Aug. 11 (Bloomberg) -- Cia. Siderurgica Nacional SA, Brazil’s third-biggest steelmaker, said second-quarter net income more than doubled because of higher steel and iron-ore prices and rising demand in Latin America’s largest economy.
Profit climbed to 894 million reais ($506 million), from 334.7 million reais a year earlier, the Rio de Janeiro-based company said yesterday in a regulatory filing. CSN, as the steelmaker is known, was expected to report profit of 829.4 million reais on an adjusted basis, the average estimate of 10 analysts in a Bloomberg survey.
CSN took advantage of an economic expansion in Brazil to lift prices. Brazil’s economy grew 9 percent in the first quarter, the most in 15 years, driven by domestic demand and a surge in investments. The government hasn’t yet reported economic growth for the second quarter.
“Results should continue to improve,” Bank of America analysts Felipe Hirai and Thiago Lofiego, who rate the stock “buy,” wrote in a note to clients today. “Steel prices in Brazil should increase in the third quarter, as well as iron ore prices.”
Revenue rose 55 percent to 3.87 billion reais in the quarter, with domestic sales accounting for 2.87 billion reais.
Steel sales rose 37 percent from the same period last year. The company also boosted sales of iron ore, the main raw material used to make steel. Sales jumped 44 percent to 6.23 million metric tons and exports rose 42 percent to 5.92 million tons.
CSN said it’s still in talks with partners in Nacional Minerios SA, known as Namisa, to include the iron-ore mine in a spinoff of the company’s mining business, Investor Relations Director Paulo Penido Marques said on conference call today.
The company may also buy back perpetual bonds and refinance the debt to cut borrowing costs, Penido said.
CSN fell 1.04 reais, or 3.4 percent, to 29.18 reais at 12 p.m. New York time in Sao Paulo trading. The benchmark Bovespa index dropped for a fourth day, losing 1.9 percent as slower Chinese growth dimmed the outlook for commodities prices.
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