Companhia Siderurgica Nacional Loss Plunges in Q4


Brazilian steel maker, Companhia Siderurgica Nacional (SID), or CSN, incurred a huge fourth-quarter 2013 loss of R$487.1 million (US$214.6 million) as against earnings of R$316.3 million (US$153.5 million) in the year-ago quarter. Loss per share was R$0.33 or US$0.15 per ADR.   

In 2013, Companhia Siderurgica Nacional recorded net earnings of R$534.0 million (US$248.4 million) as against losses of R$480.6 million in 2012. Earnings per share in 2013 were R$0.37 or US$0.17 per ADR.


Companhia Siderurgica Nacional generated net revenues of R$4,948.8 million (US$2,180.1 million) in fourth-quarter 2013, up 11.4% year over year.

The company’s crude steel production in the quarter was roughly 1.3 million tons and rolled steel produced was about 1.2 million tons. Steel sales volume decreased 5% sequentially to roughly 1.4 million tons, of which domestic sales accounted for 74.0%, overseas subsidiaries about 23% and direct exports around 3%. Iron ore sales were up 2% sequentially to 7.8 million tons.

In 2013, Companhia Siderurgica Nacional’s net revenues increased 13.7% year over year to R$17,312.4 million (US$8,052.3 million) due primarily to healthy performances from the Steel and Mining segments.
Steel revenues accounted for 63.3% of total revenue in 2013 and reflected an increase of 14.7% year over year. Revenues generated from the Mining segment increased 18.1% and accounted for 27.0% of total revenue.

The Logistics segment contributed 6.5% to total revenue and revenues generated by this segment were up 4.1% over the year-ago quarter. Cement revenues increased 7.2% and settled at 2.1% of the total. Revenues from the Energy segment accounted for 1.1% of total revenue and reflected a 7.4% year-over-year decline.


Companhia Siderurgica Nacional's cost of goods sold in the quarter decreased 0.70% year over year to R$3,291.7 million (US$1,450.1 million). Gross margin expanded 800 basis points (bps) to 33%. As a percentage of net revenue, selling expenses decreased by 230 bps year over year, while general and administrative expenses increased by 50 bps year over year.

Adjusted earnings before interest, taxes, depreciation and amortization (:EBITDA) in the quarter improved 6.0% to R$1,756.0 million (US$773.6 million) with a margin of 35.5% compared with 35.4% in the year-ago quarter. Net financial result was reflected in an expense of R$929.4 million (US$409.4 million), up 71.6% year over year.
Balance Sheet

Exiting fourth-quarter 2013, Companhia Siderurgica Nacional had cash and cash equivalents of R$9,995.7 million (US$4,253.5 million), down 10.3% sequentially. Loans, financing and debentures, net of current portion, decreased 9.8% to R$25,103.6 million (US$10,682.4 million).

Cash Flow

In 2013, Companhia Siderurgica Nacional generated net cash of R$2,198.1 million (US$1,022.4 million) from operating activities, reflecting a 13.1% year-over-year decline. Capital spent on fixed/tangible assets additions was R$2,490.2 million (US$1,158.2 million), down 9.0% year over year.

Companhia Siderurgica Nacional currently has a market capitalization of $6.5 billion and carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the steel industry include United States Steel Corp. (X), AK Steel Holding Corporation (AKS) and Olympic Steel Inc. (ZEUS), all of which have a Zacks Rank #2 (Buy).

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