Companhia Brasileira de Alumínio (CBAV3) Q3 2024 earnings summary

Executive summary

• Achieved record pipeline utilization and smelter utilization, with molten aluminum production rising to 93kt in 3Q24 and sales mix focused on higher value-added products across all segments.

• Maintained first quartile position on the global cost curve due to vertical integration and value chain integration, supporting competitiveness and mitigating cost volatility.

• Demonstrated significant EBITDA recovery, with Adjusted EBITDA of R$409 million and a 19% margin, the highest since 2Q22.

• Early settlement of R$469 million in debt due 2027, extending average debt maturity and reducing costs.

• Advanced ESG initiatives, earning gold status in the GHG Protocol and expanding partnerships for low-carbon aluminum products.

Financial highlights

• Adjusted EBITDA reached R$409 million, with a 19% margin, reflecting improved prices, higher premiums, and favorable FX rates.

• Net revenue increased 15% year-over-year to R$2.1 billion in 3Q24.

• Net income for the quarter was R$124 million, reversing prior losses.

• Free cash flow totaled R$177 million, supported by strong EBITDA and working capital divestment.

• Leverage ratio improved to 3.41x Net Debt/Adjusted EBITDA, down from 5.66x, with net debt reduced to R$3.4 billion.

Outlook and guidance

• CapEx plan remains at approximately R$800 million per year, focused on sustaining, modernization, and expansion projects.

• Additional 500 MW energy contract secured for nine years starting in 2025 to offset expiring concessions.

• Domestic demand expected to remain strong, especially in transportation and civil construction, though inflation and interest rates are monitored as potential headwinds.

• Further deleveraging expected as EBITDA recovers and currency devaluation supports competitiveness.

• Uncertainty persists in China's real estate and construction recovery; higher Selic rate may slow Brazil's construction sector.