sidpr4q17_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 March, 2018
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, March 26, 2018

 

4Q17 and 2017 Earnings Release

 

Companhia Siderúrgica Nacional (CSN) (BM & FBOVESPA: CSNA3) (NYSE: SID) announces today its results for the year 2017 and the fourth quarter of 2017 (4Q17) in Brazilian Reais, and its consolidated financial statements, which are presented in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and with the accounting practices adopted in Brazil, which are fully convergent with international accounting standards, 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. The comments presented herein refer to the Company's fourth quarter of 2017 (4Q17) and 2017 consolidated results and comparisons refer to the third quarter of 2017 (3Q17), fourth quarter of 2016 (4Q16) and 2016. The Real/U.S. Dollar exchange rate was R$ 3.3080 on December 31, 2017 and R$ 3.1680 on September 30, 2017.

 

2017 financial and operating highlights

 

·         Generation of EBITDA adjusted of R$ 4,645MM, an increase of 14% over 2016, with EBITDA margin of 23.8%, 1.3 p.p. higher than in the previous year, due to better performance in the steel and mining segments.

·         Steel segment EBITDA adjusted reached R$ 2,116 million, 12% up on 2016, with a 14% increase in steel prices in domestic and foreign markets.

·         Higher flat rolled production of 15% in 2017.

·         Mining EBITDA adjusted reached R$ 1,947MM, 11% up on 2016, with highlight for the higher average price in 2017.

·         Leverage reduction of 0.66x, closing the year at 5.66x against 6.34x in 2016, due to higher EBITDA adjusted generation.

·         Financial cycle narrowing by 11 days in despite the 8% evolution in net revenue, working capital in the order of R$ 2,919MM.

·         Reduction in General and Administrative Expenses of 20% year-over-year.

·         Reduction in Financial Expenses (ex-variation) of R$ 541 million in the year.

·         Net Income of R$ 111MM in 2017, compared to a loss of R$ 853MM in the previous year.

 

4Q17 financial and operating Highlights

 

·         Generation of EBITDA of R$ 1,203MM, with EBITDA margin of 22.9%.

·         EBITDA from steel operations reached R$ 713MM, with adjusted EBITDA margin of 20.8%, the best quarter of the last three years, 7.1 p.p. higher than in 3Q17 and average steel price 4% higher.

·          Mining segment Adjusted EBITDA reached R$ 351MM, accompanied by margin of 29.8%, considering lower Platts average (-8%) and higher freight (+23%), when compared to the previous quarter.

·         Higher iron ore third party sales of 26%, compared to the previous quarter.

 

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

   
 
 

 
 

 

Highlights

4Q16

3Q17

4Q17

2016

2017

  

Variation

 

4Q17

x

4Q16

4Q17

x

3Q17

2017

x

2016

                               

Steel Sales (thousand ton.)

1,187

1,301

1,253

4,858

4,922

  

6%

(4%)

1%

- Domestic Market

735

802

770

2,784

2,841

  

5%

(4%)

2%

- Subsidiaries Abroad

400

425

401

1,815

1,768

  

0%

(6%)

(3%)

- Export Trade

52

74

82

258

313

  

59%

12%

21%

                               

Iron Ore Sales (thousand ton.)

9,191

7,953

9,561

36,983

32,576

  

4%

20%

(12%)

- Domestic Market

1,264

1,321

1,236

4,120

5,211

  

(2%)

(6%)

26%

- Foreign market

7,927

6,632

8,325

32,863

27,365

  

5%

26%

(17%)

                               

Consolidated Results (R $ million)

                              

Net Revenue

4,519

4,810

4,993

17,149

18,525

  

10%

4%

8%

Gross Profit

1,349

1,213

1,413

4,509

4,928

  

5%

17%

9%

Adjusted EBITDA¹

1,249

1,213

1,203

4,075

4,645

  

(4%)

(1%)

14%

                               

Adjusted Net Debt²

25,831

25,717

26,268

25,831

26,268

  

2%

2%

2%

Cash / Cash Equivalents²

5,762

4,358

4,328

5,762

4,328

  

(25%)

(1%)

(25%)

Net Debt / Adjusted EBITDA

6.34x

5.48x

5.66x

6.32x

5.66x

  

(0.68x)

0.17x

(0.66x)

¹ Adjusted EBITDA is calculated based on net income/loss, plus depreciation and amortization, income tax, net financial result, results from investees and other operating revenue (expenses), and includes the proportionate share of EBITDA of the jointly-owned subsidiaries MRS Logística and CBSI. Adjusted EBITDA includes 60% stake in Namisa, 33.27% in MRS and 50% in CBSI until November/15 and 100% in Congonhas Minérios, 37.27% in MRS and 50% in CBSI as of December/15.

² Adjusted Net Debt and Adjusted Cash Position account for 33.27% stake in MRS, 60% in Namisa and 50% in CBSI until November/15. As of December 15, these lines include the 100% stake in Congonhas Minérios, 37.27% in MRS and 50% in CBSI, and exclude Forfaiting and Debtor Risk operations.

 

CSN´s Consolidated Result

 

·          Net Revenue in 2017 and in 4Q17 totaled R$ 18,525 million and R$ 4,993 million, 8% and 4% higher than those recorded in 2016 and 3Q17, respectively. The improvement in performance was due to the increase in steel product prices, while the increase in the mining segment was due to the higher price of iron ore.

 

·         In 2017, the cost of goods sold totaled R$ 13,596 million, 8% up on 2016, due to the higher prices of coal (26%) and iron ore (22%). In 4Q17, COGS totaled R$ 3,580 million, remaining flat over the previous quarter.

