SAO PAULO Feb 28 Brazilian steelmaker Companhia
Siderúrgica Nacional SA expects profit margins to
rise in 2014 as a result of cost-cutting measures and sees iron
ore sales increasing from the prior year, executives said on
Known as CSN, Brazil's second-largest producer of flat steel
products posted an unexpected 487.1 million reais ($210 million)
loss in the fourth quarter after settling a tax bill on foreign
Adjusted earnings before interest, tax, depreciation and
amortization, a measure of profitability known as EBITDA, rose
to 32 percent of net revenue at the end of December. The
so-called EBITDA margin was 31 percent in the previous three
Margins should continue to improve due to "a significant
reduction in costs," commercial director Luis Fernando Martinez
said on a conference call to discuss quarterly earnings.
Sales, general, and administrative expenses jumped 13
percent from the previous quarter to 355 million reais, with the
company citing administrative provisions.
The company, whose steel mill is running at nearly full
capacity, sees steel sales stable this year at 6.1 million
tonnes, while iron ore sales from its mining operations is
expected to rise to 44 million tonnes from 25.67 million tonnes
in 2013, executives said on the call.
The company expects investments to total 2.8 billion reais
in 2014, investor relations officer David Salama said. While the
number is little changed from the previous year, the firm sees
more of its investment focused toward the mining sector.
A major overhang on CSN shares has been the company's
conflict with a group of Asian steelmakers that own a share in
CSN's Namisa ore unit. The companies want to exit the
partnership by exercising a put option, which would force CSN to
pay them compensation.
Salama said the company is looking to conclude an agreement
with the steelmakers "at the beginning of this year."
"Short-term risks remain due to the impasse related to the
Namisa partners, whose exit remains undefined," BB Investimentos
analyst Victor Penna wrote in an investor note on Friday.
Shares of CSN fell 4.91 percent to 10.45 reais in afternoon
trading in Sao Paulo, their biggest one-day decline in over a
Fourth-quarter income was heavily affected by CSN's
agreement in November to pay Brazil 566 million reais in back
taxes related to profit at overseas operations. The company said
net income would have reached 450 million reais in the quarter
without the tax charges.
Steel sales fell 5 percent from the previous quarter. The
Brazilian market accounted for 74 percent of sales, down from 77
percent in the previous quarter, reflecting a weaker local
currency and a sluggish manufacturing sector in Latin America's
Net revenue rose 6 percent in the quarter to 4.949 billion
reais, compared with a 4.441 billion reais estimate. Cost of
goods sold came to 3.292 billion reais, little changed from the