CSN Mineração (CMIN3), one of Brazil's largest iron ore exporters, has announced a substantial R$ 1.3 billion distribution to its shareholders in the form of dividends and interest on equity, despite facing a significant net loss in the first quarter of 2025. The decision, revealed in a market communication on May 8, highlights the company's commitment to its investors even amid challenging financial results.
The dividends will consist of R$ 1.09 billion in intermediate dividends, equating to R$ 0.20 per share, and R$ 210 million in interest on equity (JCP), which translates to a gross amount of R$ 0.03 per share. However, shareholders should note that the JCP is subject to a 15% income tax withholding, resulting in a net payment of approximately R$ 0.03286 per share. To qualify for these payments, shareholders must hold their shares until May 12, 2025, after which the shares will be traded 'ex-rights' starting May 13, 2025.
The company has set a timeline for the payment, which is expected to be completed by December 31, 2025, although the exact date is yet to be determined. This substantial payout comes despite CSN Mineração reporting a net loss of R$ 357 million in the first quarter of 2025, a stark contrast to a net profit of R$ 558 million in the same period last year.
In terms of revenue, CSN Mineração saw a 21.7% increase, with net revenue rising from R$ 2.805 billion to R$ 3.412 billion year-on-year. However, the cost of goods sold also increased by 18.4%, reaching R$ 2.238 billion, which has pressured the company's operating results. The adjusted EBITDA for the first quarter was R$ 1.427 billion, marking a 27.1% increase compared to the previous year’s adjusted EBITDA of R$ 1.123 billion.
Despite the net loss, the company maintains a robust cash position of R$ 14.3 billion and has reduced its leverage ratio from 0.79 to 0.65, indicating solid financial health. The net cash position stood at R$ 4 billion for the quarter. However, the company's investments (CAPEX) decreased to R$ 377 million in the first quarter of 2025, reflecting a response to lower demand at the beginning of the year.
In a broader context, total iron ore sales grew by 5% year-on-year, with a notable 6% uptick in the foreign market. However, when compared to the fourth quarter of 2024, there was a 10% retraction, attributed to seasonal factors including favorable exchange rates from the previous period and increased shipments at the end of the year. Additionally, adverse weather conditions, including heavy rains and cyclones in key production areas, have impacted production and logistics.
While the reported loss of R$ 357 million reflects a 164% drop compared to the profit of R$ 2 billion in the fourth quarter of 2024, the company’s operational efficiency has been highlighted by the increase in EBITDA. The firm’s ability to navigate through these challenges while still providing significant returns to shareholders demonstrates its resilience in a fluctuating market.
CSN Mineração's decision to distribute dividends, despite its recent losses, raises questions about the sustainability of such payouts in the future. Investors will be closely monitoring the company's performance in the upcoming quarters, particularly how it adapts to market conditions and manages operational costs.
As the company moves forward, the focus will likely remain on balancing shareholder returns with the need to invest in growth and maintain financial stability in a competitive and often volatile market. The upcoming months will be critical for CSN Mineração as it navigates these complex dynamics while striving to uphold investor confidence.
In summary, CSN Mineração's announcement of R$ 1.3 billion in dividends, despite a net loss, showcases both the challenges and strategies of a leading player in the Brazilian mining sector. Investors will need to assess the implications of this decision on the company's long-term viability and performance.
