Release of the 1Q17 Results

Transcription

1 Public Disclosure - Belo Horizonte, April 20, Usinas Siderúrgicas de Minas Gerais S.A. - Usiminas (BM&FBOVESPA: USIM3, USIM5 e USIM6; OTC: USDMY and USNZY; LATIBEX: XUSIO and XUSI) today releases its first quarter (1Q17) results. Operational and financial information of the Company, except where otherwise stated, are presented based on consolidated figures, in Brazilian Real, according to International Financial Reporting Standards (IFRS). All comparisons made in this release take into consideration the fourth quarter of 2016 (4Q16), unless stated otherwise. Release of the 1Q17 Results The main operational and financial indicators were: Steel sales volume of 930 thousand tons; Iron ore sales volume of 643 thousand tons; Adjusted consolidated EBITDA of R$533 million and Adjusted EBITDA margin of 23%; Working capital on 03/31/17 of R$2.6 billion; Cash position on 03/31/17 of R$2.4 billion; Investments of R$23 million. Main Highlights R$ million - Consolidated 1Q17 4Q16 1Q16 Var. 1Q17/4Q16 Steel Sales Volume (000 t) % Iron Ore Sales Volume (000 t) % Net Revenue 2,351 2,120 2,041 11% COGS (1,870) (1,861) (2,081) 1% Gross Profit (Loss) (41) 85% Net Income (Loss) 108 (195) (151) - EBITDA (Instruction CVM 527) % EBITDA Margin (Instruction CVM 527) 23% 28% 2% - 5 p.p. Adjusted EBITDA % Adjusted EBITDA Margin 23% 11% 3% + 12 p.p. Investments (CAPEX) % Cash Position 2,416 2,257 1,736 7% Market Data 03/31/17 Index BM&FBOVESPA: USIM5 R$4.46/share USIM3 R$8.38/share EUA/OTC: USNZY US$1.37/ADR LATIBEX: XUSI 1.31/share XUSIO 2.49/share Consolidated Results Performance of the Business Units: - Mining - Steel - Steel Processing - Capital Goods Subsequent Events and Highlights Capital Markets Balance Sheet, Income and Cash Flow Statements 1Q17 Results 1

2 Economic Outlook Preliminary data on the global economic outlook in 2017 showed accelerated economic growth among the principal developed nations, which had been observed since mid The movement has pressured commodities prices, with positive effects for emerging economies. However, political uncertainties on the international scenario remain high, both in the US, with measures and signals from the Trump government, as well as in Europe, where political forces skeptical of the European Union project have been growing. In spite of the high degree of uncertainty in the global scenario, risk perception of the Brazilian economy has followed a downward trend over the period. Several factors have contributed to this, with a highlight for recovery in commodities prices, and domestic factors, such as signs from the government advancing with reforms and forward indicators that economic activity is finally at a path of recovery. The Dollar/Real exchange rate declined over the first quarter and inflation continued to fall above expectations. This has led to the perception that there is space to maintain or accelerate the rate of the local basic interest rate (Selic) cuts. Copom (Monetary Policy Committee) reduced Selic to 11.25% p.a. in the last meeting of 04/12/17. Brazilian industry has begun to show signs of a reaction. With available data through February, Industrial Production registered a 0.3% increase in the indicator that compares the first two months of the year to the same period in Capital goods production advanced 3.6% and durable goods, 11.7%. The industry confidence index improved in the first quarter. According to the National Industrial Association, the ICEI (Business Confidence Index) reached 54.0 points in March, the highest level since January Q17 Results 2

3 Economic and Financial Performance Comments on the Consolidated Results Net Revenue In the 1Q17, net revenue was R$2.4 billion, against R$2.1 billion in the 4Q16, due to higher sales volume and prices in the Steel and in the Steel Processing Units and higher prices in the Mining Unit. Net Revenue Breakdown 1Q17 4Q16 1Q16 Domestic Market 90% 92% 85% Exports 10% 8% 15% Total 100% 100% 100% Cost of Goods Sold - COGS COGS in the 1Q17 totaled R$1.9 billion, stable compared with the 4Q16. For detailed information, see the Business Unit sections of this release. Net profit increased from R$259.4 million in the 4Q16 to R$480.7 million in the 1Q17, showing an 85.3% recovery. Gross margin was 20.4%, against 12.2% in the 4Q16, as per demonstrated below: Gross Margin 1Q17 4Q16 1Q % 12.2% -2.0% Operating Expense and Income In the 1Q17, selling expenses were R$52.2 million, against R$85.3 million in the 4Q16, a 38.8% decrease, mainly due to lower provision for losses on doubtful accounts, which were R$3.9 million in the 1Q17, against R$33.3 million in the 4Q16. General and administrative expenses in the 1Q17 totaled R$93.1 million, stable in comparison to the 4Q16, which were R$90.9 million. Other operating expenses and income were negative in R$150.7 million in the 1Q17, against an income of R$199.9 million in the 4Q16, mainly due to: Higher negative result in the sale of surplus electric energy, which was a negative R$22.7 million in the 1Q17, against a negative R$11.9 million in the 4Q16; Higher provision for legal liabilities, which were R$49.9 million in the 1Q17, against R$13.8 million in the 4Q16; Lower fiscal credits by R$16.1 million in the 1Q17. These effects were partially offset by: Non-recurring effects in the 4Q16 referring to reversion of impairment in the Mining Unit of R$357.7 million. There was no such event in the 1Q17; Extraordinary event, non-recurring, referring to expenses for early termination of a supplier contract in the amount of R$70.7 million accounted for in the 4Q16. There was no such event in the 1Q17; Higher result of the Reintegra Program, which was R$4.5 million in the 1Q17, against R$0.2 million in the 4Q16. Thus, net operating expenses were R$296.1 million in the 1Q17, against net operating revenues of R$23.7 million in the 4Q16. 1Q17 Results 3

