* Steelmaker posts first loss in at least three years
* Second-quarter loss tops estimates in Reuters poll
* Underscores burden of Usiminas investment write-off
SAO PAULO, Aug 14 Brazilian steelmaker CSN
posted its first quarterly loss in at least
three years on Tuesday, after a write-off of its investment in
rival Usiminas amplified the impact of revenue declines and a
surge in expenses.
Brazil's second-largest producer of flat steel products lost
1.048 billion reais ($516 million) in the quarter, compared with
profit of 1.137 billion reais a year earlier, according to a
securities filing. CSN had earned 110.7 million reais in the
Eight analysts predicted that CSN would post a quarterly
profit while two predicted a loss in a recent Reuters poll. The
average of the two bearish forecasts was for a net loss of 721.5
CSN decided to reduce the value of its $1.6 billion
investment in Usiminas after common and preferred shares of the
beleaguered flat steelmaker plummeted 47 percent and 20 percent
this year, respectively. CSN Chief Executive Benjamin Steinbruch
began buying Usiminas stock from investors early last year as
part of an unsuccessful bid to win a seat on the firm's board.
As part of that, CSN booked a 2.283 billion reais investment
loss on its "other expenses" line, the filing said. A year
earlier, the item rendered a surplus of 604.65 million reais.
The shortfall was not totally unexpected. Credit Suisse
Group analyst Ivano Westin predicted that the loss could hit up
to 2 billion reais should CSN decide to write off the full loss
from its Usiminas stake.
Operating profit margins in key business segments remained
stable, sales expenses rose after production rose slightly and
net debt surged 38 percent on an annual basis. Revenue at the
mining unit, CSN's most profitable, came in at the lowest level
in three quarters.
The company's earnings before interest, tax, depreciation
and amortization sank 37 percent to 1.120 billion reais from a
year earlier, and was almost flat from the first quarter because
of rising revenue sequentially. EBITDA missed analysts' estimate
of 1.267 billion reais.
Costs jumped 20 percent on an annual basis, the company
Results from the largest local mills reaffirmed analysts'
views that Brazilian mills, facing their worst industry crisis
in years, are headed for a very gradual recovery.
Better-than-expected data for giant Gerdau and
Usiminas helped reverse drops in their shares,
although such gains might be hard to sustain.