Companhia Siderurgica (NYSE:SID) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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The full earnings call is available at https://ri.csn.com.br/en/investor-services/calendar-of-events/
Summary
Companhia Siderurgica reported a 5% increase in consolidated EBITDA for Q2 26, driven by improved operational performance across all segments.
The company achieved positive cash flow and successfully issued a new 2030 bond with 77% adherence, highlighting investor confidence.
Mining operations recorded the fourth best sales result in history despite a 15-day shutdown, maintaining a profitability margin above 30%.
The cement segment delivered the highest EBITDA in its history for the second consecutive quarter, supported by resilient demand and higher prices.
Logistics and energy segments also performed exceptionally, with logistics posting the second-best EBITDA in the company's history and energy benefiting from retroactive revenue recognition.
The company is focused on reducing inventory levels and expects further working capital releases, contributing to improved cash flow.
Management emphasized the importance of anti-dumping measures and noted a significant decline in steel imports, benefiting domestic market share.
Deleveraging remains a priority, with ongoing asset sales in cement and logistics expected to further reduce debt.
The company maintained a positive outlook for the second half of the year, aiming for sustained profitability and operational improvements across segments.
Full Transcript
OPERATOR
Morning and thank you for holding. At this time we would like to welcome everyone to Companhia Siderurgica's conference call for the results for the second quarter 26. Today we have with us the Company's Executive Officers. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the Company's presentation. Ensuing this, we will go on to the Q&A section with further instructions. You can access this event at www.csn.com.br/ir where the presentation is also available.
The replay of the event will be available soon after closing. Before proceeding, please bear in mind that some of the forward-looking statements herein are mere expectations or trends based on the current assumptions and opinions of the Company's management. Future results and events may differ materially from those expressed herein, which do not constitute projections. In fact, actual results, performance, or events may differ materially from those expressed or implied by forward-looking statements as a result of several factors such as the general and economic conditions in Brazil, interest rates, exchange rate levels, future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in the U.S., Brazil and other countries, changes in laws and regulations, and general competitive factors at a global, regional, or national basis. We will now turn the floor over to Mr. Marco Rabello, Investor Relations Executive Officer, who will present the Company's operating and financial highlights for Companhia Siderurgica for the period. You may proceed, sir.
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Good morning everybody and thank you for participating in another Companhia Siderurgica conference call. We're going to present the results for the second quarter 26, a very important period for the company where the company was able to overcome all the adversities relating to cost and raw materials to offer vigorous growth of EBITDA in the previous quarter and in comparison with the quarter 25. This 5% increase in consolidated EBITDA is a result of better operational performance in all segments, sales, and the commercial activity.
You also see the importance of having a diversified operation without bending to the pressures of a specific sector. Financially, another important point was the release of cash flow, and the positive cash flow during the period increased compared to previous quarters. Now this movement reflects the evolution of the projects that the Company has been working on since the beginning of the year to resolve the capital structure. With this, the expectation is that the Company will gradually evolve to a more sustainable cash generation going forward.
We're very satisfied to announce the conclusion of the new 2030 bond with an adherence of more than 77%. This shows the success of the operation and the credibility that people have in the project and movement of the company. It's important for the company to calmly carry out its projects. For example, the divestment of assets, the conclusion of P15, and the release of working capital in the company. After the conclusion of these projects, the company will be able to adhere better to its long-term goals.
Let's go on to the highlights of mining. In the second quarter we reached the fourth best sales result in the history of the segment. This is very relevant when we see that the operation was in shutdown for 15 days for work in the mine and elsewhere. Throughout the quarter, we had two of the best monthly performances in the history of Companhia Siderurgica, with May and June as the strongest months in the group. This shows the high level of efficiency that the operation has achieved.
This performance was important to offset the increase in load costs and the exchange rate due to the Middle East spike. Because of the exchange rate, the EBITDA of mining in the second quarter was lower than in the previous quarter, but even that way guaranteed profitability above 30%, showing the resilience and profitability of the operation in mining after a—I'm sorry. And still after a challenging year. We became successful after the anti-dumping measures approved in March.
This allowed for a significant entrance of material in the Brazilian ports, allowing the Brazilian producers to have a greater stake. The improvement in the commercial environment also allowed for a price readjustment in the quarter. We began working with higher prices. The result of this more favorable dynamic, with 10% of expansion of sales in the domestic market, more than offset the slowdown in steel. Another important factor for the recovery of steel was the excellent result achieved by subsidiaries abroad.
RSWD subsidiary in Germany had the best commercial performance since 2022, and the American operation, despite the difficulties imposed by the tariff war, has also been able to deliver stronger results compared to last year. The combination of these factors have allowed for a strong expansion of results, allowing the company to offset the pressure on costs to go back to the double-digit performance. Now steel will be an important vector of results for the company this year.
In the cement market, we continue to have exceptional performance. The company was once again able to deliver the highest EBITDA in its history. This is the second consecutive quarter of record, showing that the company is growing with resilient demand, higher prices, and a very assertive commercial strategy. This EBITDA record in the second quarter occurred with maintenance shutdowns for the period, showing that the performance can improve further.
The strategy that is being implemented of prioritizing results instead of volume is important because of the sound performance of the cement market. We have a growth in salary and a new dynamic in the real estate market because of the My House, My Home system. This allows profitability to be above 30% with an efficiency level above that of the sector. If we think about the results for the last 12 months, EBITDA has made a significant evolution compared to last year, reaching with an even greater growth perspective for the rest of the year.
