Companhia Siderurgica Nacional SA (SID) 2022 Q4 法說會逐字稿

[Interpreted] Welcome everyone to the CSN conference call to release results for the fourth quarter 2022. Today, we have with us the company's executive officers. (Operator Instructions) We have simultaneous webcast that may be access through CSN's Investor Relations website at ri.csn.com.br, where the presentation is also available. The replay of this IR event will be available as soon as the call ends after 1 week. Once again, you can flip through the slides at your own convenience.

Please bear in mind that some of these statements made herein are mere expectations or trends and are based on the current assumptions and opinions of the company management. Future results, performance and events may differ materially from those expressed herein as they do not constitute projections. In fact, actual results, performance or events may differ materially from those expressed or implied by forward-looking statements as a result of several factors such as overall and economic conditions in Brazil and other countries, interest rates and exchange rate levels, future rescheduling or prepayment of debt pegged in foreign currencies, protectionist measures in the U.S., Brazil and other countries, changes in laws and regulations and general competitive factors at global, regional or national basis.

I would now like to turn the floor over to Mr. Marcelo Cunha Ribeiro, the CFO and the IR Executive Officer, who will present the financial and operational highlights for CSN. Mr. Ribeiro, you may proceed.

[Interpreted] Good morning to all of you, and thank you for attending our results call for the fourth quarter 2022 for CSN. Before beginning the presentation, I would like to thank all of you for your attendance and the CEO and Chairman of CSN is with us as well as other executive officers that will participate in the question-and-answer session.

Let's begin with the highlights for the period. The acceleration in our financial results for the fourth quarter. We had important frameworks and some impacts, especially because of the rainfall in mining, but we were able to come up with a good response, and we had a speed up in volumes, prices and costs in mining; and in terms of steel, we had the traditional good performance, which enabled us to increase our EBITDA by 15% at the end of the year, a growth that should increase its pace throughout 2023.

Secondly, we highlight the conclusion of the acquisition process of CEEE with the acquisition of 66% of the capital of the company and also a transaction at the end of the year when we acquired an additional 32% from Eletrobras. We're now owners of 99% of the capital of CEEE. An important player in the electrical sector, it enables us to be self-sufficient, and we can also sell energy at present.

The third important impact jump in our ESG indicators, work that has been done by putting in place policies and goals but also enhancing the disclosure of our historical practices. We have attained 2 important indicators. The first, we have been called an industry mover, the company that most improved ESG throughout the year. And secondly, Sustainalytics has included us as the fourth best company in the segment throughout the world, thanks to the endeavors and efforts that CSN carries out on that front.

We go on to Page #4 and show you our evolution of our EBITDA quarter-on-quarter. Of course, we had volatility throughout the year. We were impacted by the strong prices of iron ore and steel in the first half of the year. We then saw a normalization in the price of these commodities impacting our profitability. At the end of the year, at operational level, we were able to obtain better margins, 27% and ended the year with BRL 13.8 million in EBITDA. The second best year of CSN although it represents a drop of 30% vis-a-vis 2021. With this, we had a growth of 15% in the quarter and the sequential comparison.

At the right in the graph, you can see that the great difference lies in the mining sector, where we practically increased the results twofold in terms of prices and volumes, as mentioned, still also operational, but with a gradual reduction of prices causing that drop in the EBITDA.

We go on to Page #5, where we will speak about our cash beginning with our investment. We accelerated our CapEx in the fourth quarter going from BRL 839 million to BRL 1.036 billion especially investing strongly in segments besides steel and mining. We had some factors that were not part of our initial forecast, the consolidation of (inaudible) and the rights of use bringing us a new level of CapEx in the segment of BRL 1 billion, raising our CapEx of BRL 3.4 million for the year, still below what we expect to do in 2023. And of course, we will have a speed up in the mining sector with the evolution of the p15 sector.

