CSN Mineracao SA
BOVESPA:CMIN3
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CSN Mineracao SA
Earnings Call Analysis
Q2-2024 Analysis
CSN Mineracao SA
CSN Mineração has recently announced its financial results for the second quarter of 2024, showcasing significant improvements and some challenges. The company's executives discussed their record performance in production, sales growth, cost reductions, and their strategic focus for the future.
The company achieved its highest production levels since 2016, producing 10.4 million tonnes in the second quarter, a growth of 18% from the previous quarter. This increase was driven by seasonality factors and enhanced operational efficiency. Despite a general decline in iron ore prices, CSN Mineração managed to prioritize profit margins by focusing on its own production and reducing third-party ore purchases.
The strong operational performance translated into robust financial results. The company reported a significant rise in EBITDA to BRL 1.6 billion, a 44% increase from the previous quarter. The EBITDA margin also improved, reaching 49%, up by 8.6 percentage points. Even with a 5.4% decrease in unit net revenue to $58.6 per tonne, the company maintained solid cash flow generation, ending the quarter with a net cash position of BRL 2.8 billion.
The total sales reached 10.8 million tonnes in Q2 2024, a 13.8% increase from Q1 2024. This growth was primarily attributed to higher production during the dry season and vigorous trading activities. As a result, the company's revenue for the quarter stood at BRL 13.3 billion. However, there was a reduction in unit net revenue per tonne due to a general decline in ore prices and adjustments in product quality.
The company's cost of goods sold (COGS) increased moderately by 2.8%, much lower than the growth in sales volume. This was achieved thanks to a 10% drop in production costs, bringing the cost per tonne down to $21 from $23.5 in the previous quarter. The CapEx in Q2 saw a significant increase of 60.9%, primarily to maintain and expand operational capacity. Investments were highlighted, particularly in the P15 project, which is expected to improve the quality of ore extracted.
Looking forward, CSN Mineração is optimistic about the second half of 2024 and beyond. They expect to continue achieving strong production volumes and have already exceeded their goal of increasing their own production by 2.5 million tonnes, reaching 12.94 million tonnes. The company's growth strategy includes further reducing reliance on third-party ore and focusing on high-quality, high-margin products. They are also committed to increasing investments in projects like P15, which will bring significant improvements in ore quality.
CSN Mineração emphasized its ESG (Environmental, Social, and Governance) commitments during the earnings call. They reported a 6% reduction in CO2 emissions per tonne of iron ore compared to the previous year and a substantial increase in female representation within the company. They also announced stability renewals for all their dams, ensuring safer and more sustainable operations.
In conclusion, CSN Mineração's second quarter of 2024 has been marked by record production, strong financial performance, and a strategic emphasis on sustainable growth. With significant investments in future capacity and quality improvements, the company is well-positioned for continued success. Their commitment to cost management, environmental responsibility, and operational efficiency will be key drivers as they navigate the challenges and opportunities ahead.
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Good morning and thank you for waiting. Welcome, everyone to CSN Mineração's conference call to present the results for the second quarter of 2024. Today, we have with us the company's executive officers.
I would like to inform you that this event is being recorded [Operator Instructions]
Today's event can be accessed on the CSN Mineração Investors Relations website at ri.csnmineracao.com.br, where the presentation is also available.
The replay of this event will be available right after its conclusion. Before proceeding, we would like to declare that some of the statements herein are mere expectations or trends and are based on the current assumptions and opinions of the company's management and future results, performance and events may differ materially from those expressed herein, which do not constitute projections.
In fact, actual results, performance and events may differ materially from those expressed or implied by forward-looking statements as a result of several factors, such as the general and economic conditions in Brazil and other countries, interest rates and exchange rate levels, future rescheduling of prepayments of debt denominated in foreign currencies, protectionist measures in the U.S., Brazil and other countries; changes in laws and regulations and general competitive factors on a global, regional or national basis.
Now we would like to turn the floor over to Mr. Pedro Oliva, CFO and Investor Relations Officer, who will make the presentation of the company's operating and financial highlights for CSN Mineração for the period. Please, Mr. Oliva, you may proceed.