 

·         In 2017, the gross profit totaled R$ 4,928 million, 9% up on 2016. In 4Q17, gross profit totaled R$ 1,413 million, 17% higher than in 3Q17. Gross margin increased 3.1 p.p. when compared to 3Q17 and came to 28.3%, due to better steel prices.

 

·         In 2017, the selling, general and administrative expenses totaled R$ 2,231 million, 1% up on 2016, below the growth of net revenue in the same comparison basis. Selling expenses increased 7%, while general and administrative expenses decreased 20%.  

 

·         In 2017, the other operating income and expenses line reached a positive value of R$ 177 million, mainly as a result of the gain recorded from the recognition of inflationary compensation from judicial discussions.

 

·         In 2017, the net financial result was negative by R$ 2,464 million. The financial expenses (ex-exchange variation) fell sharply in the period, due to the fall in the Selic rate, presenting a R$ 541 million reduction. In 4Q17, net financial result was negative by R$ 860 million, due to the appreciation of the U.S. dollar against the real (+4.4%) in the quarter, generating negative exchange variation in the amount of R$ 427 million, partially offset by hedge accounting positions.

 

 

 

 
 

For more information, visit our website: www.csn.com.br/ir

2

 
 

 
 

 

Financial Result (R $ million)

4Q16

3Q17

4Q17

2016

2017

Financial Results

(677)

(278)

(860)

(2,522)

(2,464)

Financial income

115

71

48

638

266

Financial expenses

(792)

(348)

(908)

(3,160)

(2,730)

Financial Expenses (ex-exchange variation)

(813)

(629)

(683)

(3,283)

(2,742)

Result w/Exchange Variation

21

280

(225)

123

12

Monetary and Exchange Variations

5

473

(427)

2,013

(107)

Hedge Accounting

17

(202)

202

(1,084)

91

Derivatives result

(2)

10

-

(807)

28

The Financial result includes stakes of 100% in CSN Mining, 37.27% in MRS and 50% in CBSI, as of December/15.

 

·         CSN´s equity result was positive by R$ 109 million in 2017, compared R$ 65 million recorded in 2016. This result was chiefly influenced by the better results in MRS and a strong reduction in losses from equivalence in the TLSA.

 

Share of profits (losses) of investees (R$ million)

4Q16

3Q17

4Q17

2016

2017

Variation

4Q17

x

3Q17

4Q17

x

4Q16

2017

x

2016

MRS Logística

20

54

25

156

172

(54%)

25%

10%

CBSI

1

1

-

3

2

(100%)

(100%)

(33%)

TLSA

(35)

(11)

(2)

(52)

(21)

(82%)

(94%)

(60%)

Arvedi Metalfer BR

-

-

(5)

1

(4)

-

-

-

Eliminations

(9)

(6)

(8)

(43)

(39)

33%

(11%)

(9%)

Share of profits (losses) of investees

(24)

38

11

65

109

(71%)

-

68%

 

 

·          In 4Q17, the Company recorded net income of R$ 378 million, against net income of R$ 256 million in 3Q17. In 2017, CSN registered net income of R$ 111 million, compared to the net loss of R$ 853 million recorded in 2016.

 

Adjusted EBITDA (R$ million)

3Q17

4Q17

2016

2017

Variation

4Q17

x

3Q17

2017

x

2016

Net Income (loss) for the period

256

378

(853)

111

48%

-

(-) Profit (loss) from Discontinued Operations

-

-

10

-

-

(100%)

(-) Depreciation

344

319

1,279

1,409

(7%)

10%

(+) Income Tax and Social Contribution

128

(1)

267

409

-

53%

(+) Financial result, net

278

860

2,522

2,464

209%

(2%)

EBITDA (ICVM 527)

1,006

1,556

3,224

4,393

55%

36%

(+) Other Operating Income (Expenses)

98

(473)

413

(177)

-

-

(+) Equity accounting result

(38)

(11)

(65)

(109)

(71%)

68%

(-) Proportionate EBITDA of the JV’s

147

132

502

538

(10%)

7%

Adjusted EBITDA¹

1,213

1,204

4,075

4,645

(1%)

14%

¹The Company discloses its adjusted EBITDA excluding stake in investees and other operating revenue (expenses) in the belief that these items should not be considered when calculating recurring operating cash flow.

 

·         In 2017, the Adjusted EBITDA totaled R$ 4,645 million, against R$ 4,075 million in 2016, an increase of 14% due to the higher contribution in the mining and steel segments. Adjusted EBITDA reached R$ 1,203 million in 4Q17, versus R$ 1,213 million in the previous quarter, while adjusted EBITDA margin reached 22.9%, flat when compared to the previous quarter.

 

 

 

For more information, visit our website: www.csn.com.br/ir

3

 
 

 

 

 

 

Adjusted EBITDA Margin is calculated based on Adjusted EBITDA divided by adjusted net revenue, which includes 100% stake in CSN Mining, 37.27% in MRS and 50% in CBSI, as of December/15.

 

 

Debt

 

On December 31, 2017, consolidated net debt reached R$ 26,268 million, while net debt/EBITDA, based on LTM adjusted EBITDA, reached 5.66x.

 

 

 

 

 

 Foreign Exchange Exposure

 

The net FX exposure of our consolidated balance sheet was US$ 2,025 million on December 31, 2017, as shown in the table below. It should be noted that within the net FX exposure, a liability of US$ 1.0 billion is included in the Loans and Financing line related to the Perpetual Bond, which, due to their nature, will not require disbursement for settlement of the principal amount in the foreseeable future.

 

The Hedge Accounting adopted by CSN correlates the projected exports inflow in dollars with part of the scheduled debt payments in the same currency. As a result, the exchange variation of the dollar-denominated debt is temporarily booked in shareholders' equity, flowing through P&L when revenues in USD from exports occur.

