RESULT 3Q20
São Paulo, October 15, 2020
Results for the Third Quarter of 2020
Companhia Siderúrgica Nacional ("CSN") (B3 S.A. - Brasil, Bolsa e Balcão: CSNA3) (NYSE: SID) announces its results for the third quarter of 2020 (3Q20) in Brazilian Reais, in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), which are fully convergent with international accounting standards and with Brazilian accounting practices.
All comments presented herein refer to the Company's consolidated results for the third quarter of 2020 (3Q20) and comparisons refer to the third quarter of 2019 (3Q19) and second quarter of 2020 (2Q20).The Brazilian Real/U.S. Dollar exchange rate was R$4.1644 on September 30, 2019, R$5.4416 on June 30, 2020, and R$5.6407 on September 30, 2020 (+3.7% appreciation of the U.S Dollar against the Brazilian Real in the quarter).
Operating and Financial Highlights in 3Q20
RECORD RESULTS IN 3Q20
Adjusted EBITDA reached R$3,506 million in 3Q20, up by 82% QoQ due to a combination of better volumes, prices and costs in all segments.
REINFORCED CASH POSITION AND DECREASED LEVERAGE
Adjusted Cash Flow reached R$2,837MM, a record for a quarter, reflecting good operating results.
Adjusted Cash and Cash Equivalents reached R$6.9BI or +33% QoQ, and Net Debt/EBITDA Leverage fell 1.50x in 3Q20, reaching 3.67x.
COMBINATION OF PRICES, PERFORMANCE AND VOLUMES IN STEEL
The recovery in sales volume and in cost competitiveness led to a 70% increase in EBITDA in 3Q20 compared to the previous quarter. Domestic sales in 3Q20 reached 923kton, 50% over 2Q20.
COMBINATION OF PRICES AND VOLUMES, RECORD IN MINING
Iron Ore production totaled 9.4Mton in 3Q20, up by 27% QoQ, due to better costs combined with higher prices generated the highest EBITDA ever recorded by the segment.
EBITDA reached a historical record of R$100MM in 3Q20 due to higher volumes and recovery in profitability.
GROWING RESULTS IN LOGISTICS
The recovery in railway volumes led EBITDA to grow by +7%, reaching R$238MM in 3Q20.
For further information, please visit our website: www.csn.com.br/ri
RESULT | ||||||||
3Q20 | ||||||||
3Q20 | 2Q20 | 3Q19 | 3Q20 x 2Q20 | 3Q20 x 3Q19 | ||||
Steel Sales (thousand tons) | 1,278 | 1,003 | 1,072 | 27% | 19% | |||
- Domestic Market | 923 | 614 | 750 | 50% | 23% | |||
- Foreign Market | 355 | 389 | 322 | -9% | 10% | |||
Iron Ore Sales (thousand tons) | 9,165 | 7,743 | 9,209 | 18% | 0% | |||
- Domestic Market | 1,050 | 1,084 | 388 | -3% | 171% | |||
- Foreign Market | 8,115 | 6,659 | 8,821 | 22% | -8% | |||
Consolidated Results (R$ million) | ||||||||
Net Revenue | 8,715 | 6,221 | 6,006 | 40% | 45% | |||
Gross Profit | 3,581 | 1,843 | 1,636 | 94% | 119% | |||
Adjusted EBITDA | (1) | 3,506 | 1,925 | 1,567 | 82% | 124% | ||
Ebitda Margin % | 39.0% | 29.7% | 25.1% | |||||
Adjusted Net Debt | (2) | 30,603 | 33,120 | 27,577 | -8% | 11% | ||
Adjusted Cash and Cash Equivalents | (2) | 6,874 | 5,177 | 2,981 | 33% | 131% | ||
Net Debt / Adjusted EBITDA | 3.67x | 5.17x | 3.81x | -1.50x | -0.14x |
- Adjusted EBITDA is calculated based on net profit (loss), plus depreciation and amortization, income tax, net financial result, share of profit (loss) of investees and other operating income/expenses, and includes the proportional share of EBITDA of jointly owned subsidiaries MRS Logística (37.27%) and CBSI (50% 3Q19, 100% 3Q20).
² Adjusted Net Debt and Adjusted Cash and Cash Equivalents include the stakes of 100% in CSN Mineração, 37.27% in MRS and CBSI (50% in 3Q19, 100% 3Q20), our stake in this company until 3Q19, excluding Forfaiting and Drawee Risk operations.
CSN's Consolidated Result
- Net Revenue in 3Q20 totaled R$8,715 million, up by 40% over 2Q20 and by 45% over 3Q19. The increase was mainly due to the normalization of the volume of iron ore production, combined with higher prices for iron ore, cement and steel when compared to 2Q20.
- In 3Q20, the Cost of Goods Sold totaled R$5,133 million, up by 17% over 2Q20. Gross Margin increased by 11.5 p.p. over 2Q20, reaching 41.1% in 3Q20, due to the positive performance, mainly in cement, steel and mining.
- In 3Q20, Selling, General and Administrative Expenses totaled R$731 million, up by 39% over 2Q20, while the Net Revenue reached 40% year-on-year.Selling Expenses increased 52% in 3Q20, mainly due to a higher volume of freight, while General and Administrative Expenses decreased by 2% YoY.