Good morning. I'd like to start by thanking everyone to our earnings conference call. We're going to start the presentation with the highlights of the period. In the second quarter, we had the best performance of our own production since 2016, which is a record in the current situation of the plant. The CSN Mineração delivered an increase in the sales with drop in production costs and better product mix, which increased our EBITDA margin to 49%. Although there was a drop in the price of ore in the period. We had a solid cash generation in the second quarter with adjusted cash flow positive by BRL 1.2 billion, which resulted in a net cash position at the end of the quarter of BRL 2.8 billion.
On the next slide, we have the production data. Here, we had a growth of 18% regarding previous quarter, reaching 10.4 million tonnes. The strong growth in the production reflects on one side seasonality for dry period and also the increased efficiency in the operations. Considering this, our own production level is the second highest volume in the history of company, a record when we consider the situation of our plants.
In the current situation, the drop in the volume is due -- exclusive to the lower iron ore purchases from third parties. Actually, it is a commercial strategy of the company of prioritizing margin to the detriment of volume. At the moment, I highlight that in the first quarter of 2024 compared to the first semester of 2023, the company delivered a growth of production of 2.94 million tonnes. And I remind you the market added in CSN CMIN Day last year, we talked about the growth of 2.5 million tonnes of our own production. In other words, we have exceeded 440,000 tonnes, the goal for growth of our own production, and we are confident that the second semester will be a semester of strong volumes.
Regarding total sales, we reached 10.8 million tonnes, which accounts for a growth of 13.8% compared to the first quarter of '24 when we sold 1.9 million tonnes. The increase in production with a dry period combined with a strong trading activity. But the main factors responsible for the solid revenue growth in the period, retaining BRL 13.3 billion in the quarter. On the other hand, the unit net revenue decreased by 5.4%, reaching $58.6 per tonne as a consequence of a drop in the price in the period and greater adjustment of the exported product before because of demerit.
On the next slide, we have price realization details, and here I highlight that despite the cost is dropped, 11.8% Platts, $123.6 to $111.8. Our unit net revenue dropped to $58.6. On the positive side, we had the same impact in the QPs basket and previous period had been minus $7 in the previous quarter. In this one, it was $0.3 freight cost, $1 higher than the previous quarter, reaching $25.2 in the second quarter and adjustment of quality that was 12.9 to 16.2. This is part of a commercial vision of the company that deterioration of margins of the Chinese steel mills encouraged the growth for lower content ore. And so we're tapping into this market with them.
On the next slide, we've actually COGS with an increase of only 2.8% compared to the growth of sales that we saw in the previous Slide of 13.8%. I think this growth significantly -- inferior growth regarding the sales volume is the drop to C1 of 10% that was $23.5 per tonne in the first quarter to $21 per tonne. And this increase in sales with the cost control, with the improvement of mix, with a drop of third-party products and increase in our own volume supported robust EBITDA growth and an expansion of margin of 8.6% points when compared to the first quarter 2024.
In addition, current devaluation also had a positive impact on the quarter's results. We concluded the quarter with an EBITDA at BRL 1.6 billion. On the next slide, we have the comparison between the quarters and the factors that explain the variation. We moved from an EBITDA of BRL 1.1 billion in the first quarter '24 to BRL 1.6 billion in the second quarter. This accounts for a growth of BRL 495 million and 44% growth.
The main factors that explain this is -- are lower impact of the provision of prices of previous quarters added to an improvement in volume, improved mix with more of our own production and logistics network optimization and cost reductions and sales. These factors actually offset the negative effect of the drop in ore prices and increase in freight prices.
Next slide, we present the investments of CapEx of the company. Second quarter, we had an increase of 60.9% in our company's CapEx as explained by the increase in investments to maintain operational capacity and this helps explain the records the company has been reaching and also in advance in the expansion projects, especially P50 (sic) [ P15 ]. Regarding P15, I highlight that we concluded the contract of the infrastructure package. And with that, we're going to have a level moves of associates on the site that will be higher over the next few months.
It's worth highlighting that this CapEx tends to keep growing materially, especially expansion CapEx as we had commented and reinforce that in this earnings results call regarding working -- net working capital.
On the next slide, we had a reduction of negative of BRL 536 million to BRL 566 million negative. Here, this is explained by the fact that the line of suppliers has grown more than the accounts receivable. Accounts receivable has grown because of the increase in volume and the account of suppliers, especially because of the increase in sales volumes, CIF in which we're responsible for hiring the freight.
