Companhia Siderurgica Nacional SA (SID) 2014 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thanks for waiting. Welcome to CSN's conference to present the results for the third quarter of 2014.

Today we have with us the Company's executive officers. We would like to inform you that this event is being recorded. (Operator Instructions).

Our event is being simultaneously webcast via the Internet; it can be accessed by www.csn.com.br/ir where you will find also the presentation. The slides will be controlled by you. And the replay service will be available after the call.

Before proceeding, let me mention that forward-looking statements that may be made during this conference call are under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on beliefs and assumptions of CSN management and information currently available to the Company.

They involve risks, uncertainties, assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also impact the future results of CSN, and could cause results to differ materially from those expressed in such forward-looking statements.

Now, I'll turn the conference over to Mr. David Salama, CSN's Executive Investor Relations Officer, who will present the Company's operating and financial highlights for the period. Mr. Salama, you may proceed.

Good morning, everybody. Thank you for attending the CSN teleconference call. Together with me, we have other executive officers.

Initially, I would like to say a few words about the segments that we work at. The world production of steel reached 1.2 million tonnes in 2014, an increase of 2% regarding the same period of last year. We have an excess of installed capacity. And in September, we had a [raise of use] of 75.1, a drop of 2.6% vis-a-vis the same period of last year. For 2014, we project a 2% growth in steel consumption.

Domestic production of steel is around 5 million tonnes from January to September 2014, a 1% reduction vis-a-vis the same period of last year. Whereas the production of rolled steel is 1.7 million tonnes, a drop of 5% vis-a-vis the same nine months of last year.

Apparent consumption in 2014 reached 9 million tonnes, a drop of 3% regarding the same period of last year. And internal sales were 8% below (inaudible).

The import of 1.3 million tonnes of steel increased in 2014. The export presented a reduction of 3%. [India] has reduced its projection for 2014 of internal sale of products; the first projection was 27 million, now it's 21.7 million. And the apparent consumption was reduced; it went from 27.2 million tonnes to 25.3 million tonnes.

The reduction of the demand in steel [resource] is a consequence of the economic situation which reached the main industries that we operate, the automotive market, capital market, [white lime], and so on.

In mining, by the end of the third quarter, the price of iron ore dropped with $78 per tonne compared to $135 in the beginning of 2014, 42% drop. And the prices still kept on dropping in October, November, today reaching $75.5 per tonne.

With the expansion of production capacity, the price of ore was impacted by demand factors, like the performance in China, low availability of credit for steel and a high level of iron ore in Chinese inventories. In this scenario, we see an average of $90, a reduction of 12% vis-a-vis the average of the second quarter of last year.

The quality went from 145, 170 for each 1 percentage point of the [sale] of iron ore. The freight from Brazil to China was $31 per tonne, an increase of 3.7 vis-a-vis the average of the second quarter of this year. The third quarter Brazilian exports of iron ore totaled 92.5 million tonnes, an increase of 9% vis-a-vis the previous quarter.

Let's go to slide number 3 where we're going to see the consolidated results for the third quarter of 2014.

The third quarter showed a consolidated net revenue of BRL3.9 million, 4% below the second quarter. This is due to lower prices of iron ore in the international market. And the gross profit was BRL971 million. Adjusted EBITDA was BRL977 million, 25% below the previous quarter due to lower contribution of mining and steel whereas EBITDA margin reached 23%.

Now let's go to slide number 4 where we have the investments made by the Company.

In YTD, the Company invested BRL1.5 billion to extend its business. We highlight the investments in steel. BRL367 million in steel (inaudible). The production of cement 22% and BRL279 million in logistics.

Now let's go to slide number 5 where we'll see the results per segment. Let's start by this first graph.

The net income in the third quarter was BRL3.9 million, 65% from steel, 21% from mining, 9% from logistics, 3% from cement and 2% from energy.

In the middle part of the slide, you see that the adjusted EBITDA was 61% by steel, 19% mining, 13% logistics, 3% cement and 4% energy.

In the third quarter, the EBITDA (inaudible) BRL658 million, a margin of 24%. Mining BRL206 million (sic - see slide 5, "BRL203 million"), 26% margin. Logistics BRL142 million, EBITDA margin of 38%. Cement BRL26 million, 22% EBITDA margin. And BRL47 million for steel, an EBITDA margin of 48%.

