CSN Quarterly Earnings Beat Estimate on Gain From Mining Venture

  • Profit jumps as asset combination led to $800 million gain
  • Steel sales declined, hurt by Brazil's economic recession

Cia. Siderurgica Nacional SA posted better-than-estimated quarterly results as Brazil’s best performing steelmaker this year fights to reduce costs and debt amid slumping domestic demand and a global glut.

The company reported earnings before interest, taxes, depreciation and amortization, or Ebitda, of 686 million reais ($189 million), higher than the 606 million-real average estimate among analysts tracked by Bloomberg. Sales fell 3.7 percent.

CSN posted a profit of 2.37 billion reais ($654 million) compared with a net income of 67 million reais a year earlier, it said Tuesday. The company booked a 2.9 billion-real gain from a transaction that combined its mining assets with those of the Namisa iron-ore joint venture, concluded in November last year. CSN holds 87.5 percent of the combined company, known as Congonhas Minerios, and its partners include Itochu Corp., JFE Steel Corp., and Posco.

“CSN’s biggest problem is its debt,” Rafael Ohmachi, an analyst at Guide Investimentos said before the earnings release. “The rise in the dollar caused the company’s debt to jump last year while its Ebitda has gone down because of market fragility, especially here in Brazil.”

Net debt more than doubled to 8.2 times Ebitda at the end of 2015. The Sao Paulo-based company’s shares have gained 95 percent this year, making it the best performer among major steelmakers and iron ore producers tracked by Bloomberg. The shares are still down 58 percent from a 2012 peak.

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