Morning and thank you for waiting. Welcome to CSN Mineração's conference call to discuss the Company's results for the third quarter of 2025. Today we are joined by the Company's Executive Officers. Please note that this event is being recorded and all participants will be in listen-only mode during the Company's presentation. After that, we'll begin the Q and A session when further instructions will be provided. The event is also streamed on CSN Mineração's investor relations website where the presentation is available. A replay of this call will also be available shortly after it ends. Before we proceed, we would like to clarify that certain statements made during this call may constitute forward-looking statements based on the current beliefs and assumptions of the Company's management.
These statements involve risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed to hearing as a result of factors such as general economic conditions in Brazil and abroad, interest and exchange rate levels, future negotiations or prepayment of obligations or foreign currency denominated credits, tariffs from the U.S. in Brazil and other countries, changes in laws and regulations, and general competitive factors on a global, regional or national scale. We'll now turn the call over to Mr. Pedro Oliva, Chief Financial Officer, Industrial Relations Executive Officer, who will present CSN Mineração's operational and financial highlights for the period. Mr. Oliva, you may go ahead.
[Foreign language]
Good morning. First of all, I'd like to thank you all to join us on our conference call.
We are going to start the presentation with the highlights of the third quarter 2025. We reached a new production record including purpose with a volume of 1.991 million tons, a growth of 4.5% compared to 3Q 2024 and a record sales of 12.4 million tons. The highlight is that this was the first time that the company exceeded the amount of 12 million tons sold in the same quarter. The company's guidance continues to operate at a level that is of $21.1 per ton, an increase of 14% and the variation is explained just by the appreciation of the exchange rate. If we remove the effect of exchange rate it would be $19.3 per ton. Adjusted EBITDA for the third quarter 2025 was BRL 1,991,000,000, a growth of 57% compared to the previous quarter and 74 percentage points when compared to the same period of last year with the strong results.
The Adjusted EBITDA margin for the third quarter was 45.2% and net income of BRL 695 million, a fivefold increase compared to the previous quarter. On the next slide we show the production volume plus iron ore purchases that reached 11.9 million tons in the third quarter, a growth of 2.8% compared to the previous quarter and 4.1% compared to 3Q 2024. This number is a new production record including purchases and reflects the excellent operational efficiency and strong logistics performance. On the other side, the consecutive drop in inventories over the last two quarters is a consequence of the strong sales volume during the period. We closed the quarter with 3.1 million tons in inventory, a drop of 12.4% compared to the previous quarter. This drop is explained by the strong sales volume.
The company reached 12.4 million tons, a growth of 4.3% compared to the previous year and 4.8% compared to the previous quarter. This is a new record reflecting operational efficiency and logistics optimization. With Techar reaching for the first time 4 million tons shipped in a single month, for the first time operating above its capacity, and MRS is operating at a record in terminus and really optimizing these numbers. Net revenue was 48.2% that of 2Q 2025, driven by record numbers of shipments and improvement in realized prices. Net unit revenue of $67.57 per ton reflects the increase in the average iron ore prices, lower demerit due to quality, and the positive impact generated by cargoes exposed to future quotation periods. On the next slide we give details on price realization. Unit net revenue was $65.70, a growth of $13.80 compared to the previous quarter.
In the period we had $4.2 growth. It was also impacted on our QPU basket of $2.1 compared to the previous quarter and positively impacted the cargoes in future quotation prices and an impact in price realization of $13.9 per ton. When we think of discount per quality, we also had an improvement. The discount was $14.1, $1.5 better than the previous quarter, and sea freights had an increase of $21.9. The company continues to have efficient management of freight costs and is operating below the C3 Index routes between Brazil and China. As for the adjusted numbers, we had a growth of CPV of 3.8% comparing to a higher sales volume but also a higher procurement from third parties and the impact of iron ore prices in the period applied from the sales volume.
Adjusted EBITDA reached BRL 1,991, an expansion of 57% compared to the previous quarter. This growth is a result of recovery of iron ore prices and better operational performance as we have seen in the history of the company with solid management of costs and expenses, which has always been and will continue a priority for our group. As for adjusted EBITDA reconciliation, we started with an EBITDA in the second quarter 2025 to 1,268, and went to BRL 1,991,000,000. The improvement of iron ore prices and the effect on cargoes that are subject to future cultures and prices adjusted. The increase in EBITDA offsetting decreasing freights and the increase of costs of iron ore and investments grew 20.6% compared to the previous quarter and 27% compared to the third quarter 2024 reaching BRL 603 million.
