* Loss at 22 mln reais is smaller than estimated in poll
* Usiminas sees margins at double-digits in coming quarters
* CFO Seckelmann says no bid was tendered for MMX's port
By Guillermo Parra-Bernal and Alberto Alerigi
SAO PAULO, July 26 Brazilian steelmaker Usinas
Siderúrgicas de Minas Gerais SA reported a much
smaller-than-expected second-quarter loss on Friday, with key
indicators showing Chief Executive Officer Julián Eguren's
turnaround efforts are bearing fruit.
Usiminas, as Brazil's No. 1 maker of flat steel
is known, lost 22.1 million reais ($9.8 million) in the second
quarter, compared with losses of 122.7 million reais in the
prior three months and 86.5 million reais a year ago, according
to a securities filing.
Shares of Usiminas, which has lost money for six straight
quarters, jumped 12 percent to 8.75 reais, the biggest rise in a
week. The stock shed 31 percent this year.
In signs of the company's recovery, adjusted earnings before
interest, taxes, depreciation and amortization rose to the
highest level in at least three years, the steel-making division
had a resilient sales mix and growing margins, and unwanted
In addition, output of flat steel rose quarter-on-quarter
despite Brazil's economic slowdown, revenue rose for the first
quarter in three, and a lid was kept on costs.
"Results came in above market consensus, mainly on the
operating margin, which may result in an upward revision of
earnings forecasts for the coming quarters," Juliana Chu, an
analyst with Votorantim Corretora, said in a client note.
According to a survey of six analysts by Thomson Reuters the
Belo Horizonte, Brazil-based company was expected to record a
net loss of 205 million reais in the quarter. A seventh analyst
in the poll estimated net income of 104 million reais.
RIGID COST STRUCTURE
Eguren, a former executive at Italian-Argentine steel group
Ternium SA who was named CEO early last year right after
Ternium bought a controlling stake in the company, also has been
dealing with a rigid cost structure that includes a lack of
proprietary energy and mining assets and an aging mill
A tumble of about 10 percent in Brazil's currency, the real
, in the second quarter stoked debt-servicing expenses,
leading to the quarterly net loss, according to the filing.
Company executives were upbeat on a conference call to
discuss earnings. Still, analysts including Leonardo Correa of
HSBC Securities said a flagging economy and resistance to price
hikes from clients and distributors could hamper Usiminas's
Output of raw steel rose 5.2 percent to 1.749 million
tonnes, the first sequential increase in five quarters. While
sales of steel products slipped 1.2 percent, Eguren's plan to
cut exports and increase shipments to local clients, which hit
91 percent of sales in the quarter, fared better than expected.
Net revenue rose 1.6 percent to 3.244 billion reais, missing
analysts' average target of 3.274 billion reais.
The average prices for some products such as plates were
higher in the local market than overseas. There is room for a
small increase of less than 2 percent in domestic flat steel
prices, said Sergio Leite, Usiminas's senior vice president for
sales, at the call.
Adjusted EBITDA, which excludes Usiminas' participation in
other companies, surged 41 percent from the first quarter to 441
million reais, the highest level since at least the fourth
quarter of 2010. EBITDA rose to 13.6 percent of revenue,
compared with 9.8 percent in the fourth quarter.
Analysts had looked for EBITDA of 391 million reais and a
margin of 11.9 percent.
Chief Financial Officer Ronald Seckelmann said in the call
that margins will stabilize at double-digit levels in coming
quarters, after staying below 10 percent for over a year.
The company has not bid for MMX Mineração e Metálicos SA's
port, but it is attentive to a potential sale of such
project, Seckelmann said. . MMX is part of Grupo EBX, a
conglomerate of mining and energy companies led by tycoon Eike
Batista that is in the process of breaking up to repay mounting