8/18/2019 Press Release 1Q16
1/20
1Q16 Results 1
Release of 1Q16 Results
The main operational and financial indicators were:
Steel sales volume of 903 thousand tons; Iron ore sales volume of 974 thousand tons;
Consolidated Adjusted EBITDA of R$51.6 million and Adjusted EBITDA margin of 2.5%;
Working capital on 03/31/16 of R$2.2 billion;
Cash position on 03/31/16 of R$1.7 million;
Investments of R$70.0 million.
R$ million - Consolidated 1Q16 4Q15 1Q15Chg.
1Q16/4Q15
Steel Sales Volume (000 t) 903 1,205 1,256 -25%Iron Ore Sales Volume (000 t) 974 670 1,139 45%Net Revenue 2,041 2,404 2,680 -15%COGS (2,081) (2,471) (2,437) -16%Gross Profit (Loss) (41) (67) 244 -39%Net Income (Loss) (151) (1,627) (235) -91%EBITDA (Instruction CVM 527) 50 (1,820) 354 -EBITDA Margin (Instruction CVM 527) 2% -76% 13% + 7800 bps
Adjusted EBITDA 52 (250) 380 -Adjusted EBITDA Margin 3% -10% 14% + 1300 bpsInvestments (CAPEX) 70 169 232 -59%Cash Position 1,736 2,024 2,621 -14%
Main Highlights
BM&FBOVESPA: USIM5 R$ 1.81/share USIM3 R$4.09/share
USA/OTC: USNZY US$0.49/ADR
LATIBEX: XUSI €0.45/share XUSIO €1.03/share
Public Disclosure
- Belo Horizonte April 25th
, 2016 Usinas Siderúrgicas de Minas Gerais S.A. - Usiminas (BM&FBOVESPA: USIM3,USIM5 e USIM6; OTC: USDMY and USNZY; LATIBEX: XUSIO and XUSI) today releases its first quarter results (1Q16). Operationaland financial information of the Company, except where otherwise stated, are presented based on consolidated figures, in BrazilianReal, according to International Financial Reporting Standards (IFRS). All comparisons made in this release take into considerationthe fourth quarter of 2015 (4Q15), except where stated otherwise.
Market Data – 03/31/16 Index
• Consolidated results
• Performance of the Business Units: - Mining- Steel- Steel processing- Capital goods
• Events Subsequent to closing of the Quarter
• Highlights
• Capital markets
• Balance sheet, Income and Cash Flow Statements
8/18/2019 Press Release 1Q16
2/20
1Q16 Results 2
Economic Outlook
Expansionist policies once again supported the global economy, making a favorable economic
environment for emerging markets, even in a risk scenario. The U.S. Federal Reserve adopted
a conservative attitude and signaled that interest rates would rise less this year, and the
European Central Bank announced new incentive to credit measures. In China, in response to
the risk of a slowdown, the government implemented more expansionist policies. With Chinese
growth remaining stable in the first half of 2016, it was reduced investor concerns that China
would devalue its currency to seek greater competitiveness. At the same time, growth in the
main economies, including Japan, is stabilizing, reducing the recession risk.
The improvement in the economic outlook favored global financial conditions and commodities
prices, favoring the environment for Latin America. Nevertheless, for the two main economies
in the region, Brazil and Argentina, domestic issues have been preponderant, maintaining
them in recession. In spite of this, low growth and lower pressure on exchange rates have
created room for a more expansionist monetary policy.
In Brazil, after the drop of 3.8% in GDP in 2015, the expectation is that economic activity will
remain very weak, suggesting that the recession worsened in the 1Q16, although at a slower
rhythm than in the previous quarters. Additional downfalls in activity are expected, and Banco
Central’s Focus Report of 04/01/16 estimates a decline of 3.7% in GDP in 2016. Over this first
quarter, the combination of deep recession and exchange appreciation modified inflation
expectations, making it possible to anticipate the interest rate reduction cycle. Also according
to the Focus Report, projected inflation for 2016 is 7.0% with the Selic interest rate reaching
13.0% by the end of the year.
Economic Indicators Index
Indicators (%) 2015 2016*
GDP (IBGE) -3.8 -3.7
Industrial Production (IBGE) -8.3 -5.8
Inflation - IPCA 10.7 7.3
Local Interest Rate - Selic (End of Period) 14.25 13.75
FX Rate R$/USD (End of Period) 3.9 4.0
Source: IBGE, FOCUS Data (04/01/16) - Central Bank
*Estimated
8/18/2019 Press Release 1Q16
3/20
1Q16 Results 3
Economic and Financial PerformanceComments on Consolidated Results
Net Revenue
Net revenue in the 1Q16 was R$2.0 billion, against R$2.4 billion in the 4Q15, due to lower
sales volume in the Steel and in the Capital Goods Units, partially compensated by higher salesvolume in the Mining and in the Steel Processing Units.
Cost of Goods Sold - COGS
COGS in the 1Q16 totaled R$2.1 billion, against R$2.5 billion in the 4Q15. For detailedinformation, see each Business Unit sections in this document. Gross margin was a negative2.0%, against a negative 2.8% in the 4Q15 and the gross net (loss) presented a 39.2%recovery. The gross margin had the following pergormance:
Operating Expense and Income
In the 1Q16, sales expenses were R$79.7 million, against R$63.8 million in the 4Q15, a 24.9%increase, mainly due to higher distribution costs in function of exports in the Mining Unit andhigher provisions for doubtful accounts in the Steel Unit.
General and administrative expenses in the 1Q16 totaled R$89.7 million, against R$108.7million in the 4Q15, a 17.4% decrease, mainly due to lower labor cost and lower third partyservices by 24.6%.
Other operating expenses and income totaled R$110.1 million, against R$2.0 billion in the4Q15, mainly due to the non-recurring effects in the 4Q15, referring to the reduction in theaccounting value of assets (impairment) and to provisions of expenses related to the business
restructuring in the Steel and in the Mining Units. In the 1Q16, there was a positive result ofthe asset sale and write-off of R$72.0 million, composed by R$59.0 million from the sale of theoxygen plant in Ipatinga and R$10.2 million from the sale of Rios Unidos Logística e Transportede Aço, both in the Steel Unit, compensated by lower provisions for lawsuits by R$41.6 millionand the negative result of surplus electric energy sale, of R$40.8 million.
