ArcelorMittal S.A. (MT) Q1 2026 Earnings Report, Transcript and Summary

Good afternoon, everyone. This is Daniel Fairclough from the ArcelorMittal Investor Relations team. Thank you for joining this call to discuss ArcelorMittal's performance and progress in the first quarter of 2026. Leading today's call will be our Group CFO, Mr. Genuino Christino. Before we begin, I would like to mention a few housekeeping items. As usual, we will not be going through the presentation that was published on our website this morning. However, I do want to draw your attention to the disclaimers on Slide 20 of that presentation. Following opening remarks from Genuino, we will move directly to the Q&A session. [Operator Instructions] And with that, I will hand the call over to Genuino.

Thanks, Daniel. Welcome, everyone, and thanks for joining today's call. As usual, I will keep my remarks brief and much of what I say will echo the messages from recent quarters. That reflects the consistency of our performance, the clarity of our focus and the discipline with which we continue to execute our strategy. What we are delivering at the bottom of the cycle positions us very well for the near future, particularly as more favorable policy conditions translate into a stronger operating environment with improving margins and returns. Alongside the impact of our growth strategy, this supports the free cash flow outlook and the delivery of consistent capital returns to shareholders. But first, I want to address safety. Our multiyear safety transformation program is now delivering more consistent and improved outcomes across our organization. Leadership expectations are clearly defined, risk management practices are being applied more uniformly and our focus on process safety has expanded across installations. Advanced analytics, including AI are strengthening these efforts, for example, enabling early identification of workers entering hazardous areas and triggering fast alerts and interventions that human monitoring alone. Most importantly, the sustained focus on safety is translating to tangible improvements in performance across the group. We provide a more detailed account of this progress in the sustainability report published last week, which I encourage you to review for a fuller picture of how we are advancing our safety objectives. Now I want to focus this quarter on 3 key points. First and foremost, our results consistently demonstrate clear structural improvements. In the first quarter, we delivered EBITDA of $131 per tonne, up $15 per tonne year-on-year and around 50% higher than our historical average margins. This clearly demonstrates the strengthening of our underlying earnings power over recent years. Importantly, this performance does not yet reflect the significantly stronger price environment seen in recent months, which we expect to be more fully evident in our second quarter results. Underlying free cash flow performance was robust. Excluding the seasonal working capital investment and the strategic growth CapEx, underlying free cash flow was running at an annualized rate of over $2 billion. Again, considering where we are in the cycle, this represents a strong outcome. Consistent and disciplined execution of our strategy is driving improved performance and providing the capacity to continually invest with discipline and focus and materially enhance the future earnings potential of ArcelorMittal. This brings me to my second point, our compelling growth opportunities, which clearly set us apart from our peers. We are allocating capital to the highest return opportunities. This includes projects that are actively enabling the energy transition, expanding our iron ore mining capacity and adding new value-added capabilities. We recently approved an EAF investment in Dunkirk. The decision was enabled by the more supportive policy backdrop, the cost visibility from a competitive long-term energy contract and the support of the French government. Our EAF projects are expected to deliver incrementally high EBITDA to provide an acceptable return on the capital deployed. So we have reflected Dunkirk together with the previously announced EAF projects in Sestao and Gijon into the expected EBITDA impact from strategic projects. This now stands at an incremental $1.8 billion from 2026 onwards. My final point is on the positive outlook, which is underpinned by trade policy. Given the change to trade policy, the steel sector today offers much more defensive characteristics, particularly in Europe than it did in the past. More effective trade protections are leading to increasingly regionalized market structures, enabling domestic producers to recapture market share from unfairly subsidized imports. The biggest shift occurring in Europe. We are very pleased with the agreement achieved in the new Tariff Rate Quota tool in Europe. As a result, we can expect this to be in effect from 1st of July 2026. Together with CBAM, this underpins our positive outlook for our European business. We are seeing stronger customer engagement, higher order inquiries and customers shifting more towards domestic supply. This is apparent in the material improvement in steel prices and spreads since the start of the year. As a result, despite the volatility of energy markets caused by the conflict in Iran, we continue to expect our production and shipments to improve across all regions in 2026. And we should see a clear improvement in our EBITDA in all Steel segments next quarter. As I conclude, the message is simple. We are consistently delivering structurally improved results while executing our strategy with discipline. Our high-return growth opportunity to differentiate us from our peers as does our track record of capital returns through the consistent application of our policy. That framework has already delivered a 38% reduction in our share count and a doubling of the dividend over the past 5 years. At the same time, we have advanced the business strategically, enhancing resilience and structurally improving returns on capital, all achieved while maintaining a strong investment-grade balance sheet. With that, Daniel, I believe we can begin the Q&A.

