SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
 
For the month of August, 2023
Commission File Number 1-14732
 

 
COMPANHIA SIDERÚRGICA NACIONAL
(Exact name of registrant as specified in its charter)
 
National Steel Company
(Translation of Registrant's name into English)
 
Av. Brigadeiro Faria Lima 3400, 20º andar
São Paulo, SP, Brazil
04538-132
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F. 
Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____

 
 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

   

 

Table of Contents

 

Company Information  
Capital Breakdown 1
Parent Company Financial Statements  
Balance Sheet – Assets 2
Balance Sheet – Liabilities 3
Statement of Income 4
Statement of Comprehensive Income 5
Statement of Cash Flows 6
Statement of Changes in Shareholders’ Equity  
01/01/2023 to 06/30/2023 7
01/01/2022 to 06/30/2022 8
Statement of Value Added 9
Consolidated Financial Statements  
Balance Sheet – Assets 10
Balance Sheet - Liabilities 11
Statement of Income 12
Statement of Comprehensive Income 13
Statement of Cash Flows 14
Statement of Changes in Shareholders’ Equity  
01/01/2023 to 06/30/2023 15
01/01/2022 to 06/30/2022 16
Statement of Value Added 17
Comments on the Company’s Consolidated Performance 18
Notes to the financial information 38
Comments on the Performance of Business Projections 83
Reports and Statements  
Unqualified Independent Auditors’ Review Report 87
Officers Statement on the Financial Statements 89
Officers Statement on Auditor’s Report 90

 

 

 
 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

   

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Period

6/30/2023

 
Paid-in Capital    
Common 1,326,093,947  
Preferred 0  
Total 1,326,093,947  
Treasury Shares    
Common 0  
Preferred 0  
Total 0  

 

 

 

 

 

1 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

Parent Company Financial Statements / Balance Sheet - Assets  
(R$ thousand)    
     

 

 

Code Description  Current Quarter 06/30/2023   Previous Year 12/31/2022 
1 Total Assets           57,267,132           61,196,813
1.01 Current assets           11,981,731           15,264,617
1.01.01 Cash and cash equivalents            1,644,167            2,839,405
1.01.02 Financial investments            1,202,825            1,207,610
1.01.02.01 Financial investments measured a fair value through profit or loss            1,167,137            1,184,895
1.01.02.01.03 Financial investments measured a fair value through profit or loss – Usiminas’ shares            1,167,137            1,184,895
1.01.02.03 Financial investments at amortized cost                 35,688                 22,715
1.01.03 Trade receivables            1,544,930            1,956,531
1.01.04 Inventory            5,704,913            7,413,421
1.01.06 Recoverable taxes            1,129,359            1,137,460
1.01.08 Other current assets               755,537               710,190
1.01.08.03 Others               755,537               710,190
1.01.08.03.04 Prepaid expenses               237,446               244,416
1.01.08.03.06 Dividends receivable               235,782               295,480
1.01.08.03.07 Others               282,309               170,294
1.02 Non-current assets           45,285,401           45,932,196
1.02.01 Long-term assets            9,303,211            9,167,437
1.02.01.03 Financial investments at amortized cost               110,842               140,510
1.02.01.07 Deferred taxes assets            3,082,109            3,256,712
1.02.01.10 Other non-current assets            6,110,260            5,770,215
1.02.01.10.03 Judicial deposits               218,218               231,627
1.02.01.10.04 Recoverable taxes               966,930               879,695
1.02.01.10.06 Prepaid expenses                 60,229                 58,950
1.02.01.10.11 Receivable from related parties            3,641,847            3,377,049
1.02.01.10.12 Others            1,223,036            1,222,894
1.02.02 Investments            27,932,253           28,918,775
1.02.02.01 Equity interest           27,793,309           28,778,632
1.02.02.02 Investment Property               138,944               140,143
1.02.03 Property, plant and equipment            7,996,194            7,786,485
1.02.03.01 Property, plant and equipment in operation            7,388,298            6,874,631
1.02.03.02 Right of use in leases                 10,999                 11,433
1.02.03.03 Property, plant and equipment in progress               596,897               900,421
1.02.04 Intangible assets                 53,743                 59,499

 

 

 

2 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

Parent Company Financial Statements / Balance Sheet – Liabilities
(R$ thousand)      

 

 

Code Description  Current Quarter 06/30/2023   Previous Year 12/31/2022 
2 Total Liabilities           57,267,132        61,196,813
2.01 Current liabilities           12,911,194        14,644,052
2.01.01 Payroll and related taxes                188,894             150,192
2.01.02 Trade payables             3,080,122          3,684,793
2.01.03 Tax payables                275,796             397,496
2.01.04 Borrowings and financing             5,915,173          3,419,019
2.01.05 Other payables             3,426,993          6,961,181
2.01.05.02 Others             3,426,993          6,961,181
2.01.05.02.01 Dividends and interests on shareholder´s equity                    4,644             598,267
2.01.05.02.04 Advances from customers                  83,318               83,300
2.01.05.02.07 Derivative financial instruments                  30,998                     -   
2.01.05.02.09 Trade payables – Forfaiting and Drawee risk             2,519,299          5,318,425
2.01.05.02.10 Lease liabilities                  11,216                8,451
2.01.05.02.11 Other payables                777,518             952,738
2.01.06 Provisions                  24,216               31,371
2.01.06.01 Provision for tax, social security, labor and civil risks                  24,216               31,371
2.02 Non-current liabilities           25,873,962        27,063,294
2.02.01 Borrowings and financing           17,014,332        17,994,249
2.02.02 Other payables                145,024             148,990
2.02.02.02 Others                145,024             148,990
2.02.02.02.06 Derivative financial instruments                         -                  58,005
2.02.02.02.07 Lease liabilities                    1,216                4,729
2.02.02.02.08 Trade payables                  19,737               14,352
2.02.02.02.09 Others                124,071               71,904
2.02.04 Provisions             8,714,606          8,920,055
2.02.04.01 Provision for tax, social security, labor and civil risks                410,469             390,445
2.02.04.02 Other provisions             8,304,137          8,529,610
2.02.04.02.03 Provision for environmental liabilities and decommissioning of assets                165,600             158,213
2.02.04.02.04 Pension and healthcare plan                537,290             537,290
2.02.04.02.05 Provision for losses on investments             7,601,247          7,834,107
2.03 Shareholders’ equity           18,481,976        19,489,467
2.03.01 Paid-up capital           10,240,000        10,240,000
2.03.02 Capital reserves                  32,720               32,720
2.03.04 Earnings reserves             7,374,442          8,988,442
2.03.04.01 Legal reserve             1,158,925          1,158,925
2.03.04.02 Statutory reserve             6,215,517          6,215,517
2.03.04.08 Proposed Additional Dividend                         -             1,614,000
2.03.05 Accumulated earnings (losses)               (742,793)                     -   
2.03.08 Other comprehensive income             1,577,607             228,305

 

 

 

 

3 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Parent Company Financial Statements / Statement of Income
(R$ thousand)  

 