 

 

 

For more information, visit our website: www.csn.com.br/ir

4

 
 

 

Foreign Exchange Exposure

9/30/2017

12/31/2017

amounts in million US$

IFRS

Cash

  846

777

Accounts Receivable

  387

311

Others

  3

3

Total assets

  1,236

1,091

Loans and Financing

(4,329)

  (4,333)

Suppliers

  (37)

(98)

Other Liabilities

(5)

  (4)

Total Liabilities

(4,370)

  (4,434)

 

-

  -

Foreign Exchange Exposure (Assets - Liabilities)

(3,135)

  (3,343)

Derivatives Contracts Liquids

-

  -

Cash Flow Hedge Accounting

  1,393

1,318

Net exchange exposure

(1,742)

  (2,025)

Perpetual

  1,000

1,000

Net exchange exposure ex Bond

  (742)

  (1,025)

 

 

Capex

 

R$ 344 million were invested in 4Q17 and R$ 1,065 million in 2017, a reduction of 35% on the year-over-year basis, due to the end of the investments of the Arcos (Cement) operation. Currently, the investments are aimed at maintaining the operations, with emphasis on the steel segment.

 

Investment (R$ million)

1Q17

2Q17

3Q17

4Q17

2017

Steel

92

102

119

168

481

Mining

60

106

115

97

378

Cement

24

20

34

40

118

Logistics

13

11

19

33

76

Others

0

0

6

6

12

 Total Investment

           190

           239

           293

           344

        1,065

 

Working Capital

 

To calculate Working Capital, CSN adjusts its assets and liabilities as demonstrated below:

 

·         Accounts Receivable: excludes Dividends receivable, Advances to employees and Other Credits;

·         Inventories: includes Estimated Losses and excludes the Spare Parts, which are not part of the cash conversion cycle, and will be booked in Fixed Assets when consumed;

·         Recoverable Taxes: Composed only by the Income (IRPJ) and Social Contribution (CSLL) Taxes amount included in Recoverable Taxes;

·         Taxes Payable: Composed of the Current Liabilities account Taxes Payable plus Taxes in Installment;

·         Advance from Clients: Subaccount of Other Liabilities recorded in Current Liabilities;

·         Suppliers: Includes Forfaiting and Drawee Risk.

 

As a result, Working Capital applied to the Company´s businesses totaled R$ 2,919 million in 4Q17. The financial cycle was reduced in 11 and 6 days, in relation to 4Q16 and 3Q17, respectively, demonstrating efficient working capital management. 

 

Working Capital (R$ million)

4Q16

3Q17

4Q17

 

Variation

 

4Q17

x

3Q17

4Q17

x

4Q16

Assets

5,210

5,868

5,986

 

118

776

Accounts Receivable

1,905

2,127

2,197

 

70

292

Inventory turnover

3,251

3,545

3,783

 

238

532

Advance to Taxes

54

196

6

 

(190)

(48)

Liabilities

2,340

2,933

3,067

 

134

727

Suppliers¹

1,763

2,250

2,461

 

211

698

Salaries and Social Contributions

254

296

252

 

(44)

(1)

Taxes Payable

232

279

286

 

7

53

Advances from Clients

91

108

69

 

(40)

(22)

Working Capital

2,870

2,935

2,919

  

(16)

49

 

 

 

 

 

 

 

 

 

 

 

Turnover ratio (days)

4Q16

3Q17

4Q17

 

Variation

 

4Q17

x

3Q17

4Q17

x

4Q16

Receivables

35

37

34

 

(3)

(1)

Supplier Payment

51

61

62

 

1

11

Inventory turnover

94

97

95

 

(2)

1

Cash Conversion Cycle

78

73

67

  

(6)

(11)

¹Drawee risk and Forfaiting are settled in 2016.

 

For more information, visit our website: www.csn.com.br/ir

5

 
 

 

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:

 

    

 

As of 2013, the Company no longer reports the proportional consolidation of its jointly-owned investees Namisa, MRS and CBSI. For the purpose of preparing and presenting the information by business segment, Management decided to maintain the proportional consolidation of the jointly- owned subsidiaries, as historically presented. For the purpose of reconciliation of CSN´ consolidated results, these companies´ results are eliminated in the "Corporate/ elimination expenses" column.

As of the end of 2015, after the combination of CSN´s mining assets (Casa de Pedra, Namisa and Tecar), the consolidated result includes the totality of this new company´s information.

 

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

6

 
 

 

 

 

 

 

 

 

Results 2017

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

                

Net Revenue

12,959

4,621

238

1,417

487

408

(1,605)

18,525

Domestic Market

7,819

829

238

1,417

487

408

(2,491)

8,706

Foreign Market

5,140

3,792

-

-

-

-

886

9,818

CPV

(10,538)

(3,006)

(157)

(1,025)

(513)

(285)

1,927

(13,596)

Gross Profit

2,421

1,615

81

392

(26)

123

322

4,928

DVGA

(964)

(159)

(28)

(95)

(81)

(27)

(877)

(2,231)

Depreciation

659

491

16

295

122

17

(190)

1,409

Proportional EBITDA of Jointly Controlled Companies

-

-

-

-

-

-

538

538

Adjusted EBITDA

2,116

1,947

69

592

15

113

(207)

4,644

                 

Results 2016

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

                

Net Revenue

11,516

4,582

208

1,320

491

269

(1,236)

17,149

Domestic Market

6,980

542

208

1,320

491

269

(2,080)

7,730

Foreign Market

4,536

4,040

-

-

-

-

843

9,419

CPV

(9,393)