In working capital this quarter, we had a very strong demand in our inventories. We had been reducing inventories of raw material because of the normalization of prices abroad. As you will see in the steel results, we had production. We ended our inventory, which was, of course, part of our strategy. We increased production and accounts receivables because of the possible evolution of the mining cost, and all of this was fully offset with the receivables from suppliers, but this led to an increase in our working capital with an impact on our cash flow.

In the next page, you can see the volatility that we faced in free cash flow -- the operational cash flow that you can see to the left of the page, ending the year with good operational results, but with a high level of inventories. That is why we have a negative cash flow. We enhanced cash generation and ended the quarter. Well, we had an EBITDA of BRL 3.4 billion used in these variations of working capital, a higher CapEx, higher interest rates as well and taxes that seasonably were somewhat higher for 2023, we will stabilize this cash flow. We have a positive result in EBITDA, and this will offset the higher investments. So a positive cash flow will enable us to reduce our indebtedness that we see in the following page.

In Page #7, we observed that this cash flow for the fourth quarter was insufficient to allow us to reduce our indebtedness subsequently, it went from BRL 24 billion to BRL 30 billion for very obvious reasons. The acquisition in the electrical sector an increase of BRL 3.3 million. This is an important payment that we carried out. All of this adding up to the totality of our net debt that grew 25% to BRL 30 billion. With this, we ended the quarter with 2.2x leverage pro forma for the prepayment of mining that we announced in the first days of January. And in truth, this leverage would have been 2x, which is the reason which we would like to operate for 2023, we will see a sequential improvement of EBITDA and cash flow. And of course, we will tend to fall within that range with minor variations through the coming quarters.

On the following slide are liquidity and our debt amortization, which is quite lengthened. Liquidity remains comfortable at BRL 12 billion and because of a prepayment of the $500 million. This would be very close to our target liquidity, a good coverage in the short term. We highlight our activity in the capital market, especially the local capital market. We took advantage of a very sound window. We debentures more than BRL 4 billion, helping us to line out our indebtedness and making it more efficient.

Before we were working in a more volatile and more expensive capital market than in this quarter. Now we had debentures in each of the businesses. We had a good year in 2022. Our volumes were very close to 2021, especially in the domestic market. We had a minor drop of 3% smaller than the prop market that was close to 10%, showing our endeavors to conquer the market. We grew an important sectors in construction and others more than levering what had happened in other sectors, the automotive line, the white line.

And we had a quarter with prices that internationally were weakened therefore, we were very careful, privileging volumes and not prices. We had a slightly higher drop but better than 2021. Regarding prices, they had a drop of approximately 8%, in line with the international prices. The positive issue has announced is that the international market has given way for new price increases. And as we will see in questions and answers, we have the opportunity of holding new rounds. We still see very high prices, and this should allow us new incursions. We had an EBITDA with a marginal drop, a drop of 13% despite a good operational performance and dropping prices.

On Page #11, as you can see, we had a production of 7% and below 2021. We took the most of some opportunities, buying swaps in the international market, taking advantage of the drop in average prices. We also had a drop of 5% in swaps. And we had a drop in the cost of the final product, which has enabled us to maintain average prices.

The floor of our profitability that would be higher than our historical average, BRL 819, which is above $150, which is the average cost. What we saw in 2022, we intend to improve upon we've that attempt of increasing prices and, of course, a better quality.

In mining, on Page 13, a very strong quarter from the viewpoint of results and operations. We were able to have an increase of sales in the quarter, which typically is a slower quarter because of seasonality. We produce somewhat less because of seasonality, but we were able to sell more and impact working capital because of the improvement in prices.

We began the quarter with low prices with a price improvement in December. We made the most of this price improvement sold on our inventory during the period, and we had a slight increase in volume vis-a-vis 2021. Our forecast for 2023 is even better. We will buy from third parties, an improvement in the market at higher prices, and we're quite enthusiastic about the margins. In 2023, all of this should speed up to what we saw in the fourth quarter above 50% and higher EBITDA that we saw of BRL 1.8 million for the fourth quarter.