4 In this manner, the Company s operating margin showed the following performance: EBIT Margin 1Q17 4Q16 1Q16 7.8% 13.3% -15.7% Adjusted EBITDA Adjusted EBITDA is calculated from net income (loss), reversing income tax and social contribution, financial result, depreciation, amortization and depletion, and equity in the results of Associate, Joint Subsidiary and Subsidiary Companies, not including impairment of assets. The adjusted EBITDA includes the proportional participation of 70% of Unigal and others joint subsidiary companies. EBITDA Breakdown Consolidated (R$ thousand) 1Q17 4Q16 1Q16 Net (Loss) Income 108,318 (194,971) (151,377) Income Tax / Social Contribution 58, ,323 (15,360) Financial Result 54,581 87,053 (101,553) Depreciation, Amortization 306, , ,086 EBITDA - Instruction CVM , ,907 49,796 Equity in the Results of Associate and Subsidiary Companies (37,080) (27,314) (51,845) Joint Subsidiary Companies proportional EBITDA 41,754 27,973 45,597 Impairment of Assets - (350,449) 8,030 Adjusted EBITDA 532, ,117 51,578 Adjusted EBITDA was R$532.8 million in the 1Q17, the best result in 11 quarters, against R$234.1 million in the 4Q16, mainly due to better performance in the Steel Unit, which presented higher sales volume and better prices in the period. For detailed information, see the Business Unit sections of this release. Adjusted EBITDA margin in the 1Q17 was 22.7%, against 11.0% in the 4Q16, as shown below: Adjusted EBITDA Margin 1Q17 4Q16 1Q % 11.0% 2.5% Financial Result In the 1Q17, net financial expenses were R$54.6 million, against R$87.1 million in the 4Q16, mainly due to exchange variation gains of R$55.6 million in the 1Q17, against losses of R$6.4 million in the 4Q16, in function of a 2.8% foreign exchange appreciation of the Real against the Dollar in the 1Q17, against a 0.4% devaluation in the 4Q16. These effects were partially offset by lower financial revenue. 1Q17 Results 4

5 The chart below summarizes the Financial Result: Financial Result - Consolidated R$ thousand 1Q17 4Q16 1Q16 Change 1Q17/4Q16 Net Currency Exchange Variation 55,617 (6,421) 346,957 - Swap Transactions Market Cap. 1,299 (8,808) (129,051) - Income and Inflationary Variation 102, ,249 56,180-20% Other Financial Income 56,525 72,148 50,032-22% Interest and Inflationary Variation over Financing and Taxes Payable in Installments (218,796) (219,021) (176,913) 0% Other Financial Expenses (51,852) (53,200) (45,652) -3% FINANCIAL RESULT (54,581) (87,053) 101,553-37% + Appreciation / - Depreciation of Exchange Rate (R$/US$) 2.8% -0.4% 8.9% p.p. Equity in the Results of Associate and Subsidiary Companies In the 1Q17, equity in the results of associate and subsidiary companies was R$37.1 million, against R$27.3 million in the 4Q16, mainly due to better the results of MRS Logística and Codeme. Net Profit (Loss) In the 1Q17, the Company accounted for a net profit of R$108.3 million, reverting the net loss of R$195.0 million in the 4Q16, representing a recovery of R$303.3 million in this period. Working Capital In the 1Q17, working capital was R$2.6 billion, against R$2.5 billion in the 4Q16, mainly due to higher steel and raw materials inventories (including purchased slabs), reflecting higher prices, partially compensated by the increase in other current liabilities (Forfaiting facilities). Although steel inventories have increased in Real, steel volume remained stable in comparison with the previous quarter. Investments (CAPEX) In the 1Q17, CAPEX totaled R$23.4 million, 65.3% lower when compared with that in the 4Q16, which was R$67.4 million. Investments were spent with in sustaining CAPEX, with approximately 77% applied to the Steel Unit, 11% applied to the Mining Unit, 9% applied to the Capital Goods Unit and 3% applied to the Steel Processing Unit. Indebtedness On 03/31/17, consolidated gross debt was R$6.88 billion, stable when compared with that on 12/31/16, which was R$6.94 billion, a R$62.6 million decrease. In the 1Q17, it was a foreign exchange appreciation of the Real against the Dollar of 2.8%, which directly positively affected the debt portion in foreign currency, which corresponded to 25.0% of total debt on that date. Debt composition by maturity was 8.9% in the short term and 91.1% in the long term. Net consolidated debt on 03/31/17 was R$4.5 billion, against R$4.7 billion on 12/31/16. The Net Debt/EBITDA ratio ended the 1Q17 at 3.9x, against 7.0x in the 4Q16. 1Q17 Results 5