Very similar to steel, cement is an important factor for the results of the company. In terms of the sale of the asset last Friday, as informed in a material fact, we have received binding offers that are unique for the Brazilian market and should lead to a very interesting valuation. Finally, if we look to the right of the slide, we have a highlight in logistics and energy. In logistics, this semester was also excellent with the second best EBITDA in the company's history.
The seasonality of a drier weather and efficiency of the logistic model were fundamental to resume the work of cargo with a margin of 45% in the quarter. This extraordinary performance shows the strength of our asset portfolio and should underpin us in the sale with a minority sale in Infra of Companhia Siderurgica. We have a very high number of NDAs signed, and the expectation is that at the end of the month the company will receive non-binding offers for a minor share in this company.
In the sector of energy, we had a favorable dynamic. It ended up being thrust by the retroactive recognition of revenue of a favorable decision related to the Jacoi hydroelectric power plant, whose commercialization had been suspended since October of 2025. Now energy returns to normalized levels in the coming quarter. Because of this, let's now go on to slide number three where we present our EBITDA results and margin for the second quarter 26. We see the favorable dynamic of the quarter with a higher EBITDA in the year-on-year and quarter-on-quarter comparison.
We were able to neutralize the problem with logistics and deliver strong commercial growth in all sectors. If we look at the graph to the right, it becomes evident the importance of having a diversified asset. Steel, mining, logistics, and energy were able to offset the negative effect of a higher cost in mining. On the following slide we present the company's investments, where we can see an increase of 26% in capex vis-à-vis the previous quarter and 6% on the year-on-year comparison.
We have advance in civil construction related to the P15 project of mining, besides the disbursements carried out for maintenance in mining and cement. In slide number five, we analyze our working capital, where we can see a significant reduction in the quarter-on-quarter comparison related to the lower inventory levels of the company. This is in line with a project that has been put in place since the beginning of the year to release cash and normalize the volume of the operations, especially in steel products.
We expect this trend to continue in the second half of the year. This will improve cash conversion, and we will have a higher balance of recoverable taxes also contributing to this new working capital for the quarter. In the next slide we show you the results of our free cash flow, where we can see a positive flow of 808 million BRLs, an important reversion after some negative quarters. Now the release of working capital and the fundraising were the main factors for this performance.
This has helped us offset the substantial debt amortization and amortization of prepayment contracts during the period. For the coming quarters, the company will continue to move forward in an operational improvement of these results, in a continuous release of working capital, and in new contracts for prepayment to maintain the impact of these operations neutral. On slide number seven, we show you the situation of our indebtedness and leverage, as well as the behavior of the debt throughout this semester.
To the right you see a buildup of net debt because of the amortization of prepayments of iron ore contracts, the exchange rate on contract, and an effective 500 million in Transnorte. This has more than offset the cash generation recorded in the period. To the left, we went from 3.36 times to 3.49 times this quarter, a minor increase that does not represent a trend. Our focus once again is on resolving our capital structure, with the divestment of assets advancing very quickly and new initiatives that could result in important activities, besides the increased operational results that we have.
Going on to slide number eight, you see our indebtedness profile. We observe that we have a high level of cash despite the fact that we have reduced our debt. You can also see that the main maturity terms are for banking debts where Companhia Siderurgica has been able to manage this properly. When we look forward in 2028, we have just addressed this with an adherence of 77% of shares sold. We're carrying out all efforts to lengthen our maturity terms to have a more structured payment of debt and to allow for the growth of our operational results.
On slide number nine you can see the pro forma of our new structure for debt. The expectation is that in short time Companhia Siderurgica will become ever lighter, not only to be able to face future maturities, but also to unharness several new projects that will completely transform the potential for cash generation of the group. With this, we conclude the analysis of consolidated results and we go on to slide 11 where we show you the results of our steel segment.
You see the results of our commercial area with a growth of 17% in sales for the quarter, driven by the domestic market and the foreign market as well. In the domestic market, we have the first effect of the anti-dumping regulation with better initiatives for local producers. The result was an annual growth of 10% in the domestic market with a mix improvement in all of the markets we are present in. In the foreign market we had the highest volume since 1Q23 with the consumption of steel recovering in Europe and the United States also increasing its import.
When we look at the following slide of production, we see that the results show the impact of the shutdown of one of the blast furnaces and the reduction of stock in the Vargas plant. To the right, you see a slight increase in the plate because of the cost of energy and raw material during the period. Despite this momentary pressure, we have a significant growth in the performance per ton with a consistent evolution in the market. This becomes ever clearer when we go on to the financial performance of steel on slide 13.
In the graph to the left, we see an increase in net revenue and average price for that period. We have an intense commercial rhythm that has been recorded and the resumption of activities abroad, and a more favorable dynamic of prices in Brazil after the readjustment that we put in place in April. Going to the graph to the right, you can see a strong recovery of EBITDA during the period with profitability back to two digits. The most difficult phase of steel is something we have left behind us.
We still have a great deal of efficiency and value to add to the segment of steel. The results of this quarter point to a sustainable recovery for steel and for the entire group. Let's now go on to the mining segment. On slide 15 we see the result of production and sales. In the production graph we see the effects of the 15 days of shutdown. With a lower volume of sales, we had a drop of 5.5%. On the other hand, when we look at the quarterly growth, this positive seasonality of the drier period offset the days in which production came to a standstill.
