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Introduction & Market Context
Brazilian steel producer Usiminas (BOVESPA:USIM5) released its third quarter 2025 results on October 24, showcasing strong cash generation and debt reduction despite facing challenging market conditions. The company reported a significant impairment charge that impacted bottom-line results, even as operational metrics showed improvement across key segments.
The presentation highlighted Usiminas’ resilience in a competitive Brazilian steel market, where increased imports have put pressure on domestic producers. Despite these headwinds, the company maintained stable revenues while substantially improving its financial position.
Quarterly Performance Highlights
Usiminas reported consolidated net revenue of R$6,604 million in Q3 2025, representing a slight decrease from R$6,626 million in the previous quarter. However, the company achieved a 6% increase in adjusted EBITDA, which reached R$434 million compared to R$408 million in Q2 2025.
The most impressive metric was free cash flow, which surged 118% quarter-over-quarter to R$613 million, demonstrating the company’s ability to generate significant liquidity even in challenging market conditions.
As shown in the following chart of quarterly highlights, Usiminas also reported improvements in steel and iron ore sales volumes, along with substantial debt reduction:
The company’s net debt decreased dramatically by 69% compared to the previous quarter, reaching R$327 million, while leverage improved to 0.16x from 0.51x in Q2 2025. This significant deleveraging strengthens Usiminas’ financial position and provides flexibility for future investments.
Detailed Financial Analysis
Despite operational improvements, Usiminas recorded a net loss of R$3,503 million in Q3 2025, compared to a net profit of R$128 million in the previous quarter. This loss was primarily due to a R$2.2 billion impairment of fixed assets and R$1.4 billion in deferred taxes recorded during the quarter.
The consolidated financial results show the contrast between improving operational metrics and the bottom-line impact of these one-time charges:
In the steel segment, Usiminas reported total sales of 1,104 thousand tons in Q3 2025, a slight increase from 1,079 thousand tons in the previous quarter. However, EBITDA in this segment decreased to R$308 million from R$378 million in Q2 2025, primarily due to lower prices and an unfavorable sales mix, partially offset by higher volumes and reduced costs.
The following chart illustrates the steel segment’s performance across key metrics:
The mining segment showed stronger performance, with total iron ore sales increasing to 2,503 thousand tons in Q3 2025, up 14% from 2,202 thousand tons in Q2 2025. This segment benefited from higher export prices, with the average export price rising to US$71 per ton from US$68 in the previous quarter.
The mining segment’s improved performance is detailed in the following chart:
Financial Position and Capital Allocation
Usiminas continued to demonstrate financial discipline with strong working capital management and strategic capital expenditures. The company reported CAPEX of R$247 million in Q3 2025, slightly higher than the R$219 million in the previous quarter, primarily directed toward steel operations.
The following chart shows the company’s capital allocation and cash flow generation:
The company’s debt profile and amortization schedule remain well-structured, with a comfortable leverage ratio of 0.16x. This represents a significant improvement from 0.51x in the previous quarter, highlighting Usiminas’ strengthening financial position.
The debt profile and leverage trend are illustrated in the following chart:
Strategic Initiatives
Usiminas continues to invest in strategic projects aimed at improving operational efficiency and environmental sustainability. Key investments include:
1. Renovation of Coke Plant #2 to increase useful life and production volume
2. New BF#3 PCI Plant to reduce coke rate, costs, and greenhouse gas emissions
3. New Gasometer for cost reduction and increased electricity generation
4. Coke Plant Battery #4 Pad-up to increase production capacity
In the mining segment, Usiminas is implementing a dry stacking process with a total investment of US$45 million. This initiative replaces conventional dam-based methods for tailings disposal, enhancing environmental safety.
The company also highlighted its commitment to social and environmental responsibility, with various initiatives including:
Market Position and Corporate Structure
Usiminas maintains a diversified customer base in the domestic market, with sales evenly distributed across industry (34%), automotive (33%), and distribution (33%) segments. Export markets are primarily concentrated in North America (46%) and Argentina (41%).
The company’s shareholder structure and governance framework provide a solid foundation for strategic decision-making:
Forward-Looking Statements
Looking ahead, Usiminas expects continued cost reductions in Q4 2025, with stable net revenues per ton. However, the company anticipates lower sales volumes due to year-end seasonality. Capital expenditures are projected to remain near the lower limit of R$1.2 billion for the year.
The Brazilian steel market continues to face challenges from increased imports, with flat steel imports up 33% according to recent data. Usiminas is focusing on maintaining its leadership in value-added products and seeking antidumping measures to protect its market position.
Despite these challenges, the company’s strong cash generation and improved financial position provide a solid foundation for navigating market uncertainties while continuing to invest in operational improvements and sustainability initiatives.
Full presentation:
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