6 The following chart demonstrates the consolidated debt indexes: R$ thousand 31-Mar Dec-16 Change 31-Mar-16 % Short Term Long Term TOTAL TOTAL Mar17/Dec16 TOTAL Local Currency 51,158 5,110,077 5,161,235 75% 5,162,822 0% 4,096,296 26% TJLP 3, , , ,880 0% 380,136 0% CDI 30,948 4,700,370 4,731,318-4,733,141 0% 3,583,170 32% Others 16,928 34,190 51,118-49,801 3% 132,990-62% Foreign Currency* 558,397 1,159,682 1,718,079 25% 1,779,065-3% 3,331,822-48% Gross Debt 609,555 6,269,759 6,879, % 6,941, % 7,428,118-7% Cash and Cash Equivalents - - 2,415,637-2,257,454 7% 1,735,627 39% Net Debt - - 4,463,677-4,684,433-5% 5,692,491-22% (*)99.9% of total foreign currency is US dollars denominated Total Indebtedness by Index - Consolidated Change Mar17/Mar16 The graph below demonstrates the cash position and debt profile (principal only) in millions of Real on 03/31/17: 2,416 Duration: R$: 51 months US$: 51 months 239 1,073 1,074 1,074 1,073 2, Cash Local Currency Foreing Currency 1Q17 Results 6

7 Performance of the Business Units Intercompany transactions are on arm s-length basis (market prices and conditions) and sales between Business Units are carried out as sales between independent parties. Usiminas - Business Units Mining Steel Steel Processing Capital Goods Mineração Usiminas Ipatinga Mill Soluções Usiminas Usiminas Mecânica Cubatão Mill Unigal Income Statement per Business Units - Non Audited - Quarterly R$ million Mining Steel* Steel Processing Capital Goods Adjustment Consolidated 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 1Q17 4Q16 Net Revenue ,219 1, (626) (504) 2,351 2,120 Domestic Market ,978 1, (626) (504) 2,110 1,958 Exports COGS (53) (47) (1,798) (1,725) (512) (453) (82) (103) (1,870) (1,861) Gross Profit (Loss) (51) (36) Operating Income (Expenses) (42) 319 (218) (246) (26) (26) (11) (25) 1 2 (296) 24 EBIT (13) 29 2 (10) (21) (50) (35) Adjusted EBITDA (4) (7) (16) (15) Adj.EBITDA Margin 48% 30% 21% 11% 7% 2% -5% -7% 3% 3% 23% 11% *Consolidated 70% of Unigal I) M I N I N G In the 1Q17, the iron ore quotation in the international market showed the highest quarterly average since the 3Q14, reaching the price of R$85.64/t, having reached US$95.05/t on 02/21/17, the highest level since 08/07/14. Continued demand for steel by China (as a result of the increase in domestic credit via federal stimulus), allied to higher profitability of Chinese mills and the growing influence of the future markets on iron ore pricing, were the main factors responsible for this impact on prices. Generally speaking, the pricing reality in the last two quarters has injected a wave of optimism in iron ore market players, having showed a return, albeit timid, of Chinese domestic production. Additionally, some international high-cost producers have seen this as an opportunity to return to the market. Also in the 1Q17, it is interesting to note the highest peak of iron ore inventories in Chinese ports, where they surpassed the mark of 130 million tons. For the rest of the year, the expectation of a price decline still prevails, mainly due to the start up of new production capacity throughout this year. 1Q17 Results 7

8 Operational and Sales Performance - Mining In the 1Q17, production volume was 681 thousand tons, against 646 thousand tons in the 4Q16. Sales volume accounted for in the 1Q17 was 643 thousand tons, against 657 thousand tons in the 4Q16, basically destined to the Steel Unit. Production and sales volumes are show in the chart below: Iron Ore Thousand tons 1Q17 4Q16 1Q16 Change 1Q17/4Q16 Production % Sales - Third Parties - Domestic Market % Sales - Exports Sales to Usiminas % Total Sales % Comments on the Business Unit Results - Mining Net revenue registered in the 1Q17 was R$108.3 million, against R$78.5 million in the 4Q16, higher by 38.0%, due to a 33.7% increase in the iron ore PLATTS price adjusted for the period of sales price formation of the Mining Unit (Fe 62%, CFR China) (US$82.5/t in the 1Q17, against US$61.7/t in the 4Q16), partially offset by the foreign exchange appreciation of the Real against the Dollar of 2.8% in the period. In the 1Q17, cash cost per ton was R$61.8/t, against R$63.2/t in the 4Q16, a 2.2% decrease, mainly due to lower own labor costs and third party services costs, partially offset by higher electric energy and fuel costs. In the 1Q17, Cost of Goods Sold (COGS) was R$53.0 million, against R$47.2 million in the 4Q16. COGS per ton was R$82.0/t, against R$71.2/t in the 4Q16, a 15.1% increase, mainly in function of the 4Q16 being impacted by the reversion of part of the depletion of mining rights. In the 1Q17, net operating expenses were R$42.5 million, against R$318.8 million in the 4Q16, due to the reversion of asset impairment in the amount of R$357.7 million occurred in the 4Q16. This effect did not occur in the 1Q17. Additionally, in the 1Q17, the result of the sale of surplus electric energy was R$0.1 million, against R$2.3 million in the 4Q16. Thus, Adjusted EBITDA was R$51.5 million in the 1Q17, against R$23.9 million in the 4Q16, a recovery of 115.4%. Adjusted EBITDA margin was 47.6%, against 30.5% in the 4Q16, a growth of 1,710 basis points. Investments (CAPEX) Investments in the 1Q17 were R$2.6 million, against R$14.2 million in the 4Q16, applied to sustaining CAPEX. Stake in MRS Logística Mineração Usiminas holds a stake in the MRS Logística through its subsidiary UPL Usiminas Participações e Logística S.A. MRS Logística is a concession that controls, operates and monitors the Brazilian Southeastern Federal Railroad Network (Malha Sudeste da Rede Ferroviária Federal). The company operates in the railway transportation segment, connecting the states of Rio de Janeiro, Minas Gerais 1Q17 Results 8

