Companhia Siderúrgica Nacional (SID) Q2 2026 earnings review
Strong Operations Eclipsed by a Bloated Balance Sheet
CSN’s core businesses are executing well, but the balance sheet is destroying shareholder value. Adjusted EBITDA grew 5% YoY to R$ 2.77B, driven by a powerful turnaround in Steel (thanks to antidumping tariffs) and record profitability in Cement and Logistics. However, the bottom line is a bloodbath. CSN posted a massive R$ 773M net loss as crushing interest rates and FX headwinds triggered R$ 1.84B in financial expenses. Management successfully released R$ 808M in free cash flow via aggressive inventory destocking, yet leverage still crept higher to 3.49x. The entire bull thesis now rests on one binary outcome: management's ability to swiftly sell minority stakes in its Cement and Logistics assets to pay down debt.
🐂 Bull Case
Government protectionist measures finally choked off cheap imports, allowing CSN to grow domestic steel volumes by 10% YoY and push EBITDA margins back into double digits (10.5%).
Binding offers for the Cement division are in hand, and non-binding offers for a 20-30% stake in Logistics are expected imminently. These sales are the silver bullets needed to fix the capital structure.
🐻 Bear Case
R$ 1.84 billion in quarterly financial expenses completely wiped out the R$ 2.77 billion in operational EBITDA, driving a steep R$ 773 million net loss.
Despite shipping near-record volumes, Mining EBITDA fell 32% QoQ due to soaring sea freight costs (Middle East conflict) and a stronger Brazilian Real.
⚖️ Verdict: ⚪
Neutral. The operational turnaround in Steel is highly encouraging, and cash generation from destocking proves management is focused on liquidity. However, rising leverage and devastating interest expenses make this stock un-investable until the asset sales are legally finalized and debt is materially retired.
Key Themes
Steel Resuscitated by Antidumping Tariffs
After quarters of bleeding margin to Chinese dumping, CSN's Steel division is reversing course. Domestic market volume grew 10% YoY, and EBITDA margins rebounded from an abysmal 7.0% in 26Q1 to 10.5% in 26Q2. The strategy shifted back to 'value and volume,' allowing CSN to reclaim market share previously lost to imports (which fell 17.6% nationally in H1). Management expects to claw back 1.5M to 2.0M tons from imports this year.
Working Capital Win Contradicted by Rising Leverage
CSN generated a positive Free Cash Flow of R$ 808M—a massive reversal from cash burns in prior quarters—driven almost entirely by a 21.8% QoQ reduction in Net Working Capital (inventory destocking). However, this operational win was completely overwhelmed by the balance sheet: Net Debt increased to R$ 42.1B and leverage deteriorated from 3.36x to 3.49x. The cash generated was immediately swallowed by FX variations on foreign debt, capital contributions to Transnordestina (R$ 495M), and crushing interest payments.
Mining Takes a Geopolitical Hit
The Mining segment achieved its 4th best sales volume in history (11.8M tons) despite a 15-day maintenance shutdown. Yet, EBITDA plunged 32% QoQ to R$ 930M. The culprit is entirely macro: the Middle East conflict drove the BCI C3 freight route up to $33.98/t, heavily pressuring net unit revenues (down to $49/t). C1 cash costs also rose to $24.0/t due to BRL appreciation. The segment remains highly profitable (32% margin), but its role as the group's cash cow was severely stunted this quarter.
Cement and Logistics: The Crown Jewels Masking the Pain
While Steel recovers and Mining stumbles, Cement and Logistics are carrying the team. Cement posted its second consecutive record EBITDA (R$ 427M) with a 30.8% margin, defying a tough macro environment by prioritizing value over volume and hiking prices ($75-$80/ton). Logistics posted its second-best EBITDA in history (R$ 548M, 45.2% margin). The stellar performance of these assets is critical, as it maximizes their valuation ahead of impending minority stake sales.
Import Whack-a-Mole (Circumvention Risk)
While tariffs successfully slowed direct Chinese steel dumping, management flagged a new threat: surging imports from Vietnam and Korea. Vietnam imported 7.2M tons of Chinese steel in 2025, and CSN believes much of this is being repackaged and dumped into Brazil (circumvention). If the government fails to expand technical barriers, the steel margin recovery could be short-lived.
Other KPIs
Accelerating loss. Financial expenses widened by 41% QoQ. This single line item wiped out 66% of the company's entire Adjusted EBITDA. Management explicitly noted this was driven by exchange-rate fluctuations on foreign-currency debt and derivative losses.
Reversing positively. Energy EBITDA spiked massively (up from R$ 62M in 26Q1). However, this is a low-quality beat driven entirely by a one-off, retroactive recognition of contingent revenue from the Jacuí Hydroelectric Power Plant. Margins temporarily spiked to 62.1%.
Guidance
Accelerating. Management guided for a significant expansion from the current 10.5% margin. This relies heavily on the implementation of further antidumping measures (specifically against Chinese hot rolled coil and European tinplate) and an upcoming 5-7% price hike in September.
Decelerating cost. Target implies an 11% cost reduction from the current R$ 3,382/ton. Management plans to achieve this through operational excellence, sintering improvements, and normalizing raw material usage, regardless of global coking coal price volatility.
Stable/Continuing. Following the successful destocking in Q2, management expects to pull another R$ 1 billion out of working capital by year-end by aggressively driving in-house inventory down to 500,000 tons.
Key Questions
Cement Sale Valuation & Use of Proceeds
With binding offers for the Cement division now received, what is the timeline for closing, and what exact percentage of the proceeds will be immediately deployed to retire gross debt versus funding the P15 expansion?
Vietnam/Korea Circumvention Threat
You highlighted the circumvention of Chinese steel via Vietnam and Korea. If the government fails to implement technical barriers against these specific countries in Q3, can you still achieve your 15-17% steel margin target?
Mining Freight Cost Permanence
With BCI C3 freight rates surging past $33/t due to the Middle East conflict, how much of this cost increase is structurally embedded into your 2H26 contracts, and at what point does it force a reduction in low-grade iron ore shipments?