CSN(SID) - 2025 Q2 - Quarterly Report

Financial and Operational Performance Consolidated Results CSN reported a slight 2.0% quarter-over-quarter decrease in net revenue to R$10,693 million, primarily due to lower iron ore prices, while gross profit and adjusted EBITDA increased by 7.7% and 5.3% respectively, leading to an 82.2% improvement in net loss | Indicator | 2Q25 | 1Q25 | 2Q25 vs 1Q25 | 2Q24 | 2Q25 vs 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenue (R$ million) | 10,693 | 10,908 | -2.0% | 10,882 | -1.7% | | Gross Profit (R$ million) | 2,726 | 2,532 | 7.7% | 2,989 | -8.8% | | Adjusted EBITDA (R$ million) | 2,643 | 2,509 | 5.3% | 2,645 | -0.1% | | Adjusted EBITDA Margin % | 23.5% | 22.1% | 1.4 p.p. | 23.2% | 0.3 p.p. | | Net Loss (R$ million) | (130.4) | (731.6) | -82.2% | (222.6) | -41.4% | - The 2.0% decrease in net revenue compared to the previous quarter was primarily a result of the drop in iron ore prices, which counteracted operational improvements in mining and revenue growth in other segments[14] - Gross profit increased by 7.7% QoQ, with the gross margin expanding by 2.3 percentage points to 25.5%, mainly driven by a significant reduction in the Cost of Goods Sold (COGS), reflecting an assertive commercial strategy and lower raw material costs in the steel industry[14] - The net loss improved by 82.2% compared to 1Q25, reflecting better operating results, the positive impact from the reversal of contingencies, and gains from iron ore hedging operations[18] Adjusted Cash Flow and Investments Adjusted Cash Flow for Q2 2025 was negative R$1,474.9 million, a significant deterioration from the previous quarter, attributed to increased investments (CAPEX) for expansion projects, higher interest rates, and increased working capital consumption - Adjusted Cash Flow was negative by R$1,474.9 million, worsening from the previous quarter despite higher EBITDA, due to increased investments, higher financial expenses from interest rates, and increased working capital consumption[24] Investment (CAPEX) | Investment (CAPEX) | 2Q25 (R$ million) | Change vs 1Q25 | Change vs 2Q24 | | :--- | :--- | :--- | :--- | | Total CAPEX | 1,331.3 | +18.2% | Stable | - The increase in investments was in line with seasonality and progress in the P15 mining infrastructure construction, as well as the modernization of the UPV steel mill operations[40] Indebtedness and Financial Position CSN made progress in deleveraging, reducing its Net Debt / Adjusted EBITDA ratio to 3.24x and gross debt by R$2.1 billion in Q2, while maintaining a strong cash position and managing foreign exchange exposure Indebtedness Metric | Indebtedness Metric | 2Q25 | 1Q25 | Change | | :--- | :--- | :--- | :--- | | Consolidated Net Debt (R$ million) | 35,665 | 35,830 | -0.5% | | Net Debt / Adjusted EBITDA LTM | 3.24x | 3.33x | -0.09x | - The company is committed to reducing indebtedness, having lowered its gross debt by R$2.1 billion in Q2 and nearly R$5.7 billion in the first half of the year, also pursuing capital recycling projects like CSN Infrastructure to enhance liquidity[28] - Net Working Capital increased by 24.8% QoQ to R$2,853 million, reflecting an increase in inventory and recoverable taxes, which offset a reduction in accounts receivable[42][44] - At the end of 2Q25, the company had a net foreign exchange asset exposure of US$1,104 million, in line with its policy to minimize the impact of exchange rate volatility[37][39] Business Segments Analysis Steel The steel segment strategically prioritized margins over volume amid import pressure, resulting in an 11.5% decrease in sales volume but a 20.0% increase in Adjusted EBITDA and a significant recovery in Adjusted EBITDA margin to 10.8% - Total sales volume decreased 11.5% QoQ to 1,013 thousand tons, reflecting a commercial strategy to prioritize results and margins over volume amid intense competition from imported materials[57] Steel Segment Performance | Steel Segment | 2Q25 | 1Q25 | Change vs 1Q25 | 2Q24 | Change vs 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales Volume (K Tons) | 1,013 | 1,143 | -11.4% | 1,124 | -9.9% | | Net Revenue (R$ million) | 5,392 | 6,107 | -11.7% | 5,591 | -3.6% | | Adjusted EBITDA (R$ million) | 581 | 485 | +20.0% | 325 | +78.8% | | Adjusted EBITDA Margin | 10.8% | 7.9% | +2.9 p.p. | 5.8% | +5.0 p.p. | - The strong increase in profitability, with the EBITDA margin returning to double digits, highlights the success of the strategy to sustain prices and focus on higher value-added products despite challenging market conditions[65] Mining The mining segment achieved a record iron ore production of 11,602 thousand tons, up 13.6% QoQ, and sales volume surged 22.7%, but a 5.7% decline in iron ore prices led to stable net revenue and a 12.1% drop in Adjusted