9 and São Paulo, and its core business is transporting, with integrated logistics, bulk cargo in general, such as iron ore, finished steel products, cement, bauxite, agricultural products, pet coke and containers. MRS transported 40 million tons in the 1Q17, stable in comparison to the 4Q16 and nearly higher than the volume transported in the same period of last year, highlighting the volume of general cargo. II) S T E E L Preliminary data from the World Steel Association indicates that crude steel production reached million tons in the first two months of 2017, equivalent to a 5.8% increase over the same period of the previous year. There was a production increase in most of the main producing countries, where the greatest contribution came from China, accounting for a volume of million tons, a 5.8% volume increase over the same period in Conditions remain challenging for steel. Weak global capital spending has made demand recovery more difficult, nearly maintaining the scenario of excess global capacity unchanged. Additionally, the increase in the cost of raw materials, as well as the close of important export markets, such as the United States and Europe, have created even more adverse conditions to the steel business environment. In the Brazilian steel industry, according to data from the Instituto Aço Brasil (the National Steel Distributors Institute), crude steel production in Brazil increased 9.5% in the first two months of 2017 over the same period in 2016, with a highlight for flat steel production. In the 1Q17, the Brazilian flat steel market consumed 2.5 million tons, with 87% of the volume supplied by local plants and 13% by imports. The first signs of recovery of industrial activity have already positively impacted the steel consumption. There was a 1.3% increase in comparison with the previous quarter. Domestic sales remained stable compared with the 4Q16, but advanced 5.5% over the 1Q16. Imports also increased in the 1Q17 and totaled 311 thousand tons, a level not seen since the 3Q15. Signals of the industrial activity s recovery in the context of Real appreciation against the Dollar and price adjustments of the local plants have opened up opportunities for imports. The volume increased 10,4% over the 4Q16 and imports corresponded to 13% of apparent consumption in this quarter, representing a 100 basis points increase over the 4Q16. China remained as the main source of imports, with a 57% share. Production - Ipatinga and Cubatão Plants In the 1Q17, crude steel production in the Ipatinga plant was 737 thousand, against 777 thousand in the 4Q16. In the 1Q17, rolled steel production in the Ipatinga and Cubatão plants totaled 965 thousand tons, stable in relation to the 4Q16, which was 999 thousand tons. Production of Crude and Rolled Steel Thousand tons 1Q17 4Q16 1Q16 Change 1Q17/4Q16 Total Crude Steel % Ipatinga Mill % Cubatão Mill Total Rolled Steel % 1Q17 Results 9

10 Sales In the 1Q17, sales volume totaled 930 thousand tons of steel, against 891 thousand tons in the 4Q16. Domestic market sales totaled 825 thousand tons in the 1Q17, stable in relation to those in the 4Q16. Export sales volume was 105 thousand tons in the 1Q17, against 71 thousand tons in the 4Q16, a 48% increase. The Sales share in the domestic market was 89% and 11% in exports in the 1Q Q16 2Q16 3Q16 4Q16 1Q17 Domestic Market Exports The main export destinations are shown below: 5% 8% 2% 1% 3% 3% 1% 3% 4% 1Q17 35% 36% Germany Argentina United Kingdom Mexico Switzerland USA Spain China Portugal Canada Belgium 1Q17 Results 10