(3,099)

(142)

(914)

(467)

(196)

1,572

(12,640)

Gross Profit

2,123

1,483

66

406

23

73

336

4,509

DVGA

(915)

(185)

(25)

(83)

(75)

(25)

(907)

(2,215)

Depreciation

679

461

13

228

73

17

(193)

1,279

Proportional EBITDA of Jointly Controlled Companies

-

-

-

-

-

-

502

502

Adjusted EBITDA

1,887

1,759

54

550

22

65

(262)

4,075

                 

Results 4Q17

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

                

Net Revenue

3,435

1,175

71

365

106

104

(263)

4,993

Domestic Market

2,147

175

71

365

106

104

(618)

2,349

Foreign Market

1,287

1,001

-

-

-

-

356

2,644

CPV

(2,670)

(909)

(45)

(259)

(106)

(71)

480

(3,580)

Gross Profit

765

266

26

106

(0)

33

217

1,413

DVGA

(204)

(37)

(8)

(27)

(22)

(7)

(356)

(660)

Depreciation

153

121

4

63

25

2

(49)

319

Proportional EBITDA of Jointly Controlled Companies

-

-

-

-

-

-

132

132

Adjusted EBITDA

713

351

22

142

3

28

(56)

1,203

                 
 
 

For more information, visit our website: www.csn.com.br/ir

7

 
 

 

Results 3Q17

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

                

Net Revenue

3,399

1,204

60

364

142

103

(462)

4,810

Domestic Market

2,133

218

60

364

142

103

(638)

2,382

Foreign Market

1,265

986

-

-

-

-

176

2,427

CPV

(2,845)

(719)

(37)

(242)

(151)

(74)

471

(3,597)

Gross Profit

553

486

23

122

(9)

29

8

1,213

DVGA

(253)

(40)

(6)

(21)

(20)

(7)

(143)

(491)

Depreciation

165

122

4

63

30

5

(45)

344

Proportional EBITDA of Jointly Controlled Companies

-

-

-

-

-

-

147

147

Adjusted EBITDA

465

568

21

164

1

27

(33)

1,213

                 

Results 4Q16

Steel

Mining

Logistics (Port)

Logistics (Railway)

Cement

Energy

Corporate Expenses/ Eliminations

Consolidated

(R$ million)

                

Net Revenue

2,962

1,317

62

324

128

67

(341)

4,519

Domestic Market

1,979

168

62

324

128

67

(570)

2,159

Foreign Market

982

1,149

-

-

-

-

228

2,359

CPV

(2,334)

(797)

(34)

(237)

(133)

(48)

413

(3,170)

Gross Profit

628

521

28

87

(5)

19

72

1,349

DVGA

(262)

(133)

(6)

(9)

(20)

(7)

(148)

(585)

Depreciation

179

124

3

58

28

4

(41)

356

Proportional EBITDA of Jointly Controlled Companies

-

-

-

-

-

-

129

129

Adjusted EBITDA

545

511

26

137

2

17

12

1,249

 

Results from CSN´s Steel Operation

 

According to the World Steel Association (WSA), global crude steel production totaled 1.691 billion tonnes in 2017, 5.3% more than in 2016.

 

·       In 4Q17, the Company´s plate production totaled 1,099 thousand tonnes, an increase of 17% over 4Q16. In 2017, the production of flat rolled products was 15% higher than in the previous year, totaling 3,679 thousand tonnes. According to the Brazilian Steel Institute (IABr), the domestic crude steel production increased by 9.9% in volume, reaching 34.4 million tonnes. Regarding flat steel products, domestic production totaled 22.4 million tonnes, an expansion of 7.2% compared to 2016, while apparent consumption grew by 5.3% to 19.2 million tonnes, with domestic sales of 16.9 million tonnes and imports of 2.3 million tonnes. 

 

Steel Production

4Q16

3Q17

4Q17

2016

2017

Variation

(thousand tons)

4Q17

x

3Q17

4Q17

x

4Q16

2017 x 2016

Total Slabs (UPV + Third Parties)

1,058

1,069

1,099

3,262

4,276

3%

4%

31%

Crude Steel Production

942

1,065

1,099

3,016

4,216

3%

17%

40%

Third Parties Slabs

116

4

0

246

60

(100%)

(100%)

(76%)

Total Flat Rolled

952

903

959

3,201

3,679

6%

1%

15%

Total Long Rolled

54

50

45

233

204

(10%)

(17%)

(12%)

 

·         The total sales came to 1,253 thousand tonnes of steel products in 4Q17, or 3.6% lower than in 3Q17. According to INDA (the Brazilian Steel Distributors’ Association), in 4Q17, distribution purchases fell 3%, while sales fell 10% compared to 3Q17. In 2017, sales reached 4,922 thousand tonnes, 1% higher than those registered in 2016.

 

 

 
 

For more information, visit our website: www.csn.com.br/ir

 

8

 
 

 

 

 

·          In 4Q17,the volume of steel sales in the domestic markettotaled 770 thousand tonnes, down 4% from 3Q17. Of this total, 720 thousand tonnes refer to flat steel and 50 thousand tonnes to long steel. In 2017, 2,841 thousand tonnes of steel were sold in the domestic market, 2% higher than in 2016. Regarding total sales, 2,608 thousand tonnes are of flat steel and 233 thousand tonnes of long steel.

