CSN Mineração Q2 2025 presentation: Record volumes offset by price pressures

Introduction & Market Context

CSN Mineração S.A. (BVMF:CMIN3) released its second quarter 2025 earnings presentation on August 1, highlighting operational achievements amid challenging iron ore market conditions. The Brazilian mining company demonstrated strong production capabilities while navigating price headwinds that impacted profitability metrics. The stock closed at R$5.64 on October 14, 2025, showing a modest 0.53% gain and trading well below its 52-week high of R$6.51.

The presentation revealed a company focused on operational excellence and cost control, with record production volumes serving as a counterbalance to declining iron ore prices. This strategy helped CSN Mineração reverse the previous quarter’s losses, though margins remained under pressure compared to the same period last year.

Quarterly Performance Highlights

CSN Mineração achieved notable operational milestones in Q2 2025, setting new production and sales records. The company produced 11.6 million tons of iron ore (including purchases), representing an 11.3% increase compared to Q2 2024 and a 13.6% improvement over Q1 2025. This production boost came alongside a 1.0% reduction in C1 cash costs to US$20.8 per ton, demonstrating the company’s focus on operational efficiency.

As shown in the following production volume chart:

Sales volume reached 11.8 million tons, marking a 9.6% year-over-year increase and setting a new Q2 record. This strong sales performance contributed to a modest 2.5% growth in net revenue compared to Q2 2024, despite challenging price conditions in the iron ore market.

The sales and revenue trends are illustrated in this chart:

However, the company’s pricing faced significant headwinds during the quarter. The average Platts 62% Fe reference price was US$97.76 per ton, but after accounting for quality adjustments, freight costs, and other factors, CSN Mineração’s realized price was US$51.90 per ton.

The detailed price realization breakdown is shown below:

Detailed Financial Analysis

Despite record operational performance, CSN Mineração’s financial metrics showed mixed results. The company reported an adjusted EBITDA of R$1,268 million with a 37.2% margin, representing a significant decline from the 48.7% margin achieved in Q2 2024. This compression was primarily attributed to lower iron ore prices rather than operational inefficiencies.

The EBITDA and margin trends are visualized here:

Cost of goods sold (COGS) excluding depreciation increased by 6.3% quarter-over-quarter to R$2,066 million, reflecting higher production volumes and inflationary pressures. Despite these challenges, CSN Mineração successfully reversed its Q1 2025 net loss of R$357 million, posting a net income of R$116 million in Q2 2025. This recovery was driven by reduced impact from exchange rate variations on foreign currency cash holdings and higher sales volumes.

The net income trajectory is shown in this chart:

Cash flow performance remained strong, with the company generating R$768 million in adjusted free cash flow during the quarter. This positive result was supported by working capital improvements and lower financial expenses.

The components of adjusted cash flow are illustrated below:

Strategic Initiatives & Financial Position

CSN Mineração continued to invest in its future growth, with capital expenditures totaling R$500 million in Q2 2025, up from R$377 million in the previous quarter. Notably, expansion CAPEX increased to R$286 million as the company accelerated work on its P15 project, which aims to enhance product quality and production capacity.

The company maintained a robust financial position, ending Q2 2025 with R$14.4 billion in cash and cash equivalents. This strong liquidity resulted in a net cash position of R$4.6 billion and a leverage ratio of -0.80x, underscoring CSN Mineração’s financial strength despite market challenges.

The debt profile and leverage trend are shown here:

Working capital management improved during the quarter, with net working capital decreasing to negative R$450 million from negative R$188 million in Q1 2025. This improvement was primarily driven by an increase in supplier accounts and a reduction in accounts receivable, contributing positively to the company’s cash flow.

ESG Achievements

CSN Mineração highlighted significant progress in its environmental, social, and governance initiatives during Q2 2025. The company received the Gold Seal from the Brazil GHG Protocol for the third consecutive year and improved its FTSE Russell ESG rating from 2.9 to 3.4.

On the social front, the company increased female leadership representation by 7% year-over-year and boosted the employment of people with disabilities by 8%. Safety performance remained strong, with over 11 years without a fatality and a total recordable injury frequency rate below 1.0.

Environmental achievements included an 11% reduction in greenhouse gas emissions intensity compared to the 2020 baseline and maintaining water intensity below target levels at 0.24 m³ per ton of ore. All tailings dams maintained certified stability, with Dam Operating Condition Statements renewed in June 2025.

The comprehensive ESG initiatives are detailed in this slide:

Forward-Looking Statements

Looking ahead, CSN Mineração appears well-positioned to navigate market challenges while advancing its strategic growth initiatives. The company’s focus on operational efficiency and cost control should help mitigate the impact of potential iron ore price volatility, while its strong cash position provides flexibility for both expansion projects and shareholder returns.

The P15 expansion project remains a key growth driver, with increasing capital allocation reflecting the company’s commitment to enhancing product quality and production capacity. This strategic investment is expected to strengthen CSN Mineração’s competitive position in the global iron ore market over the coming years.

While the company faces headwinds from iron ore price pressures, its record production volumes, improving cost structure, and solid financial foundation suggest resilience in the face of market challenges. Investors will likely focus on the company’s ability to maintain operational excellence while navigating commodity price fluctuations in the quarters ahead.

Full presentation:

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