11 Sales Volume Breakdown Thousand tons 1Q17 4Q16 1Q16 Change 1Q17/4Q16 Total Sales % % % 4% Heavy Plates % % % -20% Hot Rolled % % % 8% Cold Rolled % % % 8% Galvanized % % % 7% Slabs 23 2% 15 2% 30 3% 54% Domestic Market % % % 1% Heavy Plates % % % -20% Hot Rolled % % % 9% Cold Rolled % % % -4% Galvanized % % % 4% Slabs 20 2% 9 1% 20 2% 119% Exports % 71 8% % 48% Heavy Plates 5 1% 6 1% 10 1% -12% Hot Rolled 10 1% 11 1% 40 4% -12% Cold Rolled 54 6% 24 3% 34 4% 131% Galvanized 32 3% 25 3% 51 6% 30% Slabs 3 0% 6 1% 10 1% -44% Comments on the Business Unit Results Steel In the 1Q17, net revenue in the Steel Unit was R$2.2 billion, 13.3% higher than in the 4Q16, which was R$2.0 billion, in function of better prices by 9.9% in the domestic market and by 10.9% in the export market, in addition to a 48% higher export volume. In the 1Q17, cash cost per ton of rolled products was R$$1,614/t, against R$1,408/t in the 4Q16, a 14.6% increase comparing both periods, mainly due to higher costs in coal by 47.2%, in iron ore by 14.5% and in energy and fuel by 13.1%. Cost of Goods Sold COGS was R$1.80 billion in the 1Q17, against R$1.73 billion in the 4Q16. COGS per ton was R$1,933/t in the 1Q17, stable in comparison to the 4Q16. In the 1Q17, there was lower major repairs cost and lower inventory turnover impact. Selling expenses were R$32.0 million in the 1Q17, 52.9% lower than in the 4Q16, which were R$67.9 million, mainly due to lower provision for losses on doubtful accounts, which was R$1.0 million in the 1Q17, against R$34.2 million in the 4Q16. General and administrative expenses (G&A) totaled R$71.5 million, against R$66.7 million in the 4Q16, a 7.2% increase, mainly due to reversion of provision for bonus in the 4Q16. Other operating expenses and income totaled R$114.3 million in the 1Q17, stable in relation to the 4Q16, with mention of: Higher negative result in the sale of surplus electric energy, which was R$22.8 million in the 1Q17, against R$14.2 million in the 4Q16; Higher provision for legal liabilities by R$34.9 million; Lower fiscal credits by R$16.1 million in the 1Q17. 1Q17 Results 11

12 These effects were partially offset by: Extraordinary event, non-recurring, referring to expenses for early termination of supplier contract in the amount of R$70.7 million account for in the 4Q16. There was no such event in the 1Q17; Higher result of the Reintegra Program, which was R$4.5 million in the 1Q17, against R$0.2 million in the 4Q16. It is worthy to mention that the tariff applied over export revenues went from 0.1% in the year of 2016 to 2% in the year of 2017; In this manner, net operating expenses totaled R$217.8 million in the 1Q17, against R$246.3 million in the 4Q16. Thus, Adjusted EBITDA reached R$464.9 million in the 1Q17, against R$223.8 million in the 4Q16. Adjusted EBITDA margin was 21.0% in the 1Q17, against 11.4% in the 4Q16, an increase of 950 basis points. Investments (CAPEX) In the 1Q17, investments totaled R$18.0 million, against R$47.8 million in the 4Q16, related to sustaining CAPEX. III) S T E E L P R O C E S S I N G Soluções Usiminas SU Soluções Usiminas operates in the distribution, services and small-diameter tubes markets nationwide, offering its customers high-value added products. It serves several economic segments, such as automotive, auto parts, civil construction, distribution, electro-electronics, machinery and equipment and household appliances, among others. In the 1Q17, sales in the Distribution, Services/Just-in-Time and Tubes segments were responsible for 40%, 51% and 9% of total sales volume. Comments on the Business Unit Results Steel Processing In the 1Q17, net revenue was R$567.0 million, 18.0% higher than in the 4Q16, which was R$480.3 million, due to higher sales and services volume by 11.5%, as well as higher average prices in the period by 5.9%. In the 1Q17, cost of goods sold was R$512.1 million, against R$452.9 million in the 4Q16, a 13.1% increase, due to higher sales volume and higher value-added products being sold in the period. Operating expenses were R$26.1 million in the 1Q17, stable in relation to those in the 4Q16, which were R$25.9 million. Thus, Adjusted EBITDA in the 1Q17 was R$36.9 million, against R$9.1 million in the 4Q16, an increase of 303.5%. Adjusted EBITDA margin was 6.5% in the 1Q17, against 1.9% in the 4Q16, an increase of 460 basis points. 1Q17 Results 12

13 IV) C A P I T A L G O O D S Usiminas Mecânica S.A. Usiminas Mecânica is a Brazilian capital goods company dedicated to the fabrication and assembly of metallic structures, shipbuilding and offshore platforms, oil and gas, industrial assembly and equipment fabrication, foundry and railcar manufacture. Main Contracts In the 1Q17, the main contracts were destined to the oil and gas and mining industries. Comments on the Business Unit Results Capital Goods In the 1Q17, net revenue was R$82.7 million, 22.3% lower than in the 4Q16, which was R$106.3 million, in function of the decrease in portfolio due to its stagnation of projects in the infrastructure sectors in the country. Gross profit was R$0.5 million in the 1Q17, against R$3.7 million in the 4Q16, an 86.0% decrease, due to lower revenues obtained in all segments operated by Usiminas Mecânica. Adjusted EBITDA in the 1Q17 was a negative R$4.2 million, against a negative R$7.5 million in the 4Q16, as a result of the decrease in fixed costs in the period. Adjusted EBITDA margin in the 1Q17 was a negative 5.0%, against a negative 7.0% in the 4Q16, better by 200 basis points. Events After the End of the Quarter Annual Shareholders Meeting: The Shareholders are hereby called to meet on 04/27/17, at first call, in the Annual Shareholders Meeting ( Meeting ) in order to deliberate on the following matters: (1) Appreciation of Management s accounts and analysis, discussion and vote on the financial statements and annual management report for the fiscal year ending in 12/31/16; (2) Settlement of the global budget for the Administrators compensation for the period until the 2017 Annual Shareholders Meeting; (3) To deliberate on the appointment of the Members of the Board of Directors, effectives and alternates, who were appointed through the multiple voting ( Voto Múltiplo ) system on the Annual Shareholders Meeting held on 04/28/16, pursuant to the 3rd paragraph of article 141 of the Law # 6.404/76, for a term until the 2018 Annual Shareholders Meeting and appointment of the respective Chairman of the Board of Directors; and, (4) Appointment of the members of the Fiscal Council (Conselho Fiscal), effective and alternates, for a term until the 2018 Annual Shareholders Meeting, as well as determination of their respective compensation. The documents related to the Agenda are at the shareholders disposal in the Company s headquarters and in the websites of CVM ( BM&FBOVESPA ( and the Company ( Highlights Approval of the Capital Reduction of MUSA: On 03/03/17, an Extraordinary General Meeting of its subsidiary MINERAÇÃO USIMINAS S.A. ("MUSA") was held, in which its shareholders unanimously approved the proposal for the reduction of MUSA's capital stock in the amount of R$1,0 billion, as it was deemed excessive, and also approved, consequently, the amendment in its Bylaws, so that its wording may reflect the aforementioned Capital Reduction. Once the procedures for the Capital Reduction have been completed, the corresponding amounts for reduction of capital will be delivered to MUSA s shareholders proportionally to their participation in the capital stock of MUSA, being the amount of R$700,0 million due to Usiminas. 1Q17 Results 13

