Usiminas ends First Quarter with R$ 76million Net Income
Consolidated Ebitda reaches R$ 487.5 million, with Iron Ore higher volumes and better prices
Usiminas ended the first quarter of the year with net income of R$ 76.3 million. In the period, Adjusted Consolidated Ebitda (earnings before interest, taxes, depreciation and amortization) was R$ 487.5 million, against R$ 363.5 million in the previous quarter, a 34.1% increase, excluding the non-recurring effects. The company's Adjusted Ebitda margin reached 13.8% in 1Q19 against 10.6% in 4Q18, also without non-recurring effects.
One of the main highlights in the consolidated result of the period was the 25% increase in the total volume of iron ore sales, which registered 1.9 million tons. As for Steel sales, nearly 1 million tons were registered, keeping in line with the figures obtained in the previous quarter (4Q18).
Regarding gross debt, there was a 6.1% reduction in relation to the established debt at the end of 2018. This index was reached due to an early amortization of R$ 367 million. At the closing of first quarter 2019, Usiminas' debt composition fell to 3% in the short term and 97% in the long term.
According to Usiminas CEO Sergio Leite, the results reflect the country's economic situation, which, despite the economy gradual recovery, shows slower pace than expected for the beginning of this year. The CEO points out that economic growth in 2018 was lower than projections, with GDP closing the period at 1.1%, and the expectation for 2019 fell for the sixth consecutive time, and is now below 2%.
“In order to face this adverse external scenario, we keep on investing in operational discipline, cost reduction, revenue increase, as well as continuous improvement of our customer service. In addition, we are strongly committed to the company's sustainability through innovation”, he adds.
The highlight in Usiminas different business areas in the first quarter was “Mineração Usiminas” (MUSA), with sales of nearly 1.9 million tons, up 25%, due to higher volumes sold in the domestic market to third parties and exports. Net revenue totaled R$ 418.1 million in the period, an increase of 32.2% over the previous quarter, with better prices in the period. At the end of 1Q19, Musa had an Adjusted EBITDA of R$ 152.6 million, up 300% when compared to the last quarter of 2018. MUSA Adjusted Ebitda Margin was 36% in the first three months of this year, against 12% in 4Q18.
“Soluções Usiminas”, a company operating in steel distribution, manufacturing and sales of small diameter pipes, Net Revenues totaled R$ 879.4 million, up 5.8% when compared to 4Q18, mainly due to the highest volume of sales and services, which grew by 7.8%. “Soluções Usiminas” Adjusted Ebitda reached R$ 17.3 million, an increase of approximately 46% compared to the previous quarter (4Q18). Adjusted Ebitda Margin in the period stood at 2%, against 1.4% in the last three months of last year.
“Usiminas Mecânica” made a gross profit of R$ 8.9 million in the first quarter of the year, reversing a gross loss of R$ 14.3 million in the fourth quarter of 2018. Adjusted Ebitda in 1Q19 was negative R$ 1.3 million versus negative R$ 14.6 million in 4Q18. Adjusted EBITDA margin was 2.1% negative, compared to 21.8% negative in the previous quarter.
Rating Agency broadens degree of confidence
In the first quarter of 2019 there was also an increase in Usiminas credit rating granted in January by Moody's. The company has moved globally to B1 and, on a national scale, to Baa2. In the agency analysts' view, the upgrade mainly reflects the continued recovery in operating performance over the past year due to cost control initiatives and better demand.
At the time, Moody's also highlighted Usiminas adequate liquidity profile and its flexibility to deal with volatility in its market. It was the company's first high rating in the year. In 2018, Usiminas had already had its grade raised by Moody's and also by international agencies Fitch and Standard and Poors.
Usiminas announces investments of R$ 1 billion in 2019
In the first quarter of 2019, Usiminas accounted for investments of R$ 88.6 million focused on sustaining Capex, Security and Environment. For this year, the company expects to significantly increase its contributions, totaling the mark of R$ 1 billion. The projected investments reflect an expectation of improvement in the country's economic scenario.