Code Description  Current Quarter 04/01/2023 to 06/30/2023   Year to date 01/01/2023 to 06/30/2023   Same quarter previous year 04/01/2022 to 06/30/2022   YTD previous year  01/01/2022 to 06/30/2022 
3.01 Revenues from sale of goods and rendering of services  4,878,076   9,348,143   6,139,087 12,537,589
3.02 Costs from sale of goods and rendering of services (4,611,523)  (8,702,487) (4,894,623)  (9,762,356)
3.03 Gross profit  266,553   645,656   1,244,464   2,775,233
3.04 Operating (expenses)/income  134,319 (643,914) (516,257)   532,629
3.04.01 Selling expenses (184,478) (395,967) (221,285) (463,615)
3.04.02 General and administrative expenses  (82,717) (136,621)   (60,660) (110,326)
3.04.04 Other operating income  (35,407)  12,540 18,022  37,592
3.04.05 Other operating expenses (311,527)  (1,102,012) (572,375) (751,829)
3.04.06 Equity in results of affiliated companies  748,448   978,146   320,041   1,820,807
3.05 Income before financial income (expenses) and taxes  400,872   1,742   728,207   3,307,862
3.06 Financial income (expenses) (732,232)  (1,333,570) (605,967)  (1,361,652)
3.06.01 Financial income 73,552   263,876 (597,115) (721,877)
3.06.02 Financial expenses (805,784)  (1,597,446)  (8,852) (639,775)
3.06.02.01 Net exchange differences over financial instruments (149,538) (236,470)   539,603   407,728
3.06.02.02 Financial expenses (656,246)  (1,360,976) (548,455)  (1,047,503)
3.07 Income before income taxes (331,360)  (1,331,828)   122,240   1,946,210
3.08 Income tax and social contribution   514,963   589,035 75,086 (542,482)
3.08.01 Current  195,434   181,446 (125,014) (237,397)
3.08.02 Deferred  319,529   407,589   200,100 (305,085)
3.09 Net income  from continued operations  183,603 (742,793)   197,326   1,403,728
3.11 Net income for the year  183,603 (742,793)   197,326   1,403,728
3.99 Earnings per share – (Reais / Share)        
3.99.01 Basic earnings per share        
3.99.01.01 Common shares  0.13845 (0.56014)   0.14877   1.05710
3.99.02 Diluted earnings per share        
3.99.02.01 Common shares  0.13845 (0.56014)   0.14877   1.05710

 

 

4 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Parent Company Financial Statements / Statement of Comprehensive Income
(R$ thousand)

 

Code Description  Current Quarter 04/01/2023 to 06/30/2023   Year to date 01/01/2023 to 06/30/2023   Same quarter previous year 04/01/2022 to 06/30/2022   YTD previous year  01/01/2022 to 06/30/2022 
4.01 Net income for the year   183,603 (742,793)   197,326  1,403,728
4.02 Other comprehensive income   686,522   1,349,302  (1,023,023) (282,869)
4.02.01 Actuarial gains over pension plan of subsidiaries, net of taxes   670   1,342  25 56
4.02.04 Reflex treasury shares acquired by subsidiary (169,291) (198,093)   155,081 (585,971)
4.02.11 (Loss)/gain cash flow hedge accounting, net of taxes   575,793   889,539  (1,282,476)  117,472
4.02.13 Cash flow hedge reclassified to income upon realization, net of taxes   6,621   239,735   341,734  421,030
4.02.15 (Loss)/gain cash flow hedge accounting, net taxes,  from investments in subsidiaries   272,729   416,779 (237,387) (235,456)
4.03 Comprehensive income for the year   870,125   606,509 (825,697)  1,120,859

 

 

 

5 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method
(R$ thousand)

 

Code Description  Year to date 01/01/2023 to 06/30/2023   YTD previous year  01/01/2022 to 06/30/2022 
6.01 Net cash from operating activities           (401,881)              2,912,298
6.01.01 Cash from operations           (156,495)              1,792,049
6.01.01.01 Net income for the period           (742,793)              1,403,728
6.01.01.02 Financial charges in borrowing and financing raised            799,557                571,407
6.01.01.03 Financial charges in borrowing and financing granted           (118,574)                 (82,010)
6.01.01.04 Depreciation, amortization and depletion            558,761                516,621
6.01.01.05 Equity in results of affiliated companies           (978,146)            (1,820,807)
6.01.01.06 Deferred taxes assets           (407,589)                305,085
6.01.01.08 Provision for tax, social security, labor, civil and environmental risks              12,869                   (6,875)
6.01.01.09 Monetary and exchange variations, net            751,026                 (80,115)
6.01.01.10 Updated shares – Fair value through profit or loss               17,758              1,033,056
6.01.01.12 Write-off and estimated losses net of reversal              (1,314)                       282
6.01.01.13 Provision for environmental liabilities and decommissioning of assets                7,387                    5,416
6.01.01.14 Charges on lease liabilities                   628                       846
6.01.01.15 Accrued for consumption and services             (16,445)                   (2,080)
6.01.01.18 Dividends USIMINAS             (51,111)               (103,671)
6.01.01.19 Other provisions              11,491                  51,166
6.01.02 Changes in assets and liabilities           (245,386)              1,120,249
6.01.02.01 Trade receivables - third parties                2,485                  38,477
6.01.02.02 Trade receivables - related party            345,511                429,502
6.01.02.03 Inventory         1,636,471                 (95,441)
6.01.02.04 Receivables - related parties/dividends         1,979,543              2,431,565
6.01.02.05 Recoverable taxes             (79,134)                414,779
6.01.02.06 Judicial deposits              13,409                 (16,078)
6.01.02.07 Derivative transactions received              15,340                         -   
6.01.02.09 Trade payables           (562,692)               (551,701)
6.01.02.10 Trade payables – Forfaiting and Drawee risk        (2,799,126)               (535,835)
6.01.02.11 Payroll and related taxes              38,701                  37,634
6.01.02.12 Tax payables             (58,774)               (456,291)
6.01.02.14 Payables to related parties              (13,090)                  65,032
6.01.02.16 Interest paid            (741,416)               (489,841)
6.01.02.17 Interest received                1,565                    1,593
6.01.02.19 Others             (24,179)               (153,146)
6.02 Net cash investment activities           (970,065)            (1,061,880)
6.02.01 Investments / AFAC / Acquisitions of Shares            (110,782)               (278,399)
6.02.02 Purchase of property, plant and equipment, intangible assets and  investment  property           (717,519)               (633,551)
6.02.08 Intercompany loans granted            (161,052)               (150,312)
6.02.09 Intercompany loans received                2,592                    2,383
6.02.11 Financial Investments, net of redemption              16,696                   (2,001)
6.03 Net cash used in financing activities             176,708            (1,302,510)
6.03.01 Borrowings and financing raised         5,125,458              1,196,064
6.03.02 Transactions cost - Borrowings and financing              (6,506)                   (5,188)
6.03.03 Borrowings and financing – related parties            153,864              1,039,378
6.03.04 Amortization of leases              (5,282)                   (4,331)
6.03.05 Amortization of borrowings and financing        (2,346,132)            (2,339,156)
6.03.06 Amortization of borrowings and financing - related parties           (530,449)               (107,673)
6.03.07 Dividends and interest on shareholder’s equity         (2,214,245)               (673,129)
6.03.08 Share repurchase                     -                  (408,475)
6.05 Increase (decrease) in cash and cash equivalents        (1,195,238)                547,908
6.05.01 Cash and equivalents at the beginning of the year         2,839,405              3,885,265
6.05.02 Cash and equivalents at the end of the year         1,644,167              4,433,173

 

 

6 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2023 to 06/30/2023
(R$ thousand)          

 