In this manner, the Company’s operating margin presented the following performance:
1Q16 4Q15 1Q15
Domestic Market 85% 79% 88%
Exports 15% 21% 12%
Total 100% 100% 100%
Net Revenue Breakdown
1Q16 4Q15 1Q15
-2.0% -2.8% 9.1%
Gross Margin
1Q16 4Q15 1Q15
-15.7% -92.6% 1.3%
EBIT Margin
8/18/2019 Press Release 1Q16
4/20
1Q16 Results 4
Adjusted EBITDA
Adjusted EBITDA is calculated from net income (loss), reversing profit (loss) fromdiscontinued operations, income tax and social contribution, financial result, depreciation,amortization and depletion, equity in the results of Associate, Joint Subsidiary and SubsidiaryCompanies and not consider the impairment of assets. The adjusted EBITDA includes the
proportional participation of 70% of Unigal and others joint subsidiary companies.
Adjusted EBITDA was a positive R$51.6 million in the 1Q16, against a negative R$249.9 millionin the 4Q15, mainly due to better performance of the Steel, the Mining and the Steel ProcessingUnits. For detailed information, see each Business Unit section in this document. AdjustedEBITDA margin in the 1Q16 was 2.5%, against a negative 10.4% in the 4Q15.
It is worthwhile mentioning that, even excluding the extraordinary effects referred to the positive
result of the asset sale and write-off in the amount of R$72.0 million and of the negative resultof surplus electric energy in the amount of R$40.8 million, Adjusted EBITDA would have been apositive R$20.4 million in the 1Q16.
Adjusted EBITDA margins are shown below:
1Q16 4Q15 1Q15
Net Income (Loss) (151,377) (1,626,643) (235,380)
Income Tax / Social Contribution (15,360) (569,249) (78,071)
Financial Result (101,553) 24,089 360,900
Depreciation, Amortization 318,086 352,200 306,430
49,796 (1,819,603) 353,879
Joint Subsidiary Companies proportional EBITDA 45,597 49,401 37,626
Impairment of Assets 8,030 1,574,161 -
51,578 (249,921) 379,534
EBITDA Breakdown
(11,971)
Adjusted EBITDA
Consolidated (R$ thousand)
Equity in the Results of Associate and SubsidiaryCompanies (51,845) (53,880)
EBITDA - Instruction CVM - 527
1Q16 4Q15 1Q15
2.5% -10.4% 14.2%
Adjusted EBITDA Margin
8/18/2019 Press Release 1Q16
5/20
1Q16 Results 5
Financial Results
In the 1Q16, net financial revenue was R$101.6 million, against net financial expenses of R$24.1million in the 4Q15, mainly due to foreign exchange variation gains of R$347.0 million, againstR$67.3 million in the 4Q15, due to the appreciation of 8.9% of the Real against the Dollar in the1Q16, against an appreciation of 1.7% in the 4Q15, partially compensated by lower amount ofswap transactions of R$142.6 million.
Equity in the Results of Associate and Subsidiary Companies
In the 1Q16, equity in the results of associate and subsidiary companies was R$51.8 million,stable in relation to the 4Q15, which was R$53.9 million. There was lower participation ofUnigal and Codeme in the period, compensated by greater contribution of MRS Logística.
Net Profit (Loss)
In the 1Q16, the Company accounted for net loss of R$151.4 million, against a net loss of R$1.6billion in the 4Q15, mainly due to the impairment of assets in the amount of R$1.6 billion in the4Q15, against R$8.0 million in the 1Q16.
Working Capital
The Company concluded in the 1Q16 with working capital of R$2.2 billion, against R$2.3 billionin the 4Q15, representing a 5.7% decrease, mainly in function of the reduction in accountsreceivable of R$139.3 million and of the reduction in the steel and raw materials’ inventories of
R$266.5 million, partially compensated by the reduction in the accounts payable of R$147.3million.
Investments (CAPEX)
CAPEX totaled R$70.1 million in the 1Q16, 58.6% lower compared to the 4Q15, which wasR$169.2 million. Investments were mainly applied to sustaining CAPEX, with approximately92% in the Steel Unit, 5% in the Mining, 2% in the Steel Processing and 1% in the CapitalGoods. The significant reduction in investments was mainly due to the Company’s effort toadjust its investments to cash generation.
Indebtedness
In the 1Q16, there was an important progress the discussions related to the Usiminas’ debtprofile in view of the economic scenario and the decline in steel consumption. With the
R$ thousand 1Q16 4Q15 1Q15Change
1Q16/4Q15
Net Currency Exchange Variation 346,957 67,315 (390,815) 415%
Swap Transactions Market Cap. (129,051) 13,578 93,983 -
Income and Inflat ionary Variat ion over Financ ial Applicat ions 56,180 66,355 42,646 -15%
Other Financial Income 50,032 67,597 47,569 -26%
Interest and Inf lat ionary Variat ion over Financ ing and Taxes Payable in
Installments (176,913) (168,577) (116,472) 5%
Other Financial Expenses (45,652) (70,357) (37,811) -35%FINANCIAL RESULT 101,553 (24,089) (360,900) -522%
+ Appreciation / - Depreciation of Exchange Rate (R$/US$) 8.9% 1.7% -20.8% -
Financial Result - Consolidated
8/18/2019 Press Release 1Q16
6/20
1Q16 Results 6
approval of the Board of Directors of a capital increase of R$1.0 billion, the main lenders ofUsiminas agreed to a standstill of 120 days (see Material Fact of 03/17/16) in order to enablethe Company to renegotiate its debt to a more appropriate debt profile and financial covenantsin relation to the current leverage levels. The increase of capital will occur through issue of200,000,000 ordinary shares, all nominal and without nominal value (“New Shares”), at theissuance price of R$5.00 per share. Nippon Steel and Sumitomo Metals Corporation havecommitted to subscribing up to R$1.0 billion, subjected to the signing of final documents with
lenders.
Also in the 1Q16, the Board of Directors approved a Capital Increase to the limit of theauthorized capital of its Corporate Bylaws in the amount of R$64,882,316.80 through theissuance of 50,689,310 preferred class “A” shares, all bearer and without nominal value (“NewShares”) at the issuance price of R$1.28 per share.
