CSN Posts Upbeat 3Q Results


Companhia Siderurgica Nacional’s (SID), or CSN’s net results in the third quarter 2012 though improved from a loss reported in the second quarter 2012, failed to gain momentum and lagged behind the year-ago earnings. Net earnings in the quarter came in at R$159.1 million (US$79.6 million) versus net earnings of R$1,097.2 million (US$673.1 million) reported in the year-ago quarter.

Earnings per share came in at R$0.11, or US$0.06 per ADR, above the Zacks Consensus Estimate of US$0.01 per ADR. Compared with the year-ago, results fell drastically from R$0.75, or US$0.46 per ADR.


The company generated net revenues of R$4,267.2 million (US$2,133.6 million) in the third quarter of 2012, registering a year-over-year increase of 0.6% and sequential growth of 3.2%.   

Crude steel production in the quarter was 1.3 million tons and rolled steel produced was 1.2 million tons. Steel sales volume inched up 13% sequentially to 1.6 million tons, of which domestic sales accounted for 79.0%, overseas subsidiaries about 19% and direct exports around 2%.

Iron ore sales were up 8% sequentially to 6.6 million tons. Of total sales, domestic market accounted for 4.5% and exports about 95.5%.


During the third quarter 2012, cost of goods sold went up 23.0% year over year to R$3,103.4 million (US$1,551.7 million), leading to a fall in gross margin to 27% from 41% in the year-ago quarter.

As a percentage of net revenue, selling expenses increased by roughly 280 basis points (bps) year over year, while general and administrative expenses increased 80 bps year over year.

Adjusted EBITDA in the quarter dipped 36.8% to R$1,075.9 million (US$538.0 million) with a margin of 25% compared with 40% in the year-ago quarter. Net financial results increased 45.9% year over year to an expense of R$496.7 million (US$248.4 million).

Balance Sheet

Exiting the third quarter, Companhia Siderurgica had cash and cash equivalents of roughly R$14,553.7 million (US$7,276.9 million), up 6.3% sequentially from R$13,690.5 million (US$6,582 million) in the previous quarter. Loans, financing and debentures, net of current portion increased 5% to R$28,208.4 million (US$14,104.2 million) from R$26,863.5 million (US$12,915.1 million) in the previous quarter.

Cash Flow

Net cash flow from operating activities plummeted 20.8% year over year to R$827.3 million (US$413.7 million) while capital spending totaled R$797.3 million (US$398.7 million), down 94.3% year over year.

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