Slide number 6 now where we'll see a breakdown of steel. On the upper left corner, in the third quarter, the total volume of steel sales reached 1.2 million tonnes, 1% above the volume for the second quarter. In terms of total sales, 72% were in the domestic market, 25% in subsidiaries abroad and 3% exported.

The net revenue reached BRL2.8 million, 2% below the second quarter of this year. This is basically due to the mix of products sold. In the third quarter, the net revenue was [BRL2.130 million].

Then the adjusted EBITDA was less 17% vis-a-vis the third quarter this year. The margin was 4 percentage points below the second quarter of this year.

In the next slide, we are going to see the mining sector in detail. So we are going to start by the upper left corner. In the third quarter the sales of iron ore increased TO 7.7 million tonnes, 7% above the results for the second quarter of 2014. Sales volumes 2.6 million, was [sales at Namisa]. In addition to the sales we also had 1.5 million tonnes in iron ore in the third quarter.

It's important to highlight that year-to-date we reached a record of 36.3 million tonnes, 19% above the volume for the same quarter in 2013. From these volumes, 7.1 million tones was [traded by momentum]. Iron ore reached a record of 24.4 million tonnes, an increase of 23% over the same period of previous year.

Now the upper right corner we see that the net income closed at BRL914 million, 18% below the result for the second quarter. This is mainly due to lower prices for iron ore which reached an average of $55 per tonne vis-a-vis $63 per tonne which was the price in the second quarter of this year. This was partially offset by larger volume of shipping.

In the third quarter, we had the adjusted EBITDA BRL203 million, 54% below the previous quarter EBITDA margins was 22%, a reduction of 18 percentage points.

Now let's go to the next slide where you see the track regarding EBITDA. EBITDA of BRL977 million in the third quarter presented a drop of 23%, the reductions were due to lower prices in iron ore and the prices for steel. The offset is larger volumes of steel and iron ore sold.

Now slide number 9, where we are going to show the evolution of the net debt. The net debt at the end of the third quarter presented a growth of BRL900 million vis-a-vis the second quarter.

The ratio net debt-EBITDA calculated on the last 12 months adjusted EBITDA reached 3.2 times the total of gross debt at the end of September. 57% was in real and 33% was in foreign currency, based on North American dollars. 87% of the long term debt and the rest is short term.

We must highlight the devaluation of real vis-a-vis the dollar in the third quarter. This had an impact on our final results. Additionally, the realization of BRL600 million in fixed investments and the onus of the debt in our program to buy back shares which totaled BRL300 million.

These effects were offset by the EBITDA of BRL1 billion and the reduction of BRL100 million in the working capital of the Company. So it's basically what I had to tell.

Now let's open for questions.

(Operator Instructions) (Inaudible).

The first one is about the volumes for iron ore for the future. Can you give us some color on the work for mining expansion? If you can give us a breakdown, you talk about the rail yard and why -- how you see the CSN service expansions? And what to expect for 2015 and 2016 and the impact on volumes?

And the second question, we saw you're discussing the [Tagalong] issue again. Do you any vision about [CCM361]? Because you bought more than one third of (inaudible) so I'd like to have some color in that.

And I'm going to ask Daniel, our Mining Director to answer your first question. And then I'll talk about USIMINAS.

Regarding the expansion for Casa de Pedra, you asked two questions about the rail yard and other details. So actually we [think] the expansion work for Casa de Pedra, for (inaudible) and now we are focusing on the yards.

When we talk about yards, we are talking about the product loading yard and the duplication of our rail area in Casa de Pedra. This is ongoing. We are focusing on that activity right now. And in 2016 we hope to have all the work concluded. And at this point the plant -- Casa de Pedra plant will be able to produce 40 million tonnes.

In terms of the (inaudible), at the end of last year we closed an important deal for the mid-run. We are now at a stage to finish this work at -- we have opened it. The way we have projected its structural work and it's ready to operate in the next 4-5 years without any restrictions. So the problem has been overcome.

Regarding the second question, USIMINAS, we are on the look-out seeing the movements that are happening. And if we challenge the last -- actually we first concerning thing that we had already noticed. So our investments will be monitored. We'll see how the situation evolves and we want to prove (inaudible) was final that's why we are trying to talk to the regulating agencies to challenge their decision.

Thiago Lofiego, Merrill Lynch.