The funds obtained from the of Capital Increase transactions will be destined to the Company’scash position for purposes of reinforcing its working capital.
On 03/31/16, consolidated gross debt was R$7.4 billion, against R$7.7 billion on 12/31/15, a5.8% decrease, mainly in function of the appreciation of the Real against the Dollar of 8.9%,which directly impacted the Dollar debt portion, which accounted for 44.9% of total debt. Debtby maturity composition was 38.8% in the short term and 61.2% in the long term.
The chart below demonstrates the consolidated debt indexes:
The graph below demonstrates the cash position and the amortization debt profile in million ofReais on 03/31/16:
31-Dec-15 31-Mar-15
Short Term Long Term TOTAL TOTAL TOTAL
Local Currency 1,792,575 2,303,721 4,096,296 55% 4,161,127 -2% 4,286,353 -4%
TJLP 140,156 239,980 380,136 - 413,518 -8% 563,763 -33%
CDI 1,618,884 1,964,286 3,583,170 - 3,611,509 -1% 3,643,021 -2%
Others 33,535 99,455 132,990 - 136,100 -2% 79,569 67%
Foreign Currency (*) 890,680 2,441,142 3,331,822 45% 3,725,360 -11% 2,862,430 16%
Gross Debt 2,683,255 4,744,863 7,428,118 100% 7,886,487 -6% 7,148,783 4%
Cash and Cash Equivalents - - 1,735,627 - 2,024,457 -14% 2,621,043 -34%
Net Debt - - 5,692,491 - 5,862,030 -3% 4,527,740 26%
(*) 99% of tot al foreign currency is US dollars denominated
Total Indebtedness by Index - Consolidated
R$ thousand31-Mar-16
%Change
Mar16/Dec15Change
Mar16/Mar15
1,595
966
1,187
536
934
316
13 11 30
140
610
580
1,479
75
545
0 0 0
Cash 2016 2017 2018 2019 2020 2021 2022 2023 on
Local Currency Foreign Currency
1,768
1,009
861
133011
2,015
Duration: R$: 28 meses
US$: 24 meses
1,576
1,736
8/18/2019 Press Release 1Q16
7/20
1Q16 Results 7
Performance of the Business Units
Intercompany transactions are an arm’s-length basis (market prices and conditions) and salesbetween Business Units are carried out as sales between independent parties.
I) M I N I N G
Recent steel price increases in the international market by China and the expectation ofgovernment incentives to raise the Chinese economy affected positively thr PLATTS prices, which,on average, reached US$48.3/t in the 1Q16, against US$46.7/t in the 4Q15 (62% Fe, CFR China).At the end of the 1Q16, the iron ore price reached US$55.0/t.
Operational and Sales Performance - Mining
In the 1Q16, production volume was 701 thousand tons, against 660 thousand tons in the 4Q15.Sales volume recorded in the 1Q16 was 974 thousand tons, against 670 thousand tons in the4Q15. The lower sales volume for Usiminas due to the stoppage of production of pig iron at theCubatão plant in function of the temporary shutdown of the primary areas of this plant, wascompensated by 344 thousand tons of iron ore were exported.
R$ million
1Q16 4Q15 1Q16 4Q15 1Q16 4Q15 1Q16 4Q15 1Q16 4Q15 1Q16 4Q15
Net Revenue 106 86 1,739 2,124 431 425 170 211 (405) (441) 2,041 2,404
Domestic Market 56 86 1,476 1,632 431 425 170 210 (405) (441) 1,728 1,911
Exports 50 - 263 492 0 - - 1 - - 313 493
COGS (105) (56) (1,786) (2,236) (410) (407) (152) (177) 372 406 (2,081) (2,471)
Gross Profit (Loss) 1 30 (47) (113) 21 18 17 34 (33) (36) (41) (67)
Operating Income (Expenses) (53) (1,337) (188) (726) (25) (82) (15) (16) 2 1 (280) (2,159)
EBIT (52) (1,307) (235) (838) (4) (64) 2 18 (31) (34) (320) (2,226)
Adjusted EBITDA (12) (102) 46 (179) 3 (1) 8 24 6 8 52 (250)
Adj.EBITDA Margin -11% -119% 3% -8% 1% 0% 5% 12% - - 3% -10%
*Consolidates 70% of Unigal
Income Statement per Business Units - Non Audited - Quarterly
ConsolidatedMining Steel*Steel
ProcessingCapital Goods Adjustment
Mineração SiderurgiaTransformação do
AçoBens de Capital
Mineração Usiminas Usina de Ipatinga Soluções Usiminas Usiminas Mecânica
Usina de Cubatão
Unigal
Usiminas - Unidades de Negócios
8/18/2019 Press Release 1Q16
8/20
1Q16 Results 8
Production and sales volumes are demonstrated in the chart below:
Comments on the Business Unit Results - Mining
Net revenue recorded in the 1Q16 was R$106.1 million, against R$85.8 million in the 4Q15, a
23.6% increase, due to higher iron ore exports volume in the period and to an averagedevaluation of 2.9% of the Real against the Dollar in the period (the exchange rate used forrevenues in the Mining Unit is the average exchange rate of the previous month), which waspartially compensated by a 5.4% decrease in PLATTS iron ore prices (62% Fe CFR China) adjustedfor the period of sales price formation of the Mining Unit. Another effect that increased revenue of1Q16 was the change of criteria of registering railway and sea freights, which, up to the 4Q15,were considered as a deduction of gross revenue, that reduced gross revenue in R$12,0 million inthe 4Q15 and, as of this year, are being recorded in COGS.
In the 1Q16, cash cost per ton was R$54.5/t, against R$55.1/t in the 4Q15, a 1.2% decreasemainly due to lower labor costs and third party services, electric energy and fuel. In the 1Q16,Cost of Goods Sold – COGS – was R$105.5 million, against R$56.0 million in the 4Q15, mainly byreason of higher sales volume by 45.5%. In the 1Q16, COGS per ton was R$107.9/t, againstR$84.3/t in the 4Q15, a 27.9% increase, mainly in function of the change of criteria for registeringrailway and sea freights, which reduced COGS/t of the 4Q15 in R$16.8/t and due to inventoriesadjustment.
