Brazil's second-biggest steelmaker and biggest flat steel producer, Usiminas, reported Wednesday a 63 percent decline in Q2 profits as weak demand caused a decline in output, sales and prices.
Net income declined to 369 million reais ($194 million) from 988 million reais a year earlier. It was, however, a return to a profit after Usiminas posted a net loss of 112 million reais in the first quarter. Sales fell 39 percent from a year ago to 2.41 billion reais.
Usiminas also announced Wednesday it would suspend plans to commission a steel slab plant in Santana do Paraiso, Minas Gerais state, with a planned annual capacity of five million metric tons because of weak demand for flat steel. The company will resume the project once the demand shows signs of a sustainable recovery.
Concerning the future outlook for Q3 and the rest of 2009, the firm kept unchanged its original annual sales volume estimate of six million mt. Additionally, CFO Ronald Secklemann said that even though prices may register slight increases in Q3, demand would still be down about 30 percent compared to the levels seen a year earlier. He also explained how the firm's investment plans will be reassessed as capital expenditures likely will drop by about 17 percent to about 2.4 billion reais from an original estimate of 2.9 billion reais at the start of the year.
On a positive note, chief executive Marco Antonio Castello announced the reactivation of two of the three blast furnaces it has kept idle since late last year as expectations for the local demand and exports are on the rise. The furnaces to be restarted include one at its Ipatinga operations, by the end of July, and its Cubatao furnacem, by the end of August. Back in May, Mr. Castello announced that the company would keep all three of its downed blast furnaces idle until the end of 2009.
The firm halted three of its five blast furnaces between November and March as automakers and builders cut orders for flat steel products. The company also laid off 2,500 employees as domestic and international sales slumped.