Brazilian steel maker Companhia Siderurgica NacionalSID or CSN yet again posted disappointing results, with net loss of R$532.7 million (US$151.3 million) for third-quarter 2015. This was wider than net loss of R$250.4 million (US$110.3 million) recorded in the year-ago quarter.
Companhia Siderurgica Nacional' loss per share in the quarter came in at R$0.38 or approximately 11 cents per American Depository Receipt ("ADR").
Companhia Siderurgica Nacional's net revenue was R$3,956 million (US$1,123.9 million) in the quarter, up roughly 1.9% year over year. The year-over-year increase was driven by sales hike in mining operations as well as positive impact from depreciation of real against the U.S. dollar.
Roughly 46.3% of net revenue was generated from domestic markets, while the rest was sourced from Companhia Siderurgica Nacional's international operations.
Crude steel production declined 9% sequentially to 1.1 million tons; while production of rolled steel decreased 4% to approximately 1 million tons. Steel sales volume declined 7% year over year to roughly 1.2 million tons, of which domestic sales accounted for 58%, overseas subsidiaries about 39%, and direct exports around 3%. Iron ore sales were down 2% year over year to approximately 7.6 million tons.
Steel revenues, comprising 65% of net revenue, declined 1.8% year over year. Revenues from the Mining segment grew 3.1%, accounting for 22.4% of net revenue.
The Logistics segment contributed 8.4% to net revenue, down 5.1% year over year. Cement revenues decreased 5% and represented 2.7% of net revenue. Revenues from the Energy segment, down 38.1% year over year, accounted for 1.5% of net revenue.
Companhia Siderurgica Nacional's top-line performance was more than offset by a hike in costs, leading to a weak margin profile in the quarter. Cost of sales grew 3.6% year over year, representing 76% of net revenue versus 75% in the year-ago quarter. Gross margin fell 100 basis points (bps) to 24%.
As a percentage of net revenue, selling expenses increased 350 bps year over year; while general and administrative expenses edged up 10 bps over the same time frame.
Companhia Siderurgica Nacional's adjusted earnings before interest, taxes, depreciation and amortization decreased 13% year over year to R$853 million (US$242.3 million), with a margin of 21.6% compared with 25.2% in the prior-year quarter. Net financial results included expense of R$1,548.9 million (US$440 million), up 64% year over year.
Balance Sheet & Cash Flow
Exiting third-quarter 2015, Companhia Siderurgica Nacional's cash and cash equivalents of R$8,226.8 million (US$2,006.5 million) increased 4.9% from R$R$7,844.4 million recorded in the previous quarter. Borrowings, financing and debentures (net of current portion) increased 15.2% sequentially to R$33,366.6 million (US$8,138.2 million).
In addition, Companhia Siderurgica Nacional generated cash of R$179.7 million (US$51.1 million) from its operating activities compared with cash usage of R$640.7 million (US$208.7 million) in the prior quarter. Capital spending totaled R$803.4 million (US$228.2 million), up 42.8% sequentially.
With a market capitalization of $1.7 billion, Companhia Siderurgica Nacional presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Celanese Corporation CE , Rayonier Advanced Materials Inc. RYAM and Stepan Company SCL . While both Celanese Corporation and Rayonier Advanced Materials sport a Zacks Rank #1 (Strong Buy), Stepan Company carries a Zacks Rank #2 (Buy).