I have two questions. Can you give us some color on the [Namisa] negotiations which is not clear to us, as far as we see there is still an extension of this one to be discussed. So I'd like to know what implication is for you to reach the 40 million tonnes? I think it's a (inaudible) of additional 10 meters, that you're prepared. I would like to understand what is happening and what the implications are for you to reach the full capacity?

And the second, according -- about the iron ore, I would like to know about the average content of iron ore and silica and purity as we discussed it you had in the quarter just to understand the prices.

We are going to address the first question and then Geraldo our Commercial Director in Mining will answer the second question regarding iron ore prices.

So Thiago first let's see what the product of this (inaudible) that we are seeing is that we have a (inaudible) is that we have a (inaudible) has been operating for more than 40 years (inaudible) that mining has been operating for more than 100 years. Three, with this structure, which is not very different from the other ones that you see in other mining plants in Brazil and around the world. Only (inaudible).

So what we are doing right now is finishing work at a stage that allows us to operate in the mid-range. What you talked about the extensions regarding the moves that you have around?

Yes we have a number of periods for the -- regarding the rise in rise in cost. And a constructive method so we have these phases of rising the height. This requires public consultation and other things; we have already gone over all these phases. Now we are starting the discussion for a second phase to give us some breathing space so we will increase the height. This is a regular process, it's normal, it's current, in Minas Gerais there was the (inaudible) of structure that this has nothing to do with our dam or with the other ones of other mining companies. It's a much smaller structure, different from the ones we have here.

So, what we have been doing is to meet all the tactical parameters to the (inaudible) in terms of safety which has always been our [attitude], so much so that we have never had any accidents. And we have a very qualified team, we have auditors monitoring the process, independent auditors and consultants at the international level and then I tell you that everything is running smoothly in the most adequate way.

And we have some inspections then we need some specific licenses and very strict ones. We have different phases in this process. So the first one is the fire license; you have to consult the local community and now everybody (inaudible) are the stakeholders. And then we have (inaudible) the first licensee. Then we have the licenses for installation.

So each project will have a specific process to gain a license. This is going very well. We have reports from the agency that are responsible for keeping track of this in four mining companies is safe. So regarding the tailings dam and we have statements to be effect that we have been following everything to the letter. Our dam is one of the reference dams in terms of technical parameters and construction (inaudible) in Euro.

So in order to [produce] the BRL40 million we are very much at ease with that the work has been concluded. We are finalizing the work, we are planting grass, we have increased the (inaudible), we are cleaning some areas, and for the expansion we have another phase which will follow the process normally, the licensing process. And the second code, it is required because the people who are most interested in putting this operating well is the Company itself.

Can you help me out with the second question? Regarding our ore with the (inaudible) last month we have been focusing on reducing costs and trying to improve the aggregate value of new products.

Casa de Pedra provides good quality ore, this is history, this is something that we have always seen it is a fact.

In terms of quality we are trying to differentiate our products from the products of the rest of the market. We are competing with the Australian products of 57%, in China the difference is $10. So, we need to stand out product quality. So, when we get better returns for the quality we try to extend our customer portfolio for people who are outside China, because the Chinese market has an excess of supply.

Marcelo Aguiar, Goldman Sachs.

I would like to go back to the dam issue to make it clear then you said that the dam is available to produce for four five years, but it would be very important to increase its height. So what's the deadline to have a preliminary license to extend the dam another 10 meters, so that you can go on operating after four or five years?

With that we could have a better idea of the risk of the dam and see if there is a problem if the (inaudible) the project and those things. I would like to know a little bit about your delivery rates, that's it; and also to talk about the iron ore prices that you just talked about, if you could give us an idea of how much your selling is at the spot market, what about the quarterly contract, because the gap of your realized prices you said is $53, the price is about $91.65.

So, I would like to know what the realized price will be for the next quarter. Finally can you also tell us little bit about the purchasing of third-party products, you are at a volume internally and externally it represents BRL66 million. I think that the projection will be for year 2013, 2014 so the price is very low.

I think this means the mines won't have the same operating results as the last quarter.

Let's go back to the dam. We have the previous license for all the phases until the commissioning of the dam. Now each (inaudible) increase phase requires an installation (inaudible). So we ended up the construction of this stage that will ensure five years of production. This is an [additional good] method that all the companies, all the mining companies use and this is the licensing process for all the mining companies in Minas Gerais.

