Usinas Siderúrgicas de Minas Gerais (USIM5) Q2 2024 earnings summary

Executive summary

• Net revenue in 2Q24 reached R$6.35 billion, up 2% sequentially, driven by higher mining revenues and stable steel sales volume, while steel exports declined.

• Adjusted EBITDA fell 41% quarter-over-quarter to R$247 million (4% margin), mainly due to lower steel prices, higher costs, and non-recurring expenses, despite improved mining results.

• Net loss of R$100 million, reversing a R$36 million profit in 1Q24, mainly due to operational challenges and exchange losses.

• Domestic steel sales rose 6% sequentially, while mining sales volumes increased 3%.

• Blast Furnace 3 ramp-up at Ipatinga completed, achieving highest production in 11 years and significant operational efficiency gains.

Financial highlights

• Net revenue: R$6.35 billion (+2% vs. 1Q24, -8% vs. 2Q23).

• Adjusted EBITDA: R$247 million (-41% vs. 1Q24, -33% vs. 2Q23); margin 4%.

• Net loss: R$100 million (vs. R$36 million profit in 1Q24), mainly due to R$292 million negative FX impact.

• Free cash flow: R$150 million; CAPEX: R$231 million, lower than Q1.

• Cash and equivalents: R$5.6 billion; net debt: R$998 million; gross debt: R$6.6 billion.

Outlook and guidance

• Domestic steel sales expected to rise in 3Q24, supported by growth in automotive and household sectors.

• Capex expected to accelerate in H2, ending near the lower limit of R$1.7–1.9 billion guidance.

• Mining sales volume expected to remain stable in Q3; iron ore price volatility and high Chinese port stocks present challenges.