sidpr1q16_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of May 12, 2016
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____


 
   

 

São Paulo, May 12, 2016

 

1Q16 Earnings Release

 

 

Companhia Siderúrgica Nacional (CSN) (BM&FBOVESPA: CSNA3) (NYSE: SID) announces today its consolidated results for the first quarter of 2016 (1Q16), which are presented in Brazilian Reais and in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and with Brazilian accounting practices, which are fully convergent with international accounting norms, issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities and Exchange Commission (CVM), pursuant to CVM Instruction 485 of September 1, 2010. All comments presented herein refer to the Company’s 1Q16 consolidated results and comparisons refer to the fourth quarter of 2015 (4Q15) and the first quarter of 2015 (1Q15), unless otherwise stated. The Real/U.S. Dollar exchange rate was R$3.5583 on March 31, 2016 and R$3.9048 on December 31, 2015

 

Highlights

1Q15

4Q15

1Q16

 

Change

 

1Q16

x

4Q15

1Q16

x

1Q15

                     

Steel Sales (thousand t)

1,407

1,130

1,246

 

10%

(11%)

- Domestic Market

63%

57%

52%

 

(5%)

(11%)

- Overseas Subsidiaries

34%

37%

42%

 

5%

8%

- Exports

6%

6%

6%

 

0%

0%

         

 

 

 

 

 

 

Iron Ore Sales (thousand t)1

5,442

6,656

8,295

 

25%

52%

- Domestic Market

1%

7%

13%

 

6%

12%

- Exports

99%

93%

87%

 

(6%)

(12%)

         

 

 

 

 

 

 

Consolidated Results (R$ Million)

       

 

 

 

 

 

 

Net Revenue

4,010

3,678

3,844

 

5%

(4%)

Gross Profit

985

767

926

 

21%

(6%)

Adjusted EBITDA2

911

686

733

 

7%

(20%)

         

 

 

 

 

 

 

Adjusted Net Debt3

19,979

26,499

26,654

 

1%

33%

Adjusted Cash Position

12,251

8,862

6,472

 

(27%)

(47%)

Net Debt / Adjusted EBITDA

4.8x

8.2x

8.7x

 

0.5x

3.9x

 

1 Iron ore sales volumes include 100% of the stake in NAMISA until November 2015 and 100% of the stake in Congonhas Minérios as of December 2015.

2 Adjusted EBITDA is calculated based on net income/loss, before depreciation and amortization, income taxes, the net financial result, results from investees, and other operating income (expenses) and includes the proportional share of the EBITDA of the jointly-owned investees MRS Logística and CBSI, as well as the Company’s 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

³ Adjusted Net Debt and Adjusted Cash and Cash Equivalents included 33.27% of the stake in MRS, 60% of the interest in Namisa and 50% of the stake in CBSI until November 2015. As of December 2015, they included 100% of Congonhas Minérios, 32.27% of MRS and 50% of CBSI, excluding Forfaiting and drawee risk operations.

 

 

 

Closing Market Indicators on March 31, 2016

BM&FBovespa (CSNA3): R$7.15/share

Market Cap BM&FBovespa: R$9.92 billion

NYSE (SID): US$1.97/ADR (1 ADR = 1 share)

Market Cap NYSE: US$2.73 billion

Total no. of shares = 1,387,524,047

 

 

  

 
 

 

Macroeconomic Projections

2016

2017E

IPCA (%)

7.00

5.62

Commercial Dollar (EoP - R$)

3.70

3.90

SELIC Target (EoP - %)

13.00

11.75

GDP (%)

(3.86)

0.50

Industrial Production (%)

(5.95)

0.74

         Source: FOCUS BACEN                                                                                                                                                                                                    Base: 05/06/2016

 

CSN’s Consolidated Results

 

·         Net revenue totaled R$3,844 million in 1Q16, 5% up on 4Q15 and 4% down on the same period last year. Regarding 4Q15, the increase was due to the higher sales volume in the steel and mining segments, offsetting the decrease in the average steel and mining prices, which suffered the additional impact of BRL appreciation. Compared with 1Q15, the reduction was a result of lower sales volume in the steel segment.

 

·         COGS amounted to R$2,918 million, in line with the previous quarter and 4% less than in 1Q15. The year-on-year reduction was mainly due to lower steel and mining segments unit costs.

 

·         First-quarter gross profit came to R$926 million, 21% more than in 4Q15, while the gross margin widened by 3p.p. to 24%. In comparison with 1Q15, gross profit fell by 6% and the gross margin narrowed by 1p.p., from 25% to 24%.

 

·         Selling, general and administrative expenses totaled R$611 million in 1Q16, 12% and 49% up on 4Q15 and 1Q15, respectively, chiefly due to higher freight (related to distribution costs), due to the increase in iron sales and the higher CIF sales model, and personnel expenses.

 

·         Other operating income (expenses) was a net expense of R$127 million in 1Q16, versus expense of R$214 million in 1Q15. Most of the amount in question referred to expenses with labor provisions and judicial deposits. The positive result registered in 4Q15 was due to the Business Combination effect in the mining segment.

                                                                                                                                                         

·         The proportional net financial result was negative by R$968 million in 1Q16, due to: i) financial expenses (excluding the exchange variation) of R$890 million; ii) the negative exchange variation result of R$329 million; and iii) financial revenue of R$251 million.  