On the next slide, we have the indebtedness profile. The company in terms of amortization has a long-term solid BRL 11.8 billion at the end of the quarter, reinforcing the net working capital of the company, reaching BRL 2.8 billion, increasing our net debt/EBITDA indicator reached at 0.32x. With that, we've a very solid structure of capital in the company to face our growth projects and keep on paying dividends according to our policy.
The next slide, we have the free cash flow. Here we have positive data, BRL 1.1 billion, as a consequence of some strong operating results with the BRL 1.1 billion and positive impact of hedging operation on iron ore prices and an exchange rate variation over the period.
As usual, we're going to go to the last slide, focusing on the ESG agenda. On governance, I highlight the publication in May of the 2023 integrated report of the company, it's a very detailed document for those that are interested in diving deeper in this agenda and where we follow the development of the goals defined by our Board.
As to diversity, I highlight a growth of 86% in the representation of women at CMIN compared to the base year, which is 2020. As to environmental management, we had reduction of 6% in the emissions of CO2 per tonne of iron ore compared to the previous year. And in terms of dams, we also had statements of stability renewed in March for all our dams.
I would like to congratulate the team for this progress with a quarterly record in the volume of our own production since 2016 with 10% drop in C1. And to conclude the presentation, highlighting the growth of our net income reached BRL 1.5 billion that accounts for 2.7x the net income of the previous quarter and 2.9x the net income of the same period last year.
With this, I conclude my presentation, and I turn over to our Chairman of the Board, Mr. Benjamin Steinbruch, before we start the Q&A session.
Good morning, everyone. I would like to greet you once again in the presentation of CMIN's earnings results. I'd like to share you -- with you how happy we're that every quarter we present improvement in numbers and results. We're working hard with this challenge of being able to have book capacity on -- capacity of our production equipment is being a very big challenge because we'll always want to produce full capacity aiming with this better productivity, cost reduction and also to make sound investments.
We analyze everything, and we're very concerned when we do not attain full capacity. Regardless of all the records that we're showing this quarter consequent of the work performed in the previous quarter, I'd like to tell you that we've been able to work on the challenge of working full capacity or reducing the flows that we're working hard in reducing costs and then happy -- how happy we're with the shipment of our own production. We reduced a lot the purchase from third parties in a strategy to improve margin.
And the only thing that we still need to improve a bit more is the area of quality in which we're still being penalized because of quality, which is natural in a change of product that we're going through over these months. And we're going to wait until we've the P15 product. And also, we had the pleasant surprise of closing all the packages. As Pedro mentioned, regarding the infrastructure that was the last one closed. I would like to thank the support of all our associates and more than this, greet and congratulate them on the results presented because it's been a consequence of great -- a lot of dedication, a lot of work and many challenges faced.
We were certain that we could reach our full capacity of our equipment, and we finally managed to. And with that, we brought the results that are very sound and consequent and even better than the previous quarters. I'd like to thank all the employees, the associates and thank them for their dedication and for the deliverables. I would like to greet all of you. Thank you all for your participation.
And I turn the floor back to Pedro. Thank you all very much.
Thank you, Mr. Chairman. With that, we proceed to the Q&A session with investors and analysts.
[Operator Instructions] Now our first question is from Barbara Soares from Itaú BBA.
Can you hear me?
Yes.
First congratulations on your results. I've a few here, starting with China. How do you see supply and demand there? On last call, we talked, well, the Panorama or the landscape seems to be better when we had some big markets. So the margin of steel mills that China had, they had improved a bit, whereas now it seems the situation has been changed. The macro data are weaker. Margins of steel mills went back to negative, the inventory of iron ore at ports is high and this is reflecting a lower prices as we talked about.
In addition, whereas exports that was being used as a [ scale well ] for our domestic market, that was weaker. We dropped. We see many countries protecting themselves, including more from buying the imported Chinese project. I'd like to know a bit more about that. And linking to this point, I'd like to understand how to think about quality premiums of next quarters with the demand for low grade increases and prices realized that end up suffering? Do you have July? Is it reasonable to think in a quality discount, similar to this quarter to the next?
And lastly, regarding buying from third parties. You mentioned the growth of almost 3 million tonnes per semester this year vis-a-vis the first semester last year, a bit higher than the goal of 2.5. And you mentioned that the share of third parties would be about 23% in the last call, is this number going to be maintained? Or should we think about something lower? Those are my questions.
