the US?.

Chuck, I didn't – I heard the question was about was about advanced high-strength steel US and China..

Rate of adoption..

Rate of adoption, I think that it’s clearly the pressure is on a bit more strongly in the US now. So, the rate of adoption is strongest in the US. I think the rate of adoption in absolute term also the adoption in the absolute terms is higher in Europe than in the US, but we’re moving up and quickly to that adoption in the US.

I think China is a little bit behind. But I would say also that we have planned the VAMA facility that Mr. Mittal mentioned in his opening remarks to be fully capable of producing all the grades that we produce and sell in Europe and in asset. So, I think that's coming there as well.

And certainly, the western OEMs that are based there, which are the customers that are pulling us most strongly to be present in China, would expect to use the same materials there that they use in other parts of the world..

And then, on a slightly different subject, is your contract with Cliffs have any change in ownership clauses, or changes in management?.

I don't know the answer to it and I don't want to go there really. So, you can have a long debate, I guess, about whether what just happened there is a change of ownership, or not. I think that's part of the discussion in some..

Thank you..

The last question is come from Tim Huff with RBC please..

Yes, thank you. Just two more general questions. You guys have mentioned a couple of times on the call that you’ve been pretty disappointed with the NAFTA results.

But given the items that you've detailed that bridge the gap in between reported and underlying results I would have thought you would have been a little bit more satisfied with the underlying performance of the assets in NAFTA, especially with Calvert going above 80% capacity utilization by the end of the second quarter.

So, you can give us any sort of color how you feel about the underlying results will be great. And then the last one, on net debt. Just breaking into two.

Within six months, by the end of fiscal 2014, do you think excluding any bolt-on acquisitions you'll be able to hold the net debt level to between $17 and $17.5 billion? And I guess longer term, the $15 billion medium-term target, but maybe a little bit of clarification as to what exactly that means, because it always seems to be rolling on? Is this a level you actually want to hit, once profitability gets above the certain level, thank you..

These one-time effects are not accounting charges. So, they are operating impacts. So it's very hard to say the underlying EBITDA was okay in NAFTA. Litigation you can strip out, because that's a one-time charge, but on an underlying basis, clearly, the operations are not shipped the amount of volume they should have.

And their cost was higher because of all these impacts that we have spoken about. In terms of Calvert, as you know, Calvert is 50/50 JV, and the first income that accrues to Calvert close to our other equity income lines so those will impact on EBITDA in the second quarter. Even though Calvert has performed well.

To the extent that Calvert’s profitability increases as we continue to ramp up and more importantly we get the right products, we get the right orders from our customers of the demand in products then we will get start seeing more impact on the EBITDA line and we will update you guys when that happens.

I'm not forecasting much this year, but that will be more a 2015 event. In terms of net debt, I think the way we think about the medium-term net debt target is until we don't achieve $15 billion we will not increase CapEx or increase dividends and that’s the guideline that we’re focused on.

Clearly, as an organization, we're very focused on achieving that sooner rather than later. And we continue, I believe, to make progress on that.

We have also taken a non-measured debt from the balance sheet into net debt for example, we paid off the perpetual, which was $615 million, which is equity, which was previously equity-accounted but it was a higher costs and transferred that to.

So we will what will seeing is our interest expense cost it’s down 10% and that's a good reflection of how we're managing the balance sheet and that focus remains..

Thank you..

There being no other questions, thank you very much for participating in this call, and look forward to be talking to be talking to you for the next quarter. Thank you very much. Have a good day..