Riyadh's Capex growth reflects efforts to maintain the high level of execution of the operation, which continues reaching record numbers in addition to expansion projects, particularly the infrastructure works of P15. As for the networking capital, we had growth from negative BRL 450 million to negative BRL 45.49 million with an increase in accounts receivable and also a result of an increase in sales volume and iron ore prices. This increasing work capital happens despite the supplier line in response to the higher sip sales volume and freight payable at the higher volume of iron ore purchases from third parties. Indebtedness profile: our amortization schedule continues elongated, an average time of 52.3 months, and the company closed 3Q 2025 with BRL 13.6 billion in cash availabilities, reduction of 5.3% versus 2Q 2025 due to the payment of dividends that offset cash generation and the partial rollover of prepayment contracts.
As a result, the net cash position reached to BRL 3.9 billion and leverage measured by net debt over the last 12 months. EBITDA ratio stood at 0.59x . On the next slide we show our adjusted cash flow that was positive at BRL 284 million even before a higher working capital consumption and increased Capex and the negative financial expenses. The company still has the impact of the appreciation of real vis a vis the dollar, but a smaller impact than what we had in the first and second quarters of the years.
Net cash reached BRL 696 million, five times higher than that of the previous quarter, driven by the combination of factors including operational records as we showed and favorable pricing dynamics and a reduction in financial expenses due to a better exchange rate in the period. As usually, we conclude our presentation with our highlights in ESG. In governance, we had, we are the seventh best company in mining in Sustainability, whereas our ESG score had an important increase to 62, above 93% of the companies in the sector. In diversity, we reached 26.2% of females in our company, overcoming the target that was established for 25%. In dams, we had all renewals for 2025, with all dams of CSN Mineração considered stable and in safety.
Once again we celebrated 11 years without fatality in the company and a reduction of 25% in serious events compared to the first nine months of 2024. In environmental, reduced 11% CO2 per ton of ore more produced compared to 2020 and we reduced 3% compared to the first nine months of the previous year. I conclude my presentation talking about the approval by the company's Board of Directors of the payout of BRL 903 million in dividends and interest on equity to be paid on November 19 this year. Here with me I have Carlos Mello, the Superintendent Director, and Benjamin Steinbruch, who is the President of the Board of Directors, that I'm going to turn the call for him to make his remarks.
[Foreign language]
Good morning everyone. Thanks for attending the CSN Mineração's conference call.
We had a quarter, as you had the opportunity to see, that was quite good. We had improvements in almost all indicators. We are on the right path to continue showing positive results. Operationally speaking, we had an increase in iron ore prices. This has been kept at better levels than expected and we see a higher demand in lower quality iron ore which enables us to work with the quantities we have expected and the demand makes our quantities be basically the nominal capacities that we have. It was a quarter that was quite exceptional. Our team worked very hard. We thank the willingness to break barriers and establish targets. Thank God we had no accidents. Our safety is quite stable in our work environment and we are quite optimistic for the future quarter. Demand continues very good, prices are good, margins are good.
From the perspective of cement, I believe that we had a very, very favorable quarter, hitting records and established a good financial margin and a good result. That is basically it. Now we are going to take your questions and I would like to thank you all.
Thank you. We now start the Q& A question for investors and analysts. If you have a question, please raise your hand or send your question on the Q& A icon. Our first question comes from Guilherme Niepce from XP. Mr. Niepce, your mic is cleared.
[Foreign language]
Good morning Pedro, Benjamin, team. Thanks for taking my question. Congratulations on your results. I have two questions. The first goes along the line of purchases from third parties.