Net operating expenses were R$52.6 million, against R$1.3 billion in the 4Q15, due to theimpairment of assets in the amount of R$1.2 billion and to the provision for expenses related tothe business restructuring in the Mining Unit both having occurred in the 4Q15. There were noeffects of this nature in the 1Q16. It is worthy to mention the negative results with the sale ofsurplus electric energy of R$4.0 million in the 1Q16, against a positive result of R$0.8 million inthe 4Q15.
In this manner, Adjusted EBITDA was a negative R$11.9 million in the 1Q16, against a negativeR$102.3 million in the 4Q15, a recovery of R$90.4 million. Adjusted EBITDA margin was a
negative 11.3% in the 1Q16, against a negative 119.3% in the 4Q15, a growth of 10,800 basispoints.
Investments (CAPEX)
Investments in the 1Q16 totaled R$3.7 million against R$45.7 million in the 4Q15, mainlyapplied to sustaining CAPEX.
Stake in MRS Logística
Mineração Usiminas holds a stake in the MRS Logística through its subsidiary UPL – Usiminas
Participações e Logística S.A.
MRS Logística is a concession that controls, operates and monitors the Brazilian Southeastern
Thousand tons 1Q16 4Q15 1Q15Chg.
1Q16/4Q15
Production 701 660 1,461 6%
Sales - Third Parties - Domestic Market 16 12 91 33%
Sales - Exports 344 0 0 -
Sales to Usiminas 614 658 1,048 -7%
Total Sales 974 670 1,139 45%
Iron Ore
8/18/2019 Press Release 1Q16
9/20
1Q16 Results 9
Federal Railroad Network (Malha Sudeste da Rede Ferroviária Federal). The company operatesin the railway transportation segment, connecting the states of Rio de Janeiro, Minas Geraisand São Paulo, and its core business is transporting, with integrated logistics, cargo in general,such as iron ore, finished steel products, cement, bauxite, agricultural products, pet coke andcontainers.
In relation to the 4Q15, total volume transported by MRS fell 11%, reflecting seasonality that
typically favors rail cargo transportation at the year’s end in detriment to the first quarter.
II) S T E E L
Regarding the global crude steel production, the WSA registered a 3.6% decline in the firstthree months of 2016 compared with the same period of 2015. The largest contributor to thedecline was China, which reduced production 3.2%. Installed capacity utilization advancedfrom 64.9% at the end of December 2015 to 66.2% at the end of February. It, therefore,continues below the 71.5% verified in the 1Q15. The first months of 2016 were marked by asignificant recovery in international steel prices after having reached historic lows and at
amounts below operational and marginal costs for a significant parcel of the global steelindustry.
The consumption expectation of the World Steel Association (WSA) for the year of 2016 is 1.5billion tons, a decline of 0.8% compared with 2015. The greatest contribution to the reductionin global consumption will come from China, where the slowdown, especially in CivilConstruction and Investments, should lead to a new decline in consumption of 4.0% in 2016,after falls of 5.4% in 2015 and 3.3% in 2014. Global consumption excluding China shouldreturn to a 1.8% growth in 2016, both among advanced economies, as well as in the blockemerging economies.
According to the Brazil Steel Institute (IABr), Brazilian crude steel production in the firstmonths of 2016 decreased 13.7% in relation to the same period in 2015 to an annualized
volume of 29.3 million tons. Flat steel production receded 18.4% in the period.In relation to consumption, in the 1Q16, the Brazilian flat steel market consumed 2.2 millionton, with 95% supplied by local plants and 5% by imports, which reached their lowest levelsince third quarter 2007.
In comparison with the 4Q15, consumption practically remained stable. The rise in domesticsales of 4.4% following the worst quarters of Brazilian plant deliveries since the peak of thecrisis in 2009 compensated the 45.8% fall in imports. In comparison with the 1Q15, apparentconsumption declined 30%. The Civil Construction and Industrial sectors, boosted by theShipbuilding, Agricultural and Highway Equipment segments, performed positively in relationto the 4Q15, with growths of 5% and 4%, respectively. All other segments declined, withWhite Goods being the negative highlight, with a 6% decline. Automotive consumptionremained practically stable, with a 1% less than in the 4Q15.
The figures in the 1Q16 reinforce the deterioration of the flat steel market in Brazil. The strongdecline in consumption occurred spread out over all consumer segments due to the strongslowdown in industrial activity in the period. The lack of perspective in the economic outlookand less optimistic prognoses about the economic recovery in the short term led customers toreduce purchases, adjust inventories and postpone investments. In practical terms, allconsumer segments registered declines close or superior to 30%. In Civil Construction, thedecline in flat steel consumption is estimated to have been around 20%.
8/18/2019 Press Release 1Q16
10/20
1Q16 Results10
Production - Ipatinga and Cubatão Plants
Crude steel production at the Ipatinga and Cubatão plants was 794 thousand tons in the 1Q16,against 1.2 million tons in the 4Q15, as a result of the production stoppage of pig iron at theCubatão plant, due to the temporary shutdown of the primary areas at this plant.
SalesTotal sales in the 1Q16 were 903 thousand tons of steel, against 1.2 million tons in the 4Q15.There was a 14.1% reduction in sales to the domestic market, which totaled 758 thousand tonsin the 1Q16, against 882 thousand tons in the 4Q15, result of the stagnation in the domesticmarket. Besides this, there was a reduction of 55.0% in exports, which totaled 145.3 thousandtons in the 1Q16, against 322.9 thousand tons in the 4Q15, due to greater selection of exports,
in function of the reduction of production excess as a result of the temporary shutdown of theprimary areas at Cubatão Plant. There was a substantial improvement in sales mix, where salesvolume recorded 85.2% to the domestic market and 14.8% for exports. Prices practicedpresented an average 0.8% increase in the domestic market and 16.5% in the exports.
