Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Companhia Brasileira de Aluminio SA (BSP:CBAV3, Financial) achieved an all-time high utilization rate of potlines, reaching 93,000 tons of liquid aluminum, indicating operational stability.
- The company reported an adjusted EBITDA of BRL409 million with a margin of 19%, the highest since Q2 2022, reflecting stability in costs and favorable pricing.
- Companhia Brasileira de Aluminio SA (BSP:CBAV3) is positioned in the first quartile of the global cost curve due to vertical integration with Alumina Energy, providing a competitive edge.
- The company successfully managed its debt by making an early payment of BRL469 million, improving its debt profile and reducing financial costs.
- Companhia Brasileira de Aluminio SA (BSP:CBAV3) continues to receive recognition for its ESG efforts, including participation in Climate Week and partnerships for low carbon aluminum.
Negative Points
- The company faced increased energy costs due to lower hydrogeneration, impacting the average cost of production.
- There is uncertainty in the real estate market recovery, particularly in China, which could affect future demand.
- Companhia Brasileira de Aluminio SA (BSP:CBAV3) is operating at maximum existing capacity, limiting immediate growth potential without further investment.
- The global aluminum market experienced a surplus, and demand in key regions like the US and Europe remains weak, affecting pricing dynamics.
- The company anticipates potential increases in production costs due to currency fluctuations and rising input prices, such as anodic paste and energy.
Q & A Highlights
Q: How is Companhia Brasileira de Aluminio (CBA) planning its CapEx for the upcoming year, and what are the expectations for production costs and utilization rates?
A: Camila Abel, CFO, stated that CBA plans to allocate approximately BRL800 million per year for sustaining costs, modernization, and expansion projects. The company has flexibility in managing these investments. Regarding production costs, there was a reduction in CPV due to input costs and hydro seasonality, but currency devaluation could impact costs, particularly for dollarized inputs like anode paste.
Q: What is CBA's outlook on the bauxite and aluminum supply chain, and are the current disruptions considered structural or temporary?
A: CEO Luciano Alves explained that the disruptions in the bauxite and aluminum supply chain are seen as temporary, caused by various small impacts across different phases of the chain. While these issues are expected to be resolved, the market remains sensitive, and the timing for normalization is uncertain.
Q: How does CBA view the current demand in the local market, and what are the implications for capacity and supply?
A: Luciano Alves noted that demand in the local market remains strong, particularly in the civil construction and automotive sectors. CBA is operating at full capacity, and while there is room to grow production through increased use of recycled materials, the company will focus on optimizing its portfolio and profitability.
Q: Can you provide more details on the energy contracts and the potential impact on CBA's financials?
A: Camila Abel mentioned that CBA has completed the reduction of contracts with exit options and has secured new contracts at competitive prices. The company expects to maintain an exceeding volume of around 150 megawatts on average, which could be traded for additional revenue if energy prices remain high.
Q: What is the expected impact of the current energy and input cost dynamics on CBA's EBITDA?
A: Camila Abel indicated that while there is an expected increase in energy costs due to new contracts, this could be offset by trading exceeding energy volumes. The impact on EBITDA will depend on currency fluctuations and energy prices, with potential for minimized effects through strategic trading.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