Great. Thank you, Genuino. So we have quite a long question -- list of questions already. So we will move to the first, which we'll take from Alan.

A couple of questions from my side. The usual question is probably a good place to start. If you can walk us through the usual profit bridges Q1 versus Q2? And where do you see the greatest delta in prices and volumes? And how are your divisional costs evolving sequentially, including the CO2 cost implications in Europe? That's the first question.

So I will ask Daniel to start with the bridge. Daniel, do you want to kick it off?

Yes, sure. Thanks, Genuino. And it's a very simple bridge, which you've already alluded to, I think, in your opening remarks, you referenced that we expect all of the Steel segments to improve in the second quarter relative to the first quarter. And the drivers behind that improvement are common across the segments. So it's a theme of improved volumes and improved prices. So that's applicable to Europe. It's applicable to North America, and it's applicable to Brazil.

Yes. Perhaps then I will add, Daniel. I mean the point on carbon cost, I mean, as you know, I mean, we have the new benchmarks, right, from beginning of the year, and that's ETS 4.2. So I'm sure you know what it means in terms of reduction of free allowances, right? But I think what is important here, and we have in our results is that now with CBAM, which so far, based on what we can see, is proving to be very effective, right? I mean we see that prices since the introduction of CBAM has moved up by this year, just look at the index almost EUR 100, right? And you don't see that yet in our results. You see, of course, the costs in Europe already, right, as we accrue the higher CO2 costs, but you don't see yet the benefits of CBAM, that's I would say. So that should come, of course, from quarter 2 onwards.

And my second question is, if you're able to give us some qualitative color on the European customer behavior, how receptive are they to the new pricing frameworks both CBAM and the upcoming safeguard? And are you worried about inventory levels in Europe? Or are you seeing any client retrenchment because of the Middle Eastern conflict? So any color you can give us on your customer profile in Europe today would be much appreciated.

Yes. Well, I made some comments in my prepared opening remarks, right? We are seeing more activity. The order book is good. So when I compare where we were last year, I would say the order book is stronger. We see customers trying to develop the relationships -- so that is all supportive, Alan. That's good. So -- and that's why, I mean, we feel, of course, confident to confirm the guidance that we discussed at the time of Q4 results, higher shipments in Europe year-on-year, right? And I would expect our second half actually to be stronger than the first half, which is, as you know, unusual. Typically, our second half is weaker. But because of everything that we are discussing here, I would expect shipments in the second half to be actually stronger. Yes. So I think it's all moving in the right direction.

Great. So we'll move now to take a question from Bastian at Deutsche Bank.

My first one is also a follow-up actually on maybe your guidance, particularly on the steel production side in Europe specifically, which was, I guess, very low in terms of production in Q1. And you talked about the maintenance, but shipments were down quite a lot as well, which I guess one could say is a little bit surprising given the impact from CBAM we've seen already as well as maybe some withdrawal from imports. So I'm wondering how far we will see a real catch-up in the second quarter driving very strong year-on-year growth and whether you would be able to even give a bit more detail on that, that would be great. That's my first question.

Yes. Sure, Bastian. Yes, you're right. So we are, of course -- and as we discussed in Q4, we had maintenance in some of our facilities, right? And we have just 1 or 2 days ago, restarted one of our furnaces in Poland. And we continue to work on our furnace in France and Spain. So we're going to be in a position to bring back the capacity as and when we see the demand, right? And as a result, the furnace in Poland is already -- we are ramping up that as we speak. I mean inventories, and I have not really touched on it, so I should do it now. I mean we know that imports were quite elevated in Q4, right? We saw imports coming down in quarter 1, right? But evidence suggests that imports, at least at the beginning of quarter 2 elevated. So you still have players to try, of course, to get materials here before the new TRQ starts from 1st of July. Having said that, we don't believe that inventories are too high. I mean, of course, they are higher than, I would say, normal levels, but not so high. So our expectation is that the new TRQ comes into place, this inventory should normalize relatively quickly.

