Brazilian Iron and Steel Works CSN plans to raise prices by 25%

Brazilian steel company Companhia Siderúrgica Nacional (CSN) CSNA3.SA said it expects prices to rise by an average of 25% in the second quarter.

CSN CEO Benjamin Steinbruch told analysts that the steel mill's debt rating could be upgraded within "weeks" as the company expects to meet its 45-day debt cut target.

Sales Director Luis Martinez said CSN is likely to start raising prices for hot and cold laminate products in March and he sees their sales rise 12-15% this year as Brazil recovers from last year's coronavirus recession. ...

CSN, which posted strong fourth-quarter revenue growth fueled by high commodity prices and reduced debt, said it plans to create a cement subsidiary.

Steinbruch said he sees opportunities for cement prices to rise this year and expects production to rise by 15-18%, adding that new acquisitions may appear in the near future.

“The Brazilian cement market has the potential for consolidation and CSN is a company looking to consolidate,” he said.

CSN posted net profit of R $ 3.9 billion ($ 717.11 million) in the fourth quarter, more than triple the R $ 1.1 billion profit for the same period in 2019.

Adjusted operating result as measured by EBITDA (earnings before interest, taxes, depreciation and amortization) tripled to R $ 4.7 billion, a quarterly record, and adjusted EBITDA margin nearly doubled to 47%.

CSN posted net revenues of R $ 9.8 billion, up 50% year-on-year, which was described as “excellent performance in the steel and mining segments, driven by higher global commodity prices”.

In the fourth quarter, steel sales were 1.2 million tonnes versus 1.1 million tonnes a year earlier, while iron ore sales were 8.6 million tonnes, down 16% from a year earlier.

At the end of 2020, net debt reached R $ 25.6 billion, or 2.23 times EBITDA, the lowest since December 2011, driven by strong cash flows and a favorable exchange rate.

CSN estimates that by 2021 the company will end 2021 with net debt of R $ 15 billion and a debt to EBITDA ratio of 1.

CSN shares were initially up 2.6% on earnings and debt target news, but fell 0.6% in daytime trading.