SID

• Overall Consolidated Performance & Portfolio Diversification

  • Consolidated EBITDA grew 5% quarter-on-quarter, overcoming headwinds from rising logistics costs and raw material prices. The diversified business portfolio (steel, mining, cement, logistics, energy) allowed offsetting weakness in one segment with strength in others, demonstrating overall portfolio resilience.
  • Positive free cash flow of 808 million BRL, a material reversal after several consecutive negative quarters, driven by working capital releases and recent fundraising. This offset substantial debt amortization during the period.
  • The successful 2030 bond exchange achieved over 77% participation, demonstrating market confidence in CSN's strategy and debt management plans. Net leverage increased slightly to 3.49x, which management notes is not a material trend.

• Operational Milestones

  • May and June 2026 recorded two of the strongest monthly operational results in CSN history, reflecting achieved high operational efficiency across the group.
  • Working capital reduction initiative is on track: the company targets reducing total inventory from 3 million tons to 1 million tons by the end of 2026, and is currently very close to this goal. Significant inventory reduction in Q2 drove working capital release, with further improvements expected in H2 2026.
  • CAPEX increased 26% quarter-on-quarter, driven primarily by progress on the P15 mining expansion project and maintenance spending across mining and cement assets.

• ESG & Governance Progress

  • CSN achieved improved ESG ratings: FTSE rating increased from 3.7 to 4.2, CSN and CSN Mineração were named industry sustainability leaders, and ECO badge scores rose from 74 to 80 points (one point short of gold category).
  • All dams now have conformity and operability declarations, with full compliance to environmental obligations after millions of reais in investment for safety improvements.

• Asset Divestment Program

  • Binding offers for the cement business have been received, per a recent material fact disclosure, with the process proceeding on schedule. Non-binding offers for a minority stake in the CSN logistics infrastructure business are expected by the end of July 2026, with higher market interest than initially expected. Both divestments are core to CSN's deleveraging plan.

• Steel Segment: Management expects continued recovery in H2 2026, targeting EBITDA margin expansion to 15-17% from 10.5% in Q2, driven by further volume growth, price increases of 5-10%, and continued operational cost reduction targeting slab costs of ~3,000-3,100 BRL per ton. Management expects to recover 1.5-2 million tons of domestic market share from reduced imports in full-year 2026.
• Mining Segment: Management expects improved operational and financial results in Q3 2026, as Q2 headwinds from scheduled shutdowns, unfavorable exchange rates, and temporary freight volatility will ease, with dry season logistics supporting higher volumes.
• Cement Segment: Continued resilient demand driven by Brazil's My House My Life affordable housing program and infrastructure investment, with management expecting sustained 30%+ EBITDA margins and further performance improvements after Q2's maintenance-related constraints.
• Deleveraging & Capital Structure: The asset divestment program is proceeding ahead of the original 2026 schedule, and management expects material deleveraging following the completion of cement and logistics asset sales, leading to a lighter capital structure that can support new growth projects. The P15 mining expansion project remains on track to be delivered by the end of 2027, with full ramp-up and operational startup by 2029.
• Working Capital: Management expects additional working capital releases of up to 1 billion BRL from continued inventory optimization through the remainder of 2026, supporting improved cash conversion and free cash flow generation.

1. Steel: Net revenue and average selling price increased quarter-on-quarter, driven by domestic anti-dumping benefits and stronger performance at international subsidiaries. EBITDA margin recovered to 10.5%, returning to double-digit profitability. Domestic sales grew 10% year-on-year, total sales grew 17% quarter-on-quarter, with foreign volumes reaching their highest level since Q1 2023. Revenue contribution makes steel a core results driver for 2026.

2. Mining: Production and sales volumes fell 5.5% quarter-on-quarter due to a 15-day scheduled shutdown, but still achieved the 4th highest sales volume in company history. Net revenue was impacted by foreign exchange appreciation and higher geopolitically driven freight costs, with unit revenue down 20% from Q1 2026. Despite these headwinds, EBITDA margin remained resilient above 30%, demonstrating operational strength. It contributes a large share of consolidated profitability.

