Usiminas records Adjusted EBITDA of R$ 750 million
Result achieved in 2Q17 includes recognition of R$ 205 million received in July by Usiminas Mining.
Without this amount, Adjusted EBITDA is the highest in 13 quarters, reaching R$ 551 million
Usiminas confirmed the improvement trend of its results, which began in the third quarter of 2016, and ended the semester with positive figures, which consolidate the company's growth trajectory. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) reached R$ 749.9 million between April and June 2017, the best result in 28 quarters. The number was influenced by the recognition of R$ 205.1 million received in July by Usiminas Mining (MUSA), after an agreement signed with “Porto Sudeste” in June this year. Without considering this amount, Usiminas achieved, in the period, an Adjusted EBITDA of R$ 550.8 million, the highest in 13 quarters.
The Adjusted EBITDA margin reached 29.2%, 6.5 percentage points higher than the previous quarter, of 22.7%. The company also achieved net income of R$ 175.7 million in 2Q17, an increase of 62% compared to R$ 108.3 million in the previous three months. It should be noted that net income was partially impacted by negative exchange rate effects in the period.
For Usiminas CEO, Sergio Leite, second quarter 2017 numbers represent the new moment of the company, after overcoming complex challenges over the last years. “Usiminas went through three critical phases until we reached the current stage, where we can re-build the company's future. We had a first phase, in 2015, of results deterioration, with enormous loss of value of the company. Then we move on to a phase of quest for survival, beginning in early 2016, in which we struggle to eliminate Usiminas' risk of bankruptcy, through actions such as capital injection by shareholders and debt renegotiation. In the following months, we entered the results-building phase, focusing on reducing costs, restructuring our management and increasing revenue”, explains the CEO.
According to Sergio Leite, Usiminas is now living a new stage, with established management goals, focused mainly on generating results, seeking excellence in customer service and improving the organizational atmosphere. “We are working hard to strengthen Usiminas as a protagonist in the Brazilian and Latin American steel industry scenario. The figures that we present to the market today, consolidated with those registered as of the third quarter 2016, serve as a basis to pave the way we want to follow. We have in our favor the DNA of quality, innovation and technology, which puts Usiminas in the state of the art in the flat steel segment”.
Also noteworthy in the second quarter 2017 was the 9.3% increase in net revenue from Usiminas, which increased from R$ 2.4 billion in the previous quarter to R$ 2.6 billion in April-June this year. The figures reflect, in particular, the higher sales volume and the higher prices presented in the period by the steelmaking units and “Soluções Usiminas”, a company in the group dedicated to steel processing and distribution.
The total steel sales of the steelmaking units, which totaled 990 thousand tons in 2Q17, compared to 930 thousand tons in the first three months of the year, a 6% increase, contributed to this increase. Of the total marketed, 840 thousand tons (85%) were destined to the domestic market, while 150 thousand tons (15%) were exported. Sales to the foreign market increased 43% in relation to 1Q17, when 105 thousand tons were sold abroad.
In terms of production, 769 thousand tons of crude steel were produced in the second quarter 2017, a 4% increase compared to the previous quarter, and 1 million tons of rolled products were produced in Ipatinga (MG) and Cubatão ( SP) plants, which represents an increase of 4% over the period from January to March this year.
As for investments, Usiminas totaled R$ 34.1 million in 2Q17, 45.8% higher than in 1Q17, of R$ 23.4 million. Of the total recorded in the period, mostly invested in maintenance CAPEX, approximately 75% were allocated to the Steelmaking Unit, 14% to Mining, 7% to Steel Transformation and 4% to Capital Goods.
“Soluções Usiminas” had a net revenue of R$ 589.7 million in the second quarter 2017, a result 4% higher than the R$ 567.0 million registered in the previous quarter. The increase is due to the growth in the volume of sales of products and services in the period, in the order of 1.2%, as well as the increase of 2.8% in the average price, due to the noblest mix of products traded. The unit's Adjusted EBITDA decreased in the quarter compared to 1Q17, from R$ 36.9 million to R$ 27.3 million, mainly because of the reduction in margins due to the increase in cost of raw materials. The Adjusted EBITDA margin was 4.6% in 2Q17, against 6.5% in the first three months of 2017.
Due to the reduction in PLATTS prices in the international market, as well as the 2.2% decrease in the volume of traded iron ore, from 643 thousand tons in 1Q17 to 629 thousand tons in the 2nd quarter, the net revenue of Usiminas Mining fell 17.7% between April and June this year, from R$ 108.3 million to R$ 89.1 million. On the other hand, due to the recognition of the amount paid by Southeast Port, MUSA's Adjusted EBITDA recorded in 2Q17 amounted to R$ 225.8 million, against R$ 51.5 million in the previous quarter, an increase of 338.3% . Adjusted EBITDA margin was 253.4%, compared to 47.6% in the first quarter of the year.
Usiminas Mecânica remains impacted by the stagnation of projects in the infrastructure sectors in the country and presented a reduction of 2.7% in its net revenue in 2Q17, from R$ 80.4 million, against R$ 82.7 million registered in the previous quarter. Nevertheless, the unit achieved an increase in gross profit in the period, reaching R$ 5.3 million, a figure higher than the R$ 0.5 million reached in 1Q17. The growth is due to the higher revenues obtained in the industrial equipment segment. Adjusted EBITDA for the second quarter of 2017 was R$ 1.6 million negative, compared to R$ 4.2 million negative in 1Q17, also due to better margins in the industrial equipment segment and the reduction of fixed expenses in the period. The Adjusted EBITDA margin was negative at 2%, against 5% negative in 1Q17.