- In 3Q20, the group of Other Operating Revenues and Expenses reached a negative value of R$717 million, mainly due to hedge accounting.
- The financial result reached a negative value of R$156 million, with cost of debt partially offset by the appreciation of Usiminas shares, generating a gain of R$537 million without cash effect.
For further information, please visit our website: www.csn.com.br/ri
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RESULT 3Q20
- Equity Pick-up was positive by R$26 million in 3Q20, compared to R$29 million in 2Q20, due to higher eliminations in the period.
3Q20 | 2Q20 | 3Q19 | 3Q20 x 2Q20 | 3Q20 x 3Q19 | |
MRS Logística | 55 | 56 | 85 | -1% | -35% |
CBSI | 0 | 0 | 3 | 0% | -100% |
TLSA | (6) | (12) | (6) | 88% | 4% |
Arvedi Metalfer BR | (1) | (5) | (0) | 84% | 214% |
Equimaq S.A | (0) | - | 0% | 0% | |
Elimination | (22) | (10) | (17) | 71% | 28% |
Equity in Results of Affiliated Companies | 26 | 29 | 64 | -5% | -59% |
- In 3Q20, the Company recorded a net income of R$1,262 million, compared to net income of R$446 million in 2Q20.
Adjusted EBITDA
3Q20 | 2Q20 | 3Q19 | 3Q20 x 2Q20 3Q20 x 3Q19 |
Profit (loss) for the Period | 1,262 | 446 | (871) | 816 | 2,132 | ||||
(-) Depreciation | 461 | 428 | 352 | 33 | 109 | ||||
(+) Income Tax and Social Contribution | 742 | 392 | 301 | 350 | 441 | ||||
(+) Finance Income | 156 | (285) | 840 | 441 | (684) | ||||
EBITDA (ICVM 527) | 2,620 | 981 | 622 | 1,639 | 1,998 | ||||
(+) Other Operating Income (Expenses) | 717 | 791 | 863 | (74) | (146) | ||||
(+) Free Cash Flow Hedge Accounting - Exchange Rate | 374 | 775 | - | (401) | 374 | ||||
(+) Free Cash Flow Hedge Accounting - Platts Index | 133 | - | - | ||||||
(+) Others | 210 | 16 | - | 194 | 210 | ||||
(+) Equity in Results of Affiliated Companies | (26) | (28) | (64) | 2 | 38 | ||||
(+) Proportional EBITDA of Jointly Owned Subsidiaries | 195 | 182 | 146 | 13 | 49 | ||||
Adjusted EBITDA | 3,506 | 1,925 | 1,567 | 1,581 | 1,939 |
*The Company discloses adjusted EBITDA excluding interests in investments and other operating income (expenses) understanding that these items should not be considered when calculating the recurring operating cash flow.
- Adjusted EBITDA reached a record of R$3,506 million in 3Q20, compared to R$1,925 million in the second quarter, due to an increase in sales volume, mainly in the volume of steel sold in the domestic market and iron ore in the foreign market. Adjusted EBITDA margin reached 39% or up by 9.2 p.p. YoY.
Adjusted EBITDA (R$ Million) and Adjusted Margin¹ (%)
- Adjusted EBITDA margin is calculated as the ratio between Adjusted EBITDA and Adjusted Net Revenue, which considers stakes of 100% in CSN Mineração and 37.27% in MRS and 50% in CBSI (50% 3Q19, 100% 3Q20).
For further information, please visit our website: www.csn.com.br/ri
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RESULT 3Q20
Adjusted Free Cash Flow¹
Adjusted Cash Flow in 3Q20 reached R$2,837MM, positively affected mainly by the higher Ebitda and by the positive variation in working capital due to the sharp decrease in inventory.
Adjusted Free Cash Flow¹ 3Q20 (R$ Million)
¹Adjusted Free Cash Flow is calculated from Adjusted EBITDA less EBITDA of Joint Subsidiaries, Capex, Income Tax, Financial Income (Expenses), and variation of Assets and Liabilities², excluding the impact of Glencore's advance.
²Adjusted Working Capital² includes the variation in Net Working Capital (+R$264MM), plus the variation in long-term assets and liabilities accounts (R$701MM) and disregards the net variation of Income Tax and Social Contribution Tax for consumption (+R$3MM), dividends payable (-R$16MM) and non-cash CAPEX (-R$42MM) and AFAC TLSA non-cash (- R$95MM).
Indebtedness
On September 30, 2020, the consolidated net debt reached R$30,603 million, with the exchange rate change offset by the strong cash generation in the period and the inflow of funds from iron ore prepayment. The net debt/EBITDA ratio reached 3.67x, a considerable decrease due to the strong cash flow.
Debt (R$ Million) and Net | Net Debt Build-up |
Debt/Adjusted EBITDA(x) | |
(R$ Million) | |
¹Net Debt / EBITDA: For debt calculation purposes consider the final dollar for each period and for net debt and EBITDA the average dollar for the period.
In 3Q20 and at the beginning of 4Q20, the Company continued to extend its liabilities, obtaining approvals for an extension of R$600 million with private banks.
Amortization Schedule (R$ Billion)
¹IFRS: Not considering MRS share (37.27%)
For further information, please visit our website: www.csn.com.br/ri
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CSN - Companhia Siderúrgica Nacional published this content on 15 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 October 2020 22:39:01 UTC