 
 

·          In the foreign market,4Q17 sales totaled 484 thousand tonnes, down 3% from the previous quarter. In this period, 82 thousand tonnes were exported directly and 401 thousand tonnes were sold abroad by the subsidiaries, 126 thousand of which were sold by LLC, 198 thousand tonnes by SWT and 77 thousand tonnes by Lusosider. In 2017, the sales volume in the foreign market totaled 2,080 thousand tonnes, remaining flat over 2016. Of these sales, 313 thousand tonnes were exported directly and 1,768 thousand tonnes were sold abroad by the subsidiaries, of which 596 thousand tonnes by LLC, 808 thousand tonnes by SWT, 364 thousand tonnes by Lusosider.

  

 

 

·         In 4Q17, CSN maintained its high share of coated products as a percentage of total sales volume, following the strategy of adding more value to its product mix. Sales of coated products such as galvanized items and tin plate accounted for 57% of flat steel sales, in line with that observed in 3Q17, considering all markets in which the Company operates. The foreign market was one of the quarter´s highlights, with the share of coated products increasing from 88% of flat steel sales to 89% in 4Q17.

 

 

For more information, visit our website: www.csn.com.br/ir

9

 
 

 

 

 

According to ANFAVEA(the Auto Manufacturers’ Association), vehicle productiontotaled 2.7 million units in 2017, an increase of 25% over the same period of the previous year. On the same basis of comparison, new light car, commercial vehicle, truck and bus licensing in Brazil increased by 9.2% to 2.2 million units. The estimate is for an increase of 11.7% in car licensing in 2018 and production of 3.06 million units, 13.2% higher than in 2017.

 

According to ABRAMAT (the Construction Material Manufacturers’ Association), sales of building materials fell by 4% in 2017 over the same period in the previous year. By 2018, the association projects an increase of 1 to 2% in the sector's revenues.

 

According to IBGE (the Brazilian Institute of Geography and Statistics), home appliance production in 2017 recorded an increase of 10.5% over the same period last year.

 

·         Net Revenue reached R$ 3,435 million in 4Q17, 16% up on 4Q16. This was mainly due to the higher price of steel commercialized both in the domestic market and in the foreign market and the maintenance of sales volumes of coated products. In 2017, Net Revenue totaled R$ 12,959 million, 13% up on 2016, in view of price increases throughout the year, especially those announced in the last quarter. Average steel prices increased by 12% in 2017 versus the previous year and 4% in the 4Q17 x 3Q17 comparison.

 

 

·         The cost of goods sold in 4Q17 presented a reduction of 6% when compared to 3Q17, totaling R$ 2,670 million, resulting in a 38% increase in gross profit for the period, due to the decrease in general manufacturing costs. However, in 2017, COGS amounted to R$ 10,538 million, 12% up on 2016.

 

·         The slab production cost in 4Q17 reached R$ 1,295/t, 1% up on 3Q17. In 2017, the average slab production cost was R$ 1,339/t, 17% higher when compared to 2016 due to the increase in the main raw materials prices, especially coal, coke and iron ore.

 

 

 ·         Adjusted EBITDA reached R$ 713 million in 4Q17, 53% higher than R$ 465 million obtained in 3Q17 due to the increase in steel prices and the decrease in COGS. Adjusted EBITDA margin in 4Q17 increased to 20.8%, 7.1 p.p. higher than in the previous quarter. In 2017, Adjusted EBITDA totaled R$ 2,116 million, 12% up on 2016. The EBITDA margin increased from 16.4% in 2016 to 16.3% in 2017, noting that the margin recovery movement occurred in 4Q17.

 

Results from CSN´s Mining

 

In 2017, seaborne iron ore market intensified the recovery started in mid-2016 with the maintenance of investments in infrastructure and civil construction in China. In addition, the closure of illegal plants with high emission of pollutants resulted in an increase in the utilization of steel capacity, which, together with the increased demand for steel, allowed for improved margins and higher iron ore prices. In this scenario, the price of ore rose 22% in 2017 compared to 2016, reaching an average of US $ 71.32 / dmt (Platts, Fe62%, N. China).

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

10

 
 

 

In 4Q17, Chinese government's imposition of steel production curbs coupled with greater supply of seaborne ore negatively impacted prices. In this sense, the iron ore price index ended 4Q17 with an average of US$65.57/dmt (Platts, Fe62%, N. China), a drop of 7.5% over the previous quarter.

 

As for sea freight, the BCI-C3 (Tubarão-Qingdao) route averaged US$15.06/t in 2017, a 68% increase over the previous year. The strong rise is mainly due to a period of historical lows in hire fees and use of fleet in 2016, when the route closed the year with an average of US$8.98/t. In 4Q17, ocean freight rates were positively impacted by seasonally higher transoceanic volumes and higher oil prices, especially after production cuts announced by OPEC in November. In this context, the BCI-C3 (Tubarão-Qingdao) route closed the 4Q17 with an average of US$18.66/t, 23% increase over the third quarter.

 

·         In 4Q17, CSN´s production of iron ore totaled 6.4 million tonnes, 18% less than in 3Q17. In 2017, iron ore production totaled 29.9 million tonnes, down 7% from the 32.2 million tonnes recorded in 2016. Iron ore purchases reached 1,828 thousand tonnes in 4Q17, up 29% over 3Q17. In the annual comparison, there was a 4% increase in the amount purchased, totaling 3,551 thousand tonnes in 2017.

 

·         Sales of 9.6 million tonnes of iron ore in 4Q17, up 20% on 3Q17, of which 1.2 million tonnes were sold to CSN´s Presidente Vargas Plant. In 2017, iron ore sales to third parties totaled 27.4 million tonnes, 17% lower than sales in 2016. CSN Mining sold 5.2 million tonnes to Presidente Vargas Steelworks - UPV (+26%), following the strong increase in steel production in the year.