We see a stronger pace of sales with the company recording the fourth best result in history, even with the 15 days of shutdown, showing the robustness and efficiency of the logistics infrastructure of the company. The result also shows the efforts deployed to recover the inventories of iron ore. Regarding the financial performance on slide 16, despite the solid sales volume and iron ore prices remaining high, net revenue was impacted by foreign exchange appreciation and higher freight rates, pressured by geopolitical tensions between the United States and Iran.
The unit revenue was $18 per ton, it increased to 20% less than 1Q26 and below that recorded for the same quarter last year. Regarding EBITDA, in the graph to the right we see that this drop occurred in a period marked by operational excellence, showing the impact of logistics and exchange rate in this segment. Despite the results in this quarter, even in a quarter marked by logistic costs and foreign pressure, the company's profitability remained resilient with an EBITDA margin of above 30%.
In the following slide we see the adjusted EBITDA in 2Q26 compared to the previous quarter. We see a clear and direct impact of maritime freight during the period and the effect of exchange rate in the iron ore. On the other hand, we had better volume and costs, helping us to attenuate these effects. Let's go on to analyze the cement segment. On slide 19 we see the sales volume. Here we see a more timid activity commercially due to the scheduled maintenance events in several of the plants during this period, and the strategy continues to prioritize value.
Now, there was a dynamic that was favorable in the cement market without having to enter a price war. We continue to see resilient demand and the focus is to have sustainable performance for the operation. In the next slide we see the financial performance with a growth of revenue of 14% in quarter-on-quarter comparison and 10% compared to 2Q25. This shows the readjustments put in force in the last months and a more favorable market. On the part of EBITDA, we are very satisfied to announce a second consecutive record, going beyond 420,000 BRLs, and a margin of more than 30%.
All of this profitability shows the positive moment begun by the operation and the ability to make an asset profitable despite the price pressure. We see an operation that is ever more competitive and we can see the competitive edge of Companhia Siderurgica Cement that has more streamlined plants and a very efficient management. We go on to analyze the logistics segment on slide 22. We can see in terms of net revenue that the quarterly growth is due to the drier period and the transport of merchandise.
Everything was driven by the subsegments of the multimodal segment. We had an increase of 3.1% and this is an evolution we have observed in the last quarter, besides the synergies captured in the multimodal segment. To the right, we see that this was the second highest result of the segment, advancing in terms of efficiency and cost control, maintaining profitability at a very sound level above 45%, showing the operational resiliency of this process.
Finally, on slide 24 we see the financial performance of the energy segment. There was an exceptional performance in the EBITDA and net revenue. There was an extraordinary effect in the period because of the retroactive recognition of revenue from the Jacoi hydroelectric power plant that had been contingent on the balance sheet since October 25th. The expectation going forward is to have ever more stable results in coming quarters. With that, I would like to end the presentation on the segments and I invite Elena Geha to present the ESG highlights.
Elena Geha
Good morning everybody. I will begin once again showing that we repeat advances in our earnings call. This of course is part of our strategy. We're improving in risk management, value generation, and we treat the system as a set of initiatives that have to undergo operational improvement, overcome regulatory risk, and contribute to the long-term competitiveness of our company. The results for this quarter reinforce this position. In governance, we had an important evolution in terms of our market ratings.
The FTSE rating went from 3.7 to 5.4 points. Companhia Siderurgica and CSN Min also had consecutive increases in the quarter. CSN and CMIN were awarded the Industry Leaders in Sustainalytics ESG risk rating, and the evolution of EcoVadis badges that went from 74 to— with one additional point we will be part of the gold category. So this shows the excellence of our management and the transparency of our controls and everything we do to mitigate regulatory risks.
In terms of operational risks, we continue to move forward. In our dams we had two recognitions of competent agencies in terms of decharacterization of the Lagardo dam and the B2A dam. And all dams have the declaration of conformity and operability. In the environmental management, we have complied with all of the obligations foreseen in this instrument. This thanks to the millions of reais invested in improving the environmental conditions of our plant.
The expectation is that we will be awarded with operational efficiency. We continue to make positive moves in social and diversity: an increase in female representation in the workforce, an increase in female representation in the leadership position, and we're preparing for regulatory systems that are ever more stringent. We have also published the 2025 impact report of the CSN Foundation with investments of more than 48 million in social development, helping thousands of youngsters throughout Brazil.
So we're presenting consistent results and actions, which is our aim. And we want to continue to ensure that no risk can materialize. Everything we do according to this agenda will translate into efficiency, improvement of our competitiveness, and the generation of sustainable value for our company. I will now return the floor to Marco.
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
I will give the floor to our CEO, Mr. Benjamin Steinbruch, for his remarks at this point.
Benjamin Steinbruch, CEO
A good day to all of you. Welcome to the earnings call for Companhia Siderurgica. I would like to quickly review the main points of each of our segments. Regarding steel, we have the initial positive impact showing a strong reduction in the volume of imported material thanks to the anti-dumping regulation. In truth, this is the first time that we felt this benefit— not having that unfair competition that comes from the Asian product with a negative impact on the market, not only for the steel industry, but in all industries that are set up in Brazil.
It is impossible basically to compete with Asian imports. It's up to all of us to react strongly against this so that we can protect new investment and protect our production and protect employment, of course, which is what is of greater importance here. So we need to strongly continue on with that anti-dumping policy, ensuring that we don't have them competing in the Brazilian market. We had an improvement in the competitive environment resulting in a strong growth of more than 10% in the domestic market with room for a recovery of prices.
