--Usiminas 2Q loss widens from 1Q
--Steelmaker blames real's depreciation for loss
--Brazil government stimulus hasn't yet boosted industry, Usiminas says
(Updates throughout with additional details.)
By Diana Kinch and Gerald Jeffris
RIO DE JANEIRO--Brazilian steelmaker Usinas Siderurgicas de Minas
Gerais SA (USIM3.BR, USIM5.BR, USNZY), or Usiminas, reported a
second-quarter net loss of 87 million Brazilian reais ($42.87
million), reversing its year-earlier gain of BRL157 million, largely
due to currency factors.
The company, Brazil's biggest flat-steel-products producer, said the
net loss was mainly due to a BRL255.7 million financial loss arising
from the U.S. dollar's 10.9% gain against the Brazilian real during
the quarter. This led to a loss on swap operations and contributed to
increased overall debt in terms of Brazilian reais.
The real's depreciation was also the main reason behind Usiminas
posting a widened loss from its first-quarter net loss of BRL37
million, according to the company. That was Usiminas's first net loss
in two years.
The overall second-quarter result was impacted by recession in Europe,
low growth rates in the U.S. and slowing growth in China, which have
combined to hit industrial activity and steel-demand growth rates
world-wide, the company said. In Brazil, where Usiminas derived 75% of
its revenues in the quarter, the business climate deteriorated and
industrial performance was weak, Usiminas said.
"The reductions of the Selic (base interest) rate and the government's
efforts during the quarter to stimulate industry haven't yet
stimulated demand, or the steel business," the company said.
"Expectations are that the impact of these measures may be seen during
second-half 2012."
Net revenue in the second quarter rose to BRL3.225 billion, slightly
higher than the BRL3.026 billion posted a year earlier, the company
said. Crude-steel output fell marginally to 1.845 million metric tons
in the quarter, from 1.858 million tons a year prior.
Usiminas said it has been undertaking measures to improve its
operational performance, to reduce its debt and its costs and to
maintain cash liquidity. During the quarter, it reduced its product
inventories, renegotiated debt covenants with some creditors and cut
its capital-expenditure levels.
Usiminas said it reduced its cash flow by BRL480 million in the second
quarter and by BRL938 million in the first half, mainly by reducing
inventories and operating tighter payment schedules.
Capital expenditure totaled BRL355.2 million in the second quarter,
down from BRL481 million a year earlier. Of the second-quarter
investments, 41% went toward the steelmaking area, 47% toward mining,
3% toward steel processing and 9% in the area of capital goods,
Usiminas said.
Write to Diana Kinch at diana.kinch@dowjones.com and Gerald Jeffris at
gerald.jeffris@dowjones.com
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(END) Dow Jones Newswires
July 30, 2012 19:40 ET (23:40 GMT)
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