On Page 14, this is an x-ray, a comparison among quarters. We had an improvement in all of the areas in volume and the mix of our own mix vis-a-vis that of third parties and improvement in prices freight. And with this, we got to attain this growth also bolstered by the provision of what had been sold in previous quarters, leading us to BRL 1.8 billion of EBITDA.

Now to speak about cement on Page 16. For the first time, we consolidated LafargeHolcim a far hosting of Brazil now called Cimentos Brasil. We got to 3 million tons this quarter and ended the year with 7.2 million tons. Of course, if we look at 2023, these are figures that will change quite drastic as happens every year, but we also expect a significant growth in uncertain environment.

At the end of the year, we implemented some actions within our Cimentos Brasil to recognize capacity, and this led to a slight reduction in margin, the reconnection of some operations and because of the cost of fuel that is higher, it led to a profitability that is a onetime effect that was somewhat lower. We have prices of coke and oil dropping in 2023. We won't have these reconnection costs. And of course, we have an abundance of synergies to make the most of a control of the LafargeHolcim plant that has proven to be better than we had imagined.

We have, for example, the cost of our own energy, something we had forced in for July, we have anticipated to April. We're quite enthusiastic with the cement business in 2023. This ends our presentation of segments.

We would now like to speak about ESG.

[Interpreted] Good morning, everybody. We are here again to present to you the results for the fourth quarter of ESG. And of course, this is something under constant evolution with the aim of offering you greater transparency in terms of what is done in the company. I am just going to give you a bird view in terms of governance, create strides. We concluded the impact and dependency matrix on ecosystem services.

we're following the guidance of (inaudible) mapping of risks and opportunities, setting for some parameters, especially that related to nature. And in April, in our report, we're going to approach all of these topics. We ended the year with CSN Mining with all of its dams renewed. The Vigia dam has completed, of course, the works in re-characterization, and we continue to evolve in terms of our operational performance quarter-on-quarter.

We ended the year of 2022 with a reduction of 25% in our accident frequency rate. And compared with 2021, this is the best result in our historical series. A significant reduction, 19% in the number of accidents as well with employees and our third parties.

Our cement plant began with the 14001 certification. We're working on sewage projects for the reduction in the consumption of water and the emission of CO2, of course, this has been done for each segment. In steel, minus 5% versus the baseline in 2018, an improvement of CO2 emissions in cement, minus 7% versus the baseline in 2020, a slight increase in the emission of mining. So you can see that all of these trends have been carefully forecast segment per segment, and we have mapped out our initiatives through time.

It's also important to mention that we have identified all of the risks in the company. And all of this will be part of the next integrated report of the company. When it comes to diversity in the social area, we have a growth of women and leadership growing year-on-year. We have had a 50% growth. Of course, we would like to reach 2025 with 28% of women in leadership position.

In the social area, we concluded 2 projects in the last quarter. A partnership with Getulio Vargas Foundation and the conclusion of our theory of change, which will enable us a new instrument in terms of social investment as has been mentioned, there has been a constant evolution in the company in terms of our main ratings, especially in sustain analytics, where we had the fourth best score in the segment among 155 companies.

We are the only Brazilian company with steel and mining that was indicated into these categories. We are the steel company with the greatest evolution in terms of its ESG practices. Thank you very much. Ladies and gentlemen we will now go on to the question-and-answer session for investors and analysts.

[Interpreted] (Operator Instructions) Our first question is from Rafael Barcellos from Santander Bank. You may proceed.

[Interpreted] Good morning to everybody. My question refers to steel. We imagine what the purchase of swaps has been quarter-on-quarter. And what you are doing in the first quarter, considering that we're already in March. If you could speak about your priorities at present in terms of your capital spending, what would be ideal for the company at present.