 

Financial Result (R$ Million)

1Q15

4Q15

1Q16

Financial Result - IFRS

(870)

(183)

(943)

(+) Financial Result of Joint-Venture

500

(48)

(25)

(+) Namisa

520

(34)

-

(+) MRS

(20)

(15)

(25)

(=) Proporcional Financial Result

(370)

(231)

(968)

Financial Revenues

63

289

251

Financial Expenses

(433)

(531)

(1.219)

Financial Expenses (ex-exchange rates variation)

(878)

(483)

(890)

Result with Exchange Rate Variation

445

(48)

(329)

Monetary and Exchange Rate Variation

(482)

245

949

Hedge Accounting

428

(140)

(566)

Notional Amount of Derivatives Contracted

500

(153)

(713)

Others

-

12

-

¹ The proportional financial result considered stakes of 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and stakes of

100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

 

 
 

2


 
 

 

·         CSN’s equity result was a positive R$45 million in 1Q16, versus a negative R$55 million in 4Q15 and a positive R$398 million in 1Q15, chiefly due to MRS’s equity result in the 1Q16 and 4Q15, and Namisa’s equity result in the 1Q15. The table below presents a breakdown of this item:

 

Share of profits (losses) of investees

(R$ Million)

1Q15

4Q15

1Q16

Change

1Q16

x

4Q15

1Q16

x

1Q15

Namisa

396

(58)

-

-

-

MRS Logística

15

29

61

111%

302%

CBSI

(2)

(1)

1

-

-

TLSA

(8)

(8)

(7)

(10%)

(8%)

Arvedi Metalfer BR

-

(8)

-

-

-

Eliminations

(4)

(9)

(11)

18%

173%

Share of profits (losses) of investees

398

(55)

45

-

(89%)

 

·         CSN recorded a first-quarter net loss of R$831 million, versus net income of R$2,371 million in 4Q15 and net income of R$392 million in 1Q15. The worsening in this result, compared with 4Q15, is explained by the gains registered with the conclusion of the mining segment Business Combination last quarter. Regarding 1Q15, the lower result was due to the exchange rate variation result and taxes payment.

 

Adjusted EBITDA

(R$ Million)

1Q15

4Q15

1Q16

Change

1Q16

x

4Q15

1Q16

x

1Q15

Profit (loss) for the Period

392

2,371

(831)

-

-

(-) Depreciation

264

308

310

1%

17%

(+) Income Tax and Social Contribution

(503)

527

122

(77%)

-

(+) Finance Income

870

183

943

416%

8%

EBITDA (ICVM 527)

1,023

3,389

544

(84%)

(47%)

(+) Other Operating Income (Expenses)

214

(2,913)

127

-

(41%)

(+) Share of Profit (Loss) of Investees

(398)

55

(45)

-

(89%)

(-) Proportionate EBITDA of Joint Ventures

73

155

107

(31%)

48%

Adjusted EBITDA

911

686

733

7%

(20%)

 

·         Adjusted EBITDA amounted to R$733 million in 1Q16, 7% up on the previous quarter, but 20% down on 1Q15, accompanied by an adjusted EBITDA margin of 18.1%, 1.1 p.p. more than in 4Q15, but 3.4% less than in 1Q15.

 

 

 

 

 

¹ The adjusted EBITDA margin is calculated as the ratio between Adjusted EBITDA and Adjusted Net Income, which considers stakes of 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December 2015.

 

3


 
 

 

Debt   

 

The adjusted amounts of EBITDA, Debt and Cash included the stakes of 60% in Namisa, 33.27% in MRS and 50% in CBSI until November 2015 and the stakes of 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI, as of December 2015, as well as financial investments used as collateral for exchange operations on the BM&FBovespa. On March 31, 2016, consolidated net debt totaled R$26,654 million, while the net debt/EBITDA ratio, was 8.67x based on LTM adjusted EBITDA.

 

 

 

 

 

Foreign Exchange Exposure

 

Net foreign exchange exposure generated by the difference in dollar-denominated assets and liabilities, contracted derivatives and hedge accounting booked by CSN totaled US$115 million on March 31, 2016. The derivatives contracted form a long USD position achieved through the purchase of NDFs (Non-Deliverable Forwards). The hedge accounting adopted by CSN correlates the projected export flows in dollars with part of the future debt maturities in the same currency. As a result, the exchange variation of part of dollar-denominated debt is temporarily recorded under shareholder’s equity, being transferred to the income statement when the dollar revenue from these exports is received.

 

Foreign Exchange Exposure1

12/31/2015

03/31/2016

(US$ Million)

IFRS

Cash and cash equivalents overseas

1,625

1,288

Accounts Receivables

170

321

Total Assets

1,795

1,610

Borrowings and Financing

(4,569)

(4,466)

Accounts Payable

(20)

(7)

Other Liabilities

(25)

(6)

Total Liabilities

(4,615)

(4,479)

     

Foreign Exchange Exposure

(2,820)

(2,870)

     

Notional Amount of Derivatives Contracted, Net

1,435

1,435

Cash Flow Hedge Accounting

1,558

1,549

Net Foreign Exchange Exposure

173

115

¹As of the conclusion of the Business Combination, through asset transfers to Congonhas Minérios, CSN has been consolidating 100% of the new Company’s cash. As a result, a proportional view of foreign exchange exposure is no longer necessary.

²Proportional foreign exchange exposure includes the 60% stake in Namisa and excludes the stake in MRS.

³IFRS foreign exchange exposure on March 31, 2015 includes the 100% stake in Congonhas Minérios and excludes the stake in MRS.