Okay. And in terms of what this means for, I guess, the overall cycle, I guess there are some players in the market, which do expect that imports in the second quarter will basically go up before they fade in the second half. Is this the view you do share as well? And I guess, what is your view maybe particularly also on the pricing side, prices have been very strong already. But is your view that rely comes third quarter, we will see further price dynamic most likely kicking in, in Europe? Or will it take longer to maybe digest and work through, I guess, inventory overhang, whatever disruptions we could see?

Well, Bastian, I mean, what we are seeing, I mean, we saw prices actually moving up during the quarter, right, actually accelerating from beginning of the Iran war, also in response, right, to cost pressures. So I think it's fair to say that imports in quarter 2 should still be high, right, as we discussed because just it's normal, right? So players are trying to get the materials here before the new TRQ. But again, it's not ideal, of course. We're going to need to work through that. But we don't expect that to really be to take the market long to absorb that. And of course, on prices, as you know, we cannot comment, right? We can -- I can only refer you to what we are seeing. If you look at the index, it's right? I mean we have a nice -- not only prices increasing during the year, but it's spreads, right? So when you look at the spreads also evolving positively, also as a result of introduction of CBAM at the beginning of the year. I think we need to look at the European market. As we have always been saying, right, it is the combination of the 2 CBAM and TRQ that is very, very powerful here, right? And we have one piece, and we're going to have the second piece now from 1st of July.

Okay. Great. Maybe a very quick one on India, which you didn't mention in your early second quarter indication. I guess we have seen decent performance actually in Q1. Prices also picked up, but then there is obviously the energy situation. So I guess, what is the trajectory for India into the second quarter?

Yes. It's also good. You're right. So because of the DRI, we are more exposed to gas in India. But as you know, I mean, we have -- we are fully hedged, Bastian. So we don't expect cost pressure coming from gas in India. So we are fully hedged. And the price environment has also improved, which already benefited Q1, right? And we would expect also a good second quarter for our Indian operations.

So we'll move to take the next question from Reinhardt at Bank of America.

First one, maybe just we've spoken a lot about inventories, and it seems like it's creating a bit of an uncertain picture around when this domestic demand will kind of kick in. What are you seeing across the European steel industry in terms of capacity mobilization -- outside of the actions that you've taken, do you think that the European industry is ready for the challenge of producing that additional volume?

Well, Reinhardt, I'm not going to talk much about what the competition is doing, right? I think what we have been saying very consistently is that ArcelorMittal is in a good position, right, to take our market share of the reduced imports and we can do more, right? So to the extent that others cannot, so then we're going to be in a good position as we talked about, we have a lot of flexibility here. So we have the finances that we can bring back. We have the possibility to bring back blast furnaces. We have more downstream capacity. So we're going to be in a good position here to make sure that the market is supplied that we don't have any shortages in the -- as a result of this.

Understood. That's very clear. Just maybe a second question on the Dunkirk EAF investment. You're looking to do any kind of downstream additions there or to get any changes in your product mix maybe out of that capacity as you go through the capital allocation?

So can you repeat the question? I'm not sure that I got it.

Yes, sure sir. So as you're converting over to EAF, are you looking to add any downstream investment as well, any kind of finishing capacity as part of that project?

No, not really. We're going to be able to, of course and that's why the CapEx can be reduced to some extent because we're going to be able to still use some of the equipment there, right? And downstream will, of course, be intact. We're going to be able to -- so basically, what you're changing is the upstream, right? So instead of the blast furnace and the converters, you're going to have the EAF, the ladle furnaces and then we're going to just follow the normal process of that plant. So we should be in a position to achieve the same mix, which [indiscernible] as you know, it's quite high. We have a very quality high order book there, which we, of course, it's very important for us to protect. And that's exactly the idea here that we should be in a position to produce the same grades as we can today with the blast furnace.

So we'll move now to take a question from Boris at Kepler Cheuvreux.

The first question is about the new capacity restarts at both in France and Dabrowa in Poland and plus EAF capacity in Spain. How much capacity are you bringing back with those new furnaces? And the second question would be on North America. Are you still facing the same headwind about the tariffs, Section 232? And can you share with us the expectations you might have for the coming renegotiation of USMCA agreement?