And this also holds true for the foreign market. We have significant evolution with a higher consumption of steel. In Europe, sales increased 36% in the year, and this is the company's best result since 1Q23, once again driven by the results of Germany, Portugal, Spain and of course the United States. Now the first signs of recovery in profitability with margins going beyond two digits, 10.5% for the second quarter, and the expectation is for a stronger second half of the year, a maintenance of favorable volumes and prices as well.
We are increasing production and the idea is to have a price increase as well. This will allow us to be more competitive and advance in the product diversification. We're active in practically all segments of the economy, and this allows Companhia Siderurgica to have a differentiated capacity and a better expectation for the second half of the year in steel. Regarding cement, we continue on with strong demand driven basically by My House, My Life projects and some infrastructure projects.
This favorable scenario has also allowed for a cost recovery in the last months, despite of course the exchange rate and the increase in freight that have a strong impact on cost. The strategy is to prioritize value over volume and it is a very assertive strategy. We have been able to make the operation profitable. This was the second EBITDA record— a consecutive record this quarter— showing the strength of the operation with streamlined plants, integrated management, and a very efficient commercial strategy.
Now the outlook for results is even better in the second half of the year with the evolution of price and volume. We're rigorously delivering what we committed to do. At the beginning of the year we had an evolution in net revenue, margin, and EBITDA. We're working full steam and we simply did not have a better performance in the second quarter because of an unscheduled maintenance in June that limited us somewhat. Otherwise this would have been a more exceptional quarter because of the recovery that we observed vis-à-vis previous years, quarter-on-quarter in the last 12 months.
We are complying with our results and presenting better figures quarter after quarter. And we do believe we will continue this way until the end of the year. In logistics, that has become a very important segment for us, it was the second best EBITDA in history recorded this quarter because of the dry period and an increase in the cargo transaction. Now the strength of our assets is the best differential to capture synergies of the last acquisition we just carried out.
And cement has been improving quarter-on-quarter, and we believe that logistics will follow suit in this improvement. It has been performing better quarter after quarter. In energy, we had record results and an extraordinary effect: the recognition of retroactive revenues from the Jacoi hydropower plant. Those values had been in contingency since October of 2025. Regardless of this result, the segment continues to be strategic for the group, guaranteeing a high production with high profit for the group and very forecastable revenue.
In terms of consolidated terms, we have a growth of 5% EBITDA for the quarter and for the year. This points to the strength of the operation in a period of strong pressure because of freight and raw material. It shows the benefit of having a diversified operation and a robust asset portfolio. In terms of sales, we see the excellent commercial environment during the period, not only for sales but also for production. If you analyze all of our activities, they had an improvement in volume, in net revenue, and an improvement in margin.
We're working strongly on the operational part and expect a very strong second half of the year in all of our assets. We will continue to increase production, increase sales, and with this have better profitability, always maintaining margins or improving them. This is a goal that we set forth of creating value even with a one-time reduction of delivery in some of the markets. Now the release of working capital tells the evolution of the project to reduce our level of inventory.
We're working strongly on this. At the beginning of the year we wanted to reduce our inventory from 3 million to 1 million. We're very close to that reduction. We think we can do this in the second half of the year, to do this better in terms of raw materials, equipment, parts, and in finished products and products under production as well. Our effort is geared to this improvement in operational performance. And I would like you to analyze each of the segments to see the considerable improvement that we present in quantitative terms and profitability and the work carried out in the reduction of working capital to enhance the company cash.
To conclude, we were very successful in the change complying to the request of our creditors to show this movement of part of our debt, rolling the rest of the debt. We continue on with this process of selling our assets— the cement asset very clearly following the schedule that was set forth in March. We are now receiving the binding offers that will be analyzed and debated with the people to ensure an expeditious movement— and the minority sale of logistics.
We're carrying out a reallocation of assets. We have non-binding proposals in a number much higher than we had expected due to the quality and the moment that these assets are in. I do believe this will be a very successful project. We're deploying enormous efforts. I would like to thank all of our employees because of the challenges that we have set forth not only in production, but also in sales and in profitability. If you analyze each of these— mining quarter-on-quarter achieving records, cement every quarter also obtaining records, logistic infrastructure and energy with their own records, and finally steel— this result of the second quarter with a general improvement in figures. And I thank those working at the steel plant enabling us to have this strong improvement in the second quarter. This is what I wanted to share with you. Thank you all. I return the floor to Marco Rabello.
OPERATOR
Well, thank you, Benjamin. We will now go on to our Q&A session. We will now begin the Q&A section for investors and analysts. Should you have a question, please click on Raise Hand or send your question using the Q&A icon. The first question is from Daniel Sasson from ITAÚ BBA. Your microphone has been unmuted.
Daniel Sasson, Analyst at Itaú BBA
Good afternoon to everybody. Thank you for taking our questions. My question is for Martinez. We have seen the company margin going back to double digit, a benefit in the drop of imports thanks to the anti-dumping regulation. Mr. Steinbruch spoke about the importance of these protectionist measures. Now, which part of this is a structural recovery of market share? Which would be a sustainable margin for the steel business if the imported margins stabilize at present day levels?
Which is your vision for the second half of the year— if this margin will further improve? My second question refers to the capital structure. If you can give us further details: in the negotiations for the cement plant, you have received binding offers from three different groups, according to the news. Which are the next steps— of course, without revealing the value of the offers— are they very close to what you think the asset is worth? Are you considering the sale of 100% of the cement unit or only selling off the control and keeping a minority share in the asset?
So if you could comment on this path towards deleveraging in the future— what comes from operational cash or the disbursement of assets. Thank you very much.