EBITDA to R$1,231.5 million - Iron ore production, including purchases, reached a new historical record of 11,602 thousand tons in 2Q25, a 13.6% quarterly increase, positioning the company to meet its annual guidance[72] Mining Segment Performance | Mining Segment | 2Q25 | 1Q25 | Change vs 1Q25 | 2Q24 | Change vs 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Sales Volume (K Tons) | 11,833 | 9,640 | +22.7% | 10,792 | +9.6% | | Net Revenue (R$ million) | 3,414 | 3,432 | -0.5% | 3,347 | +2.0% | | Adjusted EBITDA (R$ million) | 1,232 | 1,401 | -12.1% | 1,590 | -22.5% | | Adjusted EBITDA Margin | 36.1% | 40.8% | -4.7 p.p. | 47.5% | -11.4 p.p. | - The lower profitability, reflected in the reduced EBITDA margin, was solely due to the fall in iron ore prices, which was partially offset by record production, efficient logistics, and solid cost control[75] Cement The cement segment saw sales volume increase by 8.1% and net revenue grow 10.1% QoQ to R$1,212.7 million, driven by a resilient real estate market and solid cost control, resulting in a 21.4% increase in Adjusted EBITDA to R$293.4 million and a 2.3 percentage point margin expansion - Sales volume increased by 8.1% compared to the previous quarter, reflecting an assertive strategy to capture market dynamism driven by the real estate sector[78] Cement Segment Performance | Cement Segment | 2Q25 | 1Q25 | Change vs 1Q25 | 2Q24 | Change vs 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Revenue (R$ million) | 1,213 | 1,102 | +10.1% | 1,238 | -2.0% | | Adjusted EBITDA (R$ million) | 293 | 241 | +21.6% | 346 | -15.2% | | Adjusted EBITDA Margin | 24.2% | 21.9% | +2.3 p.p. | 28.0% | -3.8 p.p. | - The increase in the EBITDA margin demonstrates the segment's ability to deliver robust profitability despite competitive pressures and high interest rates, supported by favorable numbers of new real estate launches[87] Logistics The logistics segment's total net revenue surged 52.7% QoQ to R$1,176.9 million and Adjusted EBITDA grew 46.1% to R$519.1 million, significantly boosted by the incorporation of Tora, with strong railway performance offsetting port logistics headwinds - The segment's results were positively impacted by the incorporation of Tora and higher rail shipments, with total Net Revenue up 52.7% QoQ and Adjusted EBITDA up 46.1% QoQ[83] - Railway Logistics: Net Revenue reached R$800.5 million (+16.8% QoQ) with an Adjusted EBITDA of R$426.7 million (+32.7% QoQ)[84] - Port Logistics: Net Revenue was R$57.4 million (-27.5% YoY) and Adjusted EBITDA was R$6.4 million, negatively impacted by tariff disputes affecting shipments[85] - Logistic Multimodal (newly reported): Following the incorporation of Estrela Group, this sub-segment reported Net Revenue of R$319.0 million and Adjusted EBITDA of R$86.0 million[86] Energy The energy segment achieved a record performance in Q2 2025, with net revenue growing 14.0% to R$203.4 million and Adjusted EBITDA reaching R$90.0 million, driven by favorable energy prices and resulting in a strong 44.3% Adjusted EBITDA margin Energy Segment Performance | Energy Segment | 2Q25 | 1Q25 | Change vs 1Q25 | | :--- | :--- | :--- | :--- | | Net Revenue (R$ million) | 203.4 | 178.4 | +14.0% | | Adjusted EBITDA (R$ million) | 90.0 | 79.0 | +13.9% | | Adjusted EBITDA Margin | 44.3% | 44.2% | +0.1 p.p. | - The segment recorded its highest EBITDA ever, reflecting favorable prices during the period[82] Other Information ESG – Environmental, Social & Governance CSN has implemented a new quarterly disclosure system for its ESG performance, providing stakeholders with more agile and effective monitoring through individualized indicators available on its investor relations website - CSN adopted a new format for disclosing its ESG actions, making performance indicators available on an individualized and quarterly basis for more effective monitoring by stakeholders[88] - Access to the quarterly ESG results is available through the results center of CSN's IR website: https://ri.csn.com.br/informacoes-financeiras/central-de-resultados/[88](index=88&type=chunk) Capital Markets Performance In Q2 2025, CSN's shares (CSNA3) on the B3 exchange fell by 21.4% and its ADRs (SID) on the NYSE declined by 16.2%, significantly underperforming the rising Ibovespa and Dow Jones indices Stock Performance | Stock Performance | 2Q25 Change | | :--- | :--- | | CSN Shares (CSNA3) | -21.4% | | Ibovespa Index | +6.6% | | CSN ADRs (SID) | -16.2% | | Dow Jones Index | +5.0% | | Market Value (R$ million) | 9,866 | Financial Statements Consolidated Income Statement Presents the company's consolidated income statement Consolidated Balance Sheet Details the company's consolidated financial position Consolidated Cash Flow Statement Summarizes the company's consolidated cash flow activities