National Steel's (SID) Q4 Earnings & Sales Beat Estimates

National Steel Company (NYSE:SID) delivered fourth-quarter 2019 net profit of R$1,134 million ($275.5 million) compared with the R$1,772 ($465.2 million) recorded in the prior-year quarter. The company reported earnings per share of 20 cents in the reported quarter, beating the Zacks Consensus Estimate of 16 cents. The company had posted a profit per share of 32 cents in the year-ago period.

Revenues

In the December-end quarter, the Brazilian steelmaker’s net revenues came in at R$6,524 million ($1,584.8 million), marking a year-over-year rise of 7.8%. Also, the revenue figure beat the Zacks Consensus Estimate of $1,412 million. This increase primarily resulted from higher iron-ore sales volume.

Domestic revenues decreased 7% year over year to R$2,761 ($670.7 million). The company’s international business flourished with foreign-market revenues registering growth of 22%, year over year, to R$3,763 million ($914 million), accounting for 57.6% of net revenues.

National Steel Company Price, Consensus and EPS Surprise

National Steel Company Price, Consensus and EPS Surprise

National Steel Company price-consensus-eps-surprise-chart | National Steel Company Quote

Segment Performance

Steel: The segment’s revenues totaled R$3,349 million ($813.5 million), down 11.1%, year over year. Production of flat-rolled products decreased 9%, year on year, while manufacturing of long-rolled products went up 15%.

Mining: The segment generated revenues of R$2,522 million ($612.6 million), reflecting a jump of 36.8%, year over year, on higher prices and sales volumes.

Logistics: Revenues came in at R$347 million ($84.3 million), down 26.2% year over year.

Cement: The segment’s revenues totaled R$144 million ($35 million) compared with the R$145 million ($38 million) reported in the year-ago quarter.

Energy: The segment’s revenues were flat at R$103 million ($25 million), year on year.

Margin & Costs

In the fourth quarter, the company’s cost of sales flared up 10.8% year over year to R$4,429 million ($1,075.9 million). Gross profit increased 2.1% year on year to R$2,095 million ($509 million). Gross margin came in at 32% compared with the year-earlier quarter’s 34%.

Selling, General and Administrative expenses came in at R$1,041 million ($252.9 million), reflecting year-over-year growth of 12%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) moved up 1.3%, year over year, to R$1,580 million ($383.8 million). EBITDA margin was 24.2% in the reported quarter compared with the prior-year quarter’s 25.8%.

Balance Sheet & Cash Flow

The company had cash and cash equivalents of R$1,089 million ($271 million) at the end of 2019, down from the R$2,248 million ($579.2 million) at 2018-end. Net debt to adjusted EBITDA ratio was 3.74 at 2019 end, down from the 4.55 as of 2018 end.

2019 Results

The company reported net profit of R$2,244 million ($558.3 million) compared with R$5,200 million ($1,339 million) in 2018. Net revenues came in at R$ 25,436 million ($6,328.7 million), up 10.7% year over year.

Zacks Rank & Stocks to Consider

National Steel currently carries a Zacks Rank #5 (Strong Sell).

Few better-ranked stocks in the basic materials space include Daqo New Energy Corp (NYSE:DQ) , Sibanye Gold Limited (NYSE:SBSW) and Impala Platinum Holdings Limited (OTC:IMPUY) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected long-term earnings growth rate of 29%. The company’s shares have surged 73.2% in the past year.

Sibanye has an expected long-term earnings growth rate of 20.4%. Its shares have soared 109.5% in a year’s time.

Impala Platinum has a projected long-term earnings growth rate of 26.5%. The company’s shares have appreciated 125.3% over the past year.

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