By Brazil Stock Guide – Usiminas (B3: USIM3, USIM5, USIM6; NYSE: USDMY) closed the third quarter of 2025 facing the same headwinds that define the broader steel industry: surging imports, compressed margins, and an uneven domestic recovery. In its earnings call, CEO Marcelo Chara, Commercial VP Miguel Ángel Camejo, and CFO Thiago da Fonseca Rodrigues struck a calm, technical tone — highlighting both the company’s resilience and the structural imbalance created by cheap Chinese steel.
Imports: The key source of pressure
Chara opened the session noting that flat-steel imports rose 33% in the first nine months of the year, mainly from China, and continue to “undermine Brazil’s industrial base.” He described the issue as structural, not cyclical: “This is a global imbalance in capacity that creates jobs elsewhere and destroys highly qualified industrial jobs in Brazil.”
Usiminas expressed confidence in Brazil’s anti-dumping investigations now under way at the Ministry of Industry and Development. Camejo said the probes into cold-rolled and coated steel are technically solid, with provisional duties near US$500 per tonne already discussed in preliminary findings. Final rulings are expected between February and March 2026. “The evidence of injury is overwhelming,” he said. “This isn’t protectionism — it’s about restoring fair competition.”
Prices: A technical correction, not a broad hike
Analysts pressed the company on its October price adjustments of 4–7%. Camejo clarified that these were “technical corrections,” not a general price increase. “The market had reached unsustainable levels,” he said. “These adjustments only restore minimum operating margins.”
The increases were implemented in distribution and retail channels and have had little inflationary impact, he added. “Prices fell sharply this year without showing up in the CPI — and these corrections won’t move inflation either.”
Industrial contracts, which carry a two- to three-month lag, will reflect the adjustments starting in January 2026. In the automotive segment, negotiations follow semiannual cycles — about 30% of contracts renew between December and January, and the rest between March and April.
Demand: Patchy recovery across sectors
Camejo said the automotive sector was the highlight of the quarter, with production up 10% from the previous period. The machinery and equipment segment remained stable, while construction continued to lag amid high borrowing costs and excess inventory.
Usiminas has limited exposure to construction steel, focusing instead on higher value-added segments, which provided partial insulation. Even so, Camejo acknowledged that overall demand remains moderate and that importers’ high inventories should lead to a sequential decline in new import volumes through year-end.
External markets: Temporary pause, expected rebound
Exports dipped slightly after the completion of oil and gas projects in Argentina, but Camejo said shipments should recover in 4Q25 as new contracts come online. “Our export pipeline remains active,” he said. The Southern Cone and North America remain core destinations, with Argentina gaining importance in quarters with larger energy shipments.
Cash flow, leverage, and capex: Discipline intact
CFO Thiago Rodrigues said the company generated R$613 million in free cash flow, supported by R$586 million in working-capital release and tighter inventory management. Adjusted EBITDA rose 6% quarter-on-quarter to R$434 million, with a 7% margin.
Net debt dropped to R$327 million, down 69%, bringing leverage to 0.16× EBITDA — one of the lowest levels in the company’s history. “We continue to operate with a strong balance sheet and long debt maturities,” Rodrigues said. “This allows us to stay focused on performance and modernization.”
Capex totaled R$266 million in the quarter, mainly for the PCI project, the Coke Plant overhaul, and PADAP infrastructure. The company reaffirmed its 2025 investment plan of roughly R$1.2 billion.
Impairment: Accounting effect, no cash impact
Rodrigues also addressed the R$3.6 billion impairment that turned operating profit into a net loss. “This was an accounting adjustment required under asset recoverability rules,” he explained. The charge reflects macroeconomic assumptions — chiefly higher discount rates and exchange-rate effects — and is not tied to any specific asset.
“There’s no cash impact, no change to our investment plan, and potential for reversal if market conditions improve,” Rodrigues said.
Strategic outlook: Patience and focus
Chara closed the call by emphasizing discipline over reaction. “This is not a crisis — it’s an adjustment,” he said. “We’ll remain rigorous on costs, liquidity, and competitiveness.” He reaffirmed ongoing investments in efficiency, ESG, and digitalization, noting that the company maintains enough spare capacity to capture future demand growth.
“We’re ready to absorb stronger demand and compete efficiently,” Chara said. “Our agenda is long-term — efficiency, sustainability, and industrial balance.”
Broader picture
Usiminas’s message was one of resilience and financial control in a distorted global market. The company maintains tight margins but solid liquidity, sees room for gradual price normalization, and expects domestic recovery to firm in 2026 if anti-dumping measures take effect.
As Chinese exports hit record highs and Western economies tighten their defenses, Brazil’s largest flat-steel producer is relying on policy, patience, and discipline to restore a level playing field. “We’re not asking for protection,” Camejo said. “We’re asking for fairness.”
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