Companhia Brasileira de Alumínio (CBAV3) Q4 2024 earnings summary

Executive summary

• Achieved strong operational and financial performance in Q4 2024, driven by vertical integration, competitive cost structure, and favorable currency movements.

• Completed the RIO/ReAl Project, enhancing recycling capacity and circularity, enabling processing of 1.3 billion carton packages annually.

• Maintained focus on high-value product mix, especially rebars for electrification and cables, with downstream and recycling volumes up year-over-year.

• Continued strategic asset optimization, including the sale of a 3% stake in Alunorte to focus on core aluminum business and maintain alumina self-sufficiency.

• Recognized for sustainability leadership, joining the S&P Global Sustainability Yearbook, achieving a 72/100 CSA score, and winning industry awards.

Financial highlights

• Adjusted EBITDA reached R$486 million in Q4 2024, over four times higher than Q4 2023, with a 21% margin.

• Net revenue for the quarter was R$2.3 billion, up 20% year-over-year, supported by higher LME prices, currency devaluation, and improved sales mix.

• Free cash flow generation totaled R$410 million in Q4, benefiting from improved EBITDA and asset sales.

• Net debt at R$3.9 billion, with leverage ratio improved to 2.84x from 3.41x in 3Q24.

• Net loss of R$56 million, a significant improvement from R$586 million loss in Q4 2023.

Outlook and guidance

• Domestic aluminum demand remains robust, especially in electric cable, transportation, and vehicle sectors, with Anfavea projecting 8.4% growth in light vehicle production for 2025.

• Global market expected to remain tight due to China's capacity cap and ongoing supply constraints.

• Energy contract costs expected to rise in 2025, but natural hedge from USD-indexed revenue and new long-term contracts secured.

• Focus for 2025 is on further deleveraging; acceleration of investments may be considered from 2026 onward.

• Potential margin pressure if product mix shifts due to softer demand, but profitability expected to remain strong.