Usiminas sees no quick profitability boost from 2013 price hike

Wed Dec 5, 2012 8:19am EST

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SAO PAULO, Dec 5 (Reuters) - Brazil's largest maker of flat steel products, Usinas Sider├║rgicas de Minas Gerais SA , is unlikely to see much better profit margins early next year even with a possible price increase on its home turf, executives said on Wednesday.

"Improvements take effect over the course of longer periods. There is no magic ... I would say I don't expect a better margin in the first quarter," Chief Executive Julián Eguren told investors at a meeting on Wednesday.

Brazil's steel industry is facing one of its worst crises in years. Mills in Brazil are grappling with global steel overcapacity and weak prices, rising costs for some raw materials such as coal, and a domestic output glut.

Usiminas, as the Belo Horizonte, Brazil-based company is known, posted a bigger-than-expected loss in the third quarter due to weak iron ore sales and surging one-time expenses.

Sales volumes from October to December will likely be in line with the prior quarter, said Sergio Leite, who heads Usiminas' commercial and logistics division.

He added that higher tariffs on steel imports will create conditions for a possible increase in Brazil's domestic steel prices in the first quarter of next year.

Usiminas may invest less than the 2 billion reais ($948 million) originally budgeted for 2012, CEO Eguren told analysts and shareholders at the event.

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