Code Description Paid-up capital Capital reserve, granted options and treasury shares Earnings reserve Retained earnings (accumulated losses) Other comprehensive income Shareholders’ equity
5.01 Opening balances   10,240,000  32,720   8,988,442  - 228,305 19,489,467
5.03 Adjusted opening balances   10,240,000  32,720   8,988,442  - 228,305 19,489,467
5.04 Capital transaction with shareholders -   -  (1,614,000)  -   - (1,614,000)
5.04.06 Dividends -   -  (1,614,000)  -   - (1,614,000)
5.05 Total comprehensive income -   -  - (742,793) 1,349,302   606,509
5.05.01 Net income for the period -   -  - (742,793)   - (742,793)
5.05.02 Other comprehensive income -   -  -  - 1,349,302   1,349,302
5.05.02.04 Cumulative translation adjustments for the year -   -  -  -  (198,093) (198,093)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes -   -  -  - 1,342   1,342
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes -   -  -  - 1,546,053   1,546,053
5.07 Closing balance   10,240,000  32,720   7,374,442 (742,793) 1,577,607 18,481,976

 

 

 

 

 

7 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2022 to 06/30/2022
(R$ thousand)        

 

Code Description Paid-up capital Capital reserve, granted options and treasury shares Earnings reserve Retained earnings (accumulated losses) Other comprehensive income Shareholders’ equity
5.01 Opening balances 10,240,000 32,720   10,092,888  -   (50,610)  20,314,998
5.03 Adjusted opening balances 10,240,000 32,720   10,092,888  -   (50,610)  20,314,998
5.04 Capital transaction with shareholders   -  -   (395,180)  -  224,806   (170,374)
5.04.04 Treasury shares acquired   - (395,180) -  -  -   (395,180)
5.04.08 (Loss) / gain on the percentage change in investments   -  - -  -  224,806 224,806
5.04.10 Treasury shares canceled   -   1,332,110   (1,332,110)  -  - -
5.04.11 Reclassifications of treasury shares   - (936,930)  936,930  -  - -
5.05 Total comprehensive income   -  - -   1,403,728 (282,869) 1,120,859
5.05.01 Net income for the period   -  - -   1,403,728  - 1,403,728
5.05.02 Other comprehensive income   -  - -  - (282,869)   (282,869)
5.05.02.04 Cumulative translation adjustments for the year   -  - -  - (585,971)   (585,971)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes   -  - -  - 56   56
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes   -  - -  -  303,046 303,046
5.07 Closing balance 10,240,000 32,720  9,697,708   1,403,728 (108,673)  21,265,483

 

 

8 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Parent Company Financial Statements / Statement of Value Added
(R$ thousand)

 

Code Description  Year to date 01/01/2023 to 06/30/2023   YTD previous year  01/01/2022 to 06/30/2022 
7.01 Revenues           11,291,561          15,156,167
7.01.01 Sales of products and rendering of services           11,268,196          15,136,063
7.01.02 Other revenues                 14,606                  9,834
7.01.04 Allowance for (reversal of) doubtful debts                   8,759                10,270
7.02 Raw materials acquired from third parties         (10,484,751)        (11,807,941)
7.02.01 Cost of sales and services           (9,644,967)        (10,778,847)
7.02.02 Materials, electric power, outsourcing and other              (816,177)             (951,557)
7.02.03 Impairment/recovery of assets                (23,607)               (77,537)
7.03 Gross value added               806,810           3,348,226
7.04 Retentions              (558,370)             (516,319)
7.04.01 Depreciation, amortization and depletion              (558,370)             (516,319)
7.05 Value added created               248,440           2,831,907
7.06 Value added received             1,401,745           2,837,249
7.06.01 Equity in results of affiliates companies               978,146           1,820,807
7.06.02 Financial income               263,876              308,825
7.06.03 Others               159,723              707,617
7.06.03.01 Other and exchange gains               159,723              707,617
7.07 Value added for distribution             1,650,185           5,669,156
7.08 Value added distributed             1,650,185           5,669,156
7.08.01 Personnel               686,288              618,594
7.08.01.01 Salaries and wages               495,287              475,769
7.08.01.02 Benefits               158,003              113,188
7.08.01.03 Severance payment (FGTS)                  32,998                29,637
7.08.02 Taxes, fees and contributions                (54,155)           1,267,837
7.08.02.01 Federal              (200,943)           1,040,473
7.08.02.02 State               146,788              227,364
7.08.03 Remuneration on third-party capital             1,760,845           2,378,997
7.08.03.01 Interest             1,168,747              579,028
7.08.03.02 Rental                   3,676                     903
7.08.03.03 Other and passive exchange variations               588,422           1,799,066
7.08.04 Remuneration on Shareholders' capital              (742,793)           1,403,728
7.08.04.03 Retained earnings (accumulated losses)              (742,793)           1,403,728

 

 

9 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

Consolidated Financial Statements / Balance Sheet - Assets
(R$ thousand)  

 

 

Code Description  Current Quarter 06/30/2023   Previous Year 12/31/2022 
1 Total assets          83,866,380         85,354,359
1.01 Current assets          28,283,039         30,612,360
1.01.01 Cash and cash equivalents          11,975,423         11,991,356
1.01.02 Financial investments            1,204,679           1,456,485
1.01.02.01 Financial investments measured a fair value through profit or loss            1,167,137           1,184,895
1.01.02.01.03 Financial investments measured a fair value through profit or loss – Usiminas’ shares            1,167,137           1,184,895
1.01.02.03 Financial investments at amortized cost                 37,542             271,590
1.01.03 Trade receivables            2,671,612           3,233,164
1.01.04 Inventory            9,508,614         11,289,229
1.01.06 Recoverable taxes            1,986,314           1,865,626
1.01.08 Other current assets               936,397             776,500
1.01.08.03 Others               936,397             776,500
1.01.08.03.03 Derivative financial instruments               140,928                      -   
1.01.08.03.04 Prepaid expenses               382,556             347,870
1.01.08.03.06 Dividends receivable                 77,377               77,377
1.01.08.03.07 Others               335,536             351,253
1.02 Non-current assets          55,583,341         54,741,999
1.02.01 Long-term assets          12,812,185         12,364,418
1.02.01.03 Financial investments at amortized cost               127,242             156,185
1.02.01.05 Inventory            1,231,360           1,045,665
1.02.01.07 Deferred taxes assets            4,977,852           5,095,718
1.02.01.10 Other non-current assets            6,475,731           6,066,850
1.02.01.10.03 Judicial deposits               537,525             533,664
1.02.01.10.04 Recoverable taxes            1,427,358           1,317,132
1.02.01.10.06 Prepaid expenses                 80,208               82,586
1.02.01.10.11 Receivable from related parties            3,168,120           2,869,532
1.02.01.10.12 Others            1,262,520           1,263,936
1.02.02 Investments             5,308,032           5,219,082
1.02.02.01 Equity interest            5,150,485           5,060,002
1.02.02.02 Investment Property               157,547             159,080
1.02.03 Property, plant and equipment          26,812,536         26,370,445
1.02.03.01 Property, plant and equipment in operation          22,405,977         21,700,015
1.02.03.02 Right of use in leases               701,683             644,880
1.02.03.03 Property, plant and equipment in progress            3,704,876           4,025,550
1.02.04 Intangible assets          10,650,588         10,788,054

 

 

 

 

10 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

Consolidated Financial Statements / Balance Sheet – Liabilities
(R$ thousand)  
   

 

