Usiminas released its first-quarter financial results on 23 April 2015.

Economic Scenario
The global economy is still growing at a moderate pace. The International Monetary Fund - IMF expects a slight growth acceleration from 3.4% in 2014 to 3.5% in 2015, but with substantial rhythm differences between advanced economies and emerging economies, whose potential growth has proved to be lower. In Latin America, the major economies have shown mixed performance in early 2015. The decrease in the commodity prices has negatively impacted the performance of several economies in that region and the more depreciated exchange rate - pressuring inflation - has reduced the chance of stimulus, limiting these countries’ recovery.

The economy activity in Brazil has still being in a weak performance. The Brazilian Central Bank’s economic activity index - IBC-Br, available for the first two months of the year, has signaled a decrease in GDP for the 1Q15. The scenario of high interest rates, inflation and job market deterioration are some of the factors that have contributed to the worsening of the economic environment, resulting in a decline in the growth expectations for 2015, which was 0.2% at the beginning of the year, moving to -1.0% at the end of the first quarter.

In the Brazilian industry, the scenario is even more challenging. The Industrial Production in February recorded the 12th consecutive month of retraction and declined 9.1%, if compared with February 2014, the highest decline since 2009. The accumulated figures in the year, up to February, represented a retraction of 7.1%. Considering high inventories and confidence indexes at minimum levels, there are no signs of an imminent recovery. Steel intensive industrial segments also had significant downfalls in the period. In the first two months of the year, the capital goods production receded 21.1% and the durable goods, 20.1%.

Net Revenue
Net revenue in the 1Q15 was R$2.7 billion, representing a growth of 3.7% against the R$2.6 billion in the 4Q14, due to higher steel sales volume in the domestic market by 10.0%.

Cost of Goods Sold (COGS)
In the 1Q15, COGS totaled R$2.4 billion, against R$2.5 billion in the 4Q14, and gross margin was 9.1%, against 2.2% in the 4Q14, an increase of 690 basis points.

Operating Expense and Income
In the 1Q15, sales expenses were R$51.2 million, against R$72.2 million in the 4Q14, a reduction of 29.2%, mainly due to lower distribution cost and to lower provisions for doubtful accounts. General and administrative expenses in the 1Q15 totaled R$122.5 million, against R$134.2 million, a decline of 8.8%, mainly due to reduction in expenses related to direct labor and third parties’ services by 9.4%. Other operating expenses and income resulted in an expense of R$34.5 million
in the 1Q15, against an income of R$105.3 million in the 4Q14, mainly in function of lower sale revenue of surplus electric energy, which totaled R$27.9 million in the 1Q15, against R$90.4 million in the 4Q14, of higher provision for contingencies in R$27.5 million in the 1Q15 and of asset sales in the amount of R$32.1 million in the 4Q14. Thus, net operating expenses totaled R$208.1 million in the 1Q15, against R$101.1 million in the 4Q14.

Financial Result
In the 1Q15, net financial expenses were R$360.9 million, against R$213.8 million in the 4Q14, an increase of R$147.1 million, mainly attributed to higher currency exchange losses in R$255.0 million due to the strong Real depreciation against the Dollar of 20.8% in this quarter. This was partially compensated by lower financial expenses in R$65.0 million in function of lower interest expenses on loans and by higher SWAP operations market cap in R$67.1 million.

For the full report, visit the company's website.