Business context and reporting period
Companhia Siderúrgica Nacional (CSN) filed this audited Form 20-F on May 17, 2022, for the fiscal year ended December 31, 2021. The filing reports full-year results, not standalone fourth-quarter results. Financial statements are prepared under IFRS in Brazilian reais (R$); dollar translations are for convenience. CSN operates steel, mining, logistics, cement and energy businesses.
Key financial metrics
Amounts below are in R$ billions unless stated otherwise.
| Metric | 2021 | 2020 |
|---|---|---|
| Net revenue | 47.91 | 30.06 |
| Gross profit / margin | 22.07 / 46.1% | 10.94 / 36.4% |
| Operating income / margin | 20.54 / 42.9% | 5.71 / 19.0% |
| Net income | 13.60 | 4.29 |
| Net income attributable to CSN | 12.26 | 3.79 |
| Cash from operating activities | 14.79 | 9.58 |
| Cash and cash equivalents at year-end | 16.65 | 9.94 |
| Total debt at year-end | 32.51 | 35.27 |
Revenue rose 59.4%, while gross profit more than doubled. Steel revenue increased 81.2% to R$30.09 billion, mainly on an 84% increase in realized prices despite slightly lower sales volume. Mining revenue grew 42.3% to R$18.04 billion, reflecting higher iron ore prices and 7% higher sales volume. Cement revenue rose 67% to R$1.43 billion, including the Elizabeth acquisition. Operating cash flow increased 54.5%. Investing activities provided R$0.45 billion, substantially reflecting proceeds from share sales; financing activities used R$8.53 billion. Property, plant and equipment purchases were R$2.86 billion.
At year-end, current assets were R$34.97 billion and current liabilities R$24.54 billion (current ratio approximately 1.42). Current inventory increased to R$10.94 billion from R$4.82 billion. Gross debt included R$5.49 billion due within one year and R$27.02 billion long term; approximately 68% was foreign-currency-denominated or linked. The filing expects to pay or refinance debt due in 2022–2024. It does not provide a clear, directly comparable cash-flow-based free-cash-flow figure in the presented text.
Material changes, outlook and risks
- 2021 earnings included a R$2.47 billion gain from selling part of CSN Mineração in its IPO. This is an unusual, non-recurring contributor to operating income. Iron ore’s average benchmark price rose 46.5% to US$159.5 per dry metric ton; steel realized prices also rose sharply.
- CSN completed the Elizabeth cement acquisition, lifting installed cement capacity to 6.0 million tons per year. The proposed LafargeHolcim Brazil acquisition, valued at a base US$1.025 billion, remained subject to antitrust approval when the filing was made. Metalgráfica acquisition approval was obtained in April 2022. Subsequent to year-end, CSN issued US$500 million of 5.875% notes due 2032 and tendered US$300 million of 7.625% notes due 2026.
- Management’s plans include expanding CSN Mineração’s production capacity from 33 million tons per year in 2021 to as much as 108 million by 2033, and increasing iron ore shipments to over 60 million tons annually. These are plans, not assured production outcomes; execution, permits, reserves, funding and market prices are material dependencies.
- Management said it had not identified a threat to continuity of operations from Russia’s conflict with Ukraine as of the filing date, but noted higher input prices and the need to seek alternatives to a Russian coal supplier. The filing highlights steel and iron ore cyclicality, China exposure, Brazilian inflation, currency and interest-rate risk, raw-material costs, trade restrictions, environmental regulation and refinancing needs.
- Legal exposures include a R$13.0 billion tax assessment related to the former Namisa transaction, classified by CSN as a possible loss, and a confidential iron-ore supply arbitration in which the claimant seeks approximately US$1.0 billion. The auditor identified TLSA’s recoverable investment value and its ability to obtain project funding as critical matters; the auditor noted material uncertainty around TLSA funding. The financial statements nevertheless received an unqualified audit opinion, and internal control over financial reporting was reported effective.
- CSN reported R$904 million of mandatory dividends approved for payment by December 31, 2022; CSN Mineração separately approved R$2.52 billion of additional dividends. The company’s dividend policy is subject to available profits, investment and liquidity needs.
Most important facts for investors to verify
- How much of 2021’s profit and operating performance is repeatable after excluding the CSN Mineração IPO gain and other fair-value or tax-related effects.
- Debt maturities, refinancing progress, foreign-currency exposure, and the availability of cash after planned investment, acquisitions and dividend payments.
- Whether inventory growth and supplier-payment extensions convert into sustainable cash generation, and the drivers of working-capital movements.
- Progress, total funding requirements and approval status for cement acquisitions and mining/logistics expansion projects, including the TLSA railway.
- Developments in the material tax assessment, environmental proceedings and US$1.0 billion arbitration, including any changes to provisions or loss assessments.
- Actual production, shipments and realized prices compared with management’s capacity and growth plans; the filing does not provide a specific consolidated earnings or cash-flow forecast.