Luis Fernando Martinez, Diretor Executivo
Hello, Daniel. You will recall that in the first quarter call I mentioned that I was seeing signs of transition of imported market to domestic production, the search for added value, and that we were foreseeing significant improvement for the second quarter. What happened in the second quarter? Improvement. We speak a great deal about value over volume. In our case here it was value and volume. We grew 11% in the flat steel market for the domestic market, a growth in the higher added value products, and a price that still has room for recovery.
We had an increase of 4% approximately. To give you an idea, if you look at BQ, a product that in our portfolio is not the main one in terms of margin, it has a gross margin of 400 reais per ton. When we go to the higher added value products— pre-painted products— we have margins varying between 1,000 to 1,200, to more than 2,000 in tin plate. So we have all of these choices in our portfolio. This is an important data point that we captured in the second quarter.
Referring to imports, to give you more color to what Benjamin said: imports— last year we ended the year with an import penetration of 25%. Four million tons for 16 million in the market. This year we already observed the following: until June we had practically 1.8 million tons with a trend towards reduction, which means, being very practical, that 600,000 are part of the domestic market. Of these 600,000, 70% belong to Companhia Siderurgica— the material we produce for civil construction, the white line, and distribution.
In the call in the first quarter I said we would recover from the market about 1.5 million to 2 million for the domestic market this year. That's a given already. This means that imports— the import penetration should be around 15 or 17%. This reinforces our strategy. From the viewpoint of demand, although we have observed negative comments in the market, we have a relative balance of several sectors helping Companhia Siderurgica offset our portfolio.
If you're only going to speak about the agricultural market, there is a temporary drop— it may resume. Compared to other markets, we have a more stable white line market. The assembly market, despite the number of imported vehicles coming in, had a 10% growth in production. And in civil construction, it has proven to be very resilient despite the interest rates. This is something very peculiar to Brazil. Brazil has learned to live with high figures for inflation and interest rates and continues to grow.
So the main challenges for the third quarter, for steel: first, operational excellence. Our businesses move by cost, and we're heading to get to a slab at 3,000–3,100 reais per ton. In our day to day, this is our mantra to seek out this cost. Otherwise we're out of the international market and it will be very difficult to compete. Regarding margin recovery, from the first quarter we got to 11% in the second quarter and we are working in a scenario of reaching 15 or 17% in the second half of the year— recovering volume and margin.
We can reduce some discounts, align some prices from 5 to 7% now in September. This would help a great deal in recovery to the higher two digits. Another point mentioned by Benjamin and Marco are the inventory reductions. We want 500,000 inventories in-house. This is very important regarding our cash flow. And finally we want to capture 600–700,000 more tons that will migrate from the imported products to the domestic market. This is data that we're working with.
From the viewpoint of a variable that is not under our control— the anti-dumping measures— what would be interesting to say here: in the anti-dumping measures we obtained practically everything we requested. It took some time, but there you are. We wanted anti-dumping against China in all products. We're missing this for hot-drawn. We had meetings this week and next week, and we want to include anti-dumping against the Chinese in the months of August and September.
That would be fundamental for us. In other products such as tin plate, which is something very peculiar for Companhia Siderurgica, there's something that will happen— anti-dumping that has been detected, incredibly enough, against Germany, the Netherlands, and Japan. The margins went from $300 to $600, and we're not even speaking about China. We also hope to implement this anti-dumping, and in Companhia Siderurgica we will be highly competitive because of this.
Obviously the government has to be more attentive. It's not only a problem of steel, as Benjamin mentioned. The problem is for all of the upstream chains full of Chinese products: the automotive market— we don't need to mention— a sector that is now being set up in Brazil; the white line sector— we have companies like IDE and LG that do not produce anything but have everything coming from China; and other sectors— we don't need to mention machines, implements, and others.
So this is structural. The great message that Benjamin mentioned: we're going to try to fight against these imports in any way possible. We have a portfolio. There is that variable— we're receiving material coming from Vietnam and Korea, for example, and we don't even know if this is a problem of circumvention, if it is part of the trade. And we're going to speak to the IRS to see if they all have the right form. What we can create in Brazil is a technical barrier, therefore.
So, Daniel, I'm at your disposal should you need more detail. This is a scenario we imagine for the third quarter— optimistic, but very realistic in terms of what is happening.
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Thank you, Daniel. This is Marco Rabello, going on to your next question. Yes, we did have a material fact this week stating that we received the binding proposals for the sale of cement. Obviously the media conveys a great deal of information. It's very difficult to manage the media information. But to benefit this competitive process where we hope to get the very best to benefit the company and the creditors, we cannot share too many details with you— number of proposals and amounts.
This is a competitive process, a bidding process. Now, once we have identified who will be the buyer and which is the final value and the conditions agreed upon, we will be able to disclose this. We're still not at this point for such a precise definition to inform anything to the market. We do have regulatory restrictions, but as soon as we have precise information, we will inform the entire market in a more homogeneous way. What we can comment are the excellent results that Cement has delivered this year— two excellent quarters with record EBITDA, despite the shutdown for maintenance.
So this is a unique asset, a unique company, and we think we will have the valuation that it deserves to carry out this operation that will be very important for the group. Deleveraging. A broader question about deleveraging going forward. To recall what we said at the beginning of the year, our deleveraging plan is preceding the schedule that we approved at the beginning of the year. We're following it very closely in all of our assets, and Infra/logistics as well.
