Ferbasa (FESA4) Q1 2025 earnings summary

Executive summary

• Net revenue in 1Q25 was R$549.8 million, up 7.9% year-over-year but down 9.5% from 4Q24, driven by lower sales volume and alloy prices despite a stronger dollar.

• Adjusted EBITDA reached R$61.1 million, a 30% increase over 4Q24 but 22.1% below 1Q24, with an EBITDA margin of 11.1%.

• Net income was R$24.2 million, down 80.8% from 4Q24 and 41.1% lower year-over-year, reflecting lower operating profit and a loss in the wind energy segment.

• Sales volume of ferroalloys totaled 69.5 thousand tons, a 5.8% decrease from 4Q24 but a 10.2% increase year-over-year.

• Domestic market sales grew 10.5% sequentially, while exports declined 20.5% due to global logistics and protectionist measures.

Financial highlights

• Cost of goods sold (COGS) was R$475.6 million, down 9.7% sequentially but up 15.4% year-over-year, mainly due to higher electricity and chrome ore costs.

• Gross profit was R$74.3 million, with a gross margin of 13.5%.

• Financial result was R$38.7 million, 47.3% lower than 4Q24 due to a drop in financial revenues and lower tax credit adjustments.

• Net cash position at quarter-end was R$786.6 million, up from R$709.9 million in 4Q24.

• CAPEX in 1Q25 was R$42.5 million, 61.9% lower than 4Q24, focused on machinery, mining, and biological assets.

Outlook and guidance

• The company expects continued volatility in global steel and alloy markets due to protectionist measures and changing tariffs, especially in the US and Europe.

• The company is preparing for Brazil's tax reform, with consultancy and system adjustments planned for 2025 and full transition by 2033.

• Ongoing investments in renewable energy and forestry are expected to support long-term sustainability and cost efficiency.

• Chromium alloys and ore are not included in new US tariffs, but silicon alloys are affected.

• The company is monitoring the effects of new US steel tariffs and European safeguard measures.