Yes. So we have a couple of questions there. So the first one on the capacity in Europe. So all these furnaces, they are 2-plus million tonnes. So they are relatively large-sized furnaces. As I mentioned before, so we started [indiscernible], and we are getting ready in force and also in Spain, right? And we'll, of course, announce when we are ready to bring these furnaces back up, right? But we're just doing all the work so that we are in a position to restart them when we need them, right? In North America, look, I mean, the USMCA, I mean, it's early days. I think we have to wait to see really how it starts, right? It's probably wouldn't be right for me to speculate. The only thing I can say is that we hope that the outcome will be one that we feel that we can operate as a single block, right? I think for us, for our business, what would be ideal is that we have Mexico, we have Canada, putting the same barriers against the imports that we have similar protection as we have in the United States, right? And then the material then can flow. So that's what I would say. I think we have to wait there, Boris.

Okay. And just the current headwind that we still something like $150 million per quarter due to that.

Yes, there is no change there. The headwinds remain basically the same, Boris.

Great. Thanks, Boris. So we'll move now to take a question from Tristan at BNP Paribas.

I have two questions. The first one is a question on North America and Section 232. We've seen recently that there could be some relief for Mexican, Canadian producer to build new capacity in the U.S. to supply the auto market. Do you believe this could be retroactively applied to your first Calvert EAF? And if not, is that a consideration for the potential second one?

Yes, Tristan. So I think it's important to be clear, right? So that today, we are not receiving any tariff relief, right? And all imports into the U.S., including from Canada and Mexico continue to pay Section 232, 50% tariffs. I think you know our position on tariffs, which is very consistent. For over 20 years, we have been arguing that the global steel industry has been suffering from overcapacity and continuously pushing for fair trade, whether it is in the U.S., Brazil, Europe, Canada or other parts of the world. So we do fully support the Section 232. But we also support being able to operate, as I was saying before, as one regional market across North America and that there are no tariffs on steel that is melted and put in Canada and Mexico. And as you know, we have been seriously considering the second EAF in Calvert as the U.S. is an attractive market to make steel. And in terms of potential tariff release, as you know, tax has been now published, designed to stimulate additional investments in the U.S., and we are analyzing it. So it's a lot of details has now been published, and we're just going through that. And the answer is not really a clear yes. We still need to study it. And I just want to also just take the opportunity as a lot has been written on this topic. I would actually like to also take the opportunity to confirm that we are contributing steel to the White House Ballroom. So approximately 600 tonnes have been delivered to date. As you know, we have a track record of both supplying strong high-quality steels to U.S. customers and donating steel to iconic buildings and projects around the world that showcase its strength and flexibility. Just to give an example, when the Freedom Tower was one of the strongest steel in the world, they came to our facilities. So we are pleased to add the White House to the list of iconic American buildings where our steel will stand strong for years in this country. So we just need to wait a bit more. We're going to go through the details, and then we're going to be in a position to update everyone.

Okay. Okay. No, that's clear, but that's a potential thing to consider. My second question is on the green steel economics in Europe. I was a bit surprised to see that you were only targeting $200 million of EBITDA for your 3 EAF projects. Because if I understood correctly, Sestao in Spain is potentially adding another 1 million tonne of new volumes. Gijon is replacing 1 million tonne and Dunkirk is replacing 2 million tonnes. So that's close to 4 million tonnes of EAF steel. And it does not look like there are much of productivity gains or green steel premiums baked into that. So maybe if you could discuss a little bit the high-level assumptions you're making and perhaps the delta is on the cost base and if you expect a big increase there from moving from BF to EF.

Well, Tristan, there are a couple of points there, right? I think it is important to appreciate that we are talking about -- we are just giving you the incremental EBITDA, right? So it's incremental to what we are adding today. So -- and as you know, the idea here is that we're going to be except for Sestao, where we are really increasing capacity. In Dunkirk, we're going to be replacing one furnace. So we are not really looking to increase capacity. So what you have is really what is incremental. And then I think it's also important to take into account the amount of the investments, right? And that's why we were so focused as a company to make sure that we have the right conditions, right, so that we can justify this investment. That's why the focus on making sure that we have visibility in terms of CBAM, visibility in terms of imports [indiscernible]. We have visibility in terms of our energy contract, which we now have for this project, as you know. So I would encourage you also to look at what is the net amount of this CapEx, right? And then in the case of Dunkirk, not only you're going to have the 50% support through the white certificates, but we're going to also be in a position to avoid the reline of the furnace that we're going to be replacing. So that's why in the end, we feel that we're going to be in a position to earn a return on our investment. And when it comes to the assumptions, we don't want to be too specific about it, Tristan. As you can imagine, this is also commercially sensitive. We have our teams going out and marketing already for the future of this contracts, the green steel. I mean, as you know, for some time, at least we believe that this will be limited, right? And I think this is -- it's -- our teams are out there. So we don't want to be talking too much about the assumptions.

