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Usiminas announced Q4 and 2018 results

Steel News - Published on Tue, 19 Feb 2019

Image Source: Business Recorder
Usiminas announced Q4 and 2018 result. The main operational and financial indicators in 2018 were:
1. Steel sales volume of 4.2 million tons;
2. Iron ore sales volume of 6.5 million tons;
3. Consolidated Adjusted EBITDA of ZAR 2.7 billion and Adjusted EBITDA margin of 19.6%;
4. Working capital on 12/31/18 of ZAR 4.0 billion;
5. Cash position on 12/31/18 of ZAR 1.7 billion;
6. Investments of ZAR 462.7 million.

Net Revenue
Net revenue in the 4Q18 was ZAR 3.4 billion, against ZAR 3.9 billion in the 3Q18, an 11.3% decrease, mainly due to lower steel and iron ore sales volume in the period.
In 2018, net revenue was ZAR 13.7 billion, a 28.0% increase over 2017, which was ZAR 10.7 billion, in function of higher average prices and volumes of steel and iron ore over the year.
Net Revenue Breakdown
Share4Q183Q184Q1720182017
Domestic Market83.00%84.00%81.00%83.00%86.00%
Exports17.00%16.00%19.00%17.00%14.00%
Total100.00%100.00%100.00%100.00%100.00%
 


Cost of Goods Sold - COGS
In the 4Q18, COGS totaled ZAR 3.1 billion, against ZAR 3.2 billion in the 3Q18, a 5.2% decrease. In 2018, COGS was 11.5 billion, a 26.6% increase compared to 2017, which was ZAR 9.1 billion. For further information, see the Business Unit section of this document.

Gross Profit
Gross profit was ZAR 375.9 million in the 4Q18, against ZAR 644.3 million in the 3Q18, a 41.7% decrease. Gross margin was 11.0% in the 4Q18, against 16.7% in the 3Q18.
In 2018, gross profit totaled ZAR 2.2 billion, against ZAR 1.6 billion in 2017, a 35.5% increase. Gross margin was 16.1% in 2018, against 15.2% in 2017.

Production - Ipatinga and Cubatao Plants
In the 4Q18, crude steel production at the Ipatinga plant was 714 thousand tons, against 845 thousand tons in the 3Q18 due to a programmed maintenance stoppage of Blast Furnace #3. In the 4Q18, finished product production in the Ipatinga and Cubatao plants totaled 1.04 million tons, stable in relation to the 3Q18, which was 1.07 million tons.

In 2018, crude steel production at the Ipatinga plant totaled 3.09 million tons, against 3.01 million tons in 2017. Finished steel production at the Ipatinga and Cubatao plants totaled 4.24 million tons in 2018, against 4.04 million tons in 2017, a 4.9% increase.
Production of Crude and Rolled Steel
Thousand tons4Q183Q184Q17QoQ20182017YoY
Total Crude Steel714845747-16.00%308730132.00%
Total Rolled Steel104810661096-2.00%424440445.00%
 


Sales
Sales totaled 1.0 million tons of steel in the 4Q18, against 1.1 million tons in the 3Q18, a 7.3% decrease. In the domestic market in the 4Q18, sales were 905 thousand tons, against 992 thousand tons in the 3Q18, a 8.7% decrease. Export market sales were 120 thousand tons in the 4Q18, a 4.7% increase over the 3Q18, which was 115 thousand tons. Sales volume was destined 88% to domestic and 12% to export markets in the 4Q18.

In 2018, total sales volume reached 4.2 million tons, a 4.3% increase over 2017, which was 4.0 million tons. Domestic market sales were 3.7 million tons, against 3.4 million tons in 2017, a 6.1% increase. In the export market, sales totaled 548 thousand tons, a 6.4% decrease over 2017, which was 585 thousand tons. Sales volume was destined 87% to domestic and 13% to export markets.

Net revenue in the Steel Unit was ZAR 3.2 billion in the 4Q18, 6.9% lower, compared to the 3Q18, which was ZAR 3.4 billion, mainly due to lower domestic sales volume by 8.7%, partially compensated by higher export market volume by 4.7%. The average prices in the domestic market in 4Q18 were stable in relation to the 3Q18, a slight increase of 0.2%.

In the 4Q18, cash cost per ton was ZAR 2,274/t, against ZAR 2,109/t in the 3Q18, a 7.8% increase, mainly due to higher iron ore costs by 21.7% and coal, by 18.8%, in addition to higher personnel cost by 17.6%, due to lower absorption of fixed cost due to lower production volume as a result of the programmed stoppage for Blast Furnace #3 maintenance, partially compensated by lower slab cost by 3.3%. In the 4Q18, 319 thousand tons of purchased slab were processed, against 306 thousand tons in the 3Q18.

Cost of Goods Sold - COGS - was ZAR 2.9 billion in the 4Q18, stable in relation to the 3Q18. COGS per ton was ZAR 2,801/t in the 4Q18, a 7.5% increase in relation to the 3Q18, which was ZAR 2,606/t, mainly due to higher expenditures with major repair and with higher barge and export freight costs.

Sales expenses were ZAR 75.0 million in the 4Q18, 107.2% higher to those in the 3Q18, which were ZAR 36.2 million, mainly due to provision for doubtful accounts in the amount of ZAR 34.0 million, accounted for in the quarter and higher distribution costs due to higher volume exported in the period.

In the 4Q18, general and administrative expenses totaled ZAR 95.5 million, against ZAR 76.4 million in the 3Q18, a 25.0% increase, mainly due to greater third party services expense (attorney fees).

Other operating expenses and income were a negative ZAR 108.2 million in the 4Q18, against a negative ZAR 89.4 million in the 3Q18, a 21.0% increase, mainly due to:

1. Loss by impairment in the amount of ZAR 529.3 million;

2. Provision for loss of legal deposits of ZAR 55.8 million;

3. Result of actuarial gains/losses of a negative ZAR 22.9 million in the 4Q18, against a negative ZAR 0.6 million in the 3Q18;

4. Negative result of ZAR 1.7 million in the sale of surplus electrical energy in the 4Q18, against a positive result of ZAR 18.8 million in the 3Q18;

5. Lower tax credits related to PIS/Cofins on imports, which were ZAR 7.0 million in the 3Q18. There was no occurrence of tax credits in the 4Q18 due to finalization of the process of recovery of PIS/COFINS over the ICMS base in imports.

These effects were partially compensated by:
A. Recognition of the principal of tax credits in the amount of ZAR 410.9 million (accounted in the Parent Company) related to the final decision regarding the exclusion of ICMS in the base calculation of PIS and COFINS (Note ICMS tax in the base calculation of PIS and COFINS taxes);

B. Recognition of the principal of the receivable in the amount of ZAR 186.0 million regarding the final decision related to the compulsory loan to Eletrobras (Note Compulsory Loan - Eletrobras).

In this manner, net operating expenses and revenue totaled a negative ZAR 278.7 million in the 4Q18, against a negative ZAR 202.0 million in the 3Q18.

Adjusted EBITDA reached ZAR 803.6 million in the 4Q18, against ZAR 577.7 million in the 3Q18, an increase of ZAR 225.9 million. Adjusted EBITDA margin was 25.1% in the 4Q18, against 16.8% in the 3Q18, an 8.3 percentage point increase.

In 2018, net revenue of the Steel unit was ZAR 12.6 billion, against ZAR 10.0 billion in 2017, a 26.0% increase, mainly due to better domestic market and export prices and higher domestic market volumes.

Source :

Posted By : Rabi Wangkhem on Tue, 19 Feb 2019
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