 

Mining Production and Sales Volume

4Q16

3Q17

4Q17

2016

2017

Variation

(thousand tons)

4Q17

x

3Q17

  

2017

x

2016

Iron ore Production

7,758

7,738

6,378

32,174

29,921

(18%)

  

(7%)

Third Party Ore Purchases

609

1,419

1,828

3,399

3,551

29%

  

4%

Total Production + Purchases

8,367

9,157

8,206

35,573

33,472

(10%)

  

(6%)

UPV Sale

1,264

1,321

1,236

4,120

5,211

(6%)

  

26%

Third Parties Sales Volume

7,927

6,632

8,325

32,863

27,365

26%

  

(17%)

Total Sales

9,191

7,953

9,561

36,983

32,576

20%

  

(12%)

Production and sales volumes include 100% stake in CSN Mining.

 

·         In 4Q17, Net Revenue from mining operations reached R$ 1,175 million, 2% less than in the previous quarter, due to lower prices. CIF + FOB unit revenue in 4Q17 was US$ 49.9/t, down 10% from the previous quarter. In 2017, net revenue from mining operations added up to R$ 4,621 million, 1% higher than in 2016, due to the lower volume sold and offset by better prices. In 2017, CIF + FOB unit revenue stood at US$ 53.8/t, while the iron ore price index (Platts, 62% Fe, N.China) moved up by an average of 22% in the same comparison.

 

·         COGS from mining operations totaled R$ 909 million in 4Q17, an increase of 26% over 3Q17, due to the higher volume traded in the period (+20%) and the highest proportion of volume purchased from third parties. In 2017, the cost of mining products reached R$ 3,006 million, 3% lower than in 2016, in view of the lower volume sold (-12%).

 

·          Adjusted EBITDA reached R$ 351 million in 4Q17, down 38% from 3Q17. The adjusted EBITDA margin reached 30% in 4Q17, or 17p.p. below 3Q17, mainly due to lower prices and higher freight. In 2017, the Adjusted EBITDA totaled R$ 1,947 million, 11% higher than in 2016. Adjusted EBITDA margin was 42%, or 4p.p. higher than in 2016.

 

 

 

 

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

11

 
 

 

 

As of 4Q16, the company started to report the price realized considering the sum of the CIF and FOB values, as shown above.

 

Results from CSN´s Logistics

Railway Logistics: In 4Q17, Net Revenue reached R$ 365 million, generating adjusted EBITDA of R$ 142 million and adjusted EBITDA margin of 39.1%. In 2017, Net Revenue totaled R$ 1,417 million, generating adjusted EBITDA of R$ 592 million accompanied by adjusted EBITDA margin of 42%.

 

Port Logistics: in 4Q17, Sepetiba Tecon shipped 253 thousand tonnes of steel products, in addition to 3 thousand tonnes of general cargo and approximately 69 thousand containers. In 4Q17, Net Revenue reached R$ 71 million, generating adjusted EBITDA of R$ 22 million and adjusted EBITDA margin of 31%. In 2017, Sepetiba Tecon handled 990 thousand tonnes of steel products (+23% against 2016), 9 thousand tonnes of general cargo and 188 thousand containers. In the year, Net Revenue totaled R$ 238 million, generating adjusted EBITDA of R$ 69 million and adjusted EBITDA margin of 31%.

 

 

 

Sepetiba TECON Highlights

3Q17

4Q17

2016

2017

Variation

4Q17

x

3Q17

2017

x

2,016

Container volume (thousand units)

51

69

140

188

35%

34%

 Volume of Steelmakers (thousand tonne)

250

253

804

990

1%

23%

 Volume of General Cargo (thousand tonne)

0

3

24

9

-

(63%)

 

Results from CSN´s Cement

 

The Brazilian cement production fell by 4.4% in the last 12 months when compared to the same period of the previous year, following the civil construction segment´s performance, according to IBGE´s Monthly Survey of Industry (PIM-PF).

 

According to preliminary figures from SNIC (the Cement Industry Association),  local cement sales accumulated 53.8 million tonnes during the year of 2017, a decrease of 6.4% in relation to the same period of the previous year. In 2018, SNIC expects cement sales to growth between 1% and 2% over 2017.

 

In 4Q17, cement sales totaled 661 thousand tonnes, 34% less than in 3Q17, generating Net Revenue of R$ 106 million.  Adjusted EBITDA reached R$ 3 million, with adjusted EBITDA margin of 3%. In 2017, 3,311 thousand tonnes of cement were sold, 18% more than reported in 2016. In 2017, net revenue amounted to R$487 million, while adjusted EBITDA reached R$15 million with adjusted EBITDA margin of 3%.

 

Cement Highlights

4Q16

3Q17

4Q17

2016

2017

Variation

(thousand tons)

4Q17

x

3Q17

2017

x

2016

Total Production

                   801

                   982

                   726

               2,846

               3,366

(26%)

18%

​​Total Sales

                   799

                   998

                   661

               2,814

               3,311

(34%)

18%

 

 

Results from CSN´s Energy

 

According to the Energy Research Company (EPE), the electricity consumption in Brazil totaled 462GWh through December 2017, an increase of 0.8% over the same period of the previous year. The industrial and commercial segments showed an increase in energy consumption of 0.3% and 1.1%, respectively, in 2017. The residential segment increased energy consumption by 0.8% due to the more favorable economic scenario.

 

In 4Q17, Net Revenue from energy operations totaled R$ 104 million, adjusted EBITDA came to R$ 28 million with adjusted EBITDA margin of 27%. In 2017, a Net Revenue reached R$ 408 million, adjusted EBITDA was R$ 113 million and adjusted EBITDA margin was 28%.