Thousand tons 1Q16 4Q15 1Q15 Chg.1Q16/4Q15
Ipatinga Mill 777 752 739 3%
Cubatão Mill 17 436 640 -96%
Total 794 1,188 1,379 -33%
Production (Crude Steel)
1,106850 751
882758
151424
427 323
145
1,256 1,2751,179
1,205
903
1Q15 2Q15 3Q15 4Q15 1Q16
Do mestic Market Expo rts
8/18/2019 Press Release 1Q16
11/20
1Q16 Results11
The main export destinations are shown in the charts below:
25%
20%
19%
10%
7%
6%5%2%2%5%
1Q16
Argentina
Germany
USA
Taiwan
India
Spain
Mexico
Italy
Portugal
Others
Thousand tonsChange
1Q16/4Q15
Total Sales 903 100% 1,205 100% 1,256 100% -25%
Heavy Plates 145 16% 162 13% 287 23% -11% Hot Rolled 260 29% 362 30% 418 33% -28%
Cold Rolled 239 26% 313 26% 312 25% -24%
Galvanized 229 25% 248 21% 214 17% -8%
Processed Products - 0% - 0% 7 1% -
Slabs 30 3% 118 10% 19 2% -74%
Domestic Market 758 84% 882 73% 1,105 88% -14%
Heavy Plates 135 15% 138 11% 261 24% -2%
Hot Coils 219 24% 276 23% 341 31% -21%
Cold Coils 205 23% 248 21% 285 26% -17%
Galvanized 179 20% 194 16% 194 18% -8%
Processed Products - 0% - 0% 7 1% -
Slabs 20 2% 25 2% 19 2% -20%
Exports 145 16% 323 27% 151 12% -55%
Heavy Plates 10 1% 24 2% 27 18% -58%
Hot Rolled 40 4% 86 7% 77 51% -53%
Cold Rolled 34 4% 65 5% 27 18% -47%
Galvanized 51 6% 54 4% 21 14% -6%
Processed Products - 0% - 0% 0 0% -
Slabs 0 1% 94 8% - 0% -
Sales Volume Breakdown
4Q151Q16 1Q15
8/18/2019 Press Release 1Q16
12/20
1Q16 Results12
Comments on the Business Unit Results - Steel
In the 1Q16, net revenue in the Steel Unit was R$1.7 billion, 18.1% lower than in the 4Q15,which was R%2.1 billion, due to a 14.1% decline in sales to the domestic market and to a55.0% in exports. Average steel prices in the domestic market were 0.8% higher and 16.5% inthe exports in relation to the 4Q15. Net revenue of the 1Q16 was also affected by the change
of criteria of registering railway and sea freights, which, up until the 4Q15 were considered as adeduction to gross revenue, that reduced gross revenue in R$82.9 million in the 4Q15 and, as ofthis year, are being recorded in COGS.
In the 1Q16, cash cost per rolled ton was R$1,446/t, against R$1,473/t in the 4Q15, a 1.8%reduction when comparing both periods, mainly due to prices and coke and iron ore cheapermix, partially compensated by higher expenses with wages and charges in function of a lowerfixed costs dilution.
The Cost of Goods Sold – COGS was R$1,786 million on the 1Q16, against R$2,236 million in the4Q15, mainly due to lower sales of steel volume of 25.1%. The COGS per ton was R$1,978/tagainst R$1,856/t in the 4Q15, an increase of 6.6%, mainly in function of the change of criteriaof registering railway and sea freights, which had reduced the COGS/t in the 4Q15 in R$68.7/t and
in function of the effect of inventories reduction in 154 thousand tons on the 1Q16.Sales expenses were R$44.5 million in the 1Q16, 26.7% higher than those in the 4Q15, mainlydue to higher provisions for doubtful accounts partially compensated by lower distributioncosts in function of lower export volume.
General and administrative expenses totaled R$64.5 million, against R$81.9 million in the4Q15, a reduction of 21.3%, mainly due to the reduction of 14.1% in direct labor expensesand of 5.7% in third-party services.
Other operating expenses and revenues totaled R$79.3 million in the 1Q16, against R$608.7million in the 4Q15, mainly due to non-recurring effects in the 4Q15 (impairment of assets inthe amount of R$357.2 million, provisions related to business restructuring in the Steel Unit inthe amount of R$93.8 million), partially compensated by the positive result of asset sale and
write-off in the amount of R$72.0 million in the 1Q16 (composed by R$59.0 million from thesale of the oxygen plant in Ipatinga and R$10.2 million from the sale of Rio Unidos Logística eTransporte de Aço), against a negative R$51.8 million in the 4Q15. In this manner, netoperating expenses totaled R$188.2 million, against R$725.6 million in the 4Q15.
Thus, Adjusted EBITDA in the 1Q16 was a positive R$46.0 million, against a negative R$178.7million in the 4Q15. Adjusted EBITDA margin was a positive 2.6% in the 1Q16, against anegative 8.4% in the 4Q15, an increase of 1100 basis points.
Investments (CAPEX)
In the 1Q16, investments totaled R$64.3 million, against R$107.6 million in the 4Q15, mainlyapplied to sustaining CAPEX. The significant reduction in investments was mainly due to thetemporary shutdown of the primary areas at Cubatão Plant and to the Company’s effort to ad justits investments to cash generation.
I) S T E E L P R O C E S S I N G
Soluções Usiminas – SU
Soluções Usiminas operates in the distribution, services and small-diameter tubes’ marketsnationwide, offering its customers high-value added products. It serves several economicsegments, such as automotive, autoparts, civil construction, distribution, electro-electronics,machinery and equipment and household appliances, among others.
8/18/2019 Press Release 1Q16
13/20
1Q16 Results13
In the 1Q16, sales of the Distribution, Services/Just-in-Time and Tubes Business Units wereresponsible for 52%, 39% and 9%, respectively, of total sales volume.
Comments of the Results of the Business Units - Steel Processing
Net revenue in the 1Q16 was R$430.9 million, 1.4% higher than in the 4Q15, due lower
production costs by 3.3%.In the 1Q16, cost of goods sold was R$409.7 million, practically stable in relation to the 4Q15,which was R$407.3 million.
Operating expenses were R$25.2 million in the 1Q16, against R$82.2 million in the 4Q15, a69.3% reduction, mainly due to the impairment of assets in the amount of R$56.7 millionoccurred in the 4Q15.
Thus, Adjusted EBITDA in the 1Q16 was a positive R$3.0 million, against a negative R$1.0million in the 4Q15. Adjusted EBITDA margin was 0.7% in the 1Q16, against a negative 0.2% inthe 4Q15.