Barbara. Thank you for your questions. Starting with China. You're correct actually. There is an evolution of 27.5 million tonnes regarding the same period with 150 million tonnes in the ports today. The inventories in the mills a bit lower than the historical limit of 21 days we've today. And this has been reflected in the price, so $98.8. So that's a Platts price. So it's interesting regarding the exports. If you look at SGX in December, SGX $98.5. The markets essentially flat at a price at a bit higher at the end of the year than the export market.
The production of considering the Chinese market dropped about 10% in the past 15 days. I think there is a bit of a price impact and also rainfalls, where the mills are located and the steel mill margins in China are lower today, $53 negative. As you put it correctly, favors the demand for low grade. The use of blast furnaces is at a level that is healthy, 87%. Same cannot be said regarding electric furnaces, the use is only 36.3%. The impact of this change in standards occurred in June regarding beams at about 26 September. So we have a strong pressure of traders to these -- those beams that are outside specification and also this has reduced the use of the electric furnaces.
Regarding future of China. There is a trend of growing urbanization. State council signaled to level of 70% of the population being -- in the next years, moving from a level of 66%. It looks like -- it seems to be a reasonable target. Brazil has over 80% of the population that is urban and a total of 160 million people. This growth in China represents 150 million people demanding housing in the urban areas. And this represents over 30% of the urban population of Brazil, just to give you a reference.
Actually, exports are strong. There was a drop in the pace in July. But if you compare January through July '24 to January though July '23, there is a growth of 10 million tonnes in the exports. And if you analyze data, we've an export in '24 of [ 105 ] million tonnes of exporting steel in China compared to 91 million in '23. Despite this reduction in July, it's still at a very strong pace. I think there's a point that you haven't approached in your question, which is growth in supply. If you see the growth of inventories in the Chinese ports of 27.5 million, it's exactly coinciding with the growth of the seaborne supply of [ 800,000 ] from January to July, 17 million tonnes came from Brazil. So this is our reading of the market, it's constructive. We recognize that it depends on the encouragement and incentives of the Chinese government. So the future market regarding spot, I think it's a signal though there is a negative feeling. There are not people putting heavy money that the price is going to drop in the near future, right?
Regarding quality premiums, I think the trend is for us to keep this level for the next quarter. We're very much -- because of this window of opportunity or very negative margins in the Chinese steel mills regarding buying from third parties, we've grown our own production, 12.94 million tonnes. The reduction in buying from third parties has been quite significant over the period, which leads us to have that quarter percentage of 23% of purchase regarding sales dropping second quarter to 18%.
And for the next quarters, can I keep thinking on this 18% or something close.
This close to the level of the previous quarter, 20-some percent, perhaps a bit over 20%.
Our next question is from Gabriel Simoes from Goldman Sachs.
On quality, you commented on the worsening quality that you've been tapping a market window with the change in the profile of the project. It's interesting to know how you see that? And more structurally a follow-up in Barbara's question, I'm thinking about the quality of the ore that has been extracted at the end in Casa de Pedra. I'm thinking about not only this quarter, but ahead over the next year, just to understand the importance you see in the investment of P15, how this could be changing the quality of the ore that you extract, how it's been changing at Casa de Pedra?
Second question regarding advance in supply of iron ore that you announced this quarter strategy, will you be using with certain frequency? I'd like to understand how much space you seek to apply this strategy? Now what sizing that is ideal for these prepayments vis-a-vis your production capacity, if you've a target or a number that you see to that?
Thank you for your questions, Gabriel. Regarding quality in the short term, we tend to stabilize. But structurally, no significant change until we've the address of projects, especially P15. P15 will place the company at a different level. In 2028, it is content of ore that is 59%, a bit below 60%, moving to 65% on average. We're going to go through a transformation that is quite relevant, less to do with content of [ Fe ] that will drop in P15. We're going to have 42% of iron ore content to have a product of average content of 67% iron. And this is the -- these are the investment company that will enable a structural change in the product mix and quality of the company.
Regarding prepayments that we have been making in the past quarter that basically the volume that we should amortize over this year. It's a rollout from our view. We'd have space to do more. We regularly discuss it. But for the time being, the company has not yet decided to make any new prepayments. Gabriel, we've a volume of prepayments that is already contracted for the next years at a level of 7.7 million for '26, '27, for next year, 8.1 million tonnes. We understand it's a level that is quite comfortable. There is room for more, but there is no decision of the company of doing it for the time being.