If you could mention the volumes that you had in the third quarter, what you expect for the fourth quarter and what is the expectation for 2026 if you carry on the rationale of keeping a level of third party purchases around 25%. Second question, prepayment contracts for iron ore. Here the question perhaps is split in several parts. I would like first to understand how much room you have to increase exposure to this contract. If you could give some color for the future in terms of volumes and what is like the evolution of these volumes for the coming years. That's it. Thank you very much,
[Foreign language]
Guilherme. Thanks for your questions. With regards to third party purchases, we had a volume of 3.2 million tons, very close to the 3.1 of the previous quarter and that was about 25% of sales volumes.
As for the fourth quarter, we generally expect a higher dosmetry. Because of the size of the operation and subject to availability, we can increase the volume of purchases. The logistics system has been hitting records and opening room for us to accommodate higher volumes for third parties. As for 2026, we should not have any significant variation compared to the levels we are operating. Expect to close the year between 25-30%, less than 30%, but above 25%, which is what you mentioned. Those levels should be kept for the year of 2026. With regards to prepayment, today we have a volume was completed in 2025. For 2026 we are comparing 15 million, 2027, 14 million, 2028, 18 million, and then 2029 way below that this year. Basically we had our investments. We had two operations, one of BRL 240.9 million, another of $300 million.
These were the investments for this year. The strategy for the future, Guillerme, is to keep the rollout and the current level of exposure in terms of prepayments
[Foreig language]
very clear. Thank you very much.
Our next question comes from Daniel Sasson from Itaú BBA. Mr. Sasson,
[Foreign language]
hello, good morning. Good morning everyone. Thanks for taking my question. Congratulations specifically on your performance on volumes this quarter. My first question has to do with capital allocation. If you could talk a bit about the last review and application date of your Capex plan for the coming years. Perhaps here, how much of Capex, especially short term, 2026, I mean, is already contracted? How much margin do you have to either wait or delay or postpone to 2027 comparing to iron ore?
Just to try and understand your capital allocation, how do you balance your investments in expansion in P15, which is very important for the company's long-term sustainability, and the payout of dividends that you've been very strong in acting as you announced for this quarter? The second question is a bit more overall, talking about supply and demand of iron ore. I think iron ore was one of the commodities that most positively surprised the market in 2025. Huge resilience, about $105 in recent months for 2026. What do you expect? What do you think the balance of the market is going to do? We have Simuldu starting to ramp up, China perhaps decelerating a bit, but Southeast Asia strong, depletion is strong. That can help us understand your projections in terms of average prices and market for next year. Thank you very much.
[Foreihn language]
Thanks for your questions. As for capital allocations, since the IPO of cement, we have been saying that the company is one of the few in the market that allows for this combination of strong dividend payout and delivery of expansion plans. I think this is possible for two reasons. First is where we start in terms of balance sheet, net cash, and strong cash generation from its operations. Fortunately, our projects deliver a very appealing return to our shareholders. Today we are keeping the plan for the execution of our projects with also priority for research, and P15 has its challenges, but our target to keep capital for 2027 is maintained. As for margins, we have the strategy of continuing paying high dividends along 2026 and the coming years.
As for supply and demand of iron ore, in fact, supply increased a bit this year. In September it grew 14 million, up to September 12 million coming from Brazil is really being structured to have the first shipment. Next year I believe we should have approximately 20 million. In terms of iron ore supply transoceanic, in terms of demand, I think that we have important data. On the one hand, you have increasing inventories, imports in recent weeks. Inventories are 148.8 million below what we had in the previous year. We have 88.6%. That means a healthy level and above the level that we had one year ago in terms of utilization. I think that given the deceleration of the Chinese consumption, we are seeing a SCAP valve that are exports.
Exports grew 14.4 million tons from a level that was already very high. Together with that, when you see the demand of iron ore to China, we have a number that is quite impressive. Despite the total production of steel having dropped 22 million. Again I highlight the change of mix in production of Chinese steel still went from 38%- 52%.
Now it's going from 52%- 41% and margins with Chinese steel companies are negative and they are behaving in a way that I would highlight that the deterioration of Australian iron ore is increasing the change of this benchmark from 462 to 461 next year and that has driven demand for Brazilian iron ore because of its low aluminum and the need for you to correct the high alumina tenor of the Australian iron ore which is abundant in this region for you to have a more efficient mix. Our interpretation is that that can have an impact on prices. Prices should be about $110 and this is what happened when we believe that it was not consensus. Lots of people should think that there was a barrier of the $100 but we continue with our conference calls talking about higher numbers than that now at 100.
