National Steel (SID) Posts Narrower-Than-Expected Loss in Q1

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National Steel Company SID reported first-quarter 2020 net loss of R$1,312 million ($296.5 million), as against the net income of R$87 million ($23 million) recorded in the prior-year quarter. The company reported loss per share of 21 cents, narrower than the Zacks Consensus Estimate of a loss of 49 cents. The company had delivered break-even results in the year-ago quarter.


In the March-end quarter, the Brazilian steelmaker’s net revenues came in at R$5,335 million ($1,205 million), indicating a year-over-year decline of 11%. This decrease primarily resulted from the heavy rainfall and delay in new mining fronts. However, the revenue figure beat the Zacks Consensus Estimate of $1,076 million. Domestic revenues edged down 0.8% year over year to R$2,738 million ($619 million). The company’s international business declined 19.9% year over year to R$2,597 million ($587 million), accounting for 48.6% of the net revenues.

National Steel Company Price, Consensus and EPS Surprise

National Steel Company Price, Consensus and EPS Surprise
National Steel Company Price, Consensus and EPS Surprise

National Steel Company price-consensus-eps-surprise-chart | National Steel Company Quote

Segment Performance

Steel: The segment’s revenues totaled R$3,542 million ($800 million), down 1.7%, year over year. Production of flat-rolled products decreased to 928 thousand tons compared with the 927 thousand tons in the prior-year quarter. Manufacturing of long-rolled products was 51 thousand tons, flat year over year.

Mining: The segment generated revenues of R$1,646 million ($372 million), reflecting a decline of 21%, year on year.

Logistics: Revenues came in at R$357 million ($81 million), down 7.7% year over year.

Cement: The segment’s revenues totaled R$146 million ($33million) compared with the R$120 million ($32 million) reported in the year-ago quarter.

Energy: The segment’s revenues slumped 40% year over year to R$42 million ($9.5 million).

Margin & Costs

In the first quarter, the company’s cost of sales came in at R$4,018 million ($908 million) compared with the R$4,021 ($1,067 million) million recorded in the year-ago quarter. Gross profit slid 33.6% year on year to R$1,317 million ($298 million). Gross margin came in at 25% compared with the year-earlier quarter’s 33%.

Selling, General and Administrative expenses came in at R$510 million ($115 million), reflecting a year-over-year fall of 26.5%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) slid 23%, year over year, to R$1,331 million ($300.8 million). EBITDA margin was 25% in the reported quarter compared with the prior-year quarter’s 29%.

Balance Sheet & Cash Flow

The company had cash and cash equivalents of R$3,281 million ($633 million) as of Mar 31, 2020, up from the R$1,089 million ($271 million) as of Dec 31, 2019. Net debt to adjusted EBITDA ratio was 4.78 in the reported quarter, down from the year-ago quarter’s 4.07.

Price Performance

The company’s shares have lost 65.4%, over the past year, compared with the industry’s decline of 33.7%.

Zacks Rank & Stocks to Consider

National Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Newmont Corporation NEM, Barrick Gold Corporation GOLD and Wheaton Precious Metals Corp. WPM each currently carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Newmont has an expected earnings growth rate of 90.2% for 2020. The company’s shares have surged 103.6% in the past year.

Barrick Gold has an estimated earnings growth rate of 60.8% for the ongoing year. Its shares have soared 112.7% over the past year.

Wheaton has a projected earnings growth rate of 62.5% for the current year. The company’s shares have appreciated 120.7% in a year’s time.

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