Our next question is from Carlos De Alba from Morgan Stanley.
Sorry for my Spanish. Just confirms the purchase of third parties in the second quarter were [ 1.87 ] million tonnes, 18% of your sales. Is that true? Sorry...
Carlos, just to give the exact number, 18% is surrounding number. The volume of third-party got to [ 1.45 ] million tonnes.
I'd like to understand a bit whether the schedule of P15 and the CapEx will continue according to what has been presented -- what was presented last year or if there are any changes that need to be updated to the market?
Carlos. We have been discussing that with our project team. I think there are some factors that would generate some kind of update in the schedule. And there are efforts and initiatives to try to anticipate it. The net effect of these factors, decision of actually starting some of those possibilities, for example, working on night shift, those are possibilities that are being analyzed, makes this updating of our schedule to be made on the CSN Day. This update has not been defined by the project team, and it will be done when it is mature. There are some factors that, yes, we generate an update in our schedule. I wouldn't say delay, but there is an effort on the other side so that we don't have any delays. Some decisions the company has not made regarding some of those possibilities.
Okay. right. I just like to understand the difference between CapEx of BRL 407 million that you've presented and your report with the number that we see in the detail of the cash flow operation of BRL 391 million. I don't know if you can explain a bit what's the difference between these 2 numbers?
I don't have here with us the breakdown, probably it's related to cash and competence. There is a mismatch of those things of recognizing CapEx from the accounting standpoint and effective output of cash. Sometimes these things are not communicated.
Our next question is from Yuri Pereira from Santander.
With the probable P15 investment, does this state any change regarding dividends? And then there's well discounted share price, is there any intent of sales of some kind of stake?
Thank you, Yuri. Thank you for your questions. I believe that regarding dividends, considering our sound position, cash -- net cash at the moment, we're comfortable to keep the dividend policy from now on. Any possible change, we'll certainly share with the market. We've no reason to do that. Regarding sales of equity from the CMIN view, we've a buyback program that has been announced. There is no interest of selling equity regarding CSN. I'm not the correct person to approach. The topic may be addressed at the CSN earnings results call.
Our next question is from Ricardo Monegaglia Neto from Safra Bank.
Ricardo, we cannot hear you.
Can you hear me now?
Yes.
Congratulations on the performance for the quarter. I've a couple of questions. Just -- the first just to confirm if I understand how you can think about the progress evaluation of cost? And second the matter for prepayment, you -- have you mentioned how much you intend to deliver in the second half in these prepayment? Probably, the third question is brief one. You were bidding down regarding the foreign exchange fluctuation you see that in the results presentation that we see positive variation.
Thank you. Thank you, Ricardo, for your questions. Regarding volume, the second half, we expect stronger semester than the first. And it's necessary for us to attain our guidance for the company. And as to cost in the third quarter despite the drop we had in the second quarter, we see room to keep on reducing cost in the third quarter, need to -- reduction of fixed cost, increase in production volume and also regarding initiatives that the team is always carrying out to make the operation more efficient and reducing costs. An example of this is the beginning of operations of advanced hubs and the mines so that the trucks have to move less to be at the filling stations, actually. So they have to have this shorter displacement. So there is an increase in productivity, and we've associates and equipment.
So I mentioned the '25 data. For 2024, we've a projection of 7 million tonnes. I don't have the data broken down by semester. This is reasonably linear, 3.5 million tonnes in the second semester. Regarding foreign exchange rotation, when we open cash flow, the main impact there is actually the iron ore hedge on the line. The foreign exchange rotation is not so much -- well, it impacts a bit more than the financial accounts because it's not on that column.
The greatest impact Ricardo would be actually in the cash that the company has in dollars of these -- those BRL 11.8 billion of availability. The great part of the cash is it's in strong currency, it's in dollar, where we get paid for our sales to CSN Mineração S.A. This is what explains the positive impact of the cash, well, because of the foreign exchange devaluation over the period.
Our next question is from Leo Correa from BTG Pactual.
