CSN Reports Significant Net Loss in 2024 Amid Rising Costs and Market Challenges
In a disappointing turn of events, Companhia Siderúrgica Nacional (CSN), Brazil’s prominent steel and iron ore producer, has reported a net loss of BRL 1.538 billion ($265 million) for the fiscal year 2024. This contrasts sharply with the net profit of BRL 402.6 million achieved in 2023. The primary drivers behind the loss were high interest rates, which heavily impacted the company’s financial results, and the price devaluation of Usiminas’ shares, which CSN holds.
Financial Performance Breakdown
CSN’s net sales revenues in 2024 declined by 3.9%, reaching BRL 43.688 billion. This marks a significant drop from the previous year. Similarly, the company’s gross profit decreased by 2.2%, amounting to BRL 11.697 billion. Perhaps most notably, the EBITDA (earnings before interest, taxes, depreciation, and amortization) dropped by 14.1%, reaching BRL 10.230 billion.
A major contributing factor to the negative profitability was a financial loss of BRL 5.814 billion, largely stemming from the high interest rates paid on the company’s debt. CSN also faced a significant decrease in the market value of the shares held in Usiminas, one of its subsidiaries. The volatile financial environment has thus had a disproportionate impact on CSN’s overall performance.
Mixed Performance in Sales and Production Volumes
Despite the financial setbacks, CSN experienced some positive developments in its sales volume across key product areas, particularly in steel and iron ore:
• Domestic steel sales saw a 13.2% increase, reaching 3.273 million metric tons (mt) in 2024, which is a promising sign of strong demand in Brazil.
• Steel exports also grew slightly, up by 0.3%, totaling 1.278 million metric tons (mt).
However, the company’s iron ore sales presented a mixed performance:
• Domestic iron ore sales saw a 19.1% decrease, falling to 4.041 million metric tons (mt), primarily due to lower demand in the local market.
• On the other hand, iron ore exports increased by 2.2%, reaching 38.512 million metric tons (mt), reflecting stronger demand in global markets, particularly in Asia.
EBITDA Contribution by Business Segments
The EBITDA performance across various business segments in 2024 showed a varied impact, with mining being the standout performer. The breakdown is as follows:
• Steel production: Contributed 15.7% to the company’s total EBITDA.
• Mining: Was the largest contributor, making up 56.7% of the EBITDA, driven by the global demand for iron ore.
• Logistics: Accounted for 14.9% of EBITDA, highlighting the importance of CSN’s transportation and infrastructure capabilities.
• Energy: Contributed a modest 1.4% to the overall EBITDA.
• Cement: Represented 13.3% of EBITDA, with consistent performance in the construction materials sector.
The Financial Impact of Interest Rates and Usiminas Shares
CSN's financial troubles were exacerbated by high interest rates in Brazil, which significantly impacted its ability to manage debt costs effectively. These elevated rates led to a negative financial result of BRL 5.814 billion for the year. Moreover, the devaluation of Usiminas' shares—a key part of CSN’s investment portfolio—further hindered the company’s profitability. These external economic factors have thus amplified the operational challenges faced by the company.
Looking Ahead: Challenges and Opportunities
The challenges CSN faced in 2024 underscore the volatility in the global commodities market and the financial pressures exerted by domestic macroeconomic conditions. While the company’s steel and iron ore exports showed some growth, particularly in international markets, the ongoing pressures from high interest rates and stock devaluation could continue to affect its performance in the short term.
CSN will likely need to adapt its strategies to mitigate these financial risks, whether through restructuring its debt or diversifying its revenue streams further. The company will also need to focus on maintaining and improving its steel production and mining operations to ensure sustained growth despite the difficult macroeconomic environment.
Key Takeaways:
• Net Loss: CSN reported a net loss of BRL 1.538 billion ($265 million) in 2024, compared to a net profit of BRL 402.6 million in 2023.
• Revenue Decline: Net sales revenues dropped by 3.9%, totaling BRL 43.688 billion.
• Gross Profit Decline: Gross profit decreased by 2.2% to BRL 11.697 billion.
• EBITDA Drop: EBITDA fell by 14.1% to BRL 10.230 billion.
• Financial Setbacks: A negative financial result of BRL 5.814 billion was primarily due to high interest rates and the devaluation of Usiminas’ shares.
• Steel Sales Growth: Domestic steel sales increased by 13.2%, totaling 3.273 million metric tons (mt).
• Iron Ore Sales: Domestic iron ore sales declined by 19.1%, while iron ore exports grew by 2.2%, reaching 38.512 million metric tons (mt).
• EBITDA Contributions:
o Mining contributed 56.7% to EBITDA.
o Steel production contributed 15.7%.
o Logistics contributed 14.9%.
o Cement contributed 13.3%.
• Economic Factors: The high interest rates and Usiminas stock devaluation were major contributing factors to CSN’s financial difficulties.
• Future Outlook: CSN needs to address financial challenges and optimize its operations to weather the ongoing economic pressures in Brazil and global markets.
