SID — Companhia Siderúrgica Nacional

Summary of CSN Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• EBITDA: Achieved BRL 3.3 billion, a 26% increase year-over-year, with an EBITDA margin of 27% (up 330 bps from the previous quarter).
• Leverage Ratio: Improved to 3.1x from 3.5x at the end of the previous year, indicating financial discipline.
• Mining Performance: Record shipment of over 12 million tons, contributing to a 57% increase in mining EBITDA to BRL 1.9 billion with a gross margin of 44%.
• Cement Sales: Second-largest sales volume in CSN's history at over 3.6 million tons, with an EBITDA of BRL 388 million and a margin of 29%.
• Logistics Segment: Highest EBITDA recorded at BRL 550 million with a margin above 35%.

2. Strategic Updates and Business Highlights

• Operational Efficiency: CSN reported historical operational records across all segments, driven by effective cost control and strategic commercial initiatives.
• Commercial Strategy: Shifted focus to volume growth in steel, achieving a 4.4% increase in sales despite competitive pressures from imports.
• Cement Market Resilience: Benefited from strong demand driven by civil construction, particularly in lower-income housing programs.
• Logistics Expansion: Increased cargo handling efficiency and revenue generation, unlocking asset value through improved operational metrics.

3. Forward Guidance and Outlook

• Q4 Expectations: Anticipated continued strong performance driven by operational efficiencies and a favorable pricing environment, particularly in steel and cement.
• Deleveraging Goals: Aiming to reach a leverage ratio of 3x by year-end 2025, supported by organic operational improvements and potential asset monetization.
• Infrastructure Project: Progressing with the CSN infrastructure project, expected to enhance liquidity and facilitate further deleveraging.

4. Bad News, Challenges, or Points of Concern

• Competitive Pressures: The steel market faces significant competition from imported materials, with penetration rates as high as 63% in certain categories, impacting local pricing power.
• Cash Flow Issues: Despite improvements, the adjusted cash flow was negative at BRL 815 million, reflecting high financial expenses and working capital consumption.
• Market Volatility: Ongoing challenges in the global market, including tariff disputes and the need for protective measures against imports, pose risks to profitability.
• Interest Rate Impact: High interest rates continue to exert pressure on financial expenses, complicating cash management.

5. Notable Q&A Insights

• Leverage and Deleveraging Strategies: Management emphasized the importance of organic operational results in reducing leverage, with ongoing discussions about asset divestments, particularly in infrastructure.
• Antidumping Measures: Upcoming G7 meeting could lead to favorable decisions on antidumping measures, which are critical for improving competitiveness against imports.
• Market Dynamics: Insights shared on the resilience of domestic demand despite high import levels, with expectations for a gradual recovery in pricing due to improved market conditions and potential antidumping measures.
• CapEx Flexibility: Management confirmed flexibility in capital expenditures, prioritizing projects that enhance operational efficiency while managing debt maturities effectively.

Overall, CSN's Q3 2025 results reflect a strong operational performance amidst challenging market conditions, with a clear focus on improving financial health and navigating competitive pressures.