4


 
 

Capex

 

CSN invested R$330 million in 1Q16 in the following projects:

 

·         Investments in the new clinker kiln in Arcos/MG, which will permit the Cement segment to reach competitive margins and scale gains in the Southeast region as a result of the clinker production self-sufficiency.

 

·         Revamp of the coke batteries, reducing imported coke needs and improving the fuel rate.

 

·         Other projects designed to improve the environmental performance of the Presidente Vargas Plant and current investments in other operations.

 

Of total investments, R$54 million went to spare parts and R$155 million to current investments.

 

Investment (R$ Million)

1Q15

4Q15

1Q16

Steel

121

130

119

Mining

116

97

62

Cement

90

218

139

Logistics

11

19

10

Others

-

-

-

Total Investment IFRS

338

464

330

 

 

Working Capital

 

In order to calculate working capital, CSN adjusts its assets and liabilities as shown below:

 

·         Accounts Receivable: Excludes Dividends Receivable, Advances to Employees and Other Credits (Note 5 of the financial statements).

·         Inventories: Includes Estimated Losses and excludes Spare Parts which is not part of the cash conversion cycle, and will be subsequently booked under Fixed Assets when consumed. (Note 6 of the financial statements);

·         Recoverable Taxes: Composed only of Income (IRPJ) and Social Contribution (CSLL) Taxes included in Recoverable Taxes (Note 7 of the financial statements);

·         Taxes Payable: Composed of Taxes Payable under Current Liabilities plus Taxes in Installments (Note 13 of the financial statements);

·         Advances from Clients: Subaccount of Other Liabilities recorded under Current Liabilities (Note 13 of the financial statements);

·         Suppliers: Includes Forfaiting and Drawee Risk (Note 11 of the financial statements).

 

As a result, working capital applied to the Company’s business totaled R$3,077 million in 1Q16, R$90 million less than in 4Q15, chiefly due to the R$472 million reduction in inventories, while accounts receivable increased by R$245 million. On a same comparison basis, the average receivable period increased by 6 days, while payment periods and inventory turnover fell by 4 and 14 days, respectively.

 

 

 

 

 

5


 
 

 

Working Capital (R$ Million)

1Q15

4Q15

1Q16

 

Change

 

1Q16

x

4Q15

1Q16

x

1Q15

Assets

5,145

5,869

5,664

 

(205)

519

Accounts Receivable

1,901

1,501

1,746

 

245

(155)

Inventories Turnover

3,107

4,092

3,621

 

(472)

514

Advances to Taxes

137

276

298

 

22

161

Liabilities

2,306

2,703

2,587

 

(115)

281

Suppliers

1,556

1,671

1,542

 

(129)

(14)

Salaries and Social Contribution

214

257

245

 

(12)

31

Taxes Payable

512

725

733

 

8

221

Advances from Clients

24

51

67

 

16

43

Working Capital

2,839

3,166

3,077

 

(90)

238

 

 

 

 

 

 

 

 

 

 

 

Turnover Ratio (days)

1Q15

4Q15

1Q16

 

Change

 

1Q16

x

4Q15

1Q16

X

1Q15

Receivables

36

30

36

 

6

-

Supplier Payment

46

52

48

 

(4)

2

Investory Turnover

92

127

113

 

(14)

21

Cash Conversion Cycle

82

105

101

 

(4)

19

 

 

Results by Segment

 

The Company maintains integrated operations in five business segments: steel, mining, logistics, cement and energy. The main assets and/or companies comprising each segment are presented below:

 

    

 

¹ Namisa’s former assets.

² As of 2013, the Company ceased the proportional consolidation of its jointly-owned subsidiaries Namisa, MRS and CBSI. For the purpose of preparing and presenting the information by business segment, Management opted to maintain the proportional consolidation of its jointly-owned subsidiaries, as historically presented. For the reconciliation of CSN’s consolidated results, these companies’ results are eliminated in the "corporate/elimination expenses" column.

³ In order to report the Company’s 2015 results, after the combination of CSN’s mining assets (Casa de Pedra, Namisa and Tecar), the consolidated result includes all this new company’s information.

 

 

6


 
 

 

 


 

 

 

 

Results 1Q16

Steel

 

Mining

 

Logistics (Port)

 

Logistics (Railways)

 

Cement

 

Energy

 

Corporate/ Eliminations

 

Consolidated

(R$ Million)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

2,809

 

777

 

50

 

303

 

114

 

68

 

(279)

 

3,844

Domestic Market

1,500

 

151

 

50

 

303

 

114

 

68

 

(475)

 

1,712

Foreign Market

1,309

 

626

 

-

 

-

 

-

 

-

 

196.7

 

2,132

Cost of Goods Sold

(2,300)

 

(585)

 

(36)

 

(214)

 

(101)

 

(51)

 

370

 

(2,918)

Gross Profit

509

 

192

 

14

 

89

 

13

 

17

 

91

 

926

Selling, General and Administrative Expenses

(255)

 

(24)

 

(8)

 

(24)

 

(18)

 

(6)

 

(276)

 

(611)

Depreciation

166

 

114

 

3

 

56

 

13

 

4

 

(47)

 

310

Proportional EBITDA of Jointly Controlled Companies

-

 

-

 

-

 

-

 

-

 

-

 

107

 

107

Adjusted EBITDA

420

 

283

 

9

 

121

 

8

 

