Ferbasa (FESA4) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA for 2Q24 reached R$99.5 million, up 26.9% from 1Q24, but 46.4% lower year-over-year for 1H24.

• Net income for 2Q24 was R$56.8 million, a 38.2% increase sequentially, but 61.4% lower year-over-year for 1H24.

• Net revenue in 2Q24 was R$522.0 million, up 2.5% from 1Q24, but down 23.2% year-over-year for 1H24.

• Ferroalloy sales volume remained stable sequentially, but down 10.6% year-over-year for 1H24.

• CAPEX reached R$72.0 million in 2Q24, with 1H24 CAPEX at R$114.0 million, focused on machinery, mining, and biological assets.

Financial highlights

• Cash consumption in 1H24 was R$125.6 million, including R$114.0 million in CAPEX and R$37.8 million in equity acquisitions.

• Financial result declined 22.4% sequentially, with financial revenue down 10.1% and expenses up 32.6%.

• Distribution of R$17.5 million in dividends (JCP) related to 1Q24 profit, with a 23% payout ratio.

• Net cash at 2Q24 was R$738.3 million, down from R$897.6 million at 4Q23.

• BWG reported a loss of R$5.0 million in 2Q24 and R$16.3 million in 1H24.

Outlook and guidance

• Strategic focus on competitive energy supply projects and vertical integration to ensure long-term cost efficiency.

• Domestic steel sector faces pressure from rising imports, especially from China, impacting demand.

• International sales affected by US protectionist measures and logistical challenges in global shipping.

• Company expects continued stabilization in revenue trends after price and volume corrections in 2023.