Bloomberg News

CSN Profit Beats Estimates on Higher Steel, Iron-Ore Sales

March 27, 2012

Cia. Siderurgica Nacional SA (CSNA3), the third-largest Brazilian steelmaker by output, posted fourth- quarter net income that beat estimates after an increase in steel and iron-ore sales.

Net income climbed 84 percent to 831.8 million reais ($457.7 million) from 451.3 million reais in the year-earlier period, the Sao Paulo-based company said late yesterday in a statement. CSN, as the steelmaker is known, was expected to post profit of 610.8 million reais, according to the average of nine analyst estimates compiled by Bloomberg.

CSN, which is also Brazil’s second-largest iron-ore producer after Vale SA, is relying on its mining business to offset lower margins in its steel unit, hurt by reduced domestic industrial production. The iron-ore unit accounted for about 55 percent of the company’s Ebitda last year, or earnings before interest, taxes, depreciation and amortization.

Iron-ore sales volumes increased 25 percent in the quarter to a record 8.02 million metric tons while steel sales increased 15 percent to 1.2 million tons, the company said. Total revenue rose 21 percent to 4.17 billion reais in the period.

CSN’s mining business allowed the company to enjoy higher profit margins than its rivals, Victor Penna, an equity analyst at Banco do Brasil SA (BBAS3), said in a note to clients today.

“CSN is likely to improve its performance in future quarters as it boosts iron-ore volumes and it implements possible steel price increases,” the analyst said.

CSN declined 2.2 percent to close at 17.89 reais in Sao Paulo, its lowest in two weeks. The stock has climbed 19 percent this year, more than the 16 percent gain in Brazil’s benchmark Bovespa stock index.

Production Target

CSN, which is planning to invest about $20 billion in the next five years, is targeting steel output of 5.7 million tons during 2012 including about 800,000 tons from a unit in Germany, Executive Director for Steel Sales Luiz Martinez told analysts today on an earnings conference call. The company sees “space” for steel prices in Brazil to rise between 5 percent and 10 percent this year, he said.

CSN will take “all measures” to preserve its investment in Usinas Siderurgicas de Minas Gerais SA (USIM5), Investor Relations Executive Officer David Salama said on the same call, without providing details. The company held 20.14 percent of the preferred stock of Usiminas, as Brazil’s second-largest steelmaker is known, and 11.97 percent of its common shares as of Dec. 31, CSN said in a separate filing late yesterday. It added that the stakes have declined about 35 percent and 31 percent, respectively since its purchase until yesterday.

Gerdau SA (GGBR4), Latin America’s largest steel producer, reported Feb. 16 fourth-quarter profit that beat analysts’ estimates on rising demand in Brazil and North America.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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