Usinas Siderúrgicas de Minas Gerais (USIM5) Q2 2025 earnings summary

Executive summary

• Net revenue for 2Q25 was R$6.6 billion, down 3% sequentially but up 4% year-over-year, with lower steel sales offset by higher mining volumes.

• Adjusted EBITDA fell 44% sequentially to R$408 million, with margin dropping to 6% from 11% in 1Q25, mainly due to weaker steel prices and higher costs.

• Net profit declined 62% from the previous quarter to R$128 million, reflecting lower operational and financial results.

• Free cash flow was R$281 million, supported by working capital reductions and positive operating cash flow.

• Net debt decreased 24% sequentially to R$1.0 billion, with leverage at 0.50x Adjusted EBITDA.

Financial highlights

• Steel sales volume was 1,079kt, down 1% sequentially but up 4% year-over-year.

• Iron ore sales volume reached 2,458kt, up 11% from 1Q25 and 22% year-over-year.

• Adjusted EBITDA margin dropped to 6% from 11% in 1Q25.

• CAPEX for the quarter was R$334 million, with 88% allocated to steel and 12% to mining.

• Gross margin was 7%, down from 11% in 1Q25 but up from 5% in 2Q24.

Outlook and guidance

• Steel sales volumes expected to remain stable in 3Q25, with further decline in net revenue per ton due to pricing adjustments.

• Management anticipates a significant reduction in COGS per ton in 3Q25, supporting margin and EBITDA improvement.

• Mining volumes projected to be lower in 3Q25 but aligned with the annual plan.

• Ongoing investments in steel and mining, including coke plant renovation, new PCI plant, and dam decharacterization, aim to reduce costs, emissions, and enhance operational safety.

• Decarbonization plan targets a 15% reduction in emissions intensity by 2030.