[Interpreted] In terms of cost, as mentioned by Marcelo, we had a significant reduction in the cost of swaps. In the fourth quarter, our efforts are strong to continue on with this cost reduction. The first half of the year, we're going to ensure that this cost reduction continues. It's fundamental to preserve our EBITDA margins. In the fourth quarter, we got to (inaudible), but we're going to work to reduce this cost even further for swap. We carried out a strategic acquisition of Flat approximately 400,000 tons. We have already used of 300,000 tons of swaps. We have 100,000 tons that we can still utilize and we're also analyzing other possible acquisitions of swaps to balance out the price of swaps at a plant. We have additional efforts to reduce the cost of conversion and manufacture as well in the transition between hot and cold swaps and for upstream products as well, 4 efforts ahead to continue to reduce our costs.

Now regarding our capital spending, minimum cash was the question. We continue with that vision that because of the volatility in Brazil, it's important to increase cash. The ideal range would be BRL 15 billion. This is an important insurance, of course, in present days, and we're making all possible efforts to reduce this making our fundraising and investment ever more efficient. And we're enhancing our facilities to receive that special check that is called to work with lower cash levels.

For the time being these our instruments only available for companies that are investment grade. We have got an investment grade and throughout 2023, we're going to except minimum volume of BRL 15 million. I hope that has answered your question. Is anything missing?

[Interpreted] Do you think it's possible to have additional cost reductions here in the first half of the year simply to complete (inaudible) in the first quarter, the cost will become more stable.

[Interpreted] In the second quarter, we do foresee the possibility of having a greater cost reduction. I will speak about our price pillar in the first quarter. We do have the ability to improve this. But in terms of cost, we will reach stability in the first quarter with the possibility of a further reduction because of the lower cost of acquisition of raw material, which we have already acquired. This has allowed us to reduce our cost or raw materials that are in inventory. We'll have more sales in the second quarter. And with the use of swaps we go off variations that we might have in the first quarter. Our acquisitions were quite interesting in terms of cost reduction.

[Interpreted] Our next question comes from Daniel Sasson from Itau BBA.

[Interpreted] My first question is to Martinez [Audio Gap0:32:12] now in Europe, everything is slower. Last year, they ended at BRL 7.5 million of capacity in terms of steel. It's coming back slowly. The prices are recovering as a counterpart situation will be very positive in terms of the demand of rebar. We will need 4 million tons to build this coming from Turkey. And when we come to Brazil and we look at the pillars that you are converting about coal continues at BRL 375 million; iron ore BRL 129 million - BRL 130 million; exchange an EUR 129 million or EUR 130. With these price levels in Brazil, a BQ at 700 million and Chinese BQ at 680, premium Daniel will be slightly negative scenario.

If we take into account a slightly stronger demand, which I do believe will materialize in March and January and February, the sector was quite well behaved. We saw an improvement in March. We could increase between 7.5% and 10% beginning in April, which is possible because of the market dynamics and the long steel scenario. The premiums are negative.

Nowadays, if you look at a Turkish rebar that was at (inaudible) longer exists. The premiums are minus 14%. So summarizing, if the demand begins to increase with growth as March stabilizing. And if the market becomes stronger in the automotive sector and civil construction in the white line where we observe an improvement, I think that as of April, we could have an increase of 7.5% to 10%. In long scale, the situation is somewhat more difficult because supply and demand is somewhat more complicated.

Again, but still, the equation is different. There is a maintenance of some plants especially our own Usiminas. This is not a secret. We're remodeling the blast furnaces. We also had some problems in special steel that are being repressed and everything will have been done as of March. Perhaps prices will drop a bit more than the market as well as the volume beginning in the fourth quarter.

So I see that the scenario is very positive. And if we look at the world situation, Brazil cannot lag behind. Everything is increasing. And I believe Brazil will accompany the world trends -- and Brazil has a put itself, again the government has to help us -- help Brazil so that it can go back to growing. Now they're saying that the growth will be 1.5% to 2%. Last year Brazil had a drop of 10% in flat steel. If we're able to grow 1.5% to 2%, we can recover prices and return to historical margins of over 20%, very approximately, this is the scenario and the cost of slab produced and purchased.