So we'll move to take the next question, which I think will be from, yes, Ephrem at Citi.

I'm just trying to understand the Page 12 AMNS future growth optionality figures. There's 15 million tonnes from Hazira, 8 million tonnes from Andhra, which gives you 23. My understanding was that Hazira was after 15, there is an optionality of Phase 2a to 18 and then Phase 2b to 24. And then obviously, the Greenfield in Andhra is sort of separate. So is the Phase 2 being delayed? Is that how we should sort of interpret that in favor of pushing ahead with the Greenfield in Andhra in order to balance the balance sheet and skill sets?

I think you're right. I mean, of course, we have to phase it, right? And absolutely right. So we have in front of us the 2 options. And it continues to be an option for us, right, to take Hazira further, and that will most likely happen over time as well. But right now, yes, that's the sequencing that we see, right, and which is to start Andhra. And yes, and Hazira will remain an option for us as well as after we complete this first phase in Andhra, we can go also for another phase, right? So the 40 million tonnes vision for the Indian operations remain intact.

And then you've said that obviously, your current energy situation is manageable, hedging and support of policies framework for insulates margins. Can you give us a sense of time line for that in terms of how long -- because, I mean, energy prices could remain high for 6 months, 12 months, 2 years. So if they remain for how long would your hedging policies cover it? And at what point do you think you and the industry will have to start thinking about energy surcharges in your steel?

Yes. Well, specifically in India, we are -- our program goes -- it's a multiyear program, Ephrem. So I think we are in a good place there. So it's a multiyear. And even in Europe for gas, we will also have a multiyear plan program. So I think we are -- as I said, I think we are in a good place.

Great. Thanks, Ephrem. So we'll move to the next question, which we'll take from Cole at Jefferies.

I'd just like a little bit of color on the metals on iron ore, just the ramp-up on volumes and how you see that into the second quarter? Just any color you can provide? And then I'd also just like to follow up on imports into Europe ahead of the trade barriers. I mean we've seen a lot of logistics disruptions globally. Do you think that there's a possibility that everyone is expecting a lot of imports into Europe, but considering the supply chains, we just don't see them delivered in time or customers potentially pull back on some of those orders just considering they might not meet the delivery dates. Just any thoughts on that?

Yes. So maybe I'll take this one, Daniel, and then maybe you can comment on iron ore. So you're right. So I think what we are seeing, of course, is at this point in time, what we are seeing is more a cost issue, right? We are seeing freight rates going up. And of course, some of the journey is also taking longer because of the conflict. But it's not something that we believe should be delaying the arrival of the materials. So I think that's why as we discussed, we feel that the second quarter should still end up with elevated levels of imports, right? And as a final quarter and then from Q3 onwards, the new TRQ comes into play. And I would say that this window is now closed, right, as we are here almost the beginning of May, the window to imports, they are basically under the existing safeguards regime are getting close to an end. And the fact that we don't have yet the quotas for the new TRQ split by country, I mean, it makes it even a little bit harder for imports, right? So that's what we are seeing. Dan, you want to talk about the iron ore?

Yes. Sorry, Cole, would you mind just repeating that question?

Just a little bit of color on the iron ore production that you're expecting into 2Q and any of the phasing through the year, just so we can think about that in the model?

Yes, sure. So thank you. So we did have obviously a good start to the year in Liberia, another record production shipment quarter. So I think as we -- and that will just continue over the next 3 quarters. So we've signaled in our initial guidance at the beginning of the year that we expect to be at full capacity in the second half and to achieve at least 80 million tonnes of shipments. So yes, I would just be -- that's how we would be factoring it into the model. Some further improvement in the second quarter. I expect that we will navigate the rainy season through Q3. We continue to improve on our ability to navigate that. And then I would expect we should finish with a strong fourth quarter performance.

And then maybe just following up on iron ore. You've been very clear that the energy situation is manageable across the rest of the business. But are there any things we should be thinking about in iron ore costs just for diesel, et cetera, on the mining side?

