Usiminas posted net income of R$ 108 million in 1T17
Adjusted EBITDA in the first quarter of the year, of R$ 533 million, reached best result for the last eleven quarters
After 11 quarters, Usiminas returned to net income and posted a positive result of R$ 108 million in 1Q17, compared to a net loss of R$ 195 million in the previous quarter. In the same way, consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) consolidated in the first three months of the year reached R$ 533 million, the best result since 2Q14. Adjusted EBITDA margin (represented by EBITDA over net revenue) in the period was 22.7%, more than the doublerecorded in the fourth quarter of 2016 of 11 %.
The figures reflect mainly the better performance of steelmaking activities, which showed an increase in sales volume and prices, and a series of measures adopted to increase the company's competitiveness, such as cost reduction, expense control and prioritization of investments. “The favorable balance of the first quarter is the result of intense teamwork focused on the revitalization of the company, which included restructuring its industrial configuration and production capacity, reducing costs and increasing sales volume and price”, reinforces Usiminas CEO, Sergio Leite.
According to Sergio Leite, improving the company's results is a key factor for business sustainability. “The good performance of the company, translated into the figures presented today, gives us confidence that Usiminas is on the right track. The country's economic environment is still challenging, as well as the Steel market, but we will continue to work hard to consistently generate results and, consequently, increase Usiminas' leadership in the flat steel sector”, he says.
Another highlight of 1Q17 results was the 11% increase in Usiminas' net revenue, which increased from R$ 2.12 billion in the last quarter of 2016 to R$ 2.35 billion in January and March of this year. In addition to the performance of steelmaking industry, the highest prices and volume of sales presented by “Soluções Usiminas”, a group company dedicated to the processing and distribution of steel, as well as the increase in ore prices, contributed to this figure, with repercussions to “Usiminas Mining ”.
Usiminas' cash flow was also positively impacted in the 1Q17, from R$ 2.26 billion in 4Q16 to R$ 2.42 billion, a 7% growth that signals the beginning of the resumption of cash generation by the company. “In addition to generating results, cash preservation is one of Usiminas' greatest challenges,” says CEO President Sergio Leite.
In 1Q17, crude steel production was 737 thousand tons, 5% lower than in 4Q16. On the other hand, total steel sales in 1Q17 totaled 930 thousand tons, an increase of 4% over the immediately previous quarter, when 891 thousand tons were sold. Of the total sold in the first quarter of 2017, 825 thousand tons (89%) were destined to the domestic market, a stable figure when compared to 4Q16. The remaining 105 thousand tons (11%) were exported, an increase of 48% compared to 4Q16, when 71 thousand tons were sent to the foreign market.
In 1Q17, Usiminas posted a CAPEX of R$ 23.4 million, a decrease of 65.3% over the last quarter of 2016. Of total investments in this period, mainly invested in maintenance CAPEX, approximately 77% were destined to the Steelmaking Unit, 11% to Mining, 9% to Capital Goods and 3% to Steel Transformation.
“Soluções Usiminas” had a net revenue of R$ 567.0 million in 1Q17, a result 18% higher than the R$ 480.3 million recorded in 4Q16. The increase is due to the growth of sales and services volume in the period, around 11.5%, as well as the increase of 5.9% on the average price. The unit's Adjusted EBITDA also increased 303.5% in the quarter compared to 4Q16, from R$ 9.1 million to R$ 36.9 million. As a result, Adjusted EBITDA margin was 6.5% in 1Q17, against 1.9% in the last quarter of 2016.
Usiminas Mining net revenue increased 38% in the period, from R$ 78.5 million to R$ 108.3 million despite a 2% decrease in the volume of ore sales in 1Q17 compared to the fourth quarter of last year. This result is due to the 33.7% increase in prices of “Usiminas Mining”, reflecting the increase in PLATTS in the international market. As a result, MUSA's Adjusted EBITDA recovered 115.4% from 4Q16, from R$ 23.9 million to R$ 51.5 million. The Adjusted EBITDA margin was 47.6% in 1Q17, against 30.5% in the previous quarter.
Impacted by the stagnation of projects in the infrastructure sectors in the country, its main consumer market, Usiminas Mecânica saw its net revenue drop by 22.3% in the 1Q17, ending the quarter by R$ 82.7 million, against the R$ 106.3 million recorded in 4Q16. Nevertheless, Adjusted EBITDA in 1Q17 was R$ 4.2 million negative, better than the negative R$ 7.5 million in 4Q16, due to the reduction of fixed expenses in the period. Adjusted EBITDA margin in 1Q17 was 5% negative, as opposed to 7% negative in 4Q16.
Usiminas is the leader in the Brazilian flat steel market and one of the largest steel complexes in Latin America. The company has industrial and logistic units located in six states of the country and is present throughout the steel chain – from the extraction of the ore, through the production of steel until its transformation into products and capital goods customized for the market. Today, it has the largest and most innovative Center for Research and Development in steelmaking in Latin America. The progress recorded by the steelmaker in recent years guarantees innovation, technology and quality in all production lines, and allows the company to offer a diversified portfolio to the market, highlighting products and services with high added value. Due to its environmental management, Usiminas was the second Steelmaker in the world certified with ISO14001, generating higher productivity with lower consumption. The company also contributes to the development of the communities where it operates, through Usiminas Cultural Institute and São Francisco Xavier Foundation, offering projects in the areas of health, education and culture. Usiminas shares are traded on the stock exchanges of São Paulo, New York (ADR level I) and Madrid.