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UPDATE 1-Brazil steelmaker CSN plans to raise prices by 25% in Q2

Alberto Alerigi and Paula Laier
·2 min read

(Adds executive comments, details from Q4 results)

By Alberto Alerigi and Paula Laier

SAO PAULO, Feb 23 (Reuters) - Brazilian steelmaker Companhia Siderúrgica Nacional (CSN) said on Tuesday that it expects to raise its prices by an average of 25% in the second quarter as it moves to shrink its debt.

CSN Chief Executive Benjamin Steinbruch said in a call to analysts that believes the steelmaker's debt rating could be upgraded in "weeks" as the company plans to reach its deleveraging goal in 45 days.

Sales director Luis Martinez said CSN will probably start raising prices for hot and cold laminated products in March and he sees their sales expanding 12-15% this year with Brazil recovering from last year's recession caused by coronavirus.

CSN, which posted strong fourth quarter revenue growth helped by high commodities prices and reduced indebtedness, said it plans to set up a cement subsidiary.

Steinbruch said he sees room to raise cement prices this year and expects a 15-18% increase in output, adding that acquisitions could be on the horizon.

"Brazil's cement market has potential to consolidate and CSN is a company with a vocation for consolidation," he said.

CSN posted a net profit of 3.9 billion reais ($717.11 million) in the fourth quarter, more than triple the 1.1 billion reais profit in the same period of 2019.

The adjusted operating result measured by EBITDA (earnings before interest, taxes, depreciation and amortization) tripled to 4.7 billion reais, a quarterly record, with its adjusted EBITDA margin almost doubling to 47%.

CSN's net revenue totaled 9.8 billion reais, a 50% increase year-over-year, on what it described as "excellent performance in the steel and mining segments, driven by the global rise in commodity prices."

In the fourth quarter, steel sales totaled 1.2 million tons, against 1.1 million tons a year earlier, while sales of iron ore totaled 8.6 million tonnes, down 16% year-on-year.

At the end of 2020, net debt reached 25.6 billion reais, or 2.23 times EBITDA, the lowest since December 2011, helped by strong cash generation and favorable exchange rates.

CSN estimated it will close 2021 with a net debt of 15 billion reais and a debt to EBITDA ratio of 1.

CSN shares initially rose 2.6% on the earnings and debt target news but was down 0.6% in afternoon trading. ($1 = 5.4385 reais) (Reporting by Alberto Alerigi and Paula Laier, writing by Anthony Boadle Editing by Marguerita Choy)