I think the only thing I would call out, Cole, is freight, right? I think the profitability of mining in Q2 will depend, of course, much more, of course, where prices finally land and freight, right? So oil will have an impact as well. But based on what I see today, I would be more focused on prices and freight.

So we'll move to the next question, which we'll take from Andy at UBS.

I've got a few follow-ups to previous questions. Just on that potential tariff carve-out in North America. My understanding is it's based upon volumes sold just into the auto sector. So if you ship slabs from Mexico into Calvert, would you -- is it your understanding you potentially get some relief on those if they then be sold into auto? That's the first one. I've got a couple of ones to follow.

Andy, as I said, I mean, we just got all these details, right? And the teams are busy going through that. So I don't want to anticipate the analysis. If you don't mind, I think we will address that with you next quarter. I'm sure we'll have more color and information to provide on that.

Yes. Okay. No worries. And just a couple of modeling ones. On the Ukraine contribution, I mean, that was obviously a drag in the first quarter. Can you quantify that on EBITDA? And do you see anything changing into 2Q?

Yes. Yes, it was -- Q1 was a challenging quarter for Ukraine, right? So energy prices, in particular, really very, very high. So as we discussed before, so Ukraine, they have been managing relatively well, right? So in the whole of 2025, as we discussed, at EBITDA level, they managed to be basically neutral, still free cash negative, of course, because of CapEx. Q1 EBITDA was negative as a result of the high energy costs. Energy has come down, so which is good news. So we do expect to do better in the second quarter, right? But as we know, the situation remains very challenging. But at least on that front, we expect to do better, and that has been really one of the key drivers of the result.

Okay. That's clear. And just finally on Mexico, the operating issues that you had last year, there was a little bit of overspill into 1Q. Like how material was that? I think you -- I think maybe in the fourth quarter, you called out 65 million hit. I mean what was the equivalent number in 1Q? Was it material?

Yes. So the evolution in Mexico is very good, right? We started the blast furnace, which is producing long products. So we were not yet at full capacity in Q1 in long. So we're going to be at full capacity in quarter 2. So I would expect our production and shipments in North America to continue to improve as we move forward, right? But it's no longer, of course, the same magnitude that we had in prior quarters. So I think it's a very good evolution. As we discussed at the time of Q4, you see profitability in North America almost doubling, and we should continue to see progress going forward in the second quarter. But production is now up and running, and it's only now the full capacity of this furnace that you should see in quarter 2.

So we'll move now to take a question from Timna at Wells Fargo.

I wanted to actually double-click as the kids say these days on North America just a bit more, if I could. I think we obviously, as you pointed out in the last response, seen a nice benefit. It was the biggest contributor to Q1 over Q4 from rising prices. You have some locked up in annual contracts. Can you talk to us about how auto annual contracts fleshed out a bit or give us high-level color on that? And then also, do you think that you could see the same order of magnitude in the U.S. into Q2 given the pace of price increases? And then also I wanted some more color on how Calvert was ramping up?

Yes. So automotive, I mean, as you know, in U.S., our contracts, they are really the negotiations happen throughout the year. It's a little bit more spread out compared to Europe. In Europe, we have a concentration really at the beginning of the year. In U.S., it's more, I would say, more like 30% Q1, 30% from quarter 2 and then the rest is 25% is Q3. And so I think we are doing well. And as you know, we don't really comment so much on the outcome of these negotiations. But I have to say that they are going in line with our expectations. It's good. The ramp-up at Calvert, the EAF is progressing. So in quarter 1, we were a little bit running above already 20%, 25%, and we are progressing. We believe that by the end of quarter 2, we should be at much higher levels. And we remain optimistic that we're going to be getting close to ending this ramp-up phase by the end of this year, Timna. And then if I have... Go ahead, Timna.

No, I just wanted to ask about if you would be able to quantify the extent of the price increase in Q1 over Q4, if that could be sustained given recent price strength continuing into Q2?

Yes. Look, we're not going to be quantifying that, but I mean, I think you know very well how prices have moved up in the U.S. I mean they continue to rise, and you should see that reflect in our results. We talked about automotive, the annual contracts and how much is resetting, right? So yes.

Okay. And one further one, if I could, please. We're hearing a bit about switching away from aluminum to steel. In the U.S., of course, it's been a more extreme change in prices between the 2. But even in Europe, to the extent that the BYDs are getting built and have more steel amount in them versus aluminum. So it would be great to get any observations that you're seeing on switching away from aluminum to steel and automotive.