II)
C A P I T A L G O O D S
Usiminas Mecânica S.A.
Usiminas Mecânica is a capital goods company in Brazil, which operates in the followingbusiness areas: steel structures, shipbuilding and offshore, oil and gas, industrial equipmentand assembly and foundry and railcars.
Main Contracts
In the 1Q16, additional contracts with Vale S.A. and Petrobras were signed, allowing the orderportfolio to remain at the same level as in the 4Q15, which was around R$400.0 million.
Comments of the Business Unit Results – Capital Goods
In the 1Q16, net revenue was R$169.7 million, 19.5% lower than in the 4Q15, which wasR$210.7 million, due to the reduction in the portfolio order in the equipment, structures andassemblies segments, result of the stagnation of projects in the oil and gas and infrastructuresegments in the country.
Gross profit was R$17.3 million in the 1Q16, against R$34.0 million in the 4Q15, a reduction of49.2%, in function of lower revenues obtained in all segments in and of lower margins in the
projects executed in the industrial assembly segment.Adjusted EBITDA in the 1Q16 totaled R$8.3 million, against R$24.3 million in the 4Q15.Adjusted EBITDA margin in the 1Q16 was 4.9%, against 11.5% in the 4Q15, a reduction of660 basis points.
8/18/2019 Press Release 1Q16
14/20
1Q16 Results14
Events Subsequent to the Closing of the Quarter
General Extraordinary Shareholders Meeting (GESM): On 04/18/16, a capital increasedwas approved by the Company by means of a private subscription in the amount ofR$1,000,000,000.00 (one billion Reais), through the issue of 200,000,000.00 (two hundredmillion) new ordinary shares, identical to the already existing shares at the issue price of
R$5.00 (five Reais) per share.
Documents pertinent to the issuance are at disposition on the CVM site (www.cvm.gov.br),BM&FBOVESPA (www.bmfbovespa.com.br) and the Company proper (www.usiminas.com/ri).
Capital Increase: The Company’s capital will be increase to R$12,214,882,316.80, in thelimit of authorized capital by its Corporate Bylaws in the amount of R$64,882,316.80.
The Capital Increase will occur through issue of 50,689,310 preferred class “A” shares, allbearer and without nominal value (“New Shares”) at the issue price of R$1 .28 per share. Thefunds obtained by means of the Capital Increase will be destined to the cash position of theCompany to reinforce working capital.
General Ordinary Shareholders Meeting (GOSM): On 04/28/16, the GOSM will be heldand will deliberate on the following matters: (1) Receive management’s accounting report,examine, discuss and vote on the Financial Report and Annual Report referring to fiscal year2015, ended on 12/31/15; (2) Establish the global amount of remuneration of the ExecutiveBoard and Board of Directors, effective and substitute members, for a mandate until the GOSMof 2018, including deliberation on the number of positions to be filled in the election; (4)Election of the Chairman of the Board; and (5) Election of the Members of the Fiscal Council,effective and substitute members, for a mandate until the GOSM of 2017, as well asestablishment of respective remuneration. The pertinent documents to the matters on theschedule of the Business of the Day are at the disposition of the Shareholders at the CompanyHeadquarters and on the CVM (www.cvm.gov.br), BM&FBOVESPA (www.bmfbovespa.com.br)and the Company proper (www.usiminas.com/ri).
Highlights
Standstill Agreement: In March 2016, an Agreement between Usiminas and its main bankcreditors suspending the liability of the principal amount of debt obligations, as well asobligations of fulfillment of covenants of financial indicators contained in the financingcontracts signed with the respective creditors was signed for a period of 120 days countingfrom the document’s signing.
Usiminas will continue to negotiate a financial restructuring project with the banks in such amanner as to adjust its debt profile to short, medium and long term perspectives, with the
purpose of preserving the financial and operational capacity of the Company.Employees elected representative to the Board of Directors: The Board of Directors willhave the participation of Luiz Carlos de Miranda Faria and his substitute Jorge Malta, who willoccupy the positions in the period from 2016 GOSM to 2018 GOSM. This card was elected asrepresentative of the employees on Usiminas’ Board of Directors in a vote held on 03/22/16 atCompany facilities. The election was organized to comply with changes in procedures relativeto the election of employee representatives on the Usiminas Board of Directors, defined duringthe General Extraordinary Shareholders Meeting held on 01/21/16.
Toyota Global Suppliers Award: Usiminas was awarded during the Global SuppliersConvention 2016, an annual event that recognizes the best suppliers of the Japanese
automaker all over the world. The award, received by Usiminas CEO Romel Erwin de Souza,was conferred by Chairman of Toyota Motor Corporation, Takeshi Uchiyamada in a ceremonyheld in February in Nagoya, Japan.
http://www.cvm.gov.br/http://www.cvm.gov.br/http://www.cvm.gov.br/http://www.bmfbovespa.com.br/http://www.bmfbovespa.com.br/http://www.bmfbovespa.com.br/http://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.bmfbovespa.com.br/http://www.cvm.gov.br/
8/18/2019 Press Release 1Q16
15/20
1Q16 Results15
Usiminas is responsible for the supply of steel used by Toyota in its three Brazilian plantslocated in Idaiatuba, Sorocaba and São Bernardo do Campo, in the State of São Paulo. Besidesthis, Soluções Usiminas processes products destined to the Idaiatuba and São Bernardo doCampo plants and delivers parts to the auto makers that will be transformed into internalmetallic parts, exposed parts and structural reinforcement of the brand’s vehicles.
8/18/2019 Press Release 1Q16
16/20
1Q16 Results16
Capital Markets
Performance on the BM&FBOVESPA
Usiminas’ Common shares (USIM3) closed the 1Q15 quoted at R$4.09 and its Preferred shares(USIM5) at R$1.81. In the quarter, USIM3 appreciated 1.7% and USIM5, 16.8%, respectively.In the same period, the IBOVESPA index appreciated 15.5%.
Foreign Stock Markets
OTC – New York
Usiminas has American Depositary Receipts (ADRs) traded on the over-the-counter market:USDMY is backed by common shares and USNZY, by Class A preferred shares. On 03/31/16,
USNZY ADRs, that have higher liquidity, were quoted at US$0.49 and appreciated 32.4% inthe quarter.