In Brazil, the people were exploiting the world market. Yesterday, I was looking at some reports and -- there was slabs for the U.S. and Mexico in an isolated way at 750, 780. Now the Brazilian slab producers in a more orderly market were selling at prices below 650. Our normalized swap cost with the cost initiatives will be below $700 for sure. And we have to calculate if it's worthwhile buying, we're going to help with this surgically to see if it's the right moment to buy where privileging our operational moments and trying to make the best of what we have in the company. We will only make use of opportunities if they are positive for us. I hope to have responded to your question.

[Interpreted] Yes. Yes, absolutely. That was very good.

[Interpreted] our next question comes from English room, from Mr. Carlos De Alba, Morgan Stanley.

[Interpreted] Just wanted to discuss a couple of things on the cash flow generation, the CapEx and working capital for 2023. I just want to see, Marcelo, is the CapEx guidance still remains intact for mining and steel and for the overall company this year. And on working capital, you alluded to the fact that you want to reduce it, obviously, the fourth quarter wasn't exactly what the market was expecting. But if you can potentially tell us if this is something that the company believes can be achieved already in the first quarter? Or if it's going to take a little bit longer to bring the working capital and to what levels to something that is more comfortable?

And then if I may ask on the cement profitability. EBITDA per ton came down in the quarter. I don't know if this is a result of the consolidation of the Lafarge business or if it is just the market being a little bit more difficult, more challenging right now. But if you can talk about how do you see the profitability of that business in Q1 and maybe in 2023, that will be really useful?

[Interpreted] Well, thank you, Carlos, for the questions. We're addressing your question on the CapEx. In the guidance, it is BRL 4.4 million with the main use in mining because of the acceleration of the p15 projects. So the answer is yes. This guidance will undergo -- will not undergo revision, not in mining or in other businesses. It was simply impacted in the fourth quarter because of some issues referring to the segment. Our RTDs, our cranes, the right of use and the acquisition of products in our cement business, but these were onetime effects that ended at the end of the fourth quarter.

What we will see in 2023 is an increase in mining, increasing this figure during the year to 4.4% as stated in the guidance. Regarding our working capital, we ended up with our stocks above BRL 11 billion. We hope for a normalization of the inventories, removing BRL 600 million from that line item.

And also in the line item of raw material costs, we still have coal and coke that are quite expensive. We have inventories of this. So we're hoping to reduce these lines by BRL 2 million throughout the coming quarters. Of course, this won't have a direct impact on cash generation. We have a proportional impact on suppliers, but the cash flow line item, the variation of working capital should be well behaved throughout 2023. We're not expecting the volatility we had in 2022.

Regarding the EBITDA per ton of cement and the consolidation of the cement Brazil plants. This will tend to reduce the EBITDA percentage per ton. Yes, because we're speaking of a capacity, integrated plants what perhaps caused the instability in the fourth quarter was not that consolidation. It was what was mentioned in the presentation, the cost of oil that was higher, the higher cost per fuel, somewhat lower volumes because of the heavy rainfall with lower volumes and the cost of reconnection of some of our capacity in the plant in Sorocaba and (inaudible). These are onetime costs that increased our fixed costs reducing the percentage.

Now going forward, with the integrated company, we think we will be able to navigate above 30%. Go back to the results we had in the past.

[Interpreted] Our next question is from Vanessa Quiroga from Credit Suisse.

[Interpreted] My question is about the cement business to speak about synergies regarding captures will be able to point to the synergies this integration, what is the stride that you have made here -- and if you can give some guidance for the year 2023 in the field of cement.

[Interpreted] Hello, Vanessa, good afternoon. This is Edvaldo to speak about the synergies and at CSN. In December, we presented our expectation for the capture of synergies was, of course, much greater than we had imagined originally. These synergies are concentrated in some drivers in the self-production of energy with a reduction in the cost of energy and all operations, a better distribution, logistics and more intelligent logistics, more competitive in the market.

