CSN(US:SID)2023-08-04 01:41Financial Data and Key Metrics Changes - The company reported an EBITDA of BRL2.2 billion for Q2 2023, a decrease of approximately 29% sequentially compared to Q1 due to lower price realization and high operational costs [6][9] - The leverage ratio increased to 2.78x in Q2 but improved to 2.57x after transactions concluded in July, with a target to return to a guideline of 2x [5][10] - Cash flow generation was strong, with almost BRL750 million generated, despite a significant dividend payout of BRL2.7 billion [8][9] Business Line Data and Key Metrics Changes - In the steel segment, domestic sales grew by over 10%, but profitability dropped from 9% to 3% due to increased production costs [12][13] - Mining achieved record production and sales volumes, but price realization fell nearly 30%, leading to a drop in EBITDA margin from 48% to 30% [14][15] - Cement volumes increased significantly from 1.3 million to 3.3 million tons year-over-year, with a 12% annual growth, but revenue only increased by 2% due to price impacts [16][17] Market Data and Key Metrics Changes - The Brazilian steel market is facing challenges with high import parity and declining prices, with expectations of a stronger third quarter driven by improved production and cost recovery [32][41] - The company anticipates a more balanced international market, particularly with expected price increases in China, which could positively impact Brazilian steel prices [35][41] Company Strategy and Development Direction - The company aims to stabilize production and reduce costs, focusing on ESG and technology as primary pillars of its strategy [29][43] - There is a commitment to deleveraging, with a target net debt to EBITDA ratio of 1.95x, while also exploring growth opportunities through potential IPOs in cement and energy [45][46] - The company is working on maximizing the value of its energy assets and considering partnerships for better energy marketing [67] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, expecting improvements in operating profitability and cash generation [9][28] - The company is confident in returning to historical margin levels as production stabilizes and raw material costs decrease [24][30] - There is a focus on maintaining competitive pricing and addressing the challenges posed by imports in the Brazilian market [38][41] Other Important Information - The company achieved a significant reduction in greenhouse gas emissions and improved its ESG ratings, reflecting its commitment to sustainability [20][21] - The company is actively working on operational efficiencies and synergies from recent acquisitions, particularly in the cement sector [52][54] Q&A Session All Questions and Answers Question: Overview of the Brazilian steel market and long-term strategic plans - The company highlighted challenges in the steel market due to high import parity and declining prices, with a focus on maintaining margins and exploring long-term growth opportunities through potential IPOs [32][33][41] Question: Changes in contracts and cost reductions - The company is negotiating contracts with a focus on maintaining prices despite import pressures, with expectations of significant cost reductions in the second half of the year [58][63] Question: Impact of the return of the blast furnace and energy structure - Management indicated that the return of the blast furnace would not significantly alter market dynamics, and they are exploring options for maximizing energy asset value [66][67]