Usiminas (USIM5) has a 77% drop in profit in the 2nd quarter and projects sales of up to 1.05 million tons of steel

Usiminas (USIM5) recorded net income of R$ 1.060 billion in the second quarter of 2022 (2Q22), 77% lower than that reported in the same stage of 2021 and 16% lower than the first quarter of this year, the steelmaker said this Friday morning. thursday (29).

The company attributes the performance to “foreign exchange losses recorded at the end of the quarter, partially offset by the better operating profit before financial result in the period”.

The steelmaker still projects sales between 950 and 1,050 thousand tons in the next quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) totaled R$1.930 billion in 2Q22, a decrease of 62% compared to 2Q21, but an increase of 24% compared to 1Q22.

The adjusted Ebitda margin (Ebitda over net revenue) reached 23% between April and June, a decrease of 30 percentage points (pp) compared to the margin recorded in 2Q21 and an increase of 3 pp compared to 1Q22.

Usiminas’ net revenue totaled BRL 8.531 billion in the second quarter of 2022, an 11% decrease compared to the same period in 2021, but a 9% growth compared to the first quarter of this year.

The Refinitiv projection was for a profit of R$ 1.075 billion, Ebitda of R$ 1.932 billion and net revenue of R$ 8.337 billion.

Steel sales volume totaled 1.088 million tons in 2Q22, a decrease of 17% compared to 2Q21 and 4% compared to 1Q22.

Iron ore sales totaled 2.4 million tons in the period, an increase of 16% compared to 2Q21 and 48% compared to the previous quarter.

The net financial result was negative by R$248.1 million in the second quarter of 2022, reversing financial gains of R$1.332 billion in the same stage of 2021.

According to Usiminas, the result was negative due to net foreign exchange losses of R$307 million in the quarter, compared to net foreign exchange gains in the previous quarter.

Gross profit reached BRL 2.187 billion in the second quarter of 2022, a 40% decrease compared to the same period in 2021, but an increase of 28% compared to the first quarter of 2022.

Gross margin was 25.6% in 2Q22, down 12.3 pp compared to 2Q21 and up 3.8 pp compared to 1Q22

General and administrative expenses totaled R$147 million in 2Q22, a growth of 12.8% compared to the first quarter of 2022.

Debt and Capex

Usiminas invested BRL 10.031 billion in the second quarter of this year, an increase of 28% year-on-year and 50% on a quarterly basis.

On June 30, 2022, the company’s net debt was R$455 million, reversing net cash of R$220 million from the same stage in 2021.

The financial leverage indicator, measured by net debt/adjusted EBITDA, was 0.05 times in June/22, up 0.07 times over the same period in 2021.

Return of Blast Furnace 2 Operation and Update on Coke Plants

The company’s Board of Directors approved the return to operation of Blast Furnace nº 2 at the Ipatinga Plant (AF2), scheduled to take place by the end of October 2022. The total CAPEX involved in the repairs of this Blast Furnace was maintained at R $35 million.

According to a statement, the decision to resume AF2 is based on the Company’s production schedule and slab stock, in view of the expected shutdown of Blast Furnace nº 3 scheduled for April 2023.

Additionally, Usiminas informs that, despite the decision on the return to operation of AF2, the coke plants at the Ipatinga Plant continue to present lower production availability and that efforts and mitigating measures are currently underway. This situation has created the need for the company to purchase coke in volumes higher than usual, in addition to an additional volume of natural gas to supply the deficit in internal gas production, which must be maintained for the period in which the coke plants show operational performance. below standard.

The company expects a gradual recovery in the performance of the coke plants, with a more relevant effect in the 2nd half of 2023. The need for additional measures in relation to the coke plants is still being evaluated by the company.

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