Yes. So when we look at -- I think you're right. I think this is -- to be honest, it has been at least now less of an issue. We continue to be very focused on that, showing the benefits of steel to our customers. I think we have been very successful there, Timna, as you know. So I think we continue to make improvements there. So it's not something that I would highlight to you as a big concern that we have at this point, right? But of course, we remain very focused on R&D, making sure that we have the right grades, we achieve what customers want. So we have successes. And so when we look at the level of intensity, steel intensity on average, we see relatively stability.

So we'll move now to a question from Tom at Barclays.

Just one quick follow-up for me, just on Ukraine, you talked about obviously high energy costs having an impact in Q1. Are you seeing anything from CBAM impacting Ukraine? I guess one of your Ukrainian peers has called out CBAM as being quite a big disruptor for Ukrainian steel going into Europe. I think it's not exempt at the moment. There's been a few articles saying maybe some order cancellations. Yes, are you seeing any kind of impact there?

Yes. I think there was the expectation that Ukraine will be exempted, right? And they are not. And we believe that is right. There shouldn't be exemptions, right? At the same time, prices are increasing in Europe. So if you have the right cost base, of course, then you should be competitive. In our business, of course, we are focused in Ukraine on the domestic market, right, and also selling pig to different parts of the group. There's good demand for pig, which we continue to sell.

Sorry, I didn't quite catch that. Did you say it shouldn't be or it should be exempt from CBAM?

It shouldn't be an exemption.

Shouldn't. Okay. So you're focusing more on the domestic market. And you would say there was some kind of earnings impact that I guess, persists into Q2 if an exemption doesn't come through. Then just second question, just on sort of buyback thoughts really. I mean I know your capital allocation policy hasn't changed. We haven't seen any buybacks for nearly a year now. If I look at your free cash over the last 12 months, it is positive. And I guess you're talking about earnings ramping up through the rest of the year. Is that sort of back on the cards potentially to restart that buyback program?

Well, I think you're right. So you know our policy, right? And we had, by the way, in Q1, our first quarterly dividend which was paid. We remain very optimistic that we're going to be free cash flow positive this year. And then the policy will kick in. And based on the visibility that I have today, I see no reason why we would not go above the minimum 50% as we have been doing in the last couple of years. And if I can remind everyone, the policies has been really great. I mean we bought more than 38% of our stock. And I think we are close to restart that.

Okay. Great. And sorry, you just said I'm so optimistic free cash flow positive this year, then the policy will kick in. Does that mean the policy only kicks in once you sort of see the full year numbers in? Or is it more dynamic than that if you have visibility, you could start sooner?

Yes. I mean it is more dynamic.

Great. So we have time for maybe 2, 3 more questions. So the first, we will take from Max at ODDO.

So first question is you published last week a sustainability report where you cut your carbon emissions objective to minus 10% from minus 30% previously by 2030. I think the new objective is very dependent actually on being delivered on time in 2030. So my question is what would be, in your view, a more realistic time line for the 30% reduction? Is it the mid-30s, late 30s, even beyond? And how should we think about the sequencing of the next EAF projects in Europe? Are you waiting for Gijón to be delivered and ramped up before potentially launching investments? Or will it come perhaps even later?

You want to start with this one, Daniel?

Yes. Thanks, Genuino. So I think you're right to observe the change to our 2030 target. We well flagged that, I think, in recent reports and communications. What's, I think, important to take away is that, that 2030 target is based on the announced projects. So it's a number that we are confident we can achieve and that's why we updated it. In terms of the timing of the next EAF projects, I think if you look at our communications on our messaging, we've also been quite clear that our EAF projects are going to be sequential. So we don't expect significant overlap on any of our blast furnace to EAF project. So the focus right now is completing Gijón. We've just announced Dunkirk, and that will occupy us for the medium term. And then the intention and time is to obviously communicate on what the project that will then follow will be. So let's really focus on getting a smooth start to Dunkirk at this stage, and then we will update on the next project in due course.

Okay. And just the second and last one is about the German stimulus plan. So expectations in recent weeks have come down actually amid the red tape, other priorities perhaps an infra for the new German government. So what's your latest view on the topic? You were quite vocal previously on it saying that it could increase demand in Europe by around 2% per year over the next 10 years. Is that still your scenario? And when do you expect that to really kick in already next 2 2026 or it's more of a story of 2027 or even 2028 based on your latest understanding?

