* Loss at 283.1 mln reais tops Reuters poll estimate
* EBITDA, inventory, mining unit post strong numbers
* Company to discuss results at Tuesday investor call
By Guillermo Parra-Bernal
SAO PAULO, Feb 18 Brazilian steelmaker Usinas
Siderúrgicas de Minas Gerais SA posted a
bigger-than-expected loss in the fourth quarter as the weakest
local market for steel in years offset strong iron ore sales and
the impact of a massive turnaround in operations.
Usiminas, as the Belo Horizonte-based company is known, lost
283 million reais ($144 million) in the fourth quarter, more
than the 114 million reais loss estimates by seven analysts in a
Thomson Reuters poll. The company lost money for a fourth
consecutive quarter - the worst string of quarterly results in a
Production and sales of products ranging from plates to
rolled steel fell, revenue fell for the first time in five
quarters and capital expenditures slipped.
But signs of a gradual recovery sprouted, as shown by a
surge in operational earnings before interest, tax, depreciation
and amortization, as well as the robust performance of the
company's mining division and a decline in inventory.
The results underpin Chief Executive Julián Eguren's efforts
to ease Usiminas' most pressing shortcomings -- a rigid cost
structure that is too vulnerable to its lack of proprietary
energy and iron ore assets, and an aging mill infrastructure.
Eguren, a former executive at Italian-Argentine steel group
Ternium S.A., took over as CEO late last year when the
latter bought a controlling stake in Usiminas.
"In order to face these challenging conditions, Usiminas is
focusing all of its efforts in cutting costs and augmenting
operational efficiency so as to pursue better competitiveness in
its activities," the company said.
Net revenue slid 5.4 percent to 3.21 billion reais on a
sequential basis, missing estimates of 3.31 billion reais in the
Reuters poll. Costs of goods sold fell 5.6 percent, thanks to
the lower price of raw materials and a 1.8 percent drop in
output, the company said.
Earnings before interest, tax, depreciation and
amortization, a gauge of operational profit known as EBITDA,
soared 51 percent to 226 million reais after iron ore sales
almost doubled. Mining responded for about three-fourths of
Usiminas' EBITDA in the fourth quarter, the company said.
In contrast, the performance of Usiminas' steel unit was
disappointing: EBITDA at the company's mills fell to 20 million
reais in the quarter from 57 million reais in the prior three
months - yielding a profit margin of a meager 1 percent.
EBITDA came roughly in line with the poll's estimate of 221
million reais. Usiminas' EBITDA rose to a better-than-expected
7.1 percent of revenue, compared with an expected margin of 6.7
percent in the poll.
Tax debts magnified the company's fourth-quarter loss,
Usiminas said. A surge in financial income helped offset a jump
in debt-servicing costs in the quarter.
Management will discuss fourth-quarter earnings at a
conference call on Tuesday.