Usiminas Earnings Call: Cash Strength Amid Import Strain

Usinas Siderurgicas de Minas ((USNZY)) has held its Q4 earnings call. Read on for the main highlights of the call.

Usinas Siderúrgicas de Minas struck a cautious but constructive tone on its latest earnings call. Management highlighted clear gains in profitability, cash generation and mining performance, yet repeatedly pointed to headwinds from unfair imports, weaker price realization and near‑term volume volatility that leave the recovery path promising but still fragile.

EBITDA Growth Signals an Operational Recovery

Usiminas reported adjusted consolidated EBITDA of BRL 2.0 billion for 2025, up 24% year over year. The EBITDA margin reached about 8%, showing that efficiency gains and better mining performance are gradually rebuilding profitability despite pricing and competitive pressures.

Mining Delivers Record Volumes and Profitability

The mining unit posted record sales of 9.6 million tons in 2025, a 14% increase versus 2024. This volume growth translated into roughly 27% higher net revenue and about 46% growth in adjusted EBITDA, confirming mining as a key earnings driver.

Free Cash Flow Strengthens Balance Sheet to Net Cash

Free cash flow reached approximately BRL 989 million for the year, with a strong BRL 744 million contribution in the fourth quarter alone. Net debt fell by around BRL 1.4 billion over the year, leaving Usiminas in a net cash position of BRL 444 million and negative leverage of 0.22x.

Steel Sales Supported by Exports Amid Market Pressure

Steel sales totaled 4.4 million tons in 2025, the company’s second‑highest annual volume in a decade. While domestic volumes were stable, exports increased and helped maintain utilization, partially offsetting the drag from weak local demand and heavy import competition.

Efficiency Gains Cushion Margin Hit from Lower Prices

In the steel unit, cost‑to‑sale per ton fell roughly 5% thanks to operational efficiency measures such as PCI coal injection and other industrial improvements. These savings helped soften the impact of lower net revenue per ton, which would otherwise have weighed more heavily on margins.

CapEx Focused on Competitiveness and Emissions

Usiminas invested about BRL 1.2 billion in 2025, in line with guidance, and flagged a 2026 CapEx target of around BRL 1.6 billion. Priority projects include finishing the PCI plant, repairing coke batteries and building Coke Battery 4, aimed at coke self‑sufficiency and further reductions in already low emissions.

Trade Remedies Offer Hope Against Unfair Imports

Brazilian authorities introduced antidumping measures that increase tariffs by about 9% on some steel products. Usiminas expects definitive measures around mid‑2026 that could curb unfair import pressure and reopen room for local sales, after imports of flat steel reached about 4 million tons in 2025.

Falling Prices and Weaker Mix Erode Steel Margins

Net revenue per ton declined roughly 4%, hurting profitability in the steel division. The shift toward lower‑margin products and an unfavorable sales mix pushed steel unit EBITDA down about 26% quarter on quarter, underscoring the sensitivity of margins to pricing and product mix.

Seasonal Softness Hits Fourth‑Quarter Domestic Volumes

Overall sales volumes in the fourth quarter slipped around 2% versus the previous quarter. Domestic market sales fell about 3.3% as seasonality and intense import competition weighed on both volumes and the quality of the sales mix.

Import and Triangulation Risks Still Cloud the Outlook

Management stressed that unfair imports, particularly Chinese surplus steel, materially hurt 2025 results. They also warned about circumvention risks through third countries such as Vietnam or Korea, which could limit the effectiveness of trade remedies and delay any sustained margin recovery.

Coal Price Trends Threaten to Raise Production Costs

Recent increases in coal prices are expected to creep into the cost base as 2026 progresses. While costs should stay stable in the first quarter, management signaled that pressure from higher coal prices may start to be felt from the second quarter onward.

Mining Volumes Face Short‑Term Seasonal Volatility

The company guided for lower mining volumes at the start of 2026, citing rainy‑season logistics and a deliberate focus on higher‑margin areas. This strategy may limit output in the short term but is intended to protect profitability per ton during less favorable operating conditions.

Dividend Pause Reflects Prior Impairment Impact

Usiminas does not plan to distribute dividends for the prior year due to the effect of past impairments on retained earnings. The decision underscores a cautious capital allocation stance, with shareholder cash returns likely to remain on hold until earnings and equity levels normalize.

One‑Off Effects Distort Quarter‑to‑Quarter Comparisons

Reported EBITDA and other figures were affected by impairments and the absence of non‑recurring gains from fixed‑asset sales that had boosted previous quarters. These one‑offs complicate simple quarter‑on‑quarter comparisons and make underlying trends more relevant than headline swings.

Guidance Points to Stable Volumes and Healthier Mix

For 2026, Usiminas expects steel unit sales to remain stable while domestic net revenue per ton recovers through a more premium product mix and higher prices, even as cost per ton rises. Mining volumes should be softer in the first quarter, but management still targets EBITDA margins above fourth‑quarter levels, supported by efficiency and trade measures.

Usiminas exits 2025 with stronger cash generation, a net cash balance and record mining performance, but still battling price pressure and import‑led distortions in the domestic market. Investors will watch whether trade remedies, a richer sales mix and disciplined CapEx can translate solid operational progress into a more durable margin and earnings recovery.