Companhia Siderurgica has so many assets. Some are non-operational, but they're also very valuable. If we decide to sell them on, we may do this, but the most important path of deleveraging is to continue to have good sales and to focus on our operational performance, our cash generation. Martinez has just given us important information on the recovery that we see in the market in steel as well. This has to be sustainable for the company and for creditors.
If all segments evolve importantly in terms of their results and cash flow, this is what we have been seeking and we will have an important conversion in the two segments that have to deliver better results, cement and steel. It's important to mention in steel that we are thinking about strategic possibilities for steel— perhaps a partner. We continue on with this analysis. These are movements that will only add to a better profitability that we already observe presently.
They will help us drive a better cash generation for steel. To answer your question, deleveraging will come through that sale that has been announced, but also through operational enhancements that we have been showing in the last few months. Another important point, Daniel— you're always asking about the cement sector that you cover. For the first time since the beginning of cement at Companhia Siderurgica we have average cement prices of $75 to $80.
I was used to speaking of $55 to $60. Nowadays, if we imagine the first half of the year and compare it to 2025, we have an expressive recovery of prices— 17 to 20% recovery in price— with an FOB price of 363–380, which shows you, as Benjamin mentioned, that we do have a business that is ready for everything. Besides the operational excellence, the streamlined assets that we have, the low level of obsolete assets, and the operational excellence at our three sites.
Because of our capillarity and distribution in our 24 distribution centers and 32,000 customers, we're a bit removed from any market impact. And when we look at the market, we have nothing to complain about. Civil construction has proven to be very resilient to the interest rate. If you look at some developers at present— there are two of them, one that is high standard, another one selling My House, My Home— real estate funding has increased 13 to 14%.
The sale of new real estate is strong— 5%. What has decreased a bit is the number of launches. We obviously hope that this lower number of launches will not lead to a market high assets going forward and that we can recover a margin in the infrastructure market. When we speak about results, the mid market loves results, and the process is nothing but a detail. We're delivering a margin of 30 to 32%, double that of our main competitor in the domestic market.
This allows us to be motivated and allows our teams to be very motivated.
Marcio Faridi, Analyst at Goldman Sachs
Thank you for taking our questions. Martinez, you have spoken a great deal already, but I'm asking for a follow-up. We have seen significant imports coming from Vietnam, hot coils. Now simply to try to understand if this is a one-off movement or if this is another circumvention and if this concerns you— what will happen in the second half of the year? To follow up on the questions of liability management— the focus presently of course is on cement.
You briefly remarked on infrastructure. Now this speed to continue the sale of assets, will it be reduced? Let's imagine you sell off your cement operation and you will roll the 2028 bonds. Are you thinking of doing anything additional or will you have to continue to divest from assets or other assets in the group?
Luis Fernando Martinez, Diretor Executivo
Thank you for the question once again, Marcio. The main point here in terms of imports is something that does concern us a great deal. Of course it was a struggle during these last three years and continues to be— to work against these illegal imports. Now obviously we cannot compete with any logic. To give you an idea, in China nowadays we have 247 plants, and of these 247 sites there are less than 35% that have a positive margin. This is public information, and it's impossible to combat this.
There's another point of communicating vessels throughout the world regarding steel— with the close of quotas that Europe put into practice by 50%, what happens by communicating vessels? What they stopped sending to Europe, the only outlet from China that is open is Brazil. Now we have no other option unless we defend ourselves— it's not only against China. We're speaking about Asian imports as a whole. To give you an idea, in 2025 Vietnam was the largest importer of Chinese material— 7.2 million tons.
It's obvious that we're very cautious because part of this material will suffer circumvention. There will be that derailing of trade. We have the frauds that exist in the ICMS that we're also combating and we're working towards that. Now the government at present could be faster, but they are more attentive to this because, as Benjamin mentioned, this is compromising employment not only in the steel industry, but in other chains of production as well.
So this scenario— Vietnam— we're fighting so that we can implement measures that will be approved and to show that this material has to be laminated in Vietnam or Korea. But this continues to be a concern for us. About a more constructive scenario for the second half of the year, it's a given. What is left from import is an inventory that exists in the market. The lineup of ships that we monitor— last year it was 700 to 800— has dropped to 110,000.
It's an issue of mass balance. Part of this volume we will sell in the domestic market. Now these countries, Vietnam and Korea, don't have an aggressive price such as China. So we can compete well with them. The only Chinese product feasible in Brazil is BQ. In September we will have anti-dumping against this. Even with other Asian materials, if we compare the materials, we can end up being quite competitive. Finally, we're increasing the production at our plant in Paraná— an increase of 15 to 20%.
It's working on products, pre-painted, galvanized products. These four lines that we have in Rio de Janeiro— the Galva Sud line, automotive line— although this is not our focus, we're benefiting from that growing market. And the lines of the plant are working with an order backlog that is quite interesting. So we have a constructive scenario based on fact. And in the third quarter we can speak about this once again, which I hope will happen.
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Marcio, regarding your second question. What has changed that is important is to change the average term of the company debt. We're going to be taking 1 billion maturing in a year and a half. We have thrown it further ahead, reducing pressure, which is important for the company and for creditors in general. This was part of the company plan since always— to work with this liability management, this exchange. Nothing changes in the rest of the company— the hurry to sell off assets.
A schedule that we have in the market: cement and infrastructure are two projects that we're working on in a parallel fashion. We're disclosing material facts. At the end of this month we will receive non-binding proposals for infrastructure. So we have a huge volume of companies concerned in delivering their proposals. In cement, we have binding proposals and we continue to look at other deleveraging alternatives. And despite the good operational results, what is more important is to continue to enhance the cash generation of the company.