Code Description  Current Quarter 06/30/2023   Previous Year 12/31/2022 
2 Total Liabilities          83,866,380          85,354,359
2.01 Current liabilities          18,537,814          22,475,119
2.01.01 Payroll and related taxes              486,135              422,495
2.01.02 Trade payables           6,248,846           6,596,915
2.01.03 Tax payables              702,210              870,333
2.01.04 Borrowings and financing           5,615,593           5,193,636
2.01.05 Other payables           5,444,605           9,318,651
2.01.05.02 Others           5,444,605           9,318,651
2.01.05.02.01 Dividends and interests on shareholder´s equity                  4,955              611,307
2.01.05.02.04 Advances from customers           1,467,095           1,120,072
2.01.05.02.07 Derivative financial instruments                30,998              416,935
2.01.05.02.09 Trade payables – Forfaiting and Drawee risk           2,878,420           5,709,069
2.01.05.02.10 Lease liabilities              163,355              177,010
2.01.05.02.11 Other payables              899,782           1,284,258
2.01.06 Provisions                40,425                73,089
2.01.06.01 Provision for tax, social security, labor and civil risks                40,425                73,089
2.02 Non-current liabilities          44,708,983          41,063,196
2.02.01 Borrowings and financing          36,054,194          35,725,106
2.02.02 Other payables           5,151,728           2,216,418
2.02.02.02 Others           5,151,728           2,216,418
2.02.02.02.03 Advances from customers           3,833,205              943,919
2.02.02.02.06 Derivative financial instruments                68,399                69,472
2.02.02.02.07 Lease liabilities              596,036              516,836
2.02.02.02.08 Trade payables                27,916                46,269
2.02.02.02.09 Others              626,172              639,922
2.02.03 Deferred taxes assets              564,325              216,950
2.02.04 Provisions           2,938,736           2,904,722
2.02.04.01 Provision for tax, social security, labor and civil risks           1,393,164           1,411,736
2.02.04.02 Other provisions           1,545,572           1,492,986
2.02.04.02.03 Provision for environmental liabilities and decommissioning of assets              990,287              937,657
2.02.04.02.04 Pension and healthcare plan              555,329              555,329
2.02.04.02.05 Provision for losses on investments                     (44)                       -   
2.03 Shareholders’ equity          20,619,583          21,816,044
2.03.01 Paid-up capital          10,240,000          10,240,000
2.03.02 Capital reserves                32,720                32,720
2.03.04 Earnings reserves           7,374,442           8,988,442
2.03.04.01 Legal reserve           1,158,925           1,158,925
2.03.04.02 Statutory reserve           6,215,517           6,215,517
2.03.04.08 Proposed Additional Dividend                       -              1,614,000
2.03.05 Accumulated earnings (losses)             (742,793)                       -   
2.03.08 Other comprehensive income           1,577,607              228,305
2.03.09 Earnings attributable to the non-controlling interests           2,137,607           2,326,577

 

 

11 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Consolidated Financial Statements / Statements of Income
(R$ thousand)      
Code Description  Current Quarter 04/01/2023 to 06/30/2023   Year to date 01/01/2023 to 06/30/2023   Same quarter previous year 04/01/2022 to 06/30/2022   YTD previous year  01/01/2022 to 06/30/2022 
3.01 Revenues from sale of goods and rendering of services   10,989,111   22,307,801   10,565,922   22,335,788
3.02 Costs from sale of goods and rendering of services   (8,745,660) (16,819,136)   (7,560,441) (14,847,726)
3.03 Gross profit  2,243,451  5,488,665  3,005,481  7,488,062
3.04 Operating (expenses)/income   (1,102,487)   (3,767,180)   (1,234,203)   (2,161,450)
3.04.01 Selling expenses   (879,942)   (1,740,455)   (503,932)   (947,928)
3.04.02 General and administrative expenses   (201,789)   (361,670)   (146,922)   (290,252)
3.04.04 Other operating income  (53,557)   41,172   26,215   49,616
3.04.05 Other operating expenses  (74,501)   (1,835,038)   (663,970)   (1,046,551)
3.04.06 Equity in results of affiliated companies 107,302 128,811   54,406   73,665
3.05 Income before financial income (expenses) and taxes  1,140,964  1,721,485  1,771,278  5,326,612
3.06 Financial income (expenses)   (1,185,909)   (2,375,536)   (890,012)   (2,015,249)
3.06.01 Financial income 249,015 593,834   (462,956)   (498,815)
3.06.02 Financial expenses   (1,434,924)   (2,969,370)   (427,056)   (1,516,434)
3.06.02.01 Net exchange differences over financial instruments  (79,960)   (327,258) 583,747 462,423
3.06.02.02 Financial expenses   (1,354,964)   (2,642,112)   (1,010,803)   (1,978,857)
3.07 Income before income taxes  (44,945)   (654,051) 881,266  3,311,363
3.08 Income tax and social contribution  328,243 114,801   (511,935)   (1,578,089)
3.08.01 Current   99,131   (258,262)   (692,486)   (1,270,201)
3.08.02 Deferred 229,112 373,063 180,551   (307,888)
3.09 Net income  from continued operations 283,298   (539,250) 369,331  1,733,274
3.11 Consolidated net income for the year 283,298   (539,250) 369,331  1,733,274
3.11.01 Earnings attributable to the controlling interests 183,603   (742,793) 197,326  1,403,728
3.11.02 Earnings it attributable to the non-controlling interests   99,695 203,543 172,005 329,546
3.99 Earnings per share – (Reais / Share)        
3.99.01 Basic earnings per share        
3.99.01.01 Common shares 0.13845   (0.56014) 0.14877 1.05710
3.99.02 Diluted earnings per share        
3.99.02.01 Common shares 0.13845   (0.56014) 0.14877 1.05710

 

 

 

12 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Consolidated Financial Statements / Statement of Comprehensive Income
(R$ thousand)

 

Code Description  Current Quarter 04/01/2023 to 06/30/2023   Year to date 01/01/2023 to 06/30/2023   Year to date 01/01/2023 to 06/30/2023   Year to date 01/01/2023 to 06/30/2023 
4.01 Consolidated net income for the year  283,298 (539,250)  369,331  1,733,274
4.02 Other comprehensive income  755,757  1,455,112 (1,083,398) (342,641)
4.02.01 Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes   672   1,351   (41) 56
4.02.04 Cumulative translation adjustments for the year  (169,291) (198,093)  155,081 (585,971)
4.02.10 Losses in cash flow hedge  575,793  889,539 (1,166,286)  260,622
4.02.12 Cash flow hedge reclassified to income upon realization, net of taxes   6,621  239,735  225,544  277,880
4.02.15 (Loss)/gain cash flow hedge accounting from investments in subsidiaries, net taxes  341,962  522,580 (297,696) (295,228)
4.03 Consolidated comprehensive income for the year  1,039,055  915,862 (714,067)  1,390,633
4.03.01 Earnings attributable to the controlling interests  870,125  606,509 (825,697)  1,120,859
4.03.02 Earnings it attributable to the non-controlling interests  168,930  309,353  111,630  269,774

 

 

13 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Consolidated Financial Statements / Statements of Cash Flows – Indirect Method
(R$ thousand)    

 