Next (inaudible) is already ongoing it's into the process of installation. It's in Minas Gerais; public hearings have already been made. All these phases are more direct actually, this is the way it works with licensing. So we have already overcome all these phases of public hearings with the local community and we are about to get the licenses in it actually we are ahead of curve of this process. We hope this process will be concluded by the first quarter of next year.

Well, the other questions you asked 14% of our returns -- 63% of the (inaudible) conference, so these (inaudible) are long-term and the rest is short-term. 34% of our sales are priced in the futures market for fixed call positions.

When you compare two quarters regarding price, there is some projections, assessments that are made but when you compare the average of last year with our average price, the average index with the average price and you compare this year the same figure. You will see that the dollar price dropped less than the index. So if you were to compare you need to compare for a longer period of time because quarter-to-quarter you will see some variation.

So we see longer scenarios we see that the drop in our prices was less than the drop that you had in the index.

[Monica Loh, Sofia Bank].

Is there any (inaudible)

What I can tell you that the negotiations are going on. They have a large group of representatives from the consortium. So the negotiations are going on. And they should go on during the weekend. As soon as we have news, we are going to report to the market.

Renato Antunes, BTG Pactual.

First question regarding leverage. It went from 2.7% to 3.2% of EBITDA. And if we see the depressed scenario (inaudible), so looking forward you would have some cash flow issues if you keep the CAPEX above BRL2 billion. So, my question is what's your strategy from now on with a different scenario in terms of iron ore. Do you have any strategy regarding leverage? And do you have any assets that would be perhaps sold to try and minimize the leveraging looking forward?

The second question is for Martinez. I would like to talk about the fuel market. First of all, how is short-term the over bookings for the fourth quarter matching with somewhat you see in the market? I think the first quarter will be more difficult. So, do you see any signs of improvement for the future? You're talking about 1% or 2% increase in (inaudible). I would like to know how comfortable you are with the projection, and also the price trend, premium trends, those that you always give us in the call.

Renato, I will ask Martinez to answer first and then I'll talk about leveraging.

Regarding the international coke, I don't want to be repetitive, but what we see is a clear upturn in the American market, in the NAFTA region; not only the U.S. but also Mexico Group about 7% this year and in the U.S. in spite of a slightly negative first quarter they're already at 4.6% in the second quarter and they could close the year with 3%.

In the euro zone, we have a stable market but in China that we are seeing the most the iron ore scenario loss of capacity (inaudible) closed every plant. They used to be a net importer, now they are a net exporter. So in only 10 years they account for 50% of world production. This is what we see in the international scenario. We are different in the U.S. as the recovery for us starts now in the fourth quarter, because in spite of fierce competition internationally we really cut those competitions. First, we are at a traditional (inaudible) in the government in the administration. So until the first quarter of the year, we will 100% focus in the domestic market. It's interesting, we expect a much better scenario (inaudible) will be solved. In the first quarter, we're going to export more and for next year we are going to work with a dollar of (inaudible). This will be good for exports and this will also be good for the domestic market in order to avoid imports.

Another important piece of data, which is (inaudible) is that the industrial GDP needs to move with separate economy of the world, and our GDP, industrial GDP is 12.5%. If you look at the other six largest economies in the world, it's never less than 25%. So I see this as something as a monopoly. Industry needs to resume its important growth in the scenario in Brazil.

And then as a consequence, the sell through -- the Company will be benefit. Give some words with this strategy. We are going to work at full speed, we are going to reduce costs, and we have a very good plan to reduce operating costs. In the fourth quarter, we are going to see an upturn in exports to the US which is the only feasible place in the world. The only place we can export to, to date.

In the fourth quarter we should export around 300,000 to 400,000 tonnes, and another important initiative is the total focusing in the domestic market, working to have products of better quality, more aggregate value, summarizing not concentrating and selling per kilo and per meter another piece of data which will help us in our free cash flow in 3Q finished stock, finished inventory and this reduction of finished inventory will be very important in our industry, especially (inaudible), to ensure that the fundamental investment for better production and quality are made. Another important piece of data, and here I would like to talk about portfolio, because we have just started our portfolio with the production of longs. So our approval was totally concluded yesterday. We have all the cases approved, and next year we should have 350,000 to 400,000 tonnes, this is created by a good synergy of cement long and short.

