Usiminas

Usiminas has shown EBITDA of BRL 519 million on second quarter and EBITDA of 16%

27-07-2018

BRL 1.16 billion is the EBITDA accrued in the semester. The margin in the same period is 18%

Usiminas recorded,on the second quarter of the year, an Adjusted EBITDA of BRL 519 million and a margin of Adjusted EBITDA of 16%. The result was impacted by accounting accruals of BRL 62.4 million for ICMS (Services and Goods State Tax) in the State of Rio Grande do Sul. Without this effect, the EBITDA of the company should have reached BRL 581 million, in view of BRL 641.8 million should have recorded from January to March, and the EBITDA margin should be 18%, in view of 19.8% (1Q2018). For the first six months of the year, the Adjusted EBITDA of the company achieved BRL 1.16 billion and EBITDA margin reached the level of 18%.

From April to June, 2018, Usiminas shown a net loss of BRL 19 million, in view of BRL 157 million of net profit in the former quarter. If the impact of the accounting accruals and of the truck drivers strike are not considered, and also the impact of Real devaluation in face to Dollar, which reached 16%, the company should account net profit higher than BRL 200 million. In the semester, Usiminas shown BRL 138 million of net profit.

“During the last months, the perception of population and economic agents was severely impacted by truck drivers strike, matching the moment of a relevant currency exchange rate increasing. These factors, plus international protectionism growing and uncertain of political scene, brought to the light the weakness of the economy, making a trust crises, which evolves until now”, evaluated Usiminas president, Sergio Leite.

The net income on the second quarter was BRL 3.2 billion, stable in relation to the first quarter, highlighting higher steel prices in domestic market and for exportation, balancing lower volumes of sales or steel and iron ore. 997 thousand tons of steel were sold on 2Q2018, in view of 1.08 million in the former quarter. In the case of iron ore, from April to June, 1,4 million in view of 1.8 million in the first quarter of the year.

Even in an adverse scenario, Ipatinga Plant increased steel production from 715 thousand tons in the first three months of the year to 813 thousand tons during the quarter ended on June. The production of rolled steel on the plants of Ipatinga and Cubatão was 1.06 million tons, stable in relation to the firs quarter, when 1.07 million tons were produced.

The investments (CAPEX) were BRL 66.8 million, in view of BRL 64.9 million during the first three months of 2018.

Results per business unit

The highlight between the business units was Soluções Usiminas, showing increasing of 31% in Adjusted EBITDA. The result was BRL 37.3 million, in view of 28.5 million for the first quarter of the year.  The Adjusted EBITDA margin of the steel industrial transformation unit and metal-mechanic chain services management was 4.8% (2Q2018), in view of 4.1 during the first three months of 2018. The net income on the second quarter was BRL 770.6 million, that is, 9.6% higher than the net income of the former quarter (BRL 702.8 million), due to, mainly, the higher average price of the period (6.1%), and higher volume of sales and services (3.3%), as well.

Mineração Usiminas (MUSA) shown reduction of 32% in Adjusted EBITDA – BRL 33.3 million, in view of 49 million on 1Q2018. The margin of Adjusted EBITDA was 16.5% on 2Q2018 in view of 19.5% for the first three months of the year. The production volume during that period was 1,3 million tons, stable in relation to the former quarter. The volume of sales was 1.4 million tons, in view of 1,8 million of the first quarter, due to the shorter volume exported during the quarter. The figures were also due to a drop about 12% in the average quotation of iron ore in international market and a strong increasing in the value of maritime freight, floating up to 60% for Brazil-China reference, causing impact in the shipment volume for foreign countries.

In the case of Usiminas Mecânica, – a company of capital goods working in the market of metallic structures, naval and offshore, oil & gas and industrial assemblies – the negative impact caused by stagnation of investments and major engineering projects in Brazil continues. Plus this, there was also the punctual impact of a wagon manufacturing project, causing an Adjusted EBITDA of the business in negative of BRL 19.9 million and a negative margin of 19.6%. During the first three months of 2018, the EBITDA margin of Usiminas Mecânica was 28.9%.

Deliveries and new projects

The second was also a period of important conquests for Usiminas. In April, operations of Blast Furnace 1 resume, after 34 months of deactivation. After the resume, Ipatinga Plant accounted an add of 650 thousand tons to the annual production capacity of pig iron, it is an indication of the rising curve of the recovery process started by the company in the middle of 2016. BRL 80 million was the investment, a work of 11 months, making 600 jobs.

On May, Fitch, one of the top international risk assessment agencies, raised the credit score of Usiminas, from B to B+, with positive bias. In sequence, Standard and Poors raised the credit score of the company, from B- to B, also with positive bias. According to the Agency, the improvement of the rating shows the progressive recovery of the company regarding economic-financial requirements and the correct strategy of the company by focusing the action in products with higher aggregate value, bringing higher margins.

It is also valid to highlight the milestones of the period, the start, on June, of the environmental licensing process for MUSA, in order to adopt a new technology for waste disposal from the productive process of the unit located in Itatiaiauçu (MG). The new system foresees filtering and stacking dry material, replacing the traditional method of waste dams.

The Filtered Waste Disposal project should employ an investment about BRL 140 million, and, once licensed, it will be one of the first major business in the country in this segment using this technology for large size production. The expectation is about 300 jobs during work phase and other 50 jobs in permanent positions.

 


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