15

 

(124)

 

733

 

 

 

7


 
 

 

Results 4Q15

Steel

 

Mining

 

Logistics (Port)

 

Logistics (Railways)

 

Cement

 

Energy

 

Corporate/

Eliminations

 

Consolidated

(R$ Million)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

2,579

 

907

 

62

 

331

 

102

 

61

 

(363)

 

3,678

Domestic Market

1,473

 

88

 

62

 

331

 

102

 

61

 

(414)

 

1,703

Foreign Market

1,106

 

819

 

-

 

-

 

-

 

-

 

50.4

 

1,975

Cost of Goods Sold

(2,267)

 

(598)

 

(42)

 

(207)

 

(89)

 

(50)

 

341

 

(2,912)

Gross Profit

312

 

309

 

20

 

124

 

13

 

10

 

(22)

 

767

Selling, General and Administrative Expenses

(267)

 

(22)

 

(5)

 

(23)

 

(21)

 

(6)

 

(199)

 

(544)

Depreciation

178

 

105

 

3

 

50

 

14

 

4

 

(47)

 

308

Proportional EBITDA of Jointly Controlled Companies

-

 

-

 

-

 

-

 

-

 

-

 

155

 

155

Adjusted EBITDA

222

 

392

 

19

 

151

 

6

 

9

 

(113)

 

686

 

 

Steel

According to preliminary figures from the World Steel Association (WSA), global crude steel production totaled 386 million tonnes in 1Q16, 3.5% down on the same period last year, while the Brazilian Steel Institute (IABr) estimates a  12.3% reduction in domestic output to 7.4 million tonnes (also preliminary figures). Domestic production of rolled products came to 5.1 million tonnes, 17.5% less than in 1Q15, while apparent consumption fell by 29.3% to 4.3 million tonnes, with domestic sales of 4.0 million tonnes and imports of 368,000 tonnes. On the other hand, exports increased by 17.1% in the same period, reaching 3.3 million tonnes.

 

In 2016, the IABr estimates an 8.8% decline in apparent consumption to 19.4 million tonnes, with domestic sales of 17.4 million tonnes and imports of 1.1 million tonnes. 

 

According to INDA (the Brazilian Steel Distributors’ Association), 1Q16 steel purchases and sales by distributors fell by 18.3% and 13.0% over 1Q15 to 761,000 and 776,000 tonnes, respectively. Inventories closed the quarter at 906,800 tonnes, in line with the previous month, representing 3.1 months of sales.

 

Automotive

 

According to ANFAVEA (the Auto Manufacturers’ Association), vehicle production totaled 482,000 units in 1Q16, 28% down on 1Q15. In the same period, new car, light commercial vehicle, truck and bus licensing fell by 29% to 481,000 units. The association estimates a reduction in vehicle sales of up to 7.5% in 2016 over 2015, to 2.37 million units, while FENABRAVE (the Vehicle Distributors’ Association) expects a 6% reduction in vehicle sales.

 

Construction

 

According to SECOVI-SP (the São Paulo Residential Builders’ Association), during 1Q16 the residential real estate launches in the city of São Paulo totaled 2,856 units, 30% up on the 1,418 units launched in the 1Q15.

 

According to ABRAMAT (the Construction Material Manufacturers’ Association), sales of building materials in 1Q16 fell by 17.3% over the same period last year. The association revised its 2016 estimate to a real decline of 4.5%.

 

Home Appliances

 

According to the Brazilian Institute of Geography and Statistics (IBGE), home appliance production accumulated until march 2016 fell by 22% over the same period in 2015, while output in the last 12 months dropped by 20% over the same period a year before, reflecting the low level of business and consumer confidence.

 

 

8


 
 

 

 

Results from CSN’s Steel Operations

 

The parent company’s slab production totaled 836,000 tonnes in 1Q16, 21% and 29% down on 4Q15 and 1Q15, respectively. It is worth noting that no slabs were purchased from third parties in 1Q16, versus 64,000 tonnes acquired in 4Q15. Flat rolled steel production came to 746,000 tonnes, 22% and 27% less than in 4Q15 and 1Q15, respectively.

 

Flat Steel Production (Parent Company)

1Q15

4Q15

1Q16

Change

(Thousand tonnes)

1Q16

x

4Q15

1Q16

x

1Q15

Total Slabs (UPV + Third Parties)

1,184

1,062

836

(21%)

(29%)

Crude Steel Production

1,115

998

835

(16%)

(25%)

Third Parties Slabs

69

64

0

-

-

Total Rolled Products

1,020

952

746

(22%)

(27%)

 

 

·         Total steel product sales volume came to 1,246 thousand tonnes in 1Q16, 10% up on 4Q15. Of this total, 52% went to the domestic market, 42% were sold by our subsidiaries abroad and 6% went to exports.

 

·         First-quarter domestic steel sales totaled 650,000 tonnes, 1% up on 4Q15, 611,000 tonnes of which flat steel and 38,000 tonnes long steel.

 

·         First-quarter foreign sales amounted to 597,000 tonnes, 23% up on 4Q15. Of this total, the overseas subsidiaries sold 520,000 tonnes, 204,000 of which by LLC, 216,000 by SWT and 100,000 by Lusosider, while direct exports came to 78,000 tonnes.  

 

·         In the first quarter, CSN increased its share of coated products as a percentage of total sales volume, following the strategy of adding more value to its product mix. Domestic sales of coated products such as galvanized items and tin plate accounted for 46% of flat steel sales, versus 45% in 4Q15. In the foreign market, the share of coated products moved up from 69% of flat steel sales to 77% in 1Q16.