Code Description  Year to date 01/01/2023 to 06/30/2023   YTD previous year  01/01/2022 to 06/30/2022 
6.01 Net cash from operating activities         1,668,650             (983,646)
6.01.01 Cash from operations         2,635,704            4,498,374
6.01.01.01 Earnings  attributable to the controlling interests          (742,793)            1,403,728
6.01.01.02 Earnings attributable to the non-controlling interests            203,543               329,546
6.01.01.03 Financial charges in borrowing and financing raised         1,661,173            1,123,146
6.01.01.04 Financial charges in borrowing and financing granted            (90,838)               (69,714)
6.01.01.05 Depreciation, amortization and depletion         1,614,863            1,320,050
6.01.01.06 Equity in results of affiliated companies          (128,811)               (73,665)
6.01.01.07 Deferred taxes assets          (373,063)               307,888
6.01.01.08 Provision for tax, social security, labor, civil and environmental risks            (66,405)                  6,190
6.01.01.09 Monetary and exchange variations, net            512,755             (861,285)
6.01.01.12 Updated shares – Fair value through profit or loss               17,758            1,033,056
6.01.01.13 Charges on lease liabilities              35,528                34,124
6.01.01.14 Accrued for consumption and services            (51,704)                11,291
6.01.01.15 Write-off and estimated losses net of reversal                  725                  6,612
6.01.01.17 Provision for environmental liabilities and decommissioning of assets              52,587                38,493
6.01.01.19 Dividends USIMINAS            (51,140)             (103,672)
6.01.01.20 Other provisions              41,526                 (7,414)
6.01.02 Changes in assets and liabilities          (967,054)          (5,482,020)
6.01.02.01 Trade receivables - third parties            533,479             (986,383)
6.01.02.02 Trade receivables - related party              44,495                40,232
6.01.02.03 Inventory         1,453,123             (331,276)
6.01.02.04 Dividends received              51,140               103,672
6.01.02.05 Recoverable taxes          (230,914)               386,763
6.01.02.06 Judicial deposits              (3,861)               (17,060)
6.01.02.08 Trade payables          (342,038)             (616,644)
6.01.02.09 Trade payables – Forfaiting and Drawee risk        (2,830,649)             (269,053)
6.01.02.10 Payroll and related taxes              65,552                61,784
6.01.02.11 Tax payables          (224,357)          (2,292,821)
6.01.02.13 Payables to related parties             (78,176)                52,059
6.01.02.14 Advances from customers         3,186,240             (393,005)
6.01.02.15 Interest paid         (1,672,086)          (1,057,410)
6.01.02.16 Receipt/(payment) of cash flow hedge operations          (793,899)                22,286
6.01.02.18 Others          (125,103)             (185,164)
6.02 Net cash investment activities        (1,631,093)          (2,395,977)
6.02.01 Cash received from the acquisition of investments -Topázio and Santa Ana                    -                     6,486
6.02.02 Investments           (141,369)             (272,239)
6.02.03 Purchase of property, plant and equipment, intangible assets and  investment  property        (1,654,963)          (1,539,406)
6.02.11 Intercompany loans granted           (101,912)             (112,693)
6.02.13 Financial Investments, net of redemption            262,993               (11,972)
6.02.14 Intercompany loans and interest received               4,158                       -   
6.02.15 Acquisition of investments in Topázio Energética, Santa Ana and Brasil Central                    -                (466,153)
6.03 Net cash used in financing activities             (94,470)            1,636,655
6.03.01 Borrowings and financing raised         7,270,697            9,545,800
6.03.03 Transactions cost - Borrowings          (107,075)             (232,189)
6.03.05 Amortization of borrowings and financing        (4,435,867)          (5,934,235)
6.03.06 Amortization of leases          (102,123)               (66,137)
6.03.07 Dividends and interest on shareholder’s equity         (2,720,102)          (1,266,016)
6.03.08 Share repurchase                    -                (410,568)
6.04 Exchange rate on translating cash and cash equivalents              40,980                20,182
6.05 Increase (decrease) in cash and cash equivalents            (15,933)          (1,722,786)
6.05.01 Cash and equivalents at the beginning of the year       11,991,356          16,646,480
6.05.02 Cash and equivalents at the end of the year       11,975,423          14,923,694

 

 

14 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2023 to 06/30/2023
(R$ thousand)          

 

 

Code Description Paid-up capital

Capital

reserve,

granted

options and

treasury shares

Earnings reserve

Retained

earnings (accumulated losses)

Other comprehensive income Shareholders’ equity Non-controlling interests Shareholders’ equity
5.01 Opening balances   10,240,000 32,720   8,988,442   - 228,305   19,489,467  2,326,577   21,816,044
5.03 Adjusted opening balances   10,240,000 32,720   8,988,442   - 228,305   19,489,467  2,326,577   21,816,044
5.04 Capital transaction with shareholders  -  -  (1,614,000)   -   -   (1,614,000)   (498,323)   (2,112,323)
5.04.06 Dividends  -  -  (1,614,000)   -   -   (1,614,000)   (441,749)   (2,055,749)
5.04.07 Interest on equity  -  -   -   -   - -  (56,574)  (56,574)
5.05 Total comprehensive income  -  -   -  (742,793) 1,349,302  606,509  309,353  915,862
5.05.01 Net income for the year  -  -   -  (742,793)   -   (742,793)  203,543   (539,250)
5.05.02 Other comprehensive income  -  -   -   - 1,349,302  1,349,302  105,810  1,455,112
5.05.02.04 Cumulative translation adjustments for the year  -  -   -   -  (198,093)   (198,093) -   (198,093)
5.05.02.06 (Loss) / gain on cash flow hedge accounting, net of taxes  -  -   -   - 1,546,053  1,546,053  105,801  1,651,854
5.05.02.07 Actuarial gains/(losses) on pension plan, net of taxes  -  -   -   - 1,342  1,342   9  1,351
5.07 Closing balance   10,240,000 32,720   7,374,442  (742,793) 1,577,607   18,481,976  2,137,607   20,619,583

 

 

 

15 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2022 to 06/30/2022
(R$ thousand)        

 

 

Code Description Paid-up capital

Capital

reserve,

granted

options and

treasury

shares

Earnings reserve

Retained

earnings (accumulated losses)

Other comprehensive income Shareholders’ equity Non-controlling interests Shareholders’ equity
5.01 Opening balances 10,240,000   32,720   10,092,888   - (50,610)   20,314,998   3,059,391   23,374,389
5.03 Adjusted opening balances 10,240,000   32,720   10,092,888   - (50,610)   20,314,998   3,059,391   23,374,389
5.04 Capital transaction with shareholders   - - (395,180)   -   224,806 (170,374) (736,907) (907,281)
5.04.04 Treasury shares acquired   -   (395,180)  -   -   - (395,180)  (1,638) (396,818)
5.04.07 Interest on equity   - -  -   -   -  - (510,463) (510,463)
5.04.08 (Loss)/gain on the percentage change in investments   - -  -   -   224,806  224,806 (224,806)  -
5.04.09 Reclassifications of treasury shares   -   (936,930)  936,930   -   -  -  -  -
5.04.10 Treasury shares canceled   -  1,332,110 (1,332,110)   -   -  -  -  -
5.05 Total comprehensive income   - -  -   1,403,728  (282,869)  1,120,859  269,774  1,390,633
5.05.01 Net income for the year   - -  -   1,403,728   -  1,403,728  329,546  1,733,274
5.05.02 Other comprehensive income   - -  -   -  (282,869) (282,869)   (59,772) (342,641)
5.05.02.04 Cumulative translation adjustments for the year   - -  -   -  (585,971) (585,971)  - (585,971)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes   - -  -   -  56 56  - 56
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes   - -  -   -   303,046  303,046   (59,772)  243,274
5.07 Closing balance 10,240,000   32,720  9,697,708   1,403,728  (108,673)   21,265,483   2,592,258   23,857,741

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

Consolidated Financial Statements / Statements of Value Added
(R$ thousand)

 