14 Usiminas Rating: On 03/10/17, as a result of measures taken by Usiminas in the last few months, such as the capital increase of R$1.0 billion, renegotiation of its debt with national and international creditors and the recent approval of the capital reduction of R$ 1 billion of MUSA, the Rating Agency, Moody s International, raised Usiminas rating. On a global scale, the rating went from Caa2 to Caa1, while on the national scale, the change was from Caa2.br to B3.br; with this, Moody s recognizes the effectiveness of the actions taken and understands that the Company reduced pressure in its short term liquidity. Moody s affirmed that the ratings continue to reflect Usiminas solid position in the Brazilian flat steel market and the measures adopted by the Company to adjust its operations to theweak domestic market demand. Quality Certification Mineração Usiminas (MUSA): MUSA is the first mining company in the country and one of the pioneering companies in Brazil to obtain the recommendation for ISSO 9001:2015 Certification, the new version of the norm referring to quality management. The certification audit was conducted by Bureau Veritas Certification, a global benchmark in the area. New product development: After a strong investment cycle and support from its Research and Development Center, the largest in Latin America, Usiminas launched several high technology content products, exclusively and for the first time in the country. Only in 2016, the company launched nine products and, this year, expects to present seven more new products to the market. Its DP 1200 grade, for example, is arriving on the market as the highest strength steel produced in Brazil for the automotive industry. With it, structural reinforcement parts, such as bumpers and door protection bars, can be manufactured with lower thicknesses and better forming performance. On the other hand, in the white goods and civil construction segments, the novelty is the Electrogalvanized Chromatized Steel. This provides higher corrosion resistance for compressor supports, stove backings, ladders and other components that do not demand painting. Mercedes-Benz Environmental Responsibility Award: Usiminas was once again recognized for its sustainability practices in the production process. On 03/30/17, Usiminas was one of the winners of the 7 th Mercedes-Benz Environmental Responsibility Award with its project Junto e Misturado - Baia de Mistura ( Together and Mixed Mixing Bay ). The auto manufacturer annually evaluates initiatives by its suppliers and the Ipatinga Plant was one of the winners for results in recycling of waste, previous disposed of in an industrial dump, which now are processed and utilized in replacement of iron ore and anthracite in one of the steel production stages. 1Q17 Results 14

15 Capital Markets Usiminas Performance Summary - BM&FBOVESPA (USIM5) 1Q17 4Q16 Change 1Q17/4Q16 1Q16 Change 1Q17/1Q16 Number of Deals 692, ,644-16% 719,719-4% Daily Average 11,165 13,470-17% 11,995-7% Traded - thousand shares 1,010,930 1,561,664-35% 1,304,536-23% Daily Average 16,305 25,601-36% 21,742-25% Financial Volume - R$ million 4,872 6,401-24% 1, % Daily Average % % Maximum % % Minimum % % Closing % % Market Capitalization - R$ million 5,589 5,138 9% 1, % Performance on the BM&FBOVESPA Usiminas Common shares (USIM3) closed the 1Q17 quoted at R$8.38 and its Preferred share (USIM5) at R$4.46. In the 1Q17, USIM3 and USIM5 appreciated 1.45% and 8.78%, respectively. In the same period, the IBOVESPA index appreciated 7.90%. Foreign Stock Markets OTC New York Usiminas has American Depositary Receipts (ADRs) traded on the over-the-counter market: USDMY is backed by common shares and USNZY, by Class A preferred shares. On 03/31/17, USNZY ADRs, which have higher liquidity, were quoted at US$1.37, presenting an appreciation of 9.60% in the quarter. LATIBEX Madrid Usiminas shares are traded on the LATIBEX the Madrid Stock Exchange: XUSI as preferred shares and XUSIO as common shares. On 03/31/17, XUSI closed quoted at 1.31, appreciating 9.17% in the quarter. XUSIO shares closed quoted at 2.49, registering a depreciation of 0.40% in the period. 1Q17 Results 15