3. Cement: Sales volume was slightly constrained by scheduled maintenance shutdowns across multiple plants. Net revenue grew 14% quarter-on-quarter and 10% year-on-year, driven by price readjustments and resilient market demand. EBITDA hit a second consecutive quarterly record exceeding 420,000 BRL, with an EBITDA margin above 30%. It is the highest margin segment among CSN's domestic operations, contributing ~15% of consolidated EBITDA on a trailing 12-month basis.

4. Logistics: Net revenue grew 3.1% quarter-on-quarter, driven by multimodal subsegment growth and synergy captures from recent acquisitions. EBITDA hit the second highest level in segment history, with an EBITDA margin maintained above 45%, supported by dry season seasonality and strong cost efficiency. It is a high-margin, resilient contributor to consolidated results.

5. Energy: Q2 2026 delivered record net revenue and EBITDA, driven by a one-time retroactive recognition of contingent revenue from the Jacoí hydroelectric power plant (suspended since October 2025). Results are expected to normalize to stable levels in coming quarters, and the segment remains a strategic, predictable high-margin contributor to group operations.

• Unfair competition from illegal and underpriced steel imports primarily from China, with growing risks of trade circumvention via third countries like Vietnam and South Korea, which threatens domestic market share and margins across the steel segment.
• Geopolitical tensions (specifically US-Iran conflict) have driven elevated maritime freight costs, which negatively pressured mining segment profitability in Q2 2026 and remain an ongoing volatility risk for export-focused mining operations.
• High domestic interest rates in Brazil increase financial costs for leveraged companies like CSN, creating ongoing pressure to continue deleveraging to maintain financial sustainability.
• Iron ore price volatility, with current prices below $100 per ton, creates pressure on the cash generation of CSN's largest core asset (mining).
• Dependence on government approval for expanded anti-dumping measures, and a history of slow regulatory action on import protection creates uncertainty for the pace of steel segment recovery.

Q: How sustainable is the current steel margin recovery from anti-dumping, what is the outlook for cement divestment, and what is the path for future deleveraging?

A: The shift of 600,000 tons of domestic market share from imports to domestic producers in H1 2026 is already realized, and management expects to capture a full 1.5-2 million tons of share for 2026, which is largely structural. Steel margin is expected to grow to 15-17% in H2 from 10.5% in Q2. For cement, binding offers have been received, but details cannot be disclosed during the competitive bidding process; the asset will get a fair valuation that supports deleveraging. Deleveraging will come both from announced asset sales and sustainable improved cash flow from operational recovery, especially in steel, and strategic partnership options for steel are also being evaluated.

Q: Are Vietnamese steel imports a circumvention risk, and will you need to continue additional asset sales beyond cement and logistics after these divestments complete?

A: Vietnam is a major importer of Chinese steel, so circumvention is a major concern that CSN is actively combating with Brazilian regulators. However, current import shipping volumes have dropped sharply from 2025 levels, and non-Chinese imports from Vietnam/Korea do not have the same aggressive pricing as Chinese steel, so CSN can compete effectively. The strategy of continued asset sales to accelerate deleveraging does not change after cement and logistics; CSN holds additional non-core assets (such as international real estate) that could be sold if needed, and the priority remains unlocking cash for high-return core projects like P15 mining expansion.

Q: How much additional working capital release can we expect in coming quarters, and are there additional asset monetization plans beyond the current divestment program amid pressured iron ore prices?

A: Most of the Q2 working capital release came from steel inventory reduction, and management expects up to an additional 1 billion BRL in releases as inventory is brought down to efficient target levels through H2 2026. Iron ore results will improve in Q3 as Q2's temporary headwinds (scheduled shutdowns, unfavorable exchange rates) fade. CSN has additional non-core assets that could be monetized if needed to speed deleveraging, and the company remains fully committed to deleveraging to reduce exposure to high Brazilian interest rates and free up capital for high-return core projects.

Q: What is the trajectory of steel production costs for H2, and how will proceeds from the bridge loan be used for liability management?

A: Target slab cost is ~3,000-3,150 BRL per ton, with raw material price volatility the main variable outside management control. Operational excellence initiatives are expected to offset raw material cost increases, supporting margin expansion to 15-17% H2. Remaining bridge loan resources will be used for debt buybacks and debt payment; CSN has already bought back a portion of 2028 bonds for the recent exchange operation, and the priority after cement divestment is to pay down the bridge loan and reduce average debt costs.