Code Description  Year to date 01/01/2023 to 06/30/2023   YTD previous year  01/01/2022 to 06/30/2022 
7.01 Revenues                25,411,662                25,461,350
7.01.01 Sales of products and rendering of services                25,314,536                25,459,603
7.01.02 Other revenues                      87,376                       (4,632)
7.01.04 Allowance for (reversal of) doubtful debts                        9,750                        6,379
7.02 Raw materials acquired from third parties               (19,327,048)               (16,536,910)
7.02.01 Cost of sales and services               (16,164,886)               (14,613,156)
7.02.02 Materials, electric power, outsourcing and other                (2,873,826)                (1,838,129)
7.02.03 Impairment/recovery of assets                   (288,336)                     (85,625)
7.03 Gross value added                  6,084,614                  8,924,440
7.04 Retentions                (1,610,985)                (1,316,597)
7.04.01 Depreciation, amortization and depletion                (1,610,985)                (1,316,597)
7.05 Value added created                  4,473,629                  7,607,843
7.06 Value added received                  1,547,472                  2,267,121
7.06.01 Equity in results of affiliated companies                     128,811                      73,665
7.06.02 Financial income                     593,834                     531,887
7.06.03 Others                     824,827                  1,661,569
7.07 Value added for distribution                  6,021,101                  9,874,964
7.08 Value added distributed                  6,021,101                  9,874,964
7.08.01 Personnel                  1,682,735                  1,284,948
7.08.01.01 Salaries and wages                  1,277,715                  1,014,204
7.08.01.02 Benefits                     326,547                     215,277
7.08.01.03 Severance payment (FGTS)                       78,473                      55,467
7.08.02 Taxes, fees and contributions                  1,082,153                  2,646,069
7.08.02.01 Federal                     654,046                  2,357,651
7.08.02.02 State                     395,778                     264,219
7.08.02.03 Municipal                      32,329                      24,199
7.08.03 Remuneration on third-party capital                  3,795,463                  4,210,673
7.08.03.01 Interest                  2,135,298                  1,170,046
7.08.03.02 Rental                        1,266                        1,968
7.08.03.03 Others                  1,658,899                  3,038,659
7.08.04 Remuneration on Shareholders' capital                   (539,250)                  1,733,274
7.08.04.03 Retained earnings (accumulated losses)                   (742,793)                  1,403,728
7.08.04.04 Non-controlling interests in retained earnings                     203,543                     329,546

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

São Paulo, August 2nd, 2023 - - Companhia Siderúrgica Nacional ("CSN") (B3: CSNA3) (NYSE: SID) discloses its second quarter of 2023 (2Q23) financial results in Brazilian Reais, with all financial statements consolidated in accordance with accounting practices adopted in Brazil issued by the Accounting Pronouncements Committee ("CPC"), approved by the Brazilian Securities and Exchange Commission ("CVM") and the Federal Accounting Council ("CFC") and in accordance with international financial reporting standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”).

 

The comments address the Company's consolidated results for the second quarter of 2023 (2Q23) and the comparisons are in relation to the first quarter of 2023 (1Q23) and the second quarter of 2022 (2Q22). The dollar price was BRL 5.24 on 06/30/2022; BRL 4.74 on 03/31/2023 and BRL 4.82 on 06/30/2023.

 

 

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

Consolidated Table - Highlights

 

¹ Adjusted EBITDA is calculated from net income (loss), plus depreciation and amortization, taxes on profit, net financial result, investment participation result, other operating income/expenses result and includes the proportional share of 37.27% of the EBITDA of the joint subsidiary MRS Logística.

² Adjusted EBITDA Margin is calculated from Adjusted EBITDA divided by Management Net Revenue.

³ Adjusted Net Debt and Adjusted Cash/Availability consider 37.27% of MRS, in addition to not considering Forfaiting and Drawn Risk operations.

 

Consolidated Results

 

·Net revenue reached BRL 10,989 million in 2Q23, representing a decrease of 2.9% when compared to 1Q23. This performance reflects the lower prices in the mining sector, which ended up offsetting the record sales verified in the segment and the operational improvements observed in the steel and cement segments.

 

·Cost of goods sold (COGS) totaled BRL 8,746 million in 2Q23, up 8.3% from the previous quarter, mainly as a result of higher volumes sold in all segments of the Company's operations, in addition to the increased cost pressure with raw materials for the production of steel and cement.

 

·The combination of revenue reduction and cost pressure resulted in an 8.3p.p. reduction in gross margins in 2Q23, reaching 20.4%.

 

·Selling, general and administrative expenses totaled BRL 1,082 million in 2Q23, 6.0% higher than in the previous quarter, as a consequence of the record traded volumes in mining, generating a higher freight expense.

 

·The group of other operating revenues and expenses was negative by BRL 128 million in 2Q23, a decrease of 92.3% compared to 1Q23, mainly explained by the positive effect of iron ore hedging operations, which generated a balance of BRL 227 million in the quarter, in addition to the lower impact of hedge accounting on the operations.

 

·In 2Q23, the financial result was negative by BRL 1,186 million, practically stable compared to the previous quarter, as a consequence of the maintenance of the cost of debt and lower impact of Usiminas shares.

 

 

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·The equity result was positive at BRL 107 million in 2Q23, an increase of 386% compared to the previous quarter, as a consequence of seasonality and recovery of MRS's result, after the strong rainfall recorded at the beginning of the year.

 

 

·CSN reported a net income of BRL 283 million in 2Q23, reversing the loss observed in the previous quarter, as a result of lower impacts on the line of other revenues and operating expenses, due to the positive effect of iron ore hedge, in addition to the tax (IR/CSLL) reversal provision verified in the period.

 

Adjusted EBITDA

*The Company discloses its Adjusted EBITDA excluding participation in investments and other operating income (expenses) because it understands that they should not be considered in the calculation of recurring operating cash generation.

 

·In 2Q23, Adjusted EBITDA was BRL 2,263 million, with an Adjusted EBITDA margin of 19.8% or 7.6 p.p. lower than last quarter. The reduction in profitability is a direct consequence of the worsening prices of the mining segment, which, even with the record sales volume, ended up presenting a much lower EBITDA in the period. In addition, rising raw material costs in steel and cement production also contributed to the reduction in margins in the quarter.

 

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Adjusted EBITDA (BRL MM) and Adjusted Margin¹ (%)

 

¹ The Adjusted EBITDA Margin is calculated from the division between Adjusted EBITDA and Adjusted Net Revenue, which considers the interests of 100% in the consolidation of CSN Mineração and 37.27% in MRS.

 

Adjusted Cash Flow

 

Adjusted Cash Flow in 2Q23 was positive at BRL 745 million, as a result of the normalization of working capital, with a strong reduction in inventories, mainly in the mining segment.

 

Adjusted Cash Flow¹ in 2Q23 (BRL MM)

 

¹ The concept of Adjusted cash flow is calculated from Adjusted EBITDA, subtracting Ebitda from Joint Subsidiaries, CAPEX, IR, Financial Result and changes in Assets and Liabilities², excluding the effect of the Glencore advance.

² The Adjusted Working Capital is composed of the variation of the Net Working Capital, plus the variation of accounts of long-term assets and liabilities and disregarding the net variation of IR and CS.

 

Indebtedness

 

On 06/30/2023, the consolidated net debt reached BRL 31,455 million, with the leverage indicator, measured by the LTM Net Debt/EBITDA ratio reaching 2.78x. This one-off increase in leverage is mainly the result of the payment of BRL 2.7 billion in dividends in the period. On the other hand, when considering the prepayment operations of iron ore and energy, in a total of BRL 3.4 billion, of which BRL 2.4 billion after the end of the quarter, the pro forma leverage would go to 2.57x. These and other initiatives that are currently being evaluated, reinforce the Company's commitment to reduce its indebtedness, bringing leverage to the expected guidance for the end of the year. In addition, CSN maintained its policy of carrying high levels of cash, which in this quarter reached the level of BRL 12.5 billion.