Another important thing is that, CSN has an important characteristic and it is studying the requirements of the various stages. We are working with the specific assets in each one of the segment to make this change more global and to maintain and operating in spite of our very negative scenario this year.

In terms of premiums we would say that the penetration of imports in the third consumption of 2014 should be around 20%, which is 2.5 million tonnes to 2.4 million tonnes. If you imagined that, this exchange rate will be around 275 and prices will come back to the domestic market then we will be focusing in the domestic market. It will have a chance to recover its margins and go back to historic EBITDA margins.

Another important piece of data is, if you imagine this year at 550 and a freight of 45 and (inaudible) at 560, and a (inaudible) premium from 3% to 10% in the domestic market, and in regarding imported versus domestic. So in terms of the prices that I see today in the domestic market, 1,830 or 1,860, at the current exchange rate that's very important. So what are my expectations for 2015?

First of all, the better definition of the political economic scenario and we hope that the industrial sector will be benefit to promote more jobs to increase the productive inflow. And then with this scenario with a dollar and with a drop in imports, we know that 2015 will be more than 2014 it will be much better year starting in the first quarter.

So in the fourth quarter this year to and the beginning of first quarter next year we are going to export to the US. This is going to be profitable because we sell it as a player in the local market because we have a base there. So, this is a macro scenario. This is what we see for the fourth quarter this year and the first quarter of next year.

Regarding the net debt. You're right. The ratio net debt-to-EBITDA is at 3.2% and it was 2.7% during the first half of the year. It's important to consider the exchange rate variation. The dollar had an impact in the increase in our debt. We also had a reduction of EBITDA with a drop in iron ore prices. So, we are very much concerned about the goal. This is something that's very much discussed in the Company itself.

We are going to work strongly to (inaudible). These will be supported by two fronts. The first one related to performance of investments. Non-core investments, we are going to review the investments. We are going to see the ones that are more profitable. And the processing really in steel and mining to reduce costs. And this will start to bring some benefits for the Company. We saw a very important drop in our plate from 964 to 950, its now below 900. Also in mining we're working to reduce costs.

And also in regards to expenditures and the working capital for the business. In other words, we are adapting ourselves through the economic reality of the times. So we are reviewing contracts we are gaining in productivity. We have tariff reviews. So there are several things going on and the results of which are already becoming apparent. Our inventorial funds have increased 7% year to year, 10% in the last 12 months.

This caused net gain of BRL130 million. We're really renegotiating the main deadlines with our suppliers. So far we have managed to be successful in 47% of the cases which translates into an improvement in terms of payments of 5 days.

We are also more [keen] to negotiate the futures contracts and to re-adjust the current contracts. So there are many efforts to reduce costs and we're already seeing the benefits of this. This of course it will have an impact on our debt and another important (inaudible) of the deck is each clutch or investments for the next year.

So we are giving priority to the investments that have provided us returns. So now this will have a positive impact on our debt and we'll bring our leverage to an adequate level.

Just two clarifications. Regarding Namisa, I did not understand you well but you said that you're going to go on discussing if you could -- so do you expect a final word in the very short term or do you think this could go on for another two weeks or even months?

Just to have an idea of what you're expecting in terms of current basis. And then you said that you're reviewing the investment goals, do you have any figures to give us in terms of the impact?

Regarding Namisa, these negotiations have been going on. We will have another round of talks this weekend. We are moving ahead. It's very hard to say what the end lines -- or the end date will be when we're going to have a conclusion. But negotiations are being developed evolving and as soon as we have news we are going to get in touch with the market.

And if you have an idea of what impact is?

As regard to impact you saw that so far we invested around BRL1.5 billion. Our expectation for the last quarter is to close the year around BRL2 billion. And we are also working with the 2015 budget. But I don't expect for this to be much different from what was the (inaudible) this year. As soon as we have these figures we are going to announce it, disclose it to the market.

Ivano Westin, Credit Suisse

Looking at the results per segment. (Inaudible) EBITDA 30% above the previous quarter, during the same period the reported EBITDA for [MIS] dropped 36%, what is the expectation? What are the trends? Should we expect a recovery of the results and MIS? I would like to talk about expensing of long steel. What is the volume of sales for the next year? And are you expecting to enter this market do you expect to gain market from the local competitors to work with (inaudible) projection or it just want to believe to increase demand and then results?