I'd just like to follow up on the topic of quality. I think it draws a bit our attention that you've this guidance of 65% iron content for 2028 with the startup of P15, which is 67%. But it draws great attention actually that today, you're running the production of 59%. Unless the startup of P15, would it not be enough to heighten so much the iron content -- average iron content in 2028? Needs just to understand that you've other initiatives in-house to heighten this average content of the other operations that you've been talking about that, but it's a bit ahead, but would you have more reserve of hematite? How can we read that in each one of those lines for you to get the guidance of 65% content of iron, how do you develop the content in each one of those lines that you're going to have over there?
Well, thank you for the question to detail this topic, which I think is very strategic. I think it's very much related to the interest of the projects, not on P15, you've recovery projects or tailings, all of them are at that level, 65% or even more of iron content increases the quality up within our assets. At processing plants, we have the central one that is the heart of the operations and Correa it does have an average iron content above the benchmark on average. We have a volume of mills that you don't have the processing of the ore. No, it's just a granulometry. It depends on the strategy on the plant that we have. And we have a volume of resources that is relevant, that is rich in hematite at Casa de Pedra. It's a mining plant. It depends very much on our central in the future and allocation of the iron ore over time.
Well, in addition to the new projects, we've a trend of the dry plants reducing the volume over time. This is reflected in the numbers projected. This helps to explain, Correa, this improvement in quality as well.
Our next question is from Camilla Barder from Bradesco BBI.
Camilla, we cannot hear you.
Can you hear me now?
Yes.
Two brief questions from my side. First, regarding CapEx. I don't know if it's a bit early to say. Do you have any estimate of disbursement for next year. And second question just briefly. Cash flow, we've seen it's been very positive. It reached BRL 1.6 billion. We had this positive effect of the hedge operation of BRL 450 million. Just if you could comment briefly, how you have this open hedge position, it would help?
Camilla, regarding next year's CapEx. We're starting to discuss budget, starting to have some projections, I'd rather not present a number to you that would be subject to relevant update in the next few months. What I may tell you is the number for this year, as we've run so far with a CapEx below BRL 700 million. And we've an expectation of reaching close to BRL 2 billion that we had mentioned early this year. So this means that we should run in the second semester at a CapEx materially higher than what we've seen so far. And what I can tell you regarding next year is that the growth will be significant regarding these BRL 2 billion in 2024.
Regarding cash flow, you're correct. There has been a positive impact of iron ore hedge. We had a settlement of hedges of volume of 4.8 million at an average price of $129.1 per tonne. And with this settlement, we've currently, no hedge in the price of iron ore. We don't have any open transactions, and that's the current situation of the company.
Our next question is from [ Jorge Martinez ] from BAM Invest.
[ Jorge ], we cannot hear you yet.
You may enable your microphone, Mr. [ Martinez ].
Our next question is in writing from Mr. [ Bruno Levada ]. And there are 2 questions. He congratulates everyone for the results and questions, is there any frequency on the payment of dividends that may be announced to enforce by the company on financial leverage? Is it expected to have any material change for the next quarters, considering the increase of disbursement for current projects?
[ Bruno ]. Thank you for your questions. Regarding frequency of payments of profits, there is no formal policy of the company regarding this. But, I may tell you this that the decisions are made on the level of the Board. And in the past years, all the payments have been made in May and November. This is true -- has been true since 2022. I cannot confirm you that what will happen in the future. This is -- as it depends on the decision of the Board that has been the practice of the company in the past 3 years.
With regard to leverage, you're correct, expecting an increase in leverage over the next years given to the greater volume of CapEx to start expansion projects. Fortunately, the projects of the company that are underway have generated expected results even with the significant iron ore prices and P15. In the long-term price, we mentioned that in the CSN Day, the last year has an EBITDA projected of BRL 4 billion, great year for a CapEx that is less than 2x this amount. Even though, we've an increase in the execution of the project, once they're operational, we believe that the level of leverage of the company is too healthy with space to generate great value to our shareholders.
[Operator Instructions] As we've no more questions, I'd like to turn over to Mr. Pedro Oliva, CFO and Investor Relations Officer, for his final remarks. You may proceed, Mr. Oliva.
I'd like to thank you once again for your participation in the earnings results call for CSN Mineração. I'd like to congratulate all the team of CSN Mineração that have exceeded their performance to be able to deliver record production that drove a 10% in cost, resulting in net income of BRL 1.5 billion in the quarter, that is 2.7x the net income of the previous quarter. Thank you all very much, and have a good day.
The CSN Mineração earnings conference call is closed. Have you all a good day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]