16 For further information: INVESTOR RELATIONS DEPARTMENT Cristina Morgan Cavalcanti Leonardo Karam Rosa For press, please contact us at Visit the Investor Relations site: or access by mobile phone: m.usiminas.com/ri 1Q17 Conference Call Results - Date 04/20/2017 In Portuguese - Simultaneous Translation into English Brasília time: at 11:00 a.m. New York time: at 10:00 a.m. Dial-in Numbers: Dial-in Numbers: Brazil: (+55 11) / USA: (1 786) Audio replay available at (55 11) Pincode for replay: # - Portuguese Pincode for replay: # - English Audio of the conference call will be transmitted live via Internet See the slide presentation on our website: Statements contained in this release, relative to the business outlook of the Company, forecasts of operating and financial income and references to growth prospects are mere forecasts and were based on the expectations of Management in relation to future performance. These expectations are highly dependent on market conduct, the economic situation in Brazil, its industry and international markets and, therefore, are subject to change. 1Q17 Results 16

17 Balance Sheet - Assets - Consolidated IFRS - R$ thousand Assets 31-Mar Dec Mar-16 Current Assets 6,893,598 6,420,478 6,099,534 Cash and Cash Equivalents 2,415,637 2,257,454 1,735,627 Trade Accounts Receivable 1,173,118 1,179,212 1,289,168 Taxes Recoverable 291, , ,430 Inventories 2,814,559 2,604,306 2,481,868 Advances to suppliers 6,617 7,226 10,574 Financial Instruments 68,652 44,669 78,040 Other Securities Receivables 123,496 89, ,827 Non-Current Assets 19,410,970 19,834,267 20,516,248 Long-Term Receivable 4,068,519 4,265,283 4,553,616 Deferred Income Tax & Social Contribution 3,040,718 3,120,368 3,322,746 Deposits at Law 667, , ,238 Accounts Receiv. Affiliated Companies 3,623 3,842 4,302 Taxes Recoverable 96, ,242 87,722 Financial Instruments , ,097 Others 259, , ,511 Investments 1,150,372 1,126,176 1,122,739 Property, Plant and Equipment 13,488,122 13,748,890 14,491,957 Intangible 703, , ,936 Total Assets 26,304,568 26,254,745 26,615,782 Balance Sheet - Liabilities and Shareholders' Equity - Consolidated IFRS - R$ thousand Liabilities and Shareholders' Equity 31-Mar Dec Mar-16 Current Liabilities 2,458,976 1,752,244 4,884,036 Loans and Financing and Taxes Payable in Installments 609,555 76,237 2,683,255 Suppliers, Subcontractors and Freight 683, , ,683 Wages and Social Charges 180, , ,759 Taxes and Taxes Payables 123,035 65, ,740 Accounts Payable Forfaiting 606, , ,873 Financial Instruments 71,225 48, ,505 Dividends Payable 22,003 22, Customers Advances 55,094 35,806 59,002 Others 107, ,215 96,079 Long-Term Liabilities 8,445,852 9,310,867 6,920,481 Loans and Financing and Taxes Payable in Installments 6,269,759 6,865,650 4,744,863 Actuarial Liability 1,139,376 1,342,727 1,158,741 Provision for Legal Liabilities 665, , ,214 Financial Instruments - 102,413 78,248 Environmental Protection Provision 146, , ,913 Others 224, , ,502 Shareholders' Equity 15,399,740 15,191,634 14,811,265 Capital 13,200,295 13,200,295 12,150,000 Reserves & Revenues from Fiscal Year 524, ,445 1,074,987 Non-controlling shareholders participation 1,675,314 1,655,894 1,586,278 Total Liabilities and Shareholders' Equity 26,304,568 26,254,745 26,615,782 1Q17 Results 17

18 Income Statement - Consolidated IFRS R$ thousand 1Q17 4Q16 1Q17 Change 1Q17/4Q16 Net Revenues 2,350,838 2,120,144 2,040,890 11% Domestic Market 2,109,663 1,957,768 1,727,749 8% Exports 241, , ,141 49% COGS (1,870,099) (1,860,736) (2,081,470) 1% Gross Profit 480, ,408 (40,580) 85% Gross Margin 20.4% 12.2% -2.0% p.p. Operating Income (Expenses) (296,065) 23,683 (279,555) - Selling Expenses (52,193) (85,302) (79,690) -39% Provision for Doubtful Accounts (3,923) (33,319) (16,910) -88% Other Selling Expenses (48,270) (51,983) (62,780) -7% General and Administrative (93,141) (90,912) (89,744) 2% Other Operating Income (expenses) (150,731) 199,897 (110,121) - Provision for Legal Liabilities (49,911) (13,804) (12,738) 262% Result of the Non Operating Asset Sale/Write-Off 1, ,972 - Result of the Sale of the Surplus Electric Energy (22,701) (11,883) (40,797) 91% Temporary Equipments Shutdown (includes depreciation) (105,241) (105,404) (118,751) 0% Impairment of Assets - 350,449 (8,030) - Termination of a Supplier Contract Other Operating Income (Expenses), Net 21,189 50,695 (2,021) -58% EBIT 184, ,091 (320,135) - EBIT Margin 7.8% 13.3% -15.7% p.p. Financial Result (54,581) (87,053) 101,553 - Financial Income 159, , ,212-21% Financial Expenses (269,349) (281,029) (351,616) -4% Equity in the Results of Associate and Subsidiary Companies 37,080 27,314 51,845 36% Operating Profit (Loss) 167, ,352 (166,737) - Income Tax / Social Contribution (58,855) (418,323) 15,360 - Net Income (Loss) 108,318 (194,971) (151,377) -156% Net Margin 4.6% -9.3% -7.4% p.p. Attributable: Shareholders 88,901 (273,609) (152,770) - Minority Shareholders 19,417 78,638 1,393-75% EBITDA (Instruction CVM 527) 528, ,907 49,796-10% EBITDA Margin (Instruction CVM 527) 22.5% 27.5% 2.4% p.p. Adjusted EBITDA - Joint Subsidiary Companies proportional EBITDA 532, ,117 51, % Adjusted EBITDA Margin 22.7% 11.0% 2.5% p.p. Depreciation and Amortization 306, , ,086 12% 1Q17 Results 18