 

·         Net revenue totaled R$2,809 million in 1Q16, 9% up on 4Q15, chiefly due to the increase in domestic sales volume and sales by subsidiaries abroad. In 1Q16, average net revenue per tonne remained in line with 1Q15, totaling R$2,196.

 

·         COGS came to R$2,300 million in 1Q16, a slight 1% increase over 4Q15.

 

·         The parent company’s production cost reached R$1,343 million in 1Q16, 21% down on 4Q15, chiefly due to the decrease in the consumption of imported raw material as a result of the extinguishing of blast furnace 2 and the startup of coke batteries, thus reducing the fuel rate, in addition to the lower electricity consumption and a downturn in maintenance expenses.

 
 
 

9


 
 

 

 

·         Slab production costs came to R$1,064/t, in line with 4Q15. In US dollars, however, the cost fell by 1.4%, from US$276/t, in 4Q15, to US$272/t. As a result, CSN maintained its position among those steel companies with the lowest slab costs in the world.

 

·          Adjusted EBITDA amounted to R$420 million in 1Q16, 89% up on the R$222 million recorded in 4Q15, accompanied by an increase of 6p.p. in the margin, which widened from 9%, in 4Q15, to 15%.

 

 

 

 
 
 

10


 
 

 

Mining

 

In 1Q16, the seaborne iron ore market was positively impacted by the greater availability of credit and the recovery of construction activities in China, led by investments in new real estate projects. The improvement in demand led to higher prices and healthier margins for the local steel producers, as well as encouraging the build-up of inventories. In addition, seasonal factors, such as higher rainfall in Australia and Brazil, as well as the rigorous Chinese winter, played an important role in reducing the iron ore supply base. As a result, iron ore prices moved up by 3.5% over the previous quarter, averaging US$48.30/dmt (Platts, 62% Fe, N. China).

 

Results from CSN’s Mining Operations

 

·         In 1Q16, iron ore production totaled 7,326 thousand tonnes, 2% and 23% up on 4Q15 and 1Q15, respectively.

 

·         First-quarter iron ore purchases came to 617,000 tonnes, 58% down on 4Q15, but 7% up on 1Q15, chiefly due to the reduced availability of iron ore from small and medium-sized producers in this quarter.

 

·         Iron ore sales came to 8,295,000 tonnes1 in 1Q16, 11% and 21% up on 4Q15 and 1Q15, respectively, thanks to an improved sales performance in the domestic market. Shipped iron ore volume totaled 6,988 thousand tonnes, 12% down on 4Q15, but 11% more than in 1Q15. Almost 1,047,000 tonnes from Congonhas Minérios were sold to UPV.

 

Production Volume and Mining Sales

1Q15

4Q15

1Q16

Change

(thousand t)

1Q16

x

4Q15

1Q16

x

1Q15

Iron Ore Production¹

5,938

7,218

7,326

1%

23%

Third Parties Purchase

543

1,481

617

(58%)

14%

Total Production + Purchase

6,481

8,698

7,943

(9%)

23%

                   

UPV Transfer and Sale

1,428

1,257

1,047

(17%)

(27%)

Third Parties Sales Volume

5,442

6,202

7,248

17%

33%

Total Sales + Transfer

6,870

7,459

8,295

11%

21%

 

 

 

 

           

Shipped Volume

6,282

7,939

6,988

(12%)

11%

 

·           Net revenue from mining operations totaled R$777 million in 1Q16, 14% down on 4Q15, but 18% more than in 1Q15. The quarter-on-quarter decline was due to the reduction in the FOB price, which did not occur in 1Q15. FOB unit revenue came to US$28/t in 1Q16, 23% less than in 4Q15.

 

·           In the first quarter, mining segment COGS came to R$585 million, in line with 4Q15 and 3% more than in 1Q15, due to the higher volume of iron ore sold in the quarter. In 1Q16, Casa de Pedra recorded a Chinese delivery cash cost excluding depreciation of US$31.2/wmt, 6% down on 4Q15.

 

·          Adjusted EBITDA stood at R$283 million in 1Q16, 28% down on the R$392 million recorded in 4Q15, while the adjusted EBITDA margin narrowed by 7 p.p., from 43%, in 4Q15, to 36%.

 

 

 

 

1 Production and sales volumes include the 100% stake in NAMISA until November 2015 and the 100% interest in Congonhas in December 2015.

2 As of December 2015, Congonhas Minérios began selling iron ore to the Presidente Vargas Plant.

 

 
 

11


 
 

 

 

 

    

 

Logistics

 

According to the ANTT (National Ground Transport Agency), the Brazilian rail container transport concessionaires transported 897,000 tonnes in 2016, 1.3% down on 1Q15.

 

Results from CSN’s Logistic Operations

 

Railway Logistics: In 1Q16, net revenue came to R$303 million, generating EBITDA of R$121 million and an EBITDA margin of 40%

 

Port Logistics: In the first quarter, Sepetiba Tecon handled 143,000 tonnes of steel products, in addition to 12,000 tonnes of general cargo and approximately 39,000 containers handled. First-quarter net revenue stood at R$50 million, generating EBITDA of R$9 million, accompanied by an EBITDA margin of 19%.

