Usiminas’ Net Income rises 163% in 2018
With better prices and sales volumes, results reached R$ 829 million
Usiminas ended 2018 with net income of R$ 829 million, up 163% from the previous year, when it posted net income of R$ 315 million. Company Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the period was R$ 2.7 billion, compared to R$ 2.2 billion in 2017. Adjusted Ebitda Margin of around 20% remained stable in relation to 2017. Best prices and steel sales volumes in 2018 (4.2 million tons) contributed to a 4% sales result over 2017. Also noteworthy for sales of ore of iron (6.5 million tons), up 76% compared to 2017.
Regarding the fourth quarter of last year, Usiminas reported net income of R$ 401 million, compared to net income of R$ 289 million in the previous quarter (3Q18). Adjusted Ebitda from October to December last year reached R$ 830 million. From July to September 2018, it was R$ 703 million.
In 2018, there was also an increase in Usiminas investments, which totaled R$ 463 million in the period, compared to the R$ 216 million registered in 2017. In relation to financial indebtedness, the company's gross debt fell from R$ 6.7 billion on 12/31/2017 to R$ 5.9 billion at the end of 2018, a decrease of 12.1%.
According to Usiminas CEO, Sergio Leite, the company kept its solid growth trajectory in 2018, despite internal and external scenarios still quite challenging. Flat steel consumption in the country rose 8.9% last year compared to 2017 and industry sales rose 10.6% over the previous year. The CEO highlights that the company ended the year with the production of plates at full capacity at Ipatinga Plant, due to the restart of Blast Furnace 1 and with a 5% increase in rolling products output in Ipatinga and Cubatão, as well as the resumption of iron ore exports.
“In 2018, Usiminas ended a period aimed at recovering results. We are now beginning a new phase in which our focus is on the longevity of the company and the sustainability of business. To do this, we must go beyond numbers and act strongly in digital transformation, in changing the company's mindset, in managing people, in preparing our leaders to face the challenges that the Present and Future pose. The driving force of the new cycle we started in 2019 will be innovation”, says the CEO.
At Usiminas Mining (Musa) there was a 42.5% increase in iron ore production in 2018. It was 5.6 million tons in the period, against 4 million tons produced in 2017. In relation to the fourth quarter of the year, production volume fell by 4.5% when compared to the previous quarter. In the period, production was 1.4 million tons (4Q18) against 1.5 million tons in the previous three months (3Q18).
Ore sales volume, in turn, reached 6.5 million tons last year against 3.7 million tons in 2017, a 76% increase due mainly to the resumption of exports and the higher volume of sales in the domestic market. In the fourth quarter of the year, sales (1.5 million tons) decreased by 14% compared to the previous quarter, when they reached 1.8 million tons.
In the year, MUSA´s Adjusted Ebitda was R$ 203.2 million, against R$ 345.4 million registered in 2017, when the company accounted for R$ 201 million net of the agreement with “Porto Sudeste” (Southeast Port). In the last three months of the year, MUSA´s Adjusted Ebitda reached R$ 38.1 million, against R$ 82.8 million registered in the third quarter of 2018.
“Soluções Usiminas”, which operates in the steel distribution and processing markets, in addition to services and manufacturing of small diameter pipes, accounted for a net revenue of R$ 3.2 billion last year. The result is 30% higher than in 2017, of R$ 2.5 billion. The improvement was mainly due to an average price of around 17% higher, in addition to the growth in sales and services volume. In the fourth quarter, net revenue totaled R$ 831.1 million, a reduction of 11% when compared to the previous quarter (3Q18) of R$ 933.4 million, mainly due to the lower volume of sales and services in the period.
Last year, “Soluções Usiminas” Adjusted Ebitda had a historical record, totaling R$ 118 million, an increase of 16.7% compared to 2017 (R$ 101 million). In the quarter, Adjusted Ebitda was R$ 11.8 million, down 70.7% from July to September 2018, when the company registered an Adjusted Ebitda of R$ 40.4 million. The reduction was due to the lower dilution of fixed costs due to the decrease in sales volume and higher average prices of raw material.
At “Usiminas Mecânica” the year of 2018 ended with a gross profit of R$ 2.9 million versus a gross profit of R$ 9.4 million in 2017. The decrease is mainly due to the lower margins practiced in the projects provided for all business segments, especially in the area of railway wagons. In the fourth quarter of the year, the company had a gross loss of R$ 14.3 million, against the negative R$ 12.9 million registered in the third quarter of 2018.
“Usiminas Mecânica” Adjusted Ebitda in 2018 was R$ 21.4 million, negative an improvement of 35.9% compared to 2017, when it was R$ 33.4 million negative. In 4Q18, Adjusted Ebitda was negative by R$ 14.6 million, against the negative R$ 19.6 million in the previous three months (3Q18).