Brazilian steel maker,
Companhia Siderurgica Nacional
, reported improved results for the first quarter 2014. Net income
was R$55.3 million (US$23.4 million), up 102.5% year over year.
Earnings per share were R$0.04 or US$0.02 per American Depositary
Companhia Siderurgica Nacional generated net revenues of R$3,490.5
million (US$1,479.0 million) in the quarter, reflecting an increase
of 22.3% year over year. The year-over-year improvement was driven
by healthy performance in Companhia Siderurgica Nacional's steel
and mining businesses.
Of the total revenues, Companhia Siderurgica Nacional generated
roughly 72.1% in the domestic markets while the rest were sourced
Crude steel production was around 1.2 million tons, up 3% year over
year while rolled steel production decreased 3% to 1.1 million
tons. Steel sales volume declined 10% year over year to roughly 1.4
million tons, of which domestic sales accounted for 73%, overseas
subsidiaries about 25% and direct exports around 2%. Iron ore sales
were up 54% year over year to 6.4 million tons.
Steel revenues comprised 64.1% of total revenue in the first
quarter 2014 reflecting an increase of 6.1% year over year.
Revenues generated from the Mining segment increased 66.9%
accounting for 25.6% of total revenue.
The Logistics segment contributed 6.9% to total revenue and
revenues generated by this segment were up 28.0% compared with the
year-ago quarter. Cement revenues were flat year over year and
settled at 2.1% of the total. Revenues from the Energy segment
accounted for 1.3% of total revenue and reflected a 38.3%
Companhia Siderurgica Nacional recorded a 4.8% year over year
increase in cost of goods that came in at R$2,311.2 million
(US$979.3 million). Higher cost of sales partially offset the top
line improvement leading to a gross margin expansion of 11% year
over year to 34%.
As a percentage of net revenue, selling expenses decreased by 103
basis points (bps) year over year, while general and administrative
expenses decreased by 30 bps year over year.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) in the quarter improved 60.0% to R$1,440.0
million (US$610.2 million) with a margin of 32.9% compared with
24.8% in the prior-year quarter. Net financial result was an
expense of R$578.8 million (US$345.3 million), up 24.4% year over
Exiting the first quarter 2014, Companhia Siderurgica Nacional had
cash and cash equivalents of R$10,000.4 million (US$4,425.0
million), flat sequentially. Loans, financing and debentures and
net of current portion decreased 3.8% to R$24,159.6 million
In the first quarter 2014, Companhia Siderurgica Nacional generated
net cash of R$576.2 million (US$244.2 million) from operating
activities, reflecting a 27.7% sequential decline. Capital spent on
fixed/tangible assets additions was R$298.7 million (US$126.6
million), down 59.7% sequentially.
Companhia Siderurgica Nacional currently has a market
capitalization of $6.0 billion and carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the steel industry include
ArcelorMittal South Africa Ltd.
General Steel Holdings, Inc.
). All these companies hold a Zacks Rank #2 (Buy).
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