 

 

For more information, visit our website: www.csn.com.br/ir

12

 
 

 

 

 

 

Capital Market

 

In 2017, CSN shares recorded a 22.8% devaluation, while Ibovespa appreciated by 26.9%. The daily traded volume (CSNA3) on B3, in turn, was R$ 65.9 million. On the New York Stock Exchange (NYSE), CSN´s American Depositary Receipts (ADRs) registered a 22.1% devaluation, while Dow Jones increased by 25.3%. On NYSE, the daily traded volume of CSN´s ADRs was $ 7.2 million.

 

4Q17

2017

Number of shares in thousands

1,387,524

1,387,524

Market value

    

Closing Price (R $ / share)

                   8,38

                   8,38

Closing Price (US $ / ADR)

                     2,52

                     2,52

Market Value (R $ million)

11,627

11,627

Market Value (US $ million)

                   3,497

                   3,497

Total return including dividends and JCP

    

CSNA3

(12.8%)

(22.8%)

SID

(11.0%)

(22.1%)

Ibovespa

2.8%

26.9%

Dow Jones

10.9%

25.3%

Volume

 

  

Daily average (thousand shares)

10,227

7,571

Daily average (R$1000)

87,317

65,931

Daily average (thousand ADRs)

3,023

2,585

Average daily (US$ thousand)

8,000

7,213

Source: Bloomberg

    

 

Webcast - 4Q17 and 2017 Earnings Presentation 

 Investor Relations Team

Conference Call in Portuguese with Simultaneous Translation into English

March 27, 2018 - Tuesday

 Executive Officer – Marcelo Cunha Ribeiro

 Leo Shinohara (leonardo.shinohara@csn.com.br)

 José Henrique Triques (jose.triques@csn.com.br)

 Carla Fernandes (carla.fernandes@csn.com.br)

 Bruno Souza (bruno.souza@csn.com.br)

 

 

10:00 a.m. (US EDT)

11:00 a.m. (Brasília time)

Phone: +1 (516) 300-1066

Code: CSN

Replay phone: +55 (11) 3127-4999

Replay code: 88918248

Webcast: click here

 

Some of the statements contained herein are forward-looking statements that express or imply expected results, performance or events. These perspectives include future results that may be influenced 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).

 

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

13

 
 

 

 

Sales Volume (thousand tonnes)

                           
 

4Q16

3Q17

4Q17

2016

2017

  

Variation

   

4Q17

x

3Q17

  

2017

x

2016

Flat Steel

689

730

720

2,607

2,608

  

(10)

  

1

Plate

-

1

1

0

2

  

-

  

2

Hot Rolled

243

267

275

921

973

  

8

  

52

Cold Rolled

137

155

129

491

520

  

(26)

  

29

Galvanized

207

234

236

826

818

  

2

  

(8)

Tin Plates

102

73

78

370

295

  

5

  

(75)

Long Steel UPV

47

72

50

176

233

  

(22)

  

57

DOMESTIC MARKET

736

802

770

2,784

2,841

  

(32)

  

57

                           
 

4Q16

3Q17

4Q17

2016

2017

  

4Q17

x

3Q17

  

2017

x

2016

Flat Steel

270

321

285

1,298

1,272

  

(36)

  

(26)

Hot Rolled

9

16

24

114

74

  

8

  

(40)

Cold Rolled

18

22

8

89

77

  

(14)

  

(12)

Galvanized

202

233

202

937

925

  

(31)

  

(12)

Tin Plates

41

51

52

158

197

  

1

  

39

Long Steel (profiles)

181

177

198

775

808

  

21

  

33

FOREIGN MARKET

451

499

484

2,073

2,081

  

(15)

  

8

                           
 

4Q16

3Q17

4Q17

2016

2017

  

4Q17

x

3Q17

  

2017

x

2016

Flat Steel

959

1,051

1,005

3,906

3,880

  

(46)

  

(26)

Plate

-

1

1

0

2

  

-

  

2

Hot Rolled

252

283

298

1,035

1,047

  

15

  

12

Cold Rolled

155

177

137

580

597

  

(40)

  

17

Galvanized

408

466

438

1,763

1,742

  

(28)

  

(21)

    Tin Plates

144

124

130

528

493

  

6

  

(35)

Long Steel UPV

47

72

50

176

233

  

(22)

  

57

Long Steel (profiles)

181

177

198

775

808

  

21

  

33

TOTAL MARKET

1,187

1,300

1,253

4,857

4,922

  

(47)

  

65

 

 

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

14

 
 

 

 

 

 

INCOME STATEMENT

CONSOLIDATED – Corporate Law (In thousand of R$)

 

4Q16

3Q17

4Q17

2016

2017

 Net Revenues

                    4,518,596

                    4,809,671

             4,992,725

           17,148,949

           18,524,601

 Domestic Market

                    2,159,265

                    2,382,265

             2,371,785

             7,729,914

             8,706,466

 Foreign Market

                    2,359,331

                    2,427,406

             2,620,940

             9,419,035

             9,818,135

 Cost of Goods Sold (COGS)

                   (3,169,630)

                   (3,596,936)

            (3,579,838)

         (12,640,042)

         (13,596,141)

 COGS, excluding depreciation

                   (2,833,972)

                   (3,260,372)

            (3,269,087)

         (11,398,617)

         (12,219,279)

 Depreciation allocated to COGS

                      (335,658)

                      (336,564)

               (310,751)

            (1,241,425)

            (1,376,862)

 Gross Profit

                    1,348,966

                    1,212,735

             1,412,887

             4,508,907

             4,928,460

 Gross Margin (%)

30%

25%

28%

26%

27%

 Selling expenses

                      (446,470)

                      (412,345)

               (549,273)

            (1,687,733)

            (1,806,256)

 General and administrative expenses

                      (118,400)

                        (70,646)

