National Steel Q3 Earnings Call Highlights

Key Points

• CSN’s third-quarter financial position weakened: Adjusted EBITDA was BRL 1.876 billion, free cash flow swung to negative BRL 3.5 billion, and net debt reached BRL 44.9 billion as leverage rose to 4.23 times.
• Asset sales and debt negotiations are central to its turnaround: The planned cement and SWT divestments have a combined stated value of BRL 16.1 billion, while CSN is also seeking to extend debt maturities and lower interest costs.
• Weaker iron ore prices and higher freight costs pressured mining revenue, while CSN plans steel price increases and is targeting a 15% steel margin longer term. Its P15 mining project is expected to begin operating in 2028 and reach full operation in 2029.

National Steel NYSE: SID, also known as Companhia Siderúrgica Nacional or CSN, reported lower third-quarter 2026 earnings and negative free cash flow as weaker iron ore prices and higher freight costs pressured its mining business. Executives said asset sales and debt negotiations were central to efforts to restore financial balance.

Adjusted EBITDA was BRL 1.876 billion, with a 17% margin, CFO and Investor Relations Officer Pedro Oliva said. Free cash flow was negative BRL 3.5 billion, reversing a positive result in the previous quarter. Consolidated net debt reached BRL 44.9 billion, and leverage rose to 4.23 times.

Oliva attributed the cash outflow to weaker operating performance, concentrated debt amortizations and an iron ore prepayment. Those factors more than offset the release of working capital and other efforts to reduce cash burn.

Asset sales and leverage

CEO Fabio Schvartsman, who said he had been in the role for a little more than two months, told analysts that his initial focus was completing asset-sale negotiations. He said the company would consider further sales and negotiations with banks over debt maturities and interest rates.

CSN announced an agreement on November 8 to sell its entire cement business to Huaxin. Oliva said the transaction valued CSN Cimentos at BRL 12.7 billion on an enterprise basis and BRL 9 billion on an equity basis. The sale is subject to regulatory approvals.

Oliva said the transaction could close in 2026, though it might close in 2027. If closing does not occur this year, the company is working on an initiative to receive a substantial portion of the equity value in 2026.

CSN also signed a binding term sheet for the full divestment of its SWT subsidiary at a transaction value of EUR 550 million. Due diligence and document negotiations were ongoing, and the expected closing was December 2026, subject to regulatory approval in Germany. Oliva put the combined impact of the two transactions at BRL 16.1 billion.

Asked whether a previously discussed year-end leverage target of 3 times remained in place, Schvartsman said the company was assessing the cement sale and potential advance receipt of proceeds. He said CSN would inform the market about leverage guidance once that work was complete.

Schvartsman also said selling a minority stake in infrastructure was not the best way to monetize those assets. If CSN proceeds with infrastructure sales, it would consider individual assets separately, he said. Other asset-sale negotiations were underway, but he declined to identify them.

Mining and steel results

Mining revenue fell 18% from the prior quarter to BRL 2.308 billion. Lower iron ore prices, provisional pricing effects and higher freight costs reduced unit revenue by $9 to $40, Oliva said. Mining adjusted EBITDA was BRL 380 million, with a 16% margin.

Iron ore production, including purchases from third parties, declined 9% to 9.9 million tons, reflecting heavier rainfall and a temporary reduction in lower-quality dry ore production. Sales were nearly stable as the company reduced inventory, Oliva said.

Steel revenue declined 5.3% sequentially to BRL 5.75 billion but rose 8.6% from a year earlier. Adjusted EBITDA was BRL 576.1 million, with a 10% margin. Domestic sales were stable from the prior quarter and up 5.8% year over year, while foreign sales fell 14.7% sequentially because of seasonality.

Luis Martinez, CSN’s executive director, said the company implemented a steel price increase on November 9 and planned another increase of 5% to 7.5% in December for certain channels. For white goods and automotive customers, he said negotiations on contract renewals would begin with a proposed 10% correction. Martinez cited raw material and exchange-rate pressures and set out a longer-term steel margin target of 15%.

P15 project and cash measures

Schvartsman identified the P15 mining project as the company’s principal longer-term priority. He said the goal was to have it running in mid-2028 and in full operation in 2029. The CEO said CSN expects an additional $40 per ton for iron ore sold through P15 and believes the project will substantially change the company’s exposure to mining and freight cycles.

In the near term, Schvartsman said CSN was limiting capital expenditures to necessary levels, cutting costs and pursuing further working-capital reductions. Net working capital fell 27.7% from the prior quarter to BRL 2.2 billion, while third-quarter capital spending was BRL 1.38 billion, down 2% sequentially.

Schvartsman said the company was quantifying opportunities to release an additional BRL 900 million in working capital by year-end, particularly in steel. He also said he would personally focus on discussions with banks about extending debt maturities and reducing interest costs.

About National Steel (NYSE:SID)

Companhia Siderúrgica Nacional (CSN), traded in the U.S. under the ticker SID, is a Brazilian industrial group best known for its steel operations. Founded in 1941, the company helped establish Brazil's domestic steel industry and operates an integrated steelmaking business. CSN produces flat steel products used in sectors such as construction, automotive manufacturing, packaging and appliances. Its other businesses include iron ore mining, cement production, logistics and energy, supporting operations across the steel supply chain.

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