Latibex – MadridUsiminas’ shares are traded on the LATIBEX – the Madrid Stock Exchange: XUSI as preferredshares and XUSIO as common shares. On 03/31/16, XUSI closed quoted at €0.45 ,appreciating 28.6% in the quarter. XUSIO shares closed quoted at €01.03, appreciating 5.1%in the period.
1Q16 4Q15Change
1Q16/4Q151Q15
Change
1Q16/1Q15Number of Deals 719,719 632,176 14% 488,983 47%
Daily Average 11,995 9,578 25% 8,016 50%
Traded - thousand shares 1,304,536 651,550 100% 523,965 149%
Daily Average 21,742 9,872 120% 8,590 153%
Financial Volume - R$ million 1,763 1,692 4% 2,237 -21%
Daily Average 29 26 13% 37 -21%
Maximum 2.11 3.73 -43% 5.19 -59%
Minimum 0.85 1.45 -41% 3.35 -75%
Closing 1.81 1.55 17% 4.97 -64%
Market Capitalization - R$ million 1,834 1,571 17% 5,039 -64%
Usiminas Performance Summary - BM&FBOVESPA (USIM5)
8/18/2019 Press Release 1Q16
17/20
1Q16 Results17
For further information:
Press: please contact us through e-mail [email protected]
Visite o Visit the Investor Relations site: www.usiminas.com/ri
or access by your mobile phone: m.usiminas.com/ri
Brasília time: at 01:00 p.m.
Dial-in Numbers:
Brazil: (55 11) 3193-1001 / 2820-4001
Pincode for replay: 1494981# - Portuguese
USA: (1 786) 924-6977
Pincode for replay: 3357910# - English
Audio of the conference call will be transmitted live via Internet
See the slide presentation on our website: www.usiminas.com/ri
1Q16 Conference Call Results - Date 04/25/2016
New York time: at 12:00 p.m.
Dial-in Numbers:
In Portuguese - Simultaneous Translation into English
Audio replay available at (55 11) 3193-1012
Statements contained in this release, relative to the business outlook of the Company, forecasts of operating and financial income and references
to growth prospects are mere forecasts and were based on the expectations of Management in relation to future performance. These
expectations are highly dependent on market conduct, the economic situation in Brazil, its industry and international markets and, therefore, are
sub ect to chan e.
Cristina Morgan C. Drumond [email protected] 31 3499-8772
Leonardo Karam Rosa [email protected] 31 3499-8550
Diogo Dias Gonçalves [email protected] 31 3499-8710
Renata Costa Couto [email protected] 31 3499-8619
GERÊNCIA GERAL DE RELAÇÕES COM INVESTIDORES
http://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.usiminas.com/rihttp://www.usiminas.com/ri
8/18/2019 Press Release 1Q16
18/20
1Q16 Results18
Assets 31-Mar-16 31-Dec-15 31-Mar-15
Current Assets 6,099,534 6,894,842 8,542,517
Cash and Cash Equivalents 1,735,627 2,024,457 2,621,043
Trade Accounts Receivable 1,289,168 1,428,421 1,380,296
Taxes Recoverable 317,430 377,198 383,123
Inventories 2,481,868 2,748,417 3,910,490Advances to suppliers 10,574 12,477 22,120
Financial Instruments 78,040 152,560 72,225
Other Securities Receivables 186,827 151,312 153,220
Non-Current Assets 20,516,248 20,863,490 22,441,466
Long-Term Receivable 4,553,616 4,697,628 3,426,528
Deferred Income Tax & Social Contribution 3,322,746 3,281,063 2,134,632
Deposits at Law 610,238 597,392 584,473
Accounts Receiv. Affiliated Companies 4,302 4,412 4,722
Taxes Recoverable 87,722 81,263 90,810
Financial Instruments 342,097 559,654 386,038
Others 186,511 173,844 225,853
Investments 1,122,739 1,084,311 1,155,951 Property, Plant and Equipment 14,491,957 14,743,629 15,492,069
Intangible 347,936 337,922 2,366,918
Total Assets 26,615,782 27,758,332 30,983,983
Balance Sheet - Assets - Consolidated | IFRS - R$ thousand
31-Mar-16 31-Dec-15 31-Mar-15
4,884,036 4,495,923 5,048,230
Loans and Financing and Taxes Payable in Installments 2,683,255 1,919,692 1,731,091
Suppliers, Subcontractors and Freight 836,683 820,571 1,179,751Wages and Social Charges 241,759 278,149 280,196
Taxes and Taxes Payables 128,740 91,698 133,509
Accounts Payable Forfaiting 706,873 954,161 1,297,193
Financial Instruments 131,505 199,657 135,708
Dividends Payable 140 142 38,368
Customers Advances 59,002 40,799 101,687
Others 96,079 191,054 150,727
6,920,481 8,268,552 7,445,663
Loans and Financing and Taxes Payable in Installments 4,744,863 5,966,795 5,417,692
Actuarial Liabil ity 1,158,741 1,153,379 1,202,560
Provision for Legal Liabilities 572,214 557,455 497,117
Financial Instruments 78,248 203,845 205,489
Environmental Protection Provision 130,913 127,103 89,372 Others 235,502 259,975 33,433
14,811,265 14,993,857 18,490,090
Capital 12,150,000 12,150,000 12,150,000
Reserves & Revenues from Fiscal Year 1,074,987 1,258,978 4,294,558
Non-controlling shareholders participation 1,586,278 1,584,879 2,045,532
28,202,060 27,758,332 30,983,983
Liabilities and Shareholders' Equity
Balance Sheet - Liabilities and Shareholders' Equity - Consolidated | IFRS - R$ thousand
Long-Term Liabilities
Total Liabilities and Shareholders' Equity
Shareholders' Equity
Current Liabilities
8/18/2019 Press Release 1Q16
19/20
1Q16 Results19
R$ thousand 1Q16 4Q15 1Q15Chg.
