Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Usinas Siderurgicas de Minas Gerais SA (USNZY, Financial) achieved a 54% increase in production volume compared to the last quarter, marking the highest production level since 2010.
- The company reported the best EBITDA since Q1 of 2023, reversing losses from the previous quarter due to operational efficiency and cost reduction.
- Steel sales increased by 10% in the domestic market, driven by resilient demand in sectors such as domestic appliances and the automobile industry.
- The company successfully issued debentures worth 1.8 billion BRL, demonstrating strong investor confidence and extending its debt profile.
- Usinas Siderurgicas de Minas Gerais SA (USNZY) reduced its net debt and financial leverage, ending the quarter with 5.9 billion BRL in cash.
Negative Points
- The company faces challenges from high levels of imports and unfair competition, particularly from Chinese steel products.
- Despite improvements, the drop in iron ore prices significantly affected the company's margins.
- The Brazilian steel market is pressured by a surplus of steel from China, impacting domestic demand.
- There is a need for adjustments in Brazil's quota systems to address the growing import levels, which are 15% higher than the previous year.
- The company is dealing with the impact of high interest rates on the Brazilian economy, which could affect future growth projections.
Q & A Highlights
Q: What are the prospects for steel prices in the upcoming months, and how does the revenue per ton compare to the average of the quarter?
A: Miguel Homes, VP of Sales, stated that price increases were transferred during Q3 in both distribution and industrial contracts. The average price in the domestic market was impacted by the sales mix, but adjustments in distribution and industry were made. The net revenue for the next quarter is expected to be close to 1% above the average price of the quarter.
Q: What is the likelihood of transferring price adjustments to the customer portfolio, considering the penetration of import products?
A: Miguel Homes explained that industrial contracts have adjustments on a quarterly or semi-annual basis, following the trend of prices transferred to distribution. For Q4, a similar adjustment to what was performed in the distribution sector is expected.
Q: Should we assume that CapEx was cut and postponed for 2025? Which investments were canceled or delayed?
A: Thiago Da Fonseca Rodrigues, CFO, clarified that no CapEx projects were canceled or postponed on purpose. Delays were due to longer negotiations for assembly contracts and technical discussions with suppliers. The expectation is to maintain the CapEx level similar to this year.
Q: What are the expectations for cost reductions in Q4, and how much is connected to operational improvements?
A: Thiago Da Fonseca Rodrigues mentioned that while it's difficult to specify the exact impact, a COGS drop similar to the level seen from Q2 to Q3 is expected. The company is working on a long-term project with quick wins and mid-to-long-term gains to consolidate industrial operations and competitiveness.
Q: What is the situation regarding anti-dumping measures, and how will this impact imports if these measures are adopted?
A: Marcelo Chara, CEO, emphasized the need for defense against unfair competition, particularly from Chinese imports. The company is working with authorities to identify cases of dumping and expects technical investigations to lead to anti-dumping measures, which should reduce imports and create more opportunities for local industries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
