Company seeks partner for energy business, plans to divest assets to reduce leverage ratio
08/14/2024
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Benjamin Steinbruch — Foto: Rogerio Vieira/Valor
CSN, the Brazilian steelmaker that holds a 12.9% stake in Usiminas, reiterated on Tuesday (13) that it will comply with the determination of the Administrative Council for Economic Defense (CADE), and more recently from the courts, to reduce its position in the competitor. However, the company still does not indicate a timeline for this move, which is defined in a process that is under confidentiality.
“The sale of the shares is still within the deadline set by the courts. CSN is observing the ideal moment to make this monetization and discussing, internally and with the authorities, the best way to do this,” the company’s chief financial and investor relations officer, Marco Rabello, told analysts.
The CADE determined in 2014 that CSN reduce its stake in Usiminas to less than 5%. Since then, the deadline for the operation has been reviewed twice, the last time in 2022. Less than a month ago, the courts ordered the sale of the shares again, and Usiminas indicated that CSN had failed to meet the legal deadline.
The timing is not ideal for this type of operation, as Usiminas shares have dropped more than 30% this year. However, divestment would help CSN reduce financial leverage at a time of high investments. Interest in acquiring assets from InterCement has been hindered precisely by this point, while CSN seeks alternatives to reduce its indebtedness.
In negotiations to bring a partner into the energy segment, Benjamin Steinbruch’s company is also negotiating the sale of a minority stake in mining. The floods in Rio Grande do Sul—CSN owns power generation company CEEE-G in the state—and the volatility of iron ore prices have prolonged the discussions, but the ambition is to close the deal by 2024.
In addition to the commitment to deleverage, another major challenge is the internationalization of the business, according to Mr. Steinbruch. “Internationalization is our biggest challenge, buying assets outside of Brazil. We are working hard on this,” said the CEO and chairman. CSN is particularly interested in steel assets in the United States and Europe.
According to the businessman, specifically in the steel business, there will still be a few quarters of efforts to reduce costs and modernization, although results have already begun to appear. “This was the first quarter after many where we showed a reaction [in steelmaking],” said Mr. Steinbruch.
In mining, the advances are more noticeable. “We are working with good future prospects. We are on the rise and will continue this way,” he said. In cement, production has already approached nominal capacity, with cost reductions, and the challenge is to “produce at full capacity.” Mr. Steinbruch also highlighted the growing contribution that the logistics business has brought to the results. “We are certain that infrastructure and logistics will be very valuable in Brazil soon.”
CSN’s results in the second quarter came in above expectations, particularly in mining. Net revenue rose 12% compared to the first quarter, reaching R$10.9 billion, while adjusted EBITDA jumped 35% to R$2.6 billion. On the bottom line, the company incurred a loss of R$222.6 million, reflecting the negative impact of the weakened real on foreign currency debt.
*Por Stella Fontes — São Paulo
Source: Valor International