Acesita performs well in Q1

Acesita performs well in Q1

Brazilian stainless steel producer Acesita posted a net profit of Reais 50.3 million(currently $17.3 million) for the first quarter, a 222% increase compared to Q1 of 2002. Net revenue jumped from Reais 302 million to Reais 541 million this quarter, while EBITDA more than tripled to Reais 151 million in the same comparison. The results were similar to what the market had forecast. For the past three quarters since Acesita finished a round of investments focusing on the production of stainless steel, EBITDA margins have hovered around 30% (27.9% in Q1 2003) and revenues have been Reais 500 million or more a quarter. Paolo di Sora, a steel analyst for Brazilian bank Itau commented the result as good with operational improvements and a lower debt burden with the sale of Acesita's stake in Brazilian long steelmaker CST. However he underlined the fact that they were keeping the company's stock under hold for now given concerns about sales in Asia and the affect that the Sars virus could have on them. The Asian region accounted for 51.8% of Acesita's export volumes in the first quarter, and export sales totaled Reais 209 million or 38.5% of total net revenue. A small short-term price drop is currently experienced in Asia mainly due to the uncertainty of Chinese demand, Acesita officials state that the market is still waiting for the Chinese government's approval of new import quotas in order to have a better idea of the behavior of the world market. On the domestic front, the steelmaker was upbeat given the economic stability the country enjoyed in the Q1. On April 24, Acesita finalized the sale of its stake in Vitoria, Espirito Santo-based flat steelmaker CST for $162 million. Acesita has assigned a capex budget of Reais 47 million for this year, which is limited to maintaining its operational competitiveness. In Q1, investments totaled Reais 7.9 million. Belo Horizonte-based Acesita, controlled by European steel group Arcelor, has installed capacity of 850'000 ton per year liquid steel and is South America's only stainless steelmaker.