We also have a commercial strategy that is historical for CSN, a pulverization of clients, and this enables us to capture results on the table. We have synergies in terms of acquisitions a larger volume of raw material in the shorter term. And in the field of operations, a range of opportunities in operations, alternative teams, new capacities, as mentioned by Marcelo in the presentation, we're already working on this. And everything will come into our provision in some weeks. Therefore, we have a very broad range of synergies that will fall within that port that we showed you at CSN Investor Day and we're going to put together 2 companies into a single company with a margin of 30%.

[Interpreted] Do you believe that in 2023, we will already see this increase in margins?

[Interpreted] Certainly, yes, we will. The results of the fourth quarter was perhaps a onetime effect, but we are going to navigate above 30%. In the last 3 years CSN has concentrated on that 30%. And with the capture of synergies, we will doubtlessly return to that level, and we're working in that direction.

[Interpreted] Our next question came from Thiago Lofiego from Bradesco BBI.

[Interpreted] My first question to (inaudible) on the topic of cement still, which is your outlook in terms of demand and prices throughout the year. It could be a somewhat more challenging market. And how are you going to tell us how this increase in utilization with a market that is not simple to operate in and as part of cement, Marcelo, what is your mindset once you're operating at an interesting level with margins and synergies, what's going to happen in terms of your IPO?

The second question to go back to capital allocation, which is the greenfield potential in the United States, which is the type of growth that you're expecting. If we could hear your comments, it would be very appreciated.

[Interpreted] Thiago this is Martinez. I'm going to speak about cement and the (inaudible). When we began the cement business -- and we have to be prepared for a war. This is what our Chairman has always said when we began in the cement business. We had, and this is what we're seeking now with the integration of both in Holcim Lafarge is a better cost. This is the best challenge we have when we had CSN business. This cost enabled us to enter the market participate in a very competitive market with other large market players with the acquisition of Lafarge Holcim, besides the excellence prices we had at (inaudible) can refer to logistics cost, the energy issue, which is very important, in the near future, this will be valuated, it will be worth a great deal because of modern techniques and energy. This will be of great value to the company.

In the commercial strategy, we have a regional strategy -- a strong regional strategy. We have an interesting share in the Southeast in the retail market. We're going to continue to sell more for less, implement the portfolio strategy from Lafarge itself. We have recovered and grown in some markets here in the Southeast despite the high share. In the Northeast, we also had room to occupy the retail market, a fragmented market for construction material, for example.

Thereby small amounts in a market that was poorly supplied. There's room to grow there. And in the market where Lafarge has the technical skill, which is a great strength. Both were entering very strongly. We have already grown our market share. We have a strong market share in the region. We have selected. Of course, the competition is harsher.

Last year, we were able to recover 18% of the price throughout the year in cement. The market stands at 2.7% with specificity of some regions and -- there are some regions where we have been able to work very well, although the competition was harsher in January and February, the market in truth began on March 1 because of the rainfall, and we see very positive sign in residential construction, in commercial construction and a carryover of the works that were launched in the past, and we could have a somewhat better market commencing now until the end of the year. We can only grow and occupy new positions. Now the price position is fundamental.

Regarding prices, the greater emphasis now is on cost. The eco has reached very high levels and we're going to have the work better with the drop eco throughout the world. The price will not have the same strength it had in last year. The increases in prices were very strong. We're now more concerned about cost and market occupation. This is our strategy.

Now regarding the IPO, and the question on projects in the United States. Our guidance is to look for growth that is profitable and sustainable, always keeping a very prudent leverage. And I think this has been sufficiently emphasized, Benjamin was very clear about our priorities on CSN Investor Day. Now working with that IPO would be in accordance with reducing our leverage. Now in-house, we're doing very well. We not only have growth, we have synergy, we have profitability gains. This is a story that could progress quite well in the market.

Now -- but we know that the market is completely close at this point in time. We're going to be ready and watchful. Regarding the United States, we would like to continue to make moves in it. This is a strategy because of the geographic location. But we look on leverage. We have been gauging the eminent launch of these projects, ensuring that our capital structure will not go beyond the levels that are both sound and sustainable. We're going to work on that balance in the coming quarters. And once we're within the range that is expected, once we have sufficient confidence in our capital, we're going to accelerate our organic growth in the United States.

