Brazil’s Usiminas Profit Soars Ninefold in Q1 2025, Yet Shares Slide Amid Market Uncertainty

Reuters reported that Usiminas, one of Brazil’s largest steel and mining groups, posted a dramatic turnaround in its first quarter 2025 results, but investors responded with skepticism.

The company’s net profit surged to R$337 million ($59 million), marking an 845% increase compared to the same period last year. Analysts had expected a profit of R$200 million ($35 million), making the result a significant beat.

Despite this, Usiminas shares fell 5.6% to R$5.74 ($1.01) after the results. The market’s reaction reflected concerns about the company’s outlook rather than disappointment with its recent performance.

Usiminas attributed its strong quarter to higher steel prices, especially in the automotive sector, and lower costs in its steel division. The company’s adjusted EBITDA reached R$733 million ($129 million), up 76% year-on-year, with an EBITDA margin of 11%, a four-point increase.

Meanwhile, net revenue climbed 10% to R$6.8 billion ($1.19 billion). The company’s steel sales volume rose to 1.09 million tons, a 5% year-on-year increase.

Mining sales volume also grew, reaching 2.2 million tons, up 13% from the previous year. Usiminas benefited from a robust automotive sector, which saw vehicle production expand by 8.3% in the quarter.

Usiminas Posts Q1 Recovery Amid Price Hikes

The company implemented price increases of 2–3% for automakers and 2–5% in other strategic segments. Usiminas reported a positive foreign exchange gain of R$112 million ($20 million), reversing a loss of R$233 million ($41 million) in the previous quarter.

However, net debt climbed to R$1.37 billion ($240 million), mainly due to working capital needs. Capital expenditures fell 43% quarter-on-quarter to R$219 million ($38 million).

Analysts at XP Investimentos described the results as solid, highlighting the positive impact of higher prices and lower costs. They cautioned, however, that high steel imports could pressure results in the second half of the year.

Brazil’s elevated interest rates may also contribute to this pressure. Santander maintained a neutral rating on the stock with a target price of R$7.50 ($1.32), citing strong sales but higher costs.

UBS analysts set a neutral rating and a R$7.00 ($1.23) target, pointing to improved visibility on margin recovery but warning that a full turnaround would take time.

Usiminas expects operational stability in the second quarter but sees a challenging environment ahead, with risks from unfair steel imports and global trade uncertainty.

The company’s story in Q1 2025 is one of operational recovery and financial improvement, but persistent industry headwinds and cautious analyst outlooks continue to weigh on its stock.

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