CSN reverses third-quarter profit loss, improves leverage projection By Reuters


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SAO PAULO (Reuters) – An environment of higher steel and iron ore prices and stronger demand for the alloy helped CSN (SA 🙂 to open the third quarter results season with a profit of more than R $ 1 billion, compared to loss of 870 million suffered a year earlier.

The company’s net result, of, was also almost three times greater than the profit obtained by the company in the second quarter, of 445.9 million.

CSN, which until mid-July projected to reach the end of 2021 with a 3-fold net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio, also said on Thursday that it expects leverage in the end of next year is 2.5 times.

CSN executives have been saying for months that the company will be able to reduce leverage, which at the end of the first half was 5.17 times, to the level of 3 times through asset sales, such as the German steel mill SWT, operations such as the eventual IPO of its mining operations, and the generation of its own cash.

In the third quarter, the company’s leverage dropped to 3.67 times, down from 3.81 times a year earlier.

Part of CSN’s performance in the third quarter was supported by the appreciation of its shares in rival Usiminas (SA :). According to CSN’s balance sheet, in the period the increase in the value of the papers generated a gain without a cash effect of R $ 537 million, which helped partially offset the cost of the debt.

CSN sold 27% more steel in the quarter than a year earlier, despite the effects of the coronavirus epidemic. One of the sectors of the economy little affected by the disease was civil construction, one of the main demanders for long steel. The vehicle segment has seen a strong resumption of sales in recent months, as measures of social isolation have been relaxed by state and municipal governments.

CSN also managed to maintain sales of iron ore at the same level as in the third quarter of last year, in the order of 9.2 million tons. Before the second quarter of this year, there was an 18% increase in sales of the commodity.

As a result, CSN’s adjusted Ebitda soared 124% compared to the third quarter of 2019, to 3.5 billion reais. The margin went from 25.1% to a robust 39%.

The company ended September with an adjusted net debt of R $ 30.6 billion, an increase of 11% in the annual comparison, but a decrease of 8% in the quarter. The company’s cash rose in a year from 2.98 billion to 6.87 billion reais.

CSN stated that in the third quarter and beginning of the current period, it maintained a process of lengthening liabilities, obtaining approvals for the extension of approximately 600 million reais in debts with private banks.


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