This does not change our strategy. All of you know the high interest rate we live with in the country. Obviously this impacts any company that grows, that invests, and that uses third party capital. And Companhia Siderurgica has excellent projects with high profitability. The iron ore project, the P15, our expansion in infrastructure and ports— these are projects with high EBITDA margins with very fast returns and they are being duly executed. And the capital structure of the group has already been adjusted.
So the speed will not change at all. It will simply incentivize us to continue on with these projects.
Matthias Moreira, Analyst at Bradesco BBI
Good day. Thank you for taking our questions. We have two of them. One on cash generation. We saw a strong release of working capital, 900 million reais approximately, helping you to offset capex and higher financial expenses. Now, a part of this gain from the reduction of inventory at mining. Marco and Benjamin remarked that you're working on reducing inventory for coming quarters. Can you quantify what we can expect— if we can expect other releases of working capital in coming quarters?
That's the first question. The second question about cash generation. We have seen more challenging conditions in the iron ore market— price below $100, C10 freight around $35 coming from China. If you're hoping to have an improvement in operational cash in coming quarters, well, the cash generation of the main asset of the group, mining, will be more pressured because of the price of iron ore and freight. Are you assessing other alternatives to monetize your assets besides what has been contemplated in the original plan— the sale of the control of cement and a minority sale in infrastructure?
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Matthias, thank you for the question. Thank you for your attendance at the call. Regarding cash generation, the release of cash that we had through an improvement in working capital and reduction of costs took place mostly in steel. It also happened in mining. In steel— the steel plants in Brazil as well as outside— 75% of stock was in new pedestrians. This was the main driver for inventory reduction and the release of cash flow. Martinez mentioned this.
We have the forecast of releasing more cash through a reduction of inventory throughout the coming quarters. Several companies have inventory levels above what would be adequate for the operations. We're bringing them down to a more efficient level, and we can get to an additional billion BRLs of cash release until the end of the year if we comply with our goals. I'm not speaking only of inventory finished products. We have reductions projected in raw material, intermediate material, and maintenance as well.
We have a very well-defined plan, company by company, with goals that we follow up on every week. Now, regarding that discussion of mining— yes, we had an impact in the second quarter. There will be an improvement in the third quarter, not only in volume. We will no longer have these scheduled shutdowns for Casa de Pedra and others. We also have dry weather. We have a recovery of the exchange rate compared to previous weeks. And freight will undergo constant management from our team.
We're trying to reduce the pressure brought about by the war in the Middle East. We see a better third quarter for mining in terms of result and cash flow. Regarding further sales of assets, Companhia Siderurgica— well, there are several very important points in the company. Among them is the quality and diversity of assets the company has. Some are non-core— a volume of real estate assets outside of Brazil that are very profitable. They're not core assets.
If the Board makes the decision, they can sell off more assets to speed up the deleveraging. We're very focused on the processes that are underway at present— cement and infrastructure now on our agenda. We always have alternative plans. If the company decides to sell more assets, the market will be duly informed. What is important is the company commitment— and the Chairman mentioned this— with the team— deleveraging of the group. The interest rate is at a non-feasible level for a large group with high leverage with a large number of assets in its portfolio, and we have to release capital to make investments for assets that are important in terms of cash generation for the group, to transform Companhia Siderurgica in the coming years. So our commitment with deleveraging is total and permanent.
Gabriel Baja, Analyst at Citi
Good day to all of you. Thank you for taking my question. I have two. Leaving aside capital allocation and steel, I remember that last quarter there was a discussion on price and cost in the steel mill. Now one of the points that was discussed last quarter was a cost closer to 3,000 BRLs per ton that ended up being higher this quarter for several obvious reasons. I would like to understand your vision in terms of the trajectory of that cost for the second half of the year.
Where should that cost stop? And that would help us a great deal to understand how sustainable that margin will be for the second half of the year. The second point, capital allocation and liability management. My question is about the bridge loan. Do you have greater comfort in terms of liquidity for the short term? And how do you look upon that money coming from the bridge loan going forward? Will you use the full amount? Will you wait for the sale of the cement asset?
Perhaps you could buy back some bonds. Will this be an adequate movement because of the present-day interest rates and the opening of the company?
Luis Fernando Martinez, Diretor Executivo
Gabriel, regarding cost and operational excellence— excellent. If we look at the KPIs in the business, the slab would be very close to fixed cost. If we had maintained the price of raw material, coke and coal, it would be close to 3,100–3,150. What is more important now is to have full control over the operation— operational excellence. I have no control in terms of what will happen with raw material. We had an increase of raw material in the second quarter.
We have to offset this by increasing the price. Now to get to that level of two digits between 15 and 17%, we have to increase price further. Besides that, in terms of costs, there are other projects we carried out in-house improving sintering, primary metal production. All of these are being analyzed to have a lower cut rate, less use of energy, and we will continue to reduce costs despite the raw material. In the third quarter we should have a decrease in iron ore— 5, 10, 5, 15 is what is being thought of.
More importantly than all of this, in our better lines, in the one where we have a stronger industrial vocation, we are working with operational excellence and it will allow us to reach higher two-digit margins very quickly— 15 to 17%. Another important point we have to think about in terms of import. It's true that we're going to have a trough and we're also working for this to stop at 15 or 16%. If we are able to evolve in some markets with tin plate, for example, where the import levels are much higher, these results can be magnified by the product mix.
