Companhia Brasileira de Alumínio (CBAV3) Q3 2024 earnings summary

Executive summary

• Achieved record pipeline utilization and smelter utilization, with molten aluminum production rising to 93kt in 3Q24 and sales mix focused on higher value-added products across primary, processed, and recycling segments.

• Maintained first quartile position on the global cost curve due to vertical integration and value chain integration, mitigating cost volatility and reinforcing competitiveness.

• Demonstrated significant EBITDA recovery, with Adjusted EBITDA of R$409 million and a margin of 19% in 3Q24, the highest since 2Q22, supported by higher pricing premiums and favorable FX movements.

• Early settlement of R$469 million in debt due 2027, extending average debt maturity and reducing cost.

• Earned gold status in the Brazilian GHG Protocol Program for the fourth consecutive year and participated in Climate Week 2024, highlighting ESG leadership.

Financial highlights

• Net revenue reached R$2.135 billion in 3Q24, up 15% year-over-year; aluminum sales revenue rose 19% year-over-year.

• Adjusted EBITDA was R$409 million, with a 19% margin, up 789% year-over-year and 21% from 2Q24.

• Net income of R$124 million for the quarter, reversing prior losses.

• Free cash flow totaled R$177 million, supported by EBITDA growth and working capital divestment.

• Net debt decreased to R$3.4 billion, with leverage ratio improving to 3.41x from 5.66x in 2Q24.

Outlook and guidance

• Expectation of continued strong domestic demand, especially in transportation, automotive, and civil construction sectors, though inflation and interest rates could pose risks.

• No major new global aluminum capacity expected in 2025; supply chain disruptions seen as temporary but persisting.

• Plan to maintain annual CapEx around R$800 million, focused on sustaining and modernizing operations, with ongoing ramp-up of recycled aluminum production.

• Additional 50 MWm of dollar-indexed energy secured for 9 years from 2025 to offset expiring proprietary generation.

• Uncertainty persists in China's real estate and construction recovery; higher Selic rate may slow Brazil's construction sector.