Regarding the first question our investment in MIS is made to equity equivalent. So along the year since I'm (inaudible) the balance sheet side has been closed, and the balance sheet for MIS. And there are some adjustments along the year. There are some mismatches which sometimes occur. But usually at the end of the year you have final results which are at (inaudible).

For long steel, the market Brazilian market has been experiencing the same variation that you had in France. Your current consumption should close around 11 million tonnes, 4.5 in bars and 2.8 in (inaudible). This year we should close around 120 tonnes with the successful ramp up that we approved (inaudible) from the largest to the smallest and just -- the end was yesterday.

So in both cases, (inaudible) are approved, and we have many infrastructure works (inaudible) products.

Looking at the cement base because (inaudible) and it had some synergies, another important effect; CSN is going to operate in aggregate value in long steel. And it can be presumed to go in place, in (inaudible) instead of scrap, as there is a certain value that can be captured by the market that is more than what we have today.

In terms of (inaudible) stock, we are projecting a volume of 300 million tonnes 350 million tonnes and by the end of 2015 beginning of 2016 we would work at around 500 million tones, 400 bars, and the rest (inaudible). I actually made some modification and work more (inaudible) more for wires than bars which are more of a supplier market and the imports of bars is also strong this year.

It is basically these scenarios that we have for this year and for the next year. Thank you.

(Operator Instructions) Thiago Lofiego, Merrill Lynch.

Could you please talk a little bit about the premium of the Q vis-a-vis imported? And what would be a comfortable Q3 level to adjust prices in Brazil? In terms of CAPEX is it -- you said that you don't expect 2015 to be higher than 2014, is there a chance that it will be higher than 2014 CAPEX?

Regarding premium, I'm starting from a Q of $515 FOB with a price of $45 so the price in Brazil would be $560. So I'm assuming that a premium 67% vis-a-vis imports and domestic is reachable and so in the current scenario it is not worth running the risk. And our (inaudible) price is between 1,800-1,850. With an exchange of 240 to 260 more so it's 260, it's upwards in 2014. We are working with a devaluation of -- we expect an exchange rate of 275 so maybe in the next -- in the near future we could think about a re-alignment on international prices.

But the scenario in the last quarter is stable. And in the last quarter moved to the domestic market it is said -- it's usually very slow because we have the vacations and companies shut down. We have the options to export.

The exchange rate that would make us comfortable would be around 310 to 290 assuming a premium of 10%. At 275, I am much more comfortable with imports I will be able to sell in the US because the market there has better prices. We now also have the possibility of selling more in the domestic market.

So this exchange rate opens up for us a different scenario. Drop in imports, more sales in the domestic market and also a possibility of exporting to market it still has a reasonable premium in the US. So 275, I think is a borderline to examine the other aspects, we need to see if the change (inaudible) if the demand is back, if we have to consumption if we have demands so there are other variables that we need to take into consideration.

But if there is an exchange rate that might lead to a change in the scenario both for exports and for the domestic market.

Regarding CAPEX, your other question, we are conducting it at the possible level year-to-date we had (inaudible) BRL1.5 billion in the last quarter with an additional BRL415 million (inaudible) that we are going to close the year around BRL2 billion. We don't have specifics on some of these (inaudible) expect something much higher than what we had this year. So around BRL2 billion was the estimate.

Thank you, since there are no more other questions I'd like to give the floor to Mr. Salama. (inaudible) for his conclusion remarks.

The Company expects to work at full capacity. In steel we are focusing in the domestic market, but also working to increase exports. I also mentioned something regarding cost reductions that has been addressed very diligently by the Company. In my view, we are going to focus on high aggregate value products; the idea is to sell products where we have an edge.

Our quality is better so we are going to focus in quality in addition to reducing our working capital. I would say that it is a challenging scenario and to again work through, it's (inaudible). We will keep on working diligently to adjust its operations in the market where we work, improving operating results, reducing working capital, focusing on more aggregate value of products, adjusting the levels of investment. We are going to (inaudible) economic reality.

I'd like to thank everybody for attending the call. The IR team is available for any questions you may have or that may come in the future. Good afternoon.

Thank you very much, CSN teleconference call has now come to an end. Please disconnect your lines and have a nice day.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.