Companhia Brasileira de Alumínio (CBAV3) Q2 2024 earnings summary

Executive summary

• Achieved strong operational recovery with 97% smelter utilization, highest since Q3 2022, and increased liquid aluminum production, supporting stability and competitiveness.

• Sales mix shifted toward higher value-added products, notably aluminum-silicon ingots and foils for automotive and packaging, with downstream segment sales up from 1Q24.

• 62% of 1H24 CapEx focused on expansion and modernization, with key projects nearing completion.

• Recognized for ESG initiatives, including climate action, biodiversity preservation, and industry awards.

• Announced termination of the Niquelândia Unit sale agreement but continues to seek alternatives for the unit.

Financial highlights

• Net revenue reached R$2.1 billion in 2Q24, up 24% year-over-year, driven by higher sales volume (+22%) and improved pricing (LME +12%, USD +5%, and premiums).

• Adjusted EBITDA was R$339 million, a 361% increase year-over-year, with a margin of 16%.

• Cash and equivalents at R$2 billion as of June 28, 2024, with 75% in BRL and 25% in USD.

• Leverage ratio (Net Debt/Adjusted EBITDA LTM) improved to 5.66x from 7.89x in 1Q24.

• Reported net loss of R$74 million, mainly due to negative net financial results.

Outlook and guidance

• CapEx for the second half expected to be similar to last year, with 62% already spent in H1; sustaining CapEx around BRL 500 million.

• Commissioning and start-up of the ReAl recycled aluminum project expected in 2H24.

• Early debt settlement planned for 3Q24 to lengthen debt maturity profile, with up to USD 85 million in 2027 debt approved for early repayment.

• Expectation of continued strong demand in Brazil, especially in transportation and packaging, and a rich sales mix.

• Cautious optimism for global aluminum prices, with potential for new peaks if demand recovers and supply remains capped.