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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¹ Net Debt / EBITDA: For debt calculation considers the final dollar of each period and for net debt and EBITDA the average dollar of the period.

 

The Company remains very active in its objective of extending its amortization period, focusing on long-term operations and the local capital market. Among the main movements of the period, the 14th issuance of simple debentures in the total amount of BRL 700 million stands out, having as objective the investment in railway infrastructure in the logistics and transport sector.

 

Amortization Schedule (BRL Bi)

¹ IFRS: does not consider participation in MRS (37.27%).

² Management Gross / Net Debt considers participation in MRS (37.27%), without accrued interest.

3 Average Term after completion of the Liability Management Plan.

 

Foreign Exchange Exposure

 

The accumulated net foreign exchange exposure in the consolidated balance sheet up to 2Q23 was US$ 509 million, as shown in the table below, in line with the company's policy of minimizing the impacts of exchange rate volatility on the result. The adopted Hedge Accounting by CSN correlates the projected flow of dollar exports with the future maturities of debt in the same currency. With this, the exchange variation of the dollar debt is temporarily recorded in the shareholders' equity, being taken to the result when the dollar revenues from the referred exports occur.

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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Investments

 

A total of BRL 991 million were invested in 2Q23, 33% higher than the amount invested in 1Q23, with emphasis on repairs to coke batteries at the UPV plant, as well as advances in studies of new batteries and general maintenance in steel operations. In the mining segment, the advances in expansion projects stand out (P15, Tailings Dams Recovery and Tecar), as well as maintenance to increase productivity, accompanied by current investments in Cement and Energy operations.

 

 

Net Working Capital

 

The Net Working Capital applied to the business totaled BRL 3,010 million in 2Q23, with a reduction of 33% compared to 1Q23, due to (i) lower Company's inventories volume, in line with the increase in recorded sales in the period, and (ii) the reduction in accounts receivable in the foreign market.

 

The calculation of the Net Working Capital applied to the business disregards Glencore's advance, as shown in the following table:

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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¹ Other CCL Assets: Considers employee advances and other accounts receivable.

² Other CCL Liabilities: Considers other accounts payable, dividends payable, installment taxes and other provisions.

³ Inventories: Does not consider the effect of the provision for inventory/inventory losses. For the calculation of the SME, the balances of warehouse stocks are not considered.

 

 

 

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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Results by Business Segments

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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2Q23 Results (BRL million) Steel Mining Logistics (Porto) Logistics (Rail) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue  5,943  3,631  54  668  159  1,142  (609)  10,989
Domestic Market  4,368  371,74  54  668  159  1,142  (1,012)  5,752
Foreign Market  1,574  3,260  -     -     -     -     403  5,237
COGS  (5,419)  (2,626)  (61)  (352)  (100)  (952)  765  (8,746)
Gross profit  523  1,006  (7)  316  59  191  156  2,243
DGA/DVE  (288)  (147.39)  (3)  (51)  (15)  (123)  (455)  (1,082)
Depreciation  318  254  13  98  24  156  (75)  788
Proportional EBITDA of joint contr  -           -     -     -     -     313  313
Adjusted EBITDA  553  1,112  3  362  69  224  (60)  2,263
                 
1Q23 Results (BRL million) Steel Mining Logistics (Porto) Logistics (Rail) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue  5,777  4,141  70  519  139  1,119  (447)  11,319
Domestic Market  3,946  282,28  70  519  139  1,119  (847)  5,229
Foreign Market  1,831  3,859  -     -     -     -     400  6,090
COGS  (5,021)  (2,247)  (59)  (340)  (124)  (960)  677  (8,073)
Gross profit  756  1,895  10  179  16  160  230  3,245
DGA/DVE  (313)  (126.36)  (2)  (43)  (13)  (96)  (427)  (1,020)
Depreciation  311  257  10  98  25  159  (78)  781
Proportional EBITDA of joint contr  -           -     -     -     -     197  197
Adjusted EBITDA  754  2,025  19  234  28  222  (79)  3,203
                 
Result 2Q22 (BRL million) Steel Mining Logistics (Porto) Logistics (Rail) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue  7,706  2,608  77  592  47  475  (940)  10,566
Domestic Market  5,248  411,20  77  592  47  475  (1,032)  5,819
Foreign Market  2,458  2,196  -     -     -     -     93  4,747
COGS  (5,789)  (1,832)  (53)  (386)  (49)  (301)  849  (7,560)
Gross profit  1,917  776  24  206  (2)  174  (90)  3,005
DGA/DVE  (313)  (87.03)  (8)  (34)  (8)  (69)  (132)  (651)
Depreciation  301  242  8  126  4  57  (95)  643
Proportional EBITDA of joint contr  -           -     -     -     -     265  265
Adjusted EBITDA  1,905  931  24  298  (6)  163  (52)  3,262

 

Steel Result

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

Steel Result

 

According to the World Steel Association (WSA), global crude steel production totaled 481.8 million tons (Mt) in the second quarter of 2023, representing a 4.9% increase compared to the previous quarter but a 1.7% reduction compared to the same period in 2022, impacted by lower production in the Chinese and European markets during the period, partially offset by a strong production rebound in India. In the quarter, the European Union reduced its production by 10.3% compared to the same period last year, still affected by the negative effects of the Russia-Ukraine war. On the other hand, China accounted for 56.8% of the global volume (273.8 Mt) in 2Q23, which corresponds to an annual decrease of 2.2%. The outlook for the second half of 2023 remains positive as an increase in incentives by the Chinese government is expected. Brazil, in turn, produced 8.2 Mt in 2Q23, a 6.8% decrease compared to the same period in 2022, impacted by scheduled and unscheduled plant shutdowns, as well as an increase in imported products in the country. The outlook for the local market in the second half of 2023 is more optimistic with the resumption of production after the shutdowns and with demand responding to government incentives through programs targeting the automotive, construction, and infrastructure sectors.

 

 

 

Steel Production (thousand tons)

 

In the case of CSN, plate production in 2Q23 totaled 732 thousand tons, a performance 2.2% lower than the previous quarter, as a consequence of the lower purchase volume of third-party plates, since its own production increased with the normalization of the operation verified throughout the quarter. In turn, the production of flat rolled products, our main market, reached 775 kton, which represents an increase of 10.3% compared to 1Q23, reflecting the normalization of the production process and bringing production up to numbers closer to previous periods.

 

Sales Volume (Kton) – Steel Industry

 

 

Total sales reached 1,051 thousand tons in the second quarter of 2023, volume 1.8% higher than that recorded in 1Q23. When analyzing the behavior in the different markets, it is noticed that the domestic market was the main responsible for this increase, with a strong performance in hot and zinc plated products. Domestic sales totaled 739 thousand tons of steel products in 2Q23, which represents an increase of 10.5% compared to 1Q23 and reinforces the normalization of the operation and the Company's resilience by being able to maintain an assertive commercial strategy even with strong pressure from imported products. In the foreign market, sales totaled 312 thousand tons in 2Q23 and were 14.3% lower than in 1Q23, as a result of weaker dynamics in the European market. During the quarter, 5,000 tons were exported directly, and 306,000 tons were sold by subsidiaries abroad, 78,000 tons by LLC, 143,000 tons by SWT and 85,000 tons by Lusosider.

 

In relation to the total sales volume in 2Q23, practically all segments showed an increase compared to the previous quarter, with the Home Appliances (+31.4%) and Automotive (+18.7%) appearing among the main highlights. In the annual comparison, there was an important recovery of flat steels for construction, home appliances, and distribution, but with declines in general industry and steel packaging.