I believe this is a hedge at this level to decrease volatility of our results in the coming months.
[Foreign language]
Very clear. Thank you very much, Pedro.
Next question comes from Tatiani Conjini from JP Mark. Tatiani, your mic is clear.
[Foreign language]
Good morning. Thanks for taking my questions. I would like to explore your Capex a bit. We did see a bit of an acceleration as expected this quarter, but still below expectations, which would lead to an even higher acceleration to the fourth quarter or an amount lower than expected for the year. What should we expect for the fourth quarter? Are you revisiting the Capex for the year? Should we expect something below what we thought we would have, and if so, what led to that? Any changing project, anything that was delayed, just to try and understand it a bit better.
In terms of volumes, obviously we did see sales records, very strong sales. You did reinforce your guidance. I would like to understand if there is room in your operation, even considering third parties, for the guidance to be different or it should be considered at the top range.
[Foreign language]
Thanks for your question. As for the Capex, you are correct in expecting an important growth in the fourth quarter. I think that we have been concentrating our Capex in the third quarter, so we expect an important growth in expansion. Capex, it's not a delay. Projects are going on quite well. We have a very advanced structure in many of our projects, completing civil works for next year.
We have the electric electronic assembly of our project, but the idea is to keep the schedule of our projects, which will have an important impact for the group in terms of increased EBITDA as we kick off the startup. In terms of volumes, we have been hitting records, operating above what we expected. Fortunately, and the guidance is from 42-45 million tons. The guidance is kept. We always have to consider the uncertainties in the operation. At the pace we have been operating so far, we believe that we are going to meet our guidance. Despite the rains, I think we are going to be able to keep our pace. We are still cautious to change our guidance. Considering what we have so far, we are going to work even to exceed the guidance.
As the year goes on and we are able to keep this value, we can even consider some acceleration.
[Foreign language]
Okay, thank you very much.
Our next question comes from Yuri Pereira from Santander.
[Foreign language]
Good morning everyone. Thank you for taking my question. I would like to have a follow up on hedge. Could you tell us the amount of the hedge, the price or average price for the quarter and do you anticipate the payout of dividends considering a possible change in regulation?
[Foreign language]
Thanks for your questions. As for hedge, I would say about 8 million ton at an average price for the coming months. Much for the first quarter, but also for 1Q2026 of $104.77 per ton, which is a positive markup considering the results of today in approximately BRL 80 million for the company dividend payout.
We announced last night the approval of additional dividends of BRL 903 million considering the results of this year.
Our next question comes from Gabrielle Baja from Citi. Mr. Baja.
[Foreign language]
Hello everyone. Thanks for taking my questions. I do have some follow ups really. First, trying to go back to the P15 and company leverage. You did give us a lot of color, but could you talk a bit more up to the ramp up process, what you were considering? That is at about 2028 when you are going to start. What is the process going to be about? In terms of leverage, two points. Considering that the remainder investment of P15, we have a relevant part of Capex to be invested. The company is in a very comfortable leverage position. Considering all this, I would like to ask you two things. One, about dividends.
You did mention something, but I'm considering the context of the possible taxation on dividends. You have a profit reserve. Perhaps you could do something extraordinary. I would like to understand what you're thinking about that. Also, what do you see? The company's leverage is going to be more in the mid long term. What would you expect CSN Mineração's leverage post P15? What level would you be comfortable with for the future? These are my three points. Thank you very much.
[Foreign language]
Thanks for your questions. P15, the expected ramp up is 12 months. We are going to expect running it in the end of 2027. Ramp up would be throughout 2028. In 2029 we would be with normal operations. In terms of leverage, indeed, the company has been a great payer of dividends since our IPO.
We already paid BRL 17.46 billion with approval of BRL 903 million as we mentioned. We are going to go above our expectation. The idea is to keep our dividend payout policy and always use our profit reserves to keep these payout levels. As for leverage in the mid and long term, naturally, as you execute a project the size of P15 keeping the policy of dividend payout, you have a trend to increase your leverage. We do consider this is healthy to have a capital structure that is more efficient and eventually this leverage in the long term will go back to a level close to one time net debt EBITDA ratio. Until P15 starts operating, we are going to have a one-off increase in this leverage slightly above this level.