 

 

Sepetiba TECON Highlights

1Q15

4Q15

1Q16

Change

1Q16

x

4Q15

1Q16

x

1Q15

Containers Volume (thousand units)

39

39

39

-

-

Steel Products Volume (thousand t)

141

261

143

(45%)

2%

General Cargo Volume (thousand t)

73

2

12

368%

(84%)

 

 

Cement

 

According to the IBGE’s Monthly Industrial Survey (PIM-PF), Brazil’s cement production fell by 17.0% in 1Q16 over 1Q15, handling with the construction industry performance.

 

Preliminary figures from SNIC (the Cement Industry Association) indicate domestic cement sales of 13.9 million tonnes in 1Q16, 14.7% less than in the same quarter the year before. For 2016 as a whole SNIC estimates respective annual declines of 12% to 15% in sales and 9% to 11% in apparent consumption.

 

Results of CSN’s Cement Operations

 

In 1Q16, cement sales amounted to 571,000 tonnes, 15% up on 4Q15, while net revenue came to R$114 million. EBITDA totaled R$8 million, accompanied by an EBITDA margin of 7%, due to the ramp-up of the new operations in Arcos, Minas Gerais.

 

 

12


 
 

 

 

Cement Highlights

1Q15

4Q15

1Q16

Change

(thousand t)

1Q16

x

4Q15

1Q16

x

1Q15

Total Production

493

564

531

(6%)

8%

Total Sales

525

496

571

15%

8%

 

Energy

 

According to the Energy Research Company (EPE), Brazilian electricity consumption totaled 121 TWh until March 2016, 4.2% less than the same period in 2015. Consumption in the industrial and residential segments fell by 7.5% and 2.5%, respectively, when the commercial segment decline 3.2%.

 

Results from CSN’s Energy Operations

 

In 1Q16, net revenue from energy operations totaled R$68 million, EBITDA stood at R$15 million and the EBITDA margin came to 23%.

 

 

Capital Market

 

CSN’s shares appreciated by 78.8% in 1Q16, while the Ibovespa increased by 15.5% in the same period. Daily traded volume on the BM&FBovespa averaged R$41.1 million. On the New York Stock Exchange (NYSE), CSN’s American Depositary Receipts (ADRs) moved up by 101.9%, versus the Dow Jones’ 1.5% appreciation. On the NYSE, daily traded volume of CSN’s ADRs averaged US$2.7 million.

 

 

1Q16

Number of shares in thousand

1,387,524

Market Capitalization

 

Closing price (R$/share)

7.15

Closing price (US$/ADR)

1.97

Market Capitalization (R$ million)

9,921

Market Capitalization (US$ million)

2,733

Total return including dividends and interest on equity

 

CSNA3

78.8%

SID

101.9%

Ibovespa

15.5%

Dow Jones

1.5%

Volume

 

Average daily (thousand shares)

7,251

Average daily (R$ Thousand)

41,089

Average daily (thousand ADRs)

1,791

Average daily (US$ Thousand)

2,725

 

Source: Bloomberg

 

 

13


 
 

 

 

Webcast – 1Q16 Earnings Release                                                            Investor Relations Team

Conference Call in Portuguese with Simultaneous Translation into English

May 12, 2016 – Thursday

3:30 p.m. – Brasília time/2:30 p.m. – US EST

Phone: +1 516 300-1066 (EUA) / +55 (11) 3127-4971 (Brazil)

Conference ID: CSN

Webcast: www.csn.com.br/ri

 

IR Executive Officer Paulo Rogério Caffarelli

Guilherme Hernandes (guilherme.hernandes@csn.com.br)

Bruno Tetner (bruno.tetner@csn.com.br)

Ana Rayes (ana.rayes@csn.com.br)

Rodrigo Bonsaver (rodrigo.bonsaver@csn.com.br)

Lucas Aparecida (lucas.aparecida@csn.com.br)

 

 

 

 Certain of the statements contained herein are forward-looking statements, which express or imply results, performance or events that are expected in the future. These include future results that may be implied by historical results and the statements under ‘Outlook’. Actual results, performance or events may differ materially from those expressed or implied by the forward-looking statements as a result of several factors, such as the general and economic conditions in Brazil and other countries, interest rate and exchange rate levels, protectionist measures in the U.S., Brazil and other countries, changes in laws and regulations and general competitive factors (on a global, regional or national basis).

 

 

 

 

 

 

 

14


 
 

 

INCOME STATEMENT

 

CONSOLIDATED – Corporate Law (In thousand of R$)

 

 

1Q15

4Q15

1Q16

 
 

Net Revenues

4,010,252

3,678,470

3,843,803

 

Domestic Market

2,240,781

1,703,493

1,712,078

 

Foreign Market

1,769,471

1,974,977

2,131,725

 

Cost of Goods Sold (COGS)

(3,025,533)

(2,911,727)

(2,917,758)

 

COGS, excluding depreciation

(2,766,657)

(2,609,884)

(2,613,847)

 

Depreciation allocated to COGS

(258,876)

(301,843)

(303,911)

 

Gross Profit

984,719

766,743

926,045

 

Gross Margin (%)

25%

21%

24%

 

Selling Expenses

(298,530)

(410,638)

(448,147)

 

General and Administrative Expenses

(106,523)

(126,715)

(156,460)

 

Depreciation allocated to SG&A

(5,622)

(6,218)

(5,925)

 

Other operation income (expense), net

(213,537)

2,913,324

(126,560)

 

Share of profits (losses) of investees

398,478

(55,436)

