Companhia Siderúrgica Nacional (CSNA3) Q2 2024 earnings summary

Executive summary

• Achieved record mining production and cement sales in 2Q24, with operational improvements and margin expansion across all segments, including a recovery in steel.

• Adjusted EBITDA rose 35% sequentially to R$2.6 billion, with margin up to 23.2%, driven by strong mining and cement performance and steel rebound.

• Despite operational gains, net loss was R$223 million in Q2 and R$702 million for H1 2024, mainly due to higher financial expenses, taxes, and FX losses.

• Strong deleveraging commitment, with cash at R$16.6 billion and focus on capital recycling, despite leverage rising to 3.36x due to FX impacts.

• ESG progress includes SBTI-approved decarbonization targets, FTSE4Good inclusion, and increased diversity and safety metrics.

Financial highlights

• Net revenue reached R$10.88 billion in Q2 2024, up 12% sequentially, but H1 2024 revenue fell 7.7% year-over-year to R$20.6 billion.

• Adjusted EBITDA margin increased to 23.2% in Q2, with mining at 47.5%, cement at 28%, and logistics above 49%.

• Adjusted cash flow was negative R$1.16 billion, impacted by working capital, higher investments, and FX effects.

• Net debt reached R$37.16 billion, leverage at 3.36x, and 64% of debt USD-denominated, exposing to FX volatility.

• CAPEX was R$1.36 billion in Q2, up 69% sequentially, focused on steel efficiency and mining expansion.

Outlook and guidance

• Steel segment expected to benefit from improved demand, product mix, and price adjustments, with further margin recovery anticipated.

• Mining to focus on operational efficiency and cost control, prioritizing margin over volume.

• Cement segment to leverage synergies and expand into new markets.

• Commitment to reducing leverage, targeting 2.5x by year-end, with ongoing M&A and potential IPOs in cement and logistics.

• Company affirms adequate resources to continue as a going concern.