Usinas Siderúrgicas de Minas Gerais (USIM5) Q2 2024 earnings summary

Executive summary

• Net revenue increased 2% sequentially to R$6.35 billion in 2Q24, driven by higher mining unit sales and stable steel sales volume, with domestic market growth offsetting export declines.

• Adjusted EBITDA fell to R$247 million (4% margin), down 17–41% sequentially, mainly due to lower steel prices, higher costs, and non-recurring expenses, despite improved mining results.

• Net loss of R$100 million, reversing a R$36 million profit in 1Q24, mainly due to operational challenges and R$290–292 million in exchange losses on dollar-denominated debt.

• Domestic steel sales rose 6% sequentially, while mining sales volumes increased 3–31%.

• Blast Furnace 3 ramp-up and stabilization at Ipatinga improved operational efficiency and competitiveness.

Financial highlights

• Net revenue: R$6.35 billion, up 2% from 1Q24.

• Adjusted EBITDA: R$247 million, margin 4%, down 17–41% sequentially.

• Net loss: R$100 million (vs. R$36 million profit in 1Q24), mainly due to FX impact.

• Free cash flow: R$150–231 million; CAPEX: R$231 million, lower than Q1.

• Cash and equivalents: R$5.6 billion; net debt: R$998 million–R$1 billion.

Outlook and guidance

• Domestic steel demand expected to remain strong in Q3, with 5% growth in auto and 1.5% in construction sectors year-over-year.

• Capex expected to accelerate in H2, ending near the lower limit of R$1.7–1.9 billion guidance.

• Mining sales volume expected to remain stable in Q3; iron ore price volatility and high Chinese port stocks present challenges.

• Price increases anticipated due to cost pressures from Real depreciation.

• Steel segment EBITDA expected to grow in Q3; mining volumes to remain stable.