44,979

 

Operational Income before Financial Results

758,985

3,081,060

233,932

 

Net Financial Results

(869,700)

(182,788)

(943,014)

 

Income before social contribution and income taxes

(110,715)

2,898,272

(709,082)

 

Income Tax and Social Contribution

502,517

(526,879)

(122,210)

 

Profit/(Loss) for the period

391,802

2,371,393

(831,292)

 
         

INCOME STATEMENT

 

PARENT COMPANY – Corporate Law (In thousand of R$)

 

 

1Q15

4Q15

1Q16

 
 

Net Revenues

3,058,032

2,670,782

1,977,640

 

Domestic Market

2,070,084

1,584,206

1,567,201

 

Foreign Market

987,948

1,086,576

410,439

 

Cost of Goods Sold (COGS)

(2,189,432)

(2,207,557)

(1,638,396)

 

COGS, excluding depreciation

(1,987,020)

(2,000,004)

(1,506,928)

 

Depreciation allocated to COGS

(202,412)

(207,553)

(131,468)

 

Gross Profit

868,600

463,225

339,244

 

Gross Margin (%)

28%

17%

17%

 

Selling Expenses

(144,140)

(202,128)

(166,823)

 

General and Administrative Expenses

(82,425)

(99,771)

(121,013)

 

Depreciation allocated to SG&A

(3,917)

(4,236)

(4,057)

 

Other operation income (expense), net

(198,038)

(272,058)

(99,702)

 

Share of profits (losses) of investees

1,442,550

2,250,870

(487,079)

 

Operational Income before Financial Results

1,882,630

2,135,902

(539,430)

 

Net Financial Results

(2,028,355)

(170,213)

(267,878)

 

Income before social contribution and income taxes

(145,725)

1,965,689

(807,308)

 

Income Tax and Social Contribution

537,781

46,932

(29,382)

 

Profit/(Loss) for the period

392,056

2,012,621

(836,690)

 

 

 

 

 
 
 

15


 
 

 

 

BALANCE SHEET

Company Corporate Law (In Thousand of R$)

 

Consolidated

 

Parent Company

 

12/31/2015

03/31/2016

 

12/31/2015

03/31/2016

Current assets

16,430,691

13,697,372

 

8,842,440

7,950,527

Cash and cash equivalents

8,624,651

6,305,072

 

2,648,798

1,919,314

Trade receivables

1,578,277

1,816,106

 

2,467,523

2,422,426

Inventories

4,941,314

4,494,832

 

2,850,744

2,834,277

Other current assets

1,286,449

1,081,362

 

875,375

774,510

Non-current assets

32,219,283

32,237,652

 

36,763,086

35,584,066

Long-term receivables

4,890,948

4,853,541

 

4,510,431

4,484,392

Investments measured at amortized cost

3,998,227

4,084,727

 

23,323,565

22,042,470

Property, plant and equipment

17,871,599

17,880,257

 

8,866,348

8,995,809

Intangible assets

5,458,509

5,419,127

 

62,742

61,395

Total assets

48,649,974

45,935,024

 

45,605,526

43,534,593

Current liabilities

5,325,571

4,819,168

 

4,272,372

4,016,450

Payroll and related taxes

256,840

245,177

 

141,496

128,882

Suppliers

1,293,008

1,235,417

 

742,364

738,848

Taxes payable

700,763

708,138

 

5,814

66,023

Borrowings and financing

1,874,681

1,459,777

 

2,879,073

2,536,813

Other payables

1,073,017

1,046,262

 

411,699

456,961

Provisions

127,262

124,397

 

91,926

88,923

Non-current liabilities

34,588,740

32,796,957

 

33,668,407

32,274,950

Borrowings and financing

32,407,834

30,561,057

 

31,109,017

29,552,923

Deferred Income Tax and Social Contribution

494,851

508,363

 

-

-

Other payables

131,284

148,318

 

126,450

109,836

Provisions

711,472

730,862

 

564,372

589,243

Other provisions

843,299

848,357

 

1,868,568

2,022,948

Shareholders’ equity

8,735,663

8,318,899

 

7,664,747

7,243,193

Paid-in capital

4,540,000

4,540,000

 

4,540,000

4,540,000

Capital reserves

30

30

 

30

30

Earnings reserves

2,104,804

2,104,804

 

2,104,804

2,104,804

Legal reserve

-

(836,690)

 

(836,690)

Statutory reserve

1,019,913

1,435,049

 

1,019,913

1,435,049

Non-controlling interests

1,070,916

1,075,706

 

-

-

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

48,649,974

45,935,024

 

45,605,526

43,534,593

 

 

16


 
 

 

 

CASH FLOW STATEMENT

CONSOLIDATED - Corporate Law (In Thousand of R$)

 

4Q15

1Q16

Net cash generated by operating activities

3,651,713

(983,507)

(Net Losses) / Net income attributable to controlling shareholders

2,012,621

(836,690)

Loss for the period attributable to non-controlling interests

358,772

5,398

Charges on borrowings and financing

359,893

734,734

Depreciation, depletion and amortization

319,703

321,944

Share of profits (losses) of investees

55,436

(44,979)

Deferred income tax and social contribution

350,888

69,681

Foreign exchange and monetary variations, net

(257,569)

(379,360)

Result from derivative financial instruments

311

362

Impairment of available-for-sale assets

376,431

-

Write-off of permanent assets

1,693

12,966

Accrued actuarial liability

1,193

-

Buyback of debt securities

(166,642)

