• Net Revenue: 6.8 billion BRL, significant growth due to high sales volume.

• Adjusted EBITDA: 426 million BRL, with a margin increase to 6%.

• Net Profit: 185 million BRL, reversing losses from the previous quarter.

• Steel Sales Volume: 126,000 million tons, a 10% increase in the domestic market.

• Steel Unit Net Revenue: 6.2 billion BRL, an 8% increase.

• Mining Sales Volume: 2.3 million tons, a 14% increase.

• Operational Cash Generation: 518 million BRL.

• CapEx: 202 million BRL, with a revised guidance of 1.1 billion BRL for the year.

• Free Cash Flow: 360 million BRL.

• Net Debt: Reduced leverage from 0.8 to 0.38.

• Cash Position: 5.9 billion BRL.

• Warning! GuruFocus has detected 4 Warning Signs with USNZY.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Usinas Siderurgicas de Minas Gerais SA (USNZY) achieved a 54% increase in production volume compared to the last quarter, marking the highest production level since 2010.

• The company reported the best EBITDA since Q1 of 2023, reversing losses from the previous quarter due to operational efficiency and cost reduction.

• Steel sales increased by 10% in the domestic market, driven by resilient demand in sectors such as domestic appliances and the automobile industry.

• The company successfully issued debentures worth 1.8 billion BRL, demonstrating strong investor confidence and extending its debt profile.

• Usinas Siderurgicas de Minas Gerais SA (USNZY) reduced its net debt and financial leverage, ending the quarter with 5.9 billion BRL in cash.

Negative Points

• The company faces challenges from high levels of imports and unfair competition, particularly from Chinese steel products.

• Despite improvements, the drop in iron ore prices significantly affected the company's margins.

• The Brazilian steel market is pressured by a surplus of steel from China, impacting domestic demand.

• There is a need for adjustments in Brazil's quota systems to address the growing import levels, which are 15% higher than the previous year.

• The company is dealing with the impact of high interest rates on the Brazilian economy, which could affect future growth projections.

Q & A Highlights

Q: What are the prospects for steel prices in the upcoming months, and how does the revenue per ton compare to the average of the quarter? A: Miguel Homes, VP of Sales, stated that price increases were transferred during Q3 in both distribution and industrial contracts. The average price in the domestic market was impacted by the sales mix, but adjustments in distribution and industry were made. The net revenue for the next quarter is expected to be close to 1% above the average price of the quarter.