Companhia Siderúrgica Nacional Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Operational Excellence: Q3 2025 saw historical operational records across segments, with EBITDA growth of 26% to BRL 3.3 billion and EBITDA margin of 27%. Leverage ratio decreased to 3.1x from 3.5x at year-end 2024.
• Mining: Record production and sales volumes, with 57% growth in EBITDA driven by higher iron ore prices and efficient operations.
• Steel: Lowest production costs in 4 years, operating at full capacity with optimized inputs. Despite price pressures, operational efficiency improved compared to 2024.
• Cement: Resilient market performance with high consumption, leading to highest EBITDA in cement history due to competitive advantages like verticalization and logistic networks.
• Logistics: Record EBITDA from highest freight volumes, unlocking value of assets through infrastructure strategy.
• ESG: Progress in safety (30% below 2021 accident rates), environmental initiatives (climate adaptation plans), and diversity and inclusion (80% increase in female representation), recognized as ESG benchmark by agencies.

Segment Performance

• Mining: Record production and sales, with over 12 million tons shipped in Q3, a first in company history. Net revenue grew due to record volumes and better realized prices, EBITDA up 57% with a 7.8 percentage point increase in profitability. Revenue contribution significant due to strong volumes and favorable prices.
• Steel: Lowest cost of steel production in 4 years. Sales volume increased by 4.4%, but revenue impacted by price reductions. Despite price pressures, EBITDA better than 2024 and a key growth driver for the year.
• Cement: Second largest sales volume in CSN history, with over 3.6 million tons sold. Highest EBITDA in cement history at BRL 388 million, EBITDA margin 29%, above sector average.
• Logistics: Highest volume of freight and cargo on highway and railway networks, with record EBITDA of BRL 550 million and EBITDA margin above 35%.

Guidance

• Deleveraging: Continued focus on reducing leverage, with leverage ratio at 3.1x in Q3, aiming to align with year-end guidance. Organic operational results and strategic projects like CSN infrastructure will aid deleveraging.
• Fourth Quarter Outlook: Expectations of improved margins in steel, with anticipated antidumping measures for galvanized and prepainted products boosting competitiveness. Continued cost control and price adjustments to drive double-digit margins in Q4.
• Future Projects: CSN infrastructure project advanced, expected to bring liquidity and aid deleveraging in 2026.

Risks

• Import Penetration: High levels of imported materials, especially in steel and cement, posing competitive pressure. Need for stronger protectionist measures to support local producers.
• Interest Rates and Exchange Rates: Fluctuations in interest and exchange rates impacting financial expenses and operational costs.
• Antidumping Delays: Prolonged timelines for antidumping measures to take effect, affecting competitiveness of local steel producers.

Question and Answer

• Q: Gabriel Barra from Citi on divestment and leverage priorities A: Antonio Marco Rabello mentioned focus on deleveraging through organic operational results and strategic projects like CSN infrastructure. Luis Martinez discussed steel strategy to recover markets and importance of antidumping measures for competitiveness.
• Q: Rafael Barcellos from Bradesco BBI on cash burn and antidumping A: Benjamin Steinbruch noted reduction in cash burn through operational improvements and cost control. Luis Martinez detailed antidumping timelines for various steel products, expecting approval in November for some and impact on margins.
• Q: Daniel Sasson from Itaú BBA on CapEx and debt maturities A: Antonio Marco Rabello stated CapEx flexibility with priority on P15 project, and ongoing renegotiation of debt maturities for 2026, with progress in infrastructure projects to aid deleveraging.
• Q: Guilherme Nippes from XP on antidumping impact on prices A: Luis Martinez explained potential price recovery of 5%-7.25% in coated materials with antidumping measures, expecting improved competitiveness and margin recovery in domestic market.
• Q: Others on debt refinancing and maturities A: Benjamin Steinbruch addressed stable cost of debt refinancing, progress in refinancing 2026 maturities, and ongoing discussions for 2028 bond refinancing.