(146,214)

Gain with business combination

(3,413,033)

-

Provisions

(5,168)

26,997

Working Capital

3,657,184

(748,346)

Accounts Receivable

810,610

(219,640)

Trade Receivables – Related Parties

299,712

(8,407)

Inventory

(196,492)

443,691

Interest receive - Related Parties

3,545,142

-

Judicial Deposits

5,565

4,098

Suppliers

(41,647)

(59,340)

Taxes and Contributions

(302,944)

57,839

Interest Expenses

(492,922)

(932,279)

Others

30,160

(34,308)

Cash Flow from Investment Activities

(2,651,757)

(887,053)

Investments

(2,727,036)

-

Fixed Assets/Intangible

86,598

(329,838)

Derivative transactions

(313,760)

(556,682)

Cash and Cash Equivalent from Namisa Consolidation

456,364

-

Related parties loans

(17,742)

-

Short-term investment, net of redeemed amount

(136,181)

(533)

Cash Flow from Financing Companies

(804,567)

(438,466)

Borrowings and financing raised, net of transaction costs

(563,514)

(26,770)

Amortizations/funding for Fortaiting/Drawee risk

14,899

(44,842)

Amortizations

(46,993)

(215,756)

Buyback of debt securities

(208,959)

(151,098)

Foreign Exchange Variation on Cash and Cash Equivalents

66,301

(55,143)

Free Cash Flow

261,690

(2,364,169)

 

17


 
 

 

 

SALES VOLUME CONSOLIDATED (thousand tonnes)

                       

 

1Q15

4Q15

1Q16

 

Change

 

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Flat Steel

847

599

611

 

12

 

(236)

Slabs

4

2

-

 

(2)

 

(4)

Hot Rolled

358

207

220

 

13

 

(138)

Cold Rolled

154

123

108

 

(15)

 

(46)

Galvanized

237

181

197

 

16

 

(40)

Tin Plates

94

86

85

 

(1)

 

(9)

Long Steel UPV

34

44

38

 

(6)

 

4

DOMESTIC MARKET

881

643

649

 

6

 

(232)

 

                   

 

 

1Q15

4Q15

1Q16

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Flat Steel

314

333

381

 

48

 

67

Hot Rolled

57

51

59

 

8

 

2

Cold Rolled

62

51

27

 

(24)

 

(35)

Galvanized

166

188

265

 

77

 

99

Tin Plates

29

43

30

 

(13)

 

1

Long Steel (profiles)

212

154

216

 

62

 

4

FOREIGN MARKET

526

487

597

 

110

 

71

 

 

 

 

             

 

 

1Q15

4Q15

1Q16

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Flat Steel

1,161

933

992

 

59

 

(169)

Slabs

4

2

-

 

(2)

 

(4)

Hot Rolled

415

258

280

 

22

 

(135)

Cold Rolled

215

174

135

 

(39)

 

(80)

Galvanized

403

369

462

 

93

 

59

Tin Plates

124

129

115

 

(14)

 

(9)

Long Steel UPV

34

44

38

 

(6)

 

4

Long Steel (profiles)

212

154

216

 

62

 

4

TOTAL MARKET

1,407

1,130

1,246

 

116

 

(161)

                       

SALES VOLUME PARENT COMPANY (thousand tonnes)

                       

 

1Q15

4Q15

1Q16

 

Change

 

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Flat Steel

955

677

709

 

32

 

(246)

Slabs

4

2

-

 

(2)

 

(4)

Hot Rolled

399

236

244

 

8

 

(155)

Cold Rolled

175

145

124

 

(21)

 

(51)

Galvanized

279

205

253

 

48

 

(26)

Tin Plates

98

88

89

 

1

 

(9)

Long Steel UPV

34

44

38

 

(6)

 

4

DOMESTIC MARKET

989

721

747

 

26

 

(242)

 

                     

 

1Q15

4Q15

1Q16

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Flat Steel

186

263

186

 

(77)

 

0

Hot Rolled

77

113

53

 

(60)

 

(24)

Cold Rolled

36

18

-

 

(18)

 

(36)

Galvanized

43

89

103

 

14

 

60

Tin Plates

29

43

30

 

(13)

 

1

Long Steel (profiles)

-

-

-

 

-

 

-

FOREIGN MARKET

186

263

186

 

(77)

 

0

 

 

 

 

             

 

 

1Q15

4Q15

1Q16

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Flat Steel

1,140

940

895

 

(45)

 

(245)

Slabs

4

2

-

 

(2)

 

(4)

Hot Rolled

476

349

297

 

(52)

 

(179)

Cold Rolled

211

163

124

 

(39)

 

(87)

Galvanized

322

294

356

 

62

 

34

Tin Plates

127

131

119

 

(12)

 

(8)

Long Steel UPV

34

44

38

 

(6)

 

4

Long Steel (profiles)

-

-

-

 

-

 

-

TOTAL MARKET

1,174

984

933

 

(51)

 

(241)

                       

NET REVENUE PER UNIT

                       

 

1Q15

4Q15

1Q16

 

1Q16

x

4Q15

 

1Q16

x

1Q15

Average (DM and FM) - R$/t

2,162

2,222

2,196

 

(26)

 

34

 

 
 

18

 

SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 12, 2016
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch

 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ Paulo Rogério Caffarelli

 
Paulo Rogério Caffarelli
Executive Officer

 
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.