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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According to ANFAVEA (National Association of Motor Vehicle Manufacturers), production in 2Q23 reached 596,000 units, an increase of 11.2% compared to the previous quarter. The Association also reported that vehicle registrations volume rose by 11.7% in the second quarter.

 

When we look at the data from the Brazilian Steel Institute (IABr), the production of Crude Steel in 2Q23 reached 8.16 million tons, a performance 7.9% lower compared to the same period in 2022 and 4.5% higher than 1Q23. As for Apparent Consumption, it was 5.78 million tons, a reduction of 3.7% in the annual comparison, and 0.1% lower than 1Q23. The Steel Industry Confidence Indicator (ICIA) for June was 44.1 points, representing an 11.4 p.p. increase compared to December. Although the indicator remains below the 50-point dividing line, there was a significant improvement in confidence in the domestic market's prospects for the next six months.

 

According to data from IBGE, the production of home appliances in May 2023 increased by 12% compared to the previous year, indicating a recovery in the white goods sector following weak performance observed last year.

 

Selling by Market Segment

 

·Net revenue at the steel segment reached BRL 5,943 million in 2Q23, a performance 2.6% higher than in 1Q23, as a result of the higher sales volume presented in the period and the Company's ability to preserve prices even with greater pressure from imported products. In this sense, the average price of 2Q23 in the domestic market was 0.3% higher than that presented in 1Q23, which shows the pressure exerted by the imported material after the adjustment applied at the beginning of the quarter. In turn, the price of the foreign market was 0.1% lower compared to the last quarter, mainly impacted by a lower dynamism in the European market that was also impacted by greater penetration of imported products.

 

·The plate cost in 2Q23 reached BRL 4,113/t, a reduction of 0.8% compared to the previous quarter, as a result of the resumption of operations, helping to dilute fixed costs, in addition to the lower volume of plates purchased.

 

·The steel segment Adjusted EBITDA reached BRL 553 million in 2Q23 and was 26.6% lower than in 1Q23, with an EBITDA margin of 9.3% (- 3.7 p.p.). This result mainly reflects the cost pressure with operational performance, still in normalization. It is important to highlight the transitory effect of this lower profitability since it is already possible to observe a much lower cost structure from 3Q23 onwards.

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

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Adjusted EBITDA and Steel Margin (BRL MM and %)

 

 

Mining Result

 

In the mining sector, the quarter was marked by weaker activity in China, mainly in the real estate sector, weakening expectations of higher demand for iron ore and weighing on the price outlook. Despite this weaker dynamic of the Chinese economy, steel production remained at high levels, supported by the infrastructure and automobile sectors, with producers selling the surplus to the international market. While the Chinese economy did not demonstrate the expected pace of economic activity recovery to justify a price appreciation in iron ore, the product's demand remained strong enough to keep inventories low and sustain its price at the current level. In this scenario, expectations of stimulus policies by the Chinese government for investments in civil construction and consumer goods persist, which are expected to boost domestic demand for steel products, reducing the volume of exports. Amidst this context, the iron ore price ended 2Q23 with an average of US$110.9/dmt (Platts, Fe62%, N. China), 11.6% lower than 1Q23 (US$125.5/dmt) but 12.1% higher than 4Q22 (US$99.0/dmt).

 

Regarding sea freight, the BCI-C3 Route (Tubarão-Qingdao) presented an average of US$ 21.06/wmt in 2Q23, which represents an increase of 15,7% in relation to the freight cost of the previous quarter, as a reflection of the lower supply of ships in the Atlantic Ocean, due to a greater demand in the Australian market.

 

 

 

·Iron ore production totaled a record volume of 11,157 thousand tons in 2Q23, representing a growth of 25% compared to 1Q23 and an increase of 35% compared to 2Q22. This performance reinforces the Company's operational improvement, especially after the difficulties experienced in the previous year and puts CSN on track to achieve the production and purchasing guidance stipulated for 2023 (which is from 39 to 41 Mton).

 

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·Sales volume also showed a record high of 11,258 thousand tons in 2Q23, a performance 31% higher than in 1Q23 and 49% higher than in the same period last year. In addition to positive seasonality with a drier weather, 2Q23 sales were boosted by the normalization of railroad operations.

 

·In 2Q23, adjusted net revenue reached BRL 3,631 million and was 12.3% lower than in 1Q23, even with the greater volume of shipments. This result reflects the lower price realization observed in the period, in addition to the negative impact of provisional prices. As a consequence, net unit revenue was US$ 66.06 per wet ton, which represents a reduction of 28.1% compared to 1Q23, in line with the downward trajectory of the Platts price, and with the appreciation of 5.9% of the Real exchange rate.

 

·In turn, the cost of products sold from mining totaled BRL 2,626 million in 2Q23, an increase of 16.9% compared to the previous quarter, impacted by higher iron ore volume, including higher purchasing volume. On the other hand, the C1 cost reached USD 21.7/t in 2Q23 and was 5.2% lower than at the beginning of the year, reflecting the higher fixed cost dilution and the lower SG&A unit costs in the period.

 

·Adjusted EBITDA, in turn, reached BRL 1,112 million in 2Q23, with a quarterly Adjusted EBITDA margin of 30.6% or 18.3p.p. lower than last quarter. This drop in profitability reflects the reduction in ore prices, aggravated by the negative pressure from provisional prices.

 

Cement Result

 

According to the National Union of the Cement Industry (SNIC), cement sales in Brazil during the first half of 2023 remained nearly stable compared to the same period of the previous year, with only an 1.8% decline, despite the high interest rates and uncertainties regarding monetary policy. The construction and infrastructure sectors, which are the main drivers of cement consumption, experienced a slowdown due to difficulties in accessing credit and a decrease in real estate launches and financing. Although there has been an improvement in industry and consumer confidence, the high level of household debt and weak demand still bring some short-term uncertainty. On the other hand, there are already some signs of economic improvement, with the sector being driven by federal programs such as Minha Casa, Minha Vida, PAC, infrastructure projects' resumption, and a probable decrease in interest rates.

 

Despite this stable market, CSN's sales in 2Q23 totaled 3.333 kton, which represents an increase of 9.4% over the previous quarter, in line with the seasonality of the period and the assertive commercial policy adopted by the Company. In this sense, it is important to highlight the synergies arising from the acquisitions of the Lafarge Holcim plants, which have provided an increase in market share, with the entry of CSN Cimentos in new regions.

 

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Sales Volume - Cements (thousand tons)

* The operations of LafargeHolcim were integrated in September 2022.

 

·Net revenue reached BRL 1,142 million in 2Q23, a 2.1% higher performance compared to the previous quarter, with the higher sales volume offsetting the lower prices in the period.

 

·In 2Q23, the unit cost of cement decreased by 13.1% as a result of higher dilution of fixed costs, due to increase in production.

 

·In turn, the segment's Adjusted EBITDA increased by 0.7% compared to the previous quarter, reaching BRL 224 million in 2Q23 and with an Adjusted EBITDA margin of 19.6%, practically stable compared to 1Q23. For the second half, it is already possible to anticipate a consistent improvement in profitability with the capture of synergies, lower raw material costs and a more favorable price scenario.

 

Energy Result

 

In 2Q23, the high level of water in the reservoirs has kept energy prices at a level significantly below the average of recent years. As a result, the traded energy volume in the quarter generated a net revenue of BRL 159 million, which represents an increase of 14.1% compared to the previous quarter. Adjusted EBITDA increased in the period, reaching BRL 69 million and generating an EBITDA margin of 