October 25, 2019 / 11:33 AM / 19 days ago

Shares in Brazil steelmaker Usiminas surge as debt refinancing offsets loss

SAO PAULO (Reuters) - Shares in Usiminas (USIM5.SA) were up 2% in Sao Paulo on Friday after the Brazilian steelmaker announced a debt refinancing and a hike in steel prices, despite posting a third-quarter loss.

Usinas Siderurgicas de Minas Gerais, as the company is formally known, missed market expectations posting a loss in the third quarter with large financial expenses due to the Brazilian currency weakness and provisions.

The company swung to a quarterly net loss of 139 million reais ($34.40 million), it said in a securities filing, from a net profit of 289 million reais a year ago. Analysts on average expected a net profit of 54.56 million reais, Refinitiv data shows.

But markets reacted well to the announcement that the company refinanced its debt with the sale of 2 billion reais in local bonds to pre-pay short term debt. Usiminas announced that large debt payments are only expected in 2023.

The company’s gross debt on Sept. 30 rose to 5.9 billion reais, from 5.5 billion reais on June 30.

Usiminas Vice President Miguel Camejo told analysts in a conference call that the company expects to raise steel prices in Brazil by 5% by the end of the year.

The company sold 2.45 million tonnes of iron ore in the third quarter, up 39% from a year ago. Steel sales, on the other hand, declined 7% to 1.03 million tonnes.

Like its rival CSN, Usiminas is in talks for long term steel supply contracts with automakers. So far this year, steelmakers raised prices to automakers in Brazil by 20%.

Reporting by Alberto Alerigi and Gabriela Mello; Editing by Marguerita Choy and Nick Zieminski

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