Brazil's Usiminas reverses loss as steelmaking revenues rise

Brazil's Usiminas reverses loss as steelmaking revenues rise

Chamber Articles Category: Energy Post Date: 04/20/17 Source: Reuters By: Guillermo Parra-Bernal, Lisa Von Ahn and Chizu Nomiyama
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Usinas Siderúrgicas de Minas Gerais SA reversed a loss in the first quarter as early signs of a recovery in industrial output allowed Brazil's No. 1 listed flat steelmaker to hike prices for some products and increase sales volumes by about 4 percent.

Usiminas said in a statement on Thursday that net income came in at 108 million reais ($34 million), compared with a fourth-quarter loss of 195 million reais. The Belo Horizonte, Brazil-based company had unveiled a similar, unaudited profit estimate in a securities filing on Wednesday.

Domestic sales, which are generally priced higher than exports, accounted for 90 percent of Usiminas's revenue last quarter. Management efforts to rein in costs bore fruit, while expenses soared on charges related to a halt of operations at the Cubatão mill and one-time provisions for legal contingencies.

The results suggest an inflection point for Usiminas, which has struggled with Brazil's worst recession ever and a dispute between top shareholders Nippon Steel & Sumitomo Metal Corp and Ternium SA. Some analysts see the removal of Rômel de Souza as chief executive officer late in March as a potential catalyst for a faster Usiminas recovery.

Still, earnings before interest, tax, depreciation and amortization fell 10 percent to 528 million reais from the prior three months, reflecting a surge in sales, general and administrative expenses. Read Full Article