               (102,944)

               (490,004)

               (392,789)

 Depreciation allocated to SG&A

                        (20,173)

                           (7,727)

                    (8,069)

                 (37,391)

                 (31,903)

 Other operation income (expense), net

                      (114,226)

                        (97,824)

                 473,380

               (413,221)

                 177,342

 Share of profits (losses) of investees

                        (23,555)

                          38,002

                   10,611

                   64,918

                 109,111

 Operational Income before Financial Results

                        626,142

                        662,195

             1,236,592

             1,945,476

             2,983,965

 Net Financial Results

                      (677,171)

                      (277,797)

               (859,987)

            (2,522,427)

            (2,463,627)

 Income before social contribution and income taxes

                        (51,029)

                        384,398

                 376,605

               (576,951)

                 520,338

 Income Tax and Social Contribution

                           (1,929)

                      (128,214)

                         781

               (266,546)

               (409,109)

 Continued operations, net

                        (52,958)

                        256,184

                 377,386

               (843,497)

                 111,229

 Discontinued Operations, Net

                           (2,775)

                                       

                                

                    (9,561)

                                

 Profit/(Loss) for the period

                        (55,733)

                        256,184

                 377,386

               (853,058)

                 111,229

 

 

 

For more information, visit our website: www.csn.com.br/ir

15

 
 

 

 

BALANCE SHEET

Company Corporate Law (In Thousand of R$)

 

Consolidated

 

12/31/2017

12/31/2016

 Current assets

11,881,496

12,444,918

Cash and cash equivalents

  4,147,284

  5,631,553

Trade receivables

  2,276,215

  1,997,216

Inventories

  4,464,419

  3,964,136

Other current assets

993,578

852,013

 Non-current assets

33,328,474

31,708,705

Long-term receivables

  2,591,594

  1,745,971

Investments measured at amortized cost

  5,499,995

  4,568,451

Property, plant and equipment

17,964,839

18,135,879

Intangible assets

  7,272,046

  7,258,404

 Total assets

45,209,970

44,153,623

 Current liabilities

10,670,050

  5,496,683

Payroll and related taxes

252,418

253,837

Suppliers

  2,460,774

  1,763,206

Taxes payable

264,097

231,861

Borrowings and financing

  6,526,902

  2,117,448

Other payables

  1,059,901

  1,021,724

Provision for tax, social security, labor and civil risks

105,958

108,607

 Non-current liabilities

26,251,691

31,272,419

Borrowings and financing

22,983,942

28,323,570

Deferred Income Tax and Social Contribution

  1,173,559

  1,046,897

Other payables

129,323

131,137

Provision for tax, social security, labor and civil risks

719,133

704,485

Other provisions

  1,245,734

  1,066,330

 Shareholders’ equity

  8,288,229

  7,384,521

Paid-in capital

  4,540,000

  4,540,000

Capital reserves

30

30

Acumulated Losses

  (1,291,689)

  (1,301,961)

Statutory reserve

  3,779,032

  2,956,459

Non-controlling interests

  1,260,856

  1,189,993

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

45,209,970

44,153,623

 

 

 

 

For more information, visit our website: www.csn.com.br/ir

16

 
 

 

 

CASH FLOW STATEMENT

CONSOLIDATED - Corporate Law (In Thousand of R$)

 

3Q17

4Q17

 Net cash generated by operating activities

  585,411

  477,680

 (Net Losses) / Net income attributable to controlling shareholders

  226,466

  357,570

 Loss for the period attributable to non-controlling interests

29,718

19,816

 Charges on borrowings and financing

 561,341

  443,511

 Depreciation, depletion and amortization

  355,400

  330,259

 Share of profits (losses) of investees

(38,002)

(10,611)

 Deferred income tax and social contribution

37,309

(82,043)

 Foreign exchange and monetary variations, net

(404,039)

  490,044

 Result from derivative financial instruments

(10,262)

 

 Write off fixed assets and intangible

(14,575)

6,527

 Accrued actuarial liability

 

(36,953)

 Environmental liabilities and Deactvation Provisions

(9,136)

34,643

 Monetary correction from Eletrobrás compulsory loan 

 

(755,151)

 Fiscal, Social Security, Labor, Civil and Environmental Provisions

(27,009)

  120,663

 Working Capital

  502,326

76,253

 Accounts Receivable

  163,272

(81,296)

 Trade Receivables – Related Parties

(7,165)

3,308

 Inventory

  184,935

(178,848)

 Interest receive - Related Parties

(6,748)

77,781

 Judicial Deposits

(9,323)

26,087

 Suppliers

  183,578

  186,520

 Taxes and Contributions

41,197

2,299

 Others

(47,420)

40,402

 Others Payments and Receipts

(624,126)

(516,848)

 Interest Expenses

(624,126)

(516,848)

 Cash Flow from Investment Activities

(297,953)

(363,382)

 Fixed Assets/Intangible

(288,498)

(343,905)

 Derivative transactions

10,717

79

 Related parties loans

 

(33,884)

 Loans / Receive loans - related parties

 

(7,297)

 Short-term investment, net of redeemed amount

(20,172)

21,625

 Cash Flow from Financing Companies

(500,336)

(94,279)

 Borrowings and financing raised, net of transaction costs

  171,000

  363,506

 Borrowing amortizations - principal

(671,336)

(457,547)

 Borrowing costs

 

(238)

 Foreign Exchange Variation on Cash and Cash Equivalents

2,971

10,121

 Free Cash Flow

  (209,907)

30,140

 

 
 

For more information, visit our website: www.csn.com.br/ir

17

 
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: March 26, 2018
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch
 
Benjamin Steinbruch
Chief 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.