CAP (CAP) Q3 2024 earnings summary

Executive summary

• 2024 marked a transformational year with the suspension of steel production, management consolidation, and strategic alignment toward decarbonization and rare earths projects.

• Revenue for the nine months ended September 30, 2024, was $1,553 million, down from $2,036 million year-over-year, with a net loss of $335 million compared to a net loss of $110 million in the prior year period.

• Strategy 2030 focuses on becoming a leading provider of decarbonization materials, leveraging mining, industrial, and infrastructure assets.

• The company reported negative EBITDA and operating losses, mainly due to lower sales volumes, higher costs, and significant impairment charges in the steel segment.

• Expansion projects in mining and rare earths, and a pivot to green steel and logistics at Huachipato, are underway.

Financial highlights

• Consolidated EBITDA and net income decreased 23% and swung to a net loss in 3Q24, mainly due to lower prices and negative mark-to-market (MtM) effects in mining.

• Revenues fell 33.4% year-over-year, driven by the indefinite suspension of steelmaking and lower mining prices.

• Mining EBITDA dropped 40% and net income 99% in 3Q24 versus 3Q23, despite a 2% increase in shipments.

• Gross margin for the nine months was $235 million, down from $380 million year-over-year.

• Steel solutions EBITDA fell 53% and net income turned negative, reflecting weak construction demand and Argentina's economic contraction.

Outlook and guidance

• Mining expansion projects aim to increase high-grade iron ore production by ~38% by 2032, targeting 23 Mtpa.

• Rare earths JV with Aclara targets a 12% global HREE market share by 2030.

• The company expects lower production and EBITDA in Q4 2024 and 2025 due to the temporary halt at Mina Los Colorados.

• Management is implementing a stabilization plan and expects to partially offset lost production with other sources.

• Huachipato 2.0 will focus on logistics, green steel, and REE alloys, with ongoing R&D and asset preservation.