Our next question comes from Guilherme (inaudible) from Bank of America.

[Interpreted] Good afternoon. A question to Martinez, which is a difficulty of increasing prices here compared to the prices in Europe, United States and China. Now will the export levels of CSN be higher than they were last year, importing still from Turkey, for example. And another question to Marcelo regarding capital allocation, which are your priorities in the coming quarters? Is there room for growth? Is your cash position acceptable? There is a general assembly coming. So what will happen with all this?

[Interpreted] Well, Guilherme, in the first quarter, we should have a carrier because we increased the prices this year between 3% to 5% regarding the fourth quarter, which is already positive. Now in the face of the price increase for flex steel, what I will say is that the demand in March has already improved. We have positive sign. And this might improve the environment to increase prices now the premium is negative.

[Interpreted] In my opinion, with a negative premium. It doesn't make sense. Regardless of the demand, the level of exports is still very high, 18%. Now regarding exports from CSN to give you an idea, last year, we exported to the U.S.A., our whole quote, 250,000 tons of galvanized steel. We're thinking of sending 400,000 in 2023. This is part of the project and the BQ because of this (inaudible) review, I could send a bit of this. It is more of an advantage at $1,200 instead of sending it here and the laminated steel, but there could be greater exports to the U.S.A.

In terms of other markets, I would like to have more rebar to sell in the domestic market. We're completely sold out in the Brazilian market, which is quite fragmented. Exports would not make sense. We're going to focus on the domestic market. In terms of capital allocation, we're always in a situation of balance, leveraging and much more as Benjamin mentioned on CSN Day.

With our leverage at 2 or up to 2.2x, we're going to keep our eye on generating cash. The situation is given at the general ordinary assembly. The dividends that had already been disclosed in November for the equation is given. And the (inaudible) will come about because of the capital allocation we carried out last year in September and December, almost BRL 8 billion invested in (inaudible) and the electrical companies. This will have an impact on the consolidated results in 2023. We hope to deliver all of this deleveraging, dividends and growth. Of course, everything in a sustainable way.

[Interpreted] My next question from Caio Greiner from BTG Pactual.

[Interpreted] A quick question and a follow-up. We have occurred from your client and distributors recently that CSN has delayed some deliveries because of some reported problems, operational problems at Volta Redonda. If you could clarify this, if there truly was a factor reducing your delivery rate, impacting your deliveries, if this happened, if it has been resolved, if we could have an impact in the first quarter in the domestic market, a follow-up from Martinez, mentioned that we expect potentially stable costs in the first half of the year. Is this for the swap you produce or would this be the total COGS per ton, including the swaps of the parties that you have been purchasing?

[Interpreted] Well, in truth it refers to the COGS. That's what we are referring to. The cost of the swap is more stable at BRL 3.90 per ton presented in the fourth quarter. Regarding the problem, their truth, there's more noise than there should be. We had onetime problem that had an impact that are being resolved. We did have an impact on the first quarter. In the second quarter, they will have been fully resolved. At the beginning of March, the problem has practically been resolved. We continued forward. It had a greater impact than special steel linked to other markets and not that of distribution. It indirectly impacts distribution that is a channel, not a market, and there are small clients selling to assembly pads, a white line and buildings that did suffer an impact, but the impact was minor. We have to readdress the problem, and they will be fully solved.

[Interpreted] Thank you very much Martinez and that informal guidance of costs per COGS will extend during the first half of the year. Despite this minor impact?

[Interpreted] Yes, all of this has been taken into account.

[Interpreted] Our next question comes from the Roman English, Gustavo Allevato from Santander Bank.

