Its mining division accounted for near 70% of EBITDA generation, but we were pleased to see its steel division gain some ground (EBITDA growing q/q after maintenance; still a low base).
On the more negative side, CSN’s net debt figures expanded yet again to R$32.8bn (leverage at 4.8x), which continues to be a structural concern for equity holders.
In all fairness, this was highly influenced by exogenous FX variation as the company generated FCF in the Q, but its unbalanced capital structure remains the critical aspect of the case.
Unless markets are convinced there is a path to sustainable reduction to R$20bn or so in leverage, we believe shares prices will remain pressured. We remain on the sidelines for now, waiting for delivery. @BTGPDigital