[Foreign language]
Very clear. Thank you very much.
Our next question comes from Matthias Moreira from Bradesco BBI. Mr. Moreira,
[Foreign language]
good morning. How are you? Thanks for taking my questions. Congratulations on your results. I have two questions. One about cost. Another very strong quarter in terms of cost close to $21. Even with the negative exchange rate variation for the future. I know that there are variables that you cannot control, the exchange rate itself. How can we consider cost performance? The second question is a follow-up on Sasson's question on dividend to better calibrate our expectations. Do you have a level of iron ore prices that makes the likelihood of dividend payout higher or lower?
[Foreign language]
Okay. As we showed in the presentation, this is going to be a priority for the group. We always have a challenge.
Next year you're going to have an increase in AT&ET so it's probably going to be a bit higher with a bit more volumes in terms of handling. On the other side, several increases in efficiency and better performance as we have been showing in terms of records and that we continue to reach in the next months. This all happens to keep the company at the levels that we believe are suitable with regards to dividends. You talked about iron ore prices. As Pedro mentioned, we also have a half full glass view. In the recent past the sector was a bit more negative in terms of data from China.
That is not necessarily generating better iron ore prices. They came with an increase of measures from the Chinese government to foster internal demand, and we continue to believe this is what is going to happen. I think that we are having the right interpretation until now, and therefore we do not believe that we are going to change our policy in terms of dividend payout based on iron ore prices.
[Foreign language]
Okay, thank you very much. Very clear.
Our next question comes from Eugenia Cavaliero from Morgan Stanley. Ms. Cavaliero,
[Foreign language]
good morning everyone. How are you? Thanks for taking my question. I think the question I have is about MRS Logística and the expansion they are having in waterways.
I would like to know if there is an impact on your company, any change with regards to logistic costs related to that and also your ideas in terms of freight costs for the next quarter. Thank you very much.
[Foreign language]
Thanks for your questions. MRS, well, this is a renewal process and the company was able to keep investments in its network and move on to several market initiatives with room for growth, but growth in the allocation of capital with return to its shareholders. We do not expect that this is going to be a problem for the iron ore operation. We have in contract that an improved efficiency translates in more competitive tariffs and that has been the case as we have been hitting records in our operation.
As for freight costs, we have a spot of $23.6 per ton and I think it's worth mentioning that today we have the volume for the fourth quarter of 3 million tons at a cost of $20.9 per ton. We have a trend in the fourth quarter with the coming of the rains and some impact from Australia of having better demand in terms of freight. The trend of the spot price is going to show in the fourth quarter and beginning of 2026. We want to, this is a time where we want to close volumes for next year. Although the spot price is a bit above what was the previous quarter, I believe that we have this dynamics. This is an additional demand in the Atlantic. Despite all that, I think the freight segment tends to continue strong and seasonal.
We have to understand what are going to be the impacts for that in the future. As for the price of fuels, and we did talk about the demand for ships, fuels is also an important cost, and fortunately the cost of the oil bearer has not been an offender along the year on the cost of freight on the C3 route.
Our next question comes from Emerson Vieira from Goldman Sachs. Mr. Vieira,
[Foreign language]
good morning team. Thanks for taking my questions. I have two. First is at this quarter we had a slight increase in forfeiting and the rollout of iron ore contracts in a market that was a bit more challenging because of several corporate moves that we saw. First, you said that you have the rollout strategy and that this is going to continue.
My question is what is the company's capacity to eventually increase prepayment volumes without jeopardizing operational cash generation of operational cash and also what is the cost of prepayment contracts when we think of yield in dollars, for example. This is my first question and the second a follow up on dividends. I understand that out of the BRL 900 million approved this quarter, half is related to results from previous years. BRL 450 million that was accrued. That was used as a reinforcement of cash for CSN Mineração. Now, considering that the worst has passed, considering the steel market, probably your cash need for the future is not going to be as high. Does it make sense considering dividends for the future at the levels that we have today?