19 Cash Flow - Consolidated IFRS R$ thousand 1Q17 4Q16 1Q16 Operating Activities Cash Flow Net Income (Loss) in the Period 108,318 (194,971) (151,377) Financial Expenses and Monetary Var. / Net Exchge Var. 4,178 66,726 (54,411) Interest Expenses 192, ,744 70,502 Depreciation and Amortization 306, , ,086 Losses/(gains) on Sale of Property, Plant and Equipment (1,408) 26,411 (1,972) Equity in the Results of Subsidiaries/Associated Companies (37,080) (27,314) (51,845) Impairment of Assets - (350,449) 8,030 Difered Income Tax and Social Contribution 30, ,660 (20,441) Constitution (reversal) of Provisions 73,428 31,613 2,572 Actuarial Gains and losses 7,273 (514) (350) Stock Option Plan ,209 Total 684, , ,003 (Increase)/Decrease of Assets Accounts Receivables Customer (85,924) 127, ,563 Inventories (253,094) (380,518) 288,733 Recovery of Taxes 2,125 (32,188) 51,389 Judicial Deposits (16,947) (23,829) (12,844) Accounts Receiv. Affiliated Companies Others 25,957 89,236 (32,793) Total (327,664) (219,493) 422,158 Increase /(Decrease) of Liabilities Suppliers, Contractors and Freights (163,220) 249,626 16,112 Amounts Owed to Affiliated Companies (23,086) 5,021 (24,262) Customers Advances 19,288 (17,657) 18,203 Tax Payable 57,850 (46,680) 38,016 Securities Payable Forfaiting 249,782 (252,356) (184,626) Actuarial Liability Payments (59,582) (55,807) (51,384) Others (3,782) (18,562) (137,779) Total 77,250 (136,415) (325,720) Cash Generated from Operating Activities 434, , ,441 Interest Paid (234,033) (245,421) (240,115) Income Tax and Social Contribution (14,760) (2,375) (4,135) Net Cash Generated from Operating Activities 185,262 (126,793) (27,809) Investments activities cash flow Marketable Securities 1,025, , ,194 Amount Received on Disposal of Investments Amount Paid on the Acquisition of Investments Fixed Asset Acquisition (22,674) (74,799) (64,859) Fixed Asset Sale Receipt 1,693 (52,711) 2,364 Additions to / Payments of Intangible Assets Dividends Received 1,274 93, Purchase of Software (683) (3,430) (4,576) Net Cash Employed on Investments Activities 1,005, ,892 44,978 Financial Activities Cash Flow Assigned Credits ,825 Settled Credits assignments - - (87,487) Inflow of Loans, Financing and Debentures Payment of Loans, Financ. & Debent. (4,892) 80,586 (90,104) Shares Issued / Capital Increase Payment of Taxes Installments (335) (329) (552) Swap Operations Liquidations (2,525) 1 (30,723) Dividends and Interest on Capital - (1) (2) Net Cash Generated from (Employed on) Financial Activities (7,752) 80,257 (184,043) Exchange Variation on Cash and Cash Equivalents 1,063 1,664 (10,762) Net Increase (Decrease) of Cash and Cash Equivalents 1,183, ,020 (177,636) Cash and Cash Equivalents at the Beginning of the Period 719, , ,272 Cash and Cash Equivalents at the End of The Period 1,903, , ,636 RECONCILIATION WITH BALANCE SHEET Cash and Cash Equivalents at the Beginning of the Period 719, , ,272 Marketable Securities at the Beginning of the Period 1,537,584 1,811,939 1,224,185 Cash and Cash Equivalents at the Beginning of the Period 2,257,454 2,339,789 2,024,457 Net Increase (Decrease) of Cash and Cash Equivalentes 1,183, ,020 (177,636) Net Increase (Decrease) of Marketable Securities (1,025,604) (274,355) (111,194) Cash and Cash Equivalents at the End of the Period 1,903, , ,636 Marketable Securities at the End of the Period 511,980 1,537,584 1,112,991 Cash and Cash Equivalents at the End of the Period 2,415,637 2,257,454 1,735,627 1Q17 Results 19