1Q16/4Q15
Net Revenues 2,040,890 2,404,124 2,680,422 -15%
Domestic Market 1,727,749 1,910,870 2,349,706 -10%
Exports 313,141 493,254 330,716 -37%
COGS (2,081,470) (2,470,876) (2,436,800) -16%
Gross Profit (40,580) (66,752) 243,622 -39.2%
Gross Margin -2.0% -2.8% 9.1% -850 b.p
Operating Income (Expenses) (279,555) (2,158,931) (208,144) -87% Selling Expenses (79,690) (63,802) (51,154) 25%
Provision for Doubtful Accounts (16,910) (2,901) 1,185 483%
Other Selling Expenses (62,780) (60,901) (52,339) 3%
General and Administrative (89,744) (108,661) (122,471) -17%
Other Operating Income (expenses) (110,121) (1,986,468) (34,519) -94%
Reintegra Program (Braz ilian Government Export Benefit) 244 2,645 7,525 -91%
Net Cost of Actuarial Obligations 350 (4,121) (3,954) -
Provision for Legal Liabilities (14,609) (56,216) (44,708) -74%
Result of the Non Operating Asset Sale/Write-Off 71,972 (50,121) 373 -
Result of the Sale of the Surplus Electric Energy (40,797) (1,262) 27,865 3133%
Cubatão Reestructure - (93,811) - -
Mining Unit Reestructure (MRS Renegot iation) - (162,957) - -
MRSTake or Pay - 33,875 (8,383) -
Impairment of Assets (8,030) (1,574,161) - -99%
Other Operating Income (Expenses), Net (119,251) (80,339) (13,237) 48%
EBIT (320,135) (2,225,683) 35,478 -86%
EBIT Margin -15.7% -92.6% 1.3% +76900 b.p
Financial Result 101,553 (24,089) (360,900) -
Financial Income 99,122 125,187 368,863 -21%
Financial Expenses 2,431 (149,276) (729,763) -
Equity in the Results of Associate and Subsidiary Companies 51,845 53,880 11,971 -4%
Operating Profit (Loss) (166,737) (2,195,892) (313,451) -92%
Income Tax / Social Contribution 15,360 569,249 78,071 -97%
Net Income (Loss) (151,377) (1,626,643) (235,380) -91%
Net Margin -7.4% -67.7% -8.8% -60200 b.p
Attributable:
Shareholders (152,770) (1,356,843) (247,460) -89%
Minority Shareholders 1,393 (269,800) 12,080 -
EBITDA (Instruction CVM 527) 49,796 (1,819,603) 353,879 -
EBITDA Margin (Instruction CVM 527) 2.4% -75.7% 13.2% +78100 b.p
Adjusted EBITDA - Joint Subsidiary Companies proportional EBITDA 51,578 (249,921) 379,534 -
Adjusted EBITDA Margin 2.5% -10.4% 14.2% -12900 b.p
Depreciation and Amortization 318,086 352,200 306,430 -10%
Income Statement - Consolidated | IFRS
8/18/2019 Press Release 1Q16
20/20
1Q16 Results
R$ thousand 1Q16 4Q15
Operating Activities Cash Flow Net Income (Loss) in the Period (151,377) (1,626,643)
Financial Expenses and Monetary Var. / Net Exchge Var. (54,411) 29,454
Interest Expenses 70,502 65,178
Depreciation and Amortization 318,086 352,200
Losses/(gains) on Sale of Property, Plant and Equipment (1,972) 50,314
Equity in the Results of Subsidiaries/Associated Companies (51,845) (25,318) Impairment of Assets 8,030 1,574,648
Difered Income Tax and Social Contribution (20,441) (558,581)
Constitution (reversal) of Provisions 2,572 93,441
Actuarial Gains and losses (350) 4,121
Stock Option Plan 1,209 985
Total 120,003 (40,201)
(Increase)/Decrease of Assets Accounts Receivables Customer 127,563 (63,942)
Inventories 288,733 156,622
Recovery of Taxes 51,389 (23,347)
Judicial Deposits (12,844) (32,663)
Accounts Receiv. Affiliated Companies 110 125
Others (32,793) 115,938
Total 422,158 152,733Increase /(Decrease) of Liabilities
Suppliers, Contractors and Freights 16,112 (255,043)
Amounts Owed to Affiliated Companies (24,262) 262,354
Customers Advances 18,203 (13,854)
Tax Payable 38,016 4,596
Securities Payable Forfaiting (184,626) 88,125
Actuarial Liability Payments (51,384) (56,548)
Others (137,779) 46,619
Total (325,720) 76,249
Cash Generated from Operating Activities 216,441 188,781
Interest Paid (240,115) (120,911)
Income Tax and Social Contribution (4,135) (21,555)
Net Cash Generated from Operating Activities (27,809) 46,315Investments activities cash flow Marketable Securities 111,194 (1,003,543)
Amount Received on Disposal of Investments - -
Amount Paid on the Acquisition of Investments - -
Fixed Asset Acquisition (64,859) (152,985)
Fixed Asset Sale Receipt 2,364 9,263
Additions to / Payments of Intangible Assets - -
Dividends Received 855 83,238
Purchase of Software (4,576) (8,777)
Net Cash Employed on Investments Activities 44,978 (1,072,804)
Financial Activities Cash Flow Assigned Credits 24,825 477,357
Settled Credits assignments (87,487) (593,585) Inflow of Loans, Financing and Debentures - -
Payment of Loans, Financ. & Debent. (90,104) (207,420)
Payment of Taxes Installments (552) (304)
Swap Operations Liquidations (30,723) (23,332)
Dividends and Interest on Capital (2) (2)
Net Cash Generated from (Employed on) Financial Activities (184,043) (231,058)
Exchange Variation on Cash and Cash Equivalents (10,762) (1,927)
Net Increase (Decrease) of Cash and Cash Equivalents (177,636) (1,375,702)
Cash and Cash Equivalents at the Beginning of the Period 800,272 (3,668,001)
Cash and Cash Equivalents at the End of The Period 622,636 (5,043,703)
RECONCILIATION WITH BALANCE SHEET
Cash and Cash Equivalents at the Beginning of the Period 800,272 2,175,974Marketable Securities at the Beginning of the Period 1,224,185 220,642
Cash and Cash Equivalents at the Beginning of the Period 2,024,457 2,396,616Net Increase (Decrease) of Cash and Cash Equivalentes (177,636) (1,375,702)
Net Increase (Decrease) of Marketable Securities (111,194) 1,003,543
Cash Flow - Consolidated | IFRS
Top Related