Well, I mean, to be honest, I mean, we don't see any significant change there. I mean when we look at the impact of the program. We start actually to see some activity, right? So I don't believe that the overall numbers that we talked about, they will change. I mean we -- at least that's not the intelligence that we have. We will, of course, have to -- we'll keep monitoring that. But I think we are progressing as the progress is happening there.

Great. So we do have time for 2 more questions. So we'll take the first from Dominic at JPMorgan.

Just 2 quick questions. You've spoken and given us a lot of granularity on Europe. And again, just maybe coming back to the U.S. given how tight we see that market at the moment, do you think there's any possibility that you actually run harder through Q2 than normal? So obviously, we often see a summer slowdown. Do you think there is potential that given the state of lead times that you may run harder than normal? And second question, just on -- so any kind of obvious cash flow items we need to be aware of for Q2 modeling for the net debt bridge.

Dominic, so in U.S., I mean, as you know, I mean, we are running our facilities full. I mean Calvert, we have been running at high levels, and that will continue, right? So where you're going to see improvements in terms of production shipments is going to be more really in Mexico and a little bit also in Canada, right? And the focus in U.S. for us right now is to ramp up EAF as we talked about, that will bring more results, so it should contribute to results. And the second part of the question, can you repeat that for me, please?

But just in terms of modeling for net debt in Q2, are there any...

I would not -- Daniel, I would not focus so much in quarter 2, right? I mean I guess my message is more really when I think about the year as a whole, as you know, we have -- typically, we will have a larger release of working capital in the second half. That should continue to be the case despite all the improvements that we are discussing, we are seeing, right? And we explained that because we built some strategic inventories at end of last year that we're going to be releasing. So despite all the good developments that we are seeing in terms of prices, volumes in the second half, our expectation is that for full year, working capital should not really be consuming a significant amount of cash, which should then support even more the free cash flow generation.

Is that helpful, Dominic? So I think the focus there just to reiterate is normally, the working capital movement in Q2, Q3 is not a major delta in the cash flow bridge, where it is a major delta is normally Q1 and Q4. So normally, we invest in working capital in the first quarter, and this year has been no different. And then normally, we see a nice release of working capital in Q4 and Q2, Q3 normally that's broadly a wash. Great. So I think we will now move to the last question, which we're going to take from Matt at Goldman Sachs.

I have one question on your Indian operations, perhaps in 2 parts. Genuino, you mentioned costs are largely hedged, that's fine. But given India's reliance on gas imports primarily from the Middle East and some of your peers flagging shortages, could you outline where you're sourcing your gas from today and whether you've received any force majeure on future deliveries? And then just a follow-up, given your use of gas-based DRI and captive power, what measures can you realistically take to manage gas availability or reduce gas intensity across the Indian operations?

So I think we are in a good place there as well. I mean we have different sources of gas. So we are not really dependent only on Middle East. So we are in a good place. So we have not had any force majeure. So we have received all our gas. We have no indication as we speak in end of April, beginning of May, no indication of force majeure. So I think we are -- as we discussed, I think we are in a good place there. So we are not expecting any disruptions because of availability for sure on the price and also on availability, it's not something that we are overly concerned at this point.

Great. So I'll hand back to Aditya Mittal for any closing remarks.

Yes. So thank you, everyone. Before we close, let me briefly reflect on the key messages from today's discussion. First, our first quarter performance again demonstrates the structural improvement in the earnings power of ArcelorMittal. Margins are well above historical levels with the further benefits of more favorable policy still to accrue. Underlying free cash is annualizing at over $2 billion. Second, we have a clear and differentiated growth pipeline. Our strategic investments are supporting our results and materially enhancing our future EBITDA potential. Finally, the positive outlook for our business is underpinned by more supportive trade policy, especially for Europe. More effective trade protections are fostering a more regionalized market structure, providing a robust platform for higher capacity utilization and profitability and higher and more consistent returns on capital employed. Alongside the impact of our growth strategy, this supports the free cash flow outlook for ArcelorMittal and the delivery of consistent capital returns to shareholders. With that, I will close today's call. And if you have any follow-up questions, please reach out to Daniel and his team. Thank you again for joining us, and I look forward to speaking with you soon. Stay safe and keep those around you safe as well. Thank you.