This is the question I have considering a bit of a more pessimistic scenario, so to speak, in terms of iron ore prices for next year. Thank you
[Foreign language]
. I'm going to start from the last part of your question, the pessimistic scenario. I think the market has been more pessimistic recurrently in recent years and fortunately until now the market has surprised us positively. We consistently have had a more optimistic view than the market and that continues true and that was true in the third quarter once again. Indeed you start with a div leverage balance sheet and we believe this is suboptimal considering everything to reduce the income tax to be paid. We believe that keeping the payout of dividends together with expansion projects will bring our leverage to a healthier level for cement and therefore we don't have to change our dividend policy.
As for funding prepayment that you asked, I think that we are always trying to have long term capital with competitive prices. In the case of P15 we had a line of $1.4 billion from a Chinese development bank led by the IDB. We also considered other very competitive credit lines. As for credit appetite at cement, it continues very high in terms of prepayment. We have had demands from partners that always work with us. They have appetite for more and other partners that have not worked with us this way before showing the interest in those operations with CSN Mineração. I think clearly it is not a closed call and with regards to what you are asking, we are improving constantly.
Our last prepayment operation was the operation with the least spread over the reference interest rate and a contract where we're able to reach the best levels in terms of premium considering the pricing methodology and also very good competitive discounting freight. It has been a winning model for cement. Commercially speaking, we are being able to have an appealing product to our shareholders and being competitive in the market. I think this appetite of doing more with our partners is very good and shows that our capacity has not come to a limit.
[Foreign language]
Thanks for your answers. Thank you very much.
Our next question comes from Mariana Leiji from Bank of America. Ms. Leiji.
[Foreign language]
Good morning everyone. Can you hear me? I think you are now. Thanks for taking my question. The first is a follow up on volume.
I'd like to know for 2026 if we should expect a guidance of growing volumes compared to 2025. How do you see your quality evolving and what would be the main driver to increase volume for next year? What should we pay attention to? The second question on P15, if you could talk about the project status, what has been completed, next steps and the main bottlenecks.
[Foreign language]
Thank you very much. Thanks for your questions, Mariana. The volume for 2026, on our Seminar Day we showed a target between 43.5-47.5 million tons. This target is maintained and that represents growth compared to the guidance that we released in 2025. As for quality mix, we have implemented some initiatives and operational strategies with regards to the branding that we have that goes to each one of the different plans.
We believe that we are going to have an improvement that is going to translate in lower quality discounts for next year. As we mentioned along the presentation, we are seeing strong demand for lower quality iron ores and a premium for the slower alumina in Brazilian iron ore. We continue with a very positive understanding of the iron ore that we have for the market. Higher demand has been translating also higher competition and lower demerits for cement.
As for P15, I think that the major evolution has been infrastructure works are moving on very well and next year we expect to have a day with investors and analysts to be able to take a look with their in person. Civil works have a very advanced mobilization and electromechanical assembling and the ducts that are to connect the plant to the large plateau factors of P15 1 next to the piling areas and the terminals and iron ore loading. I think that those are the next steps in terms of supply is to have the electromechanical assembly of the plants that should be next year. Also these ducts, these pipes to connect the plant.
[Foreign language]
Very clear. Thank you very much.
Our next question is in writing by Filson Raj from Valorum Capital.
[Foreign language]
Considering the strong profit and the net cash position shown this quarter, do we intend to review or make the dividend and interest on equity payout policy more predictable for the coming quarters? The company has made the decision to keep the payout policy from 80-100% of its net income. This has been kept since the IPO and we have had a strong payout of dividends. The announcement last year talked about an excess of BRL 18 million for the year and the idea is to keep this policy. We believe that dividend payout is an important part of the investment thesis of our shareholders so we do not want to change that in the short period of time.
[Foreign language]
As a reminder, if you have a question, just click on Raise hand or write your question on the Q and A session.
Please wait while we collect the questions.
Since there are no further questions, we are going to turn the call to Pedro Oliva, CFO and IR Officer, for his final remarks.
[Foreign language]
I'd like to once again thank you for joining our conference call, celebrate with each member of the team the operational records reached. We know that took a lot of dedication from our members and also celebrate the new dividend payout to our shareholders. Good morning everyone.
[Foreign language]
CSN Mineração conference call is now closed. We wish you a very good day.