Companhia Brasileira de Alumínio (CBAV3) Q2 2024 earnings summary

Executive summary

• Achieved strong operational recovery with smelter utilization at 97%, the highest since Q3 2022, and increased liquid aluminum production, supporting operational stability and competitiveness.

• Sales of high value-added products, especially aluminum-silicon ingots and foils, rose notably, with downstream segment sales up from 1Q24.

• 62% of 1H24 CapEx focused on expansion and modernization, with key projects nearing completion.

• Recognized for ESG leadership and workplace excellence, including awards for sustainability and recycling initiatives.

• Announced termination of the Niquelândia Unit sale agreement, with impairment provision recognized and alternatives being sought.

Financial highlights

• Net revenue reached R$2.1 billion in 2Q24, up 24% year-over-year and 22% sequentially, driven by higher sales volumes and improved pricing.

• Adjusted EBITDA was R$339 million in 2Q24, a 361% increase year-over-year, with a margin of 16%.

• Leverage ratio (Net Debt/Adjusted EBITDA LTM) improved to 5.66x from 7.89x sequentially.

• Cash and equivalents at period end were R$2 billion, with 75% in BRL and 25% in USD.

• Reported net loss of R$74 million in 2Q24, mainly due to negative net financial results and asset impairments.

Outlook and guidance

• Continued investment in expansion, modernization, and sustainability projects, with commissioning of the ReAl recycled aluminum project expected in 2H24.

• CapEx for the second half projected to be similar to last year, with sustaining CapEx around BRL 500 million.

• Early repayment of up to USD 85 million in debt maturing in 2027 approved to extend average debt term.

• Market fundamentals for aluminum remain positive in the medium term, despite LME volatility.

• Ongoing adaptation to new accounting and sustainability standards, with no material impact expected from recent amendments.