We're very confident on those pillars we have been working with for some time already.
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Gabriel, regarding your second question linked to capital allocation. Well, we have an important initiative in the company to help us manage debts in 26 and 27 and throughout this year. We have the resources remaining from the bridge loans. We're going to manage them in a very important fashion. At some moments, we have acquired bonds and debentures from the secondary market, and with the exchange at present, what we used as a cash component in the transaction was a buyback of bonds.
We bought back a significant part of bonds that we have used now in the operation we carried out yesterday. Basically this is what we have done, and this movement shows you what we are doing. The use going forward will depend on the discussion of the rolling of the rest of the debts with the banks. They are very productive discussions without difficulties in extending our debt. And the greater focus will be on deleveraging through the sales we have already announced, and this will transform the deleverage, and of course the payment of the bridge loan through the sale of this asset.
We want to further decrease our average cost of debt, and bond 2030 as well as bridge loan are outside that curve that we would like to have.
Nicolas, Analyst at Jefferies
Thank you very much. Congratulations for the results and recent operations in the capital market— the bridge loan and exchange 2028 that was so successful. Can you give us additional color on the rolling of your debt 2026–2028— if you will push this towards 2029— and which are your conversations in this last phase? And any recent update on the P15 project, the capex that you still have to disburse, and any change in your plan for EBITDA for this project that will be finished at the end of 2027?
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Nicolas, thank you for your question. Regarding the rolling of the bank debt, even in 2028, in the prior month where the debt was lower, we were able to roll our bank debt very naturally. Now with the exchange that we just carried out, this is an operation regarding the term. We have $1.4 billion in a billion and a half that would mature. We have moved $1 billion forward, which allows us another discussion on the emergency maturity term of the rolling of our bank debt.
So we do have a new plan that I showed you in the presentation that will enable us to discuss longer periods for the rolling of the debt. And of course after this call we will be speaking to creditors. One of the points that was happening recurrently— it was questioned by the company creditors. We have delivered this plan, we're offering them better conditions, and there should be no difficulty in continuing to have these discussions. Naturally, we have received quite a bit of support from the main creditors of the company.
Regarding P15, as mentioned in the CSN Min call, the goal is to deliver it until the end of 2027 with a ramp-up in 2028 for it to be fully operational in 2029. We're still missing 4 billion BRLs in capex to make in the plant. The plant is being funded by a long-term credit line.
Julian, Analyst
The loan related to cement— this was taken until June. Are there any installments that were not used that could be disbursed in the third quarter to fund the exchange offer? With the conclusion of exchange of securities, should we expect greater facility in the roll of the remaining bank debts until 2029? A third question: when answering the question by Gabriel, you seem to have bought back bonds with maturity in 2028 and they are part of the exchange operation.
Could you inform us on the amount and if you will cancel or sell these bought-back bonds?
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Julian, thank you very much for your questions. Regarding the bridge loan, you are correct. We have obtained it fully in the previous quarter, but the resources have not been fully used. The use will be just only to the payment of debt or the buyback of debt— it has not been fully used. It has been fully withdrawn. Referring to the exchange, yes. We are in a new moment of the rolling of debt with banks. We can now enhance the conditions, and the exchange was a condition of several of the creditors with us and their dialogue with us.
We did this very successfully. We reached more than $1 billion that we're throwing forward— going from January of 2028 with another schedule of maturity, as we saw a short while ago. We have repurchased— in the exchange operation— while the securities have been paid off, there are others that we bought back, as you mentioned. They're not very material and they will be canceled in the coming weeks.
Bruno, Analyst at Benestis
Good day. About the management of working capital, there is a relevant reduction in with-drawee risk. Does this reduction reflect a decision to optimize the financial cost of these because of the present-day rate? Which is the normative standard that you project for the coming quarters— will it be closer to 2Q26, 1.5 billion BRLs, or a recomposition to the levels of 2025, 2.9 billion BRLs?
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Bruno, thank you very much for the question. The reduction of with-drawee risk has some conditions. One is the exchange of suppliers of companies from time to time, and they have to be within the limits of the bank for with-drawee risk. Now, the company has made an effort to reduce interest rates in all operations. We do the payment of iron ore. As you observed, this quarter we amortized a significant part of the purchase of iron ore to reduce our financial expenses.
And it's much closer to what we presented recently in terms of the level of with-drawee risk.
Alberto Gagito, Analyst at Clearbug
Hello. Would it be possible to know the share of infrastructure that you will sell off— 30% or 40%?
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Alberto, thank you for the question. We're very enthusiastic about this. There is a great deal of value in this company. The results are very resilient, much above that of other segments we have here. The discussion continues between 20 to 30%, as we had commented. This will depend on the creation of this new vehicle and the proposals that we receive. At the end of this month, we'll define the percentage. It will not be lower than 20 and not higher than 30 at this specific point in time.
OPERATOR
Once again, should you wish to pose more questions, please click on Raise Hand. If your question is in writing, please use the Q&A icon. Please hold while we poll for questions. As we have no further questions, I would like to return the floor to Mr. Marco Rabello, Executive Director of Finances.
Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores
Thank you all very much and on behalf of the Company Board and our Chairman staff, I would like to thank the members of Companhia Siderurgica that have contributed to CSN going beyond their jobs. Thank you all for your attendance at our call.
OPERATOR
Thus, we end the earnings call for the second quarter, 2026. Thank you very much. The earnings result for Companhia Siderurgica ends here. We wish you all a very good day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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