Usiminas

Usiminas ends 2011 with R$ 404 million net income and focuses on competitiveness improvement in 2012

07-03-2012

Steelmaker expects the steel industry to recover this year

2011 was a challenging year for the Brazilian steel industry. Raw material cost pressures along with the persistently high level of direct and indirect (steel contained in imported products) imports have led steelmakers to lower their margins. The Brazilian flat steel consumption dropped 8% from 2010 levels, while the mills’ sales remained virtually at the same level (10.7 million tonnes) as that of 2010.

In such a scenario, Usiminas’ consolidated net income amounted to R$ 404 million at the yearend, after an accounting loss of R$ 124.9 million in connection with the divestiture of its interest in Ternium in February 2011. The net income in the 4th quarter 2011 was R$ 77 million.

The EBITDA amounted to R$ 1.3 billion and R$ 218 million in the whole of 2011 and 4th quarter, respectively. The EBITDA margin, for its turn, reached 7.7% in the 4th quarter and 10.6% in the whole year. The net revenue totaled R$ 2.8 billion in the last quarter and R$ 11.9 billion in the year.

Usiminas ended fiscal 2011 with a cash position higher than that of 2010: R$ 5.2 billion.

NThe crude steel production of Ipatinga and Cubatão mills totaled 1.5 million tonnes in last year’s 4th quarter and 6.7 million tonnes in the whole year.
As far as steel shipments are concerned, the domestic market took 85% of the 1.3 million tonnes shipped during the 4th quarter.

In the whole of 2011, shipments amounted to 5.9 million tonnes, out of which 82% were supplied domestically and 18% to foreign markets. A highlight during the year was the significant increase in the domestic sales of heavy plates and hot-dip galvanized steels (up 22% and 8%, respectively).

Competitiveness

Julián Eguren, who took over the position of Usiminas CEO in January 2012, commented the results with an eye in the future:

“Right now, we have to focus on regaining Usiminas’ efficiency and competitiveness. All our energy is focused on this goal. Along with the strength of our partners Nippon Steel and Ternium, this will make Usiminas increasingly stronger. The entry of Ternium will give the Group the competitive edge of combining state-of-the-art technology and a remarkable presence in Latin America. Nippon Steel is a leading player in technology, whereas Ternium holds a top market share position in the region where it operates. This is an outstandingly strong combination of high operational efficiency and huge sales capability. And this will work in favor of Usiminas.

We are aware of the difficulties arising out of the crisis in the Euro Zone, the international competition, the excess steel supply and the high volume of imports of steel and steel-containing products into Brazil, but we rely on the support of our partners and Usiminas to further grow”, the CEO said.

Notwithstanding the challenging scenario, Usiminas envisages 2012 as a year of recovery for the steel industry. The expectation is that the economy will go through a strong resumption in industrial investments, especially infrastructure investments, along with sustainable consumption as seen in the past two years.

Usiminas estimates that the Brazilian flat steel consumption will grow more than 550,000 tonnes from 2011 levels to 13.2 million tonnes. In 2012, the share of the local steelmakers is set to increase, whereas imports are foreseen to drop from 158,000 tonnes/month in 2011 to 131,000 tonnes/month this year, answering for 12% of the overall consumption (against 15% in 2011 and 23% in 2010).

Investments

The investments amounted to R$ 647 million in the last quarter 2011 and R$ 2.5 billion over the whole of 2011. Out of the total investments in 2011, approximately 80% were allocated to steel operations, 14% to Mineração Usiminas, 3% to Soluções Usiminas and Automotiva Usiminas, and 3% to Usiminas Mecânica.

The period was marked by the consolidation of an investment cycle that started in previous years and whose focus was to add value to the steel product and technically upgrade the various plants. The table below shows the main projects completed in the past few years, as well as those planned to be completed this year.

 


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