On a different topic, just looking at balance sheet metrics and considering, I think, the fact that year-to-date, the local markets in Brazil have become more credit constrained. Given the amount of amortizations that are scheduled, I guess it's around BRL 8 billion or so between now and the end of next year. Have you changed your thought process in thinking ahead to tackling that? And can you talk a little bit about how you see market access? I believe its 3/4 bank, ¼ capital markets. But if you could give a bit more detail given how the market has changed in Brazil and given to the extent there's market access is also not relatively as cheap versus the international market as it was, say, last year. So any kind of details there would be helpful. And if you're kind of contemplating accessing the dollar market at some point to address this, if you got into that stage yet.

[Interpreted] Now regarding market access, it's completely open. We have access to the international capital markets. The good ones are back with a limitation in China. We have a good market here, and there's a debenture market as well. That will be back, now all of them at a slightly higher level. We're being quite selective. We're not concerned with the amortizations that have all been fully addressed. We do have special fundraising -- specific fund raising for using our cash for investments in (inaudible) lines, for example, Japanese lines that are our partners in mining, and they're going to enable us to complete the p15 project, more than $1 million. We have spoken with multilateral agencies to fund our projects in cement because they have that green characteristic hundreds of millions of dollars. And for the very long term, we have a more efficient cost. Now regarding the capital markets, they're completely open. We're being very selective because at this point in time, the costs are higher.

[Interpreted] No further questions, we will return the floor to Mr. Marcelo Ribeiro, the CFO and IR Executive Director, for his closing remarks. You may proceed, Mr. Ribeiro.

[Interpreted] Well, thank you all for the confidence. I will give the floor to our CEO and Chairman, Benjamin Steinberg for closing remarks.

[Interpreted] I would like to thank all for your attendance at our Fourth Quarter 2022 Conference Call for CSN Mining and CSN. I would like to reiterate the commitments we made formally regarding leveraging. We're at 2x if we consider the prepayment of iron ore and that Quest to be at 1, 1.2x. We have had expressive growth in the last half of the year in the last semester, and we count upon significant synergies that will be proven in our results because of the acquisition. And along with this, we're also hoping for an opportunity of an eventual capital opening in cement and also in energy and/or perhaps a participation as a strategic partner.

If there's any other market operation in terms of capital for our new assets, we will have the certainty that everything will go back to normalcy in terms of our leverage. Well, this has been reiterated in the past. It's a commitment having it stand at 1x or 2x at the very most.

Now in terms of ESG and technology and the growth of our results we have had significant evolution in ESG. In fact, we're working strongly on that. We are fully committed to the use of technology as well. We use it broadly. We're working with the green steel that causes less abrasion.

In the production of iron ore, steel and cement we had a year of 2022 that, of course, could have been better. We did not make the most of some opportunities. We faced some operational difficulties that were quickly overcome. And in the fourth quarter, we were able to show the improvement and enhancement. We believe that beginning in the first quarter, we will have stronger results because of the synergies that we are capturing in cement and the integration of energy into our units.

And along with mining, we will have better prices than those that have been foreseen and some of the prices are still low in the market, and we have an excellent outlook of results for the second half of the year. Now the price of raw materials is given the market prices already given as well. So we're quite convinced that we will harvest the results of all of the efforts carried out formerly.

We overcome the difficulties that exist in the market. Attain global profitability as well as local profitability, and we're quite optimistic regarding the year 2023 as all of the necessary measures have been adopted. And our idea at present is to make the most of what has already been done and to work at full steam, with margins that have always been our mark that have others aside in the market. We hope to be able to show these results very soon beginning in the second quarter of 2023.

We reiterate our commitment with deleveraging full production in that quest for greater productivity, a commitment with the use of technology, and we're convinced that we're on the right path. As in a large company, we're moving -- we're moving towards growth in a very complicated market. Everything tends to be somewhat more difficult because of the peculiarities of our day to date. We have gotten it right in terms of acquisitions. And well, if we make minor mistakes in 2023, I'm convinced we will have excellent results.

Once again, I would like to thank all of you for your attendance at our conference call. And we will very soon be disclosing the results of the first quarter. Thank you once again to all of you. Thank you for attending.