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.
Revenues
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-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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