UPDATE 3-Brazil’s Usiminas Q2 web revenue falls 77% after foreign exchange losses

UPDATE 3-Brazil’s Usiminas Q2 web revenue falls 77% after foreign exchange losses

(Provides government feedback to analysts, updates shared response)

By Gabriel Araujo

SAO PAULO, Jul 29 (Reuters) – Brazilian steelmaker Usiminas reported a 77% drop in second-quarter web earnings from a yr earlier, according to analysts’ expectations, after forex fluctuations eroded income and the interruption of manufacturing decreased gross sales.

The corporate, formally referred to as Usinas Siderúrgicas de Minas Gerais SA, mentioned in a securities submitting that it made a web revenue of 1.06 billion reais ($204.48 million) within the interval, practically matching a Refinitiv survey forecast of 1,050 million reais.

Internet earnings totaled 8.53 billion reais, down 11% year-on-year however exceeding the 8.34 billion forecast by analysts.

Usiminas mentioned forex volatility had led to a lack of 306 million reais within the second quarter, in comparison with a web achieve of 482.9 million reais from forex actions a yr in the past.

Most popular shares fell 3.3% to eight.73 reais in afternoon buying and selling, whereas Brazil’s Bovespa inventory index rose 0.36%.

Gross sales at Usiminas’ metal division fell 17% after decrease manufacturing as blast furnace No.2 was stopped for restore work from September 2021. Nevertheless, larger costs improved working margins.

Trying forward, the corporate mentioned its board of administrators had accepted blast furnace No.2 to renew operations on the finish of October, however mentioned its Ipatinga coke plant could have to chop output.

Usiminas mentioned it expects its third quarter metal gross sales to be between 950,000 tonnes and 1.05m tonnes, down from the 1.1m tonnes reported within the quarter to June. In the identical interval of 2021, gross sales reached 1.2 million tons.

Usiminas director Miguel Camejo instructed analysts in a convention name on Friday that he expects steady demand for metal in Brazil within the coming quarters. The demand for metal plates could enhance within the second half of the yr because of the building of recent vitality initiatives.

Within the mining division, second-quarter iron ore gross sales have been up 16% from a yr earlier and have been additionally up from a sluggish first quarter when heavy rains in Brazil capped manufacturing.

“The quarter was marked by robust metal outcomes, primarily as a result of the corporate applied value will increase for the automotive sector,” JPMorgan analysts mentioned.

BTG Pactual thought of the outcomes to be higher than feared because of the firm’s operational issues, however mentioned they have been nonetheless beneath potential. He made a “purchase” name based mostly on Usiminas’ discounted valuation: the shares have plunged nearly 40% to date this yr.

($1 = 5.1838 reais) (Reporting by Gabriel Araujo; enhancing by Barbara Lewis and Nick Zieminski)

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