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Behind Usiminas' Big Loss In Q3: Accounting Clean-Up, Stronger Cash, And Brazil's Steel Calculus
(MENAFN- The Rio Times) Usiminas startled investors with a headline net loss of R$3.503 billion ($661 million) in the third quarter, sending its shares down about 7.6% to R$4.59 ($0.87).
The shock number masks what actually happened: the company took two big non-cash charges-an asset impairment of R$2.2 billion ($415 million) and a reassessment of deferred tax assets of R$1.4 billion ($264 million).
Those moves reset book values but did not drain cash. Under the hood, the story was steadier. Adjusted EBITDA rose to R$434 million ($82 million).
Operating cash flow was a bright spot at R$878 million ($166 million), helped by working-capital release. Free cash flow reached R$613 million ($116 million) after R$266 million ($50 million) of capex.
Net debt fell to just R$327 million ($62 million), bringing leverage to 0.16x-low for a cyclical steelmaker. Revenue was R$6.604 billion ($1.246 billion).
Steel shipments hit 1.104 million tons and iron-ore volumes 2.503 million tons: the steel side looked like it may be bottoming, while mining margins remained under pressure.
The story behind the story is Brazil 's steel policy turn. After a year of import pressure, Brasília has leaned into trade-defense measures.
If anti-dumping actions broaden to more flat-steel categories, Usiminas-whose portfolio concentrates in coated and other flat products-could see firmer domestic prices and fuller mills. If those measures stall or prove narrow, recovery rests mostly on lower raw-material costs and operational tweaks.
Why this matters if you're outside Brazil: it's a live case of how emerging-market industrial policy, commodity cycles, and corporate balance-sheet discipline collide.
The giant loss number is largely accounting. What matters now is whether lower input costs and any trade remedies rebuild margins while Usiminas keeps debt tight.
Watch three signals into year-end: the fine print and timing of trade-defense decisions, the spread between steel prices and coking-coal/iron-ore costs, and the mining unit's cost control.
If policy support and cost relief align, this“clean-up” quarter could mark the bottom. If not, expect a slower grind rather than a quick snap-back.
The shock number masks what actually happened: the company took two big non-cash charges-an asset impairment of R$2.2 billion ($415 million) and a reassessment of deferred tax assets of R$1.4 billion ($264 million).
Those moves reset book values but did not drain cash. Under the hood, the story was steadier. Adjusted EBITDA rose to R$434 million ($82 million).
Operating cash flow was a bright spot at R$878 million ($166 million), helped by working-capital release. Free cash flow reached R$613 million ($116 million) after R$266 million ($50 million) of capex.
Net debt fell to just R$327 million ($62 million), bringing leverage to 0.16x-low for a cyclical steelmaker. Revenue was R$6.604 billion ($1.246 billion).
Steel shipments hit 1.104 million tons and iron-ore volumes 2.503 million tons: the steel side looked like it may be bottoming, while mining margins remained under pressure.
The story behind the story is Brazil 's steel policy turn. After a year of import pressure, Brasília has leaned into trade-defense measures.
If anti-dumping actions broaden to more flat-steel categories, Usiminas-whose portfolio concentrates in coated and other flat products-could see firmer domestic prices and fuller mills. If those measures stall or prove narrow, recovery rests mostly on lower raw-material costs and operational tweaks.
Why this matters if you're outside Brazil: it's a live case of how emerging-market industrial policy, commodity cycles, and corporate balance-sheet discipline collide.
The giant loss number is largely accounting. What matters now is whether lower input costs and any trade remedies rebuild margins while Usiminas keeps debt tight.
Watch three signals into year-end: the fine print and timing of trade-defense decisions, the spread between steel prices and coking-coal/iron-ore costs, and the mining unit's cost control.
If policy support and cost relief align, this“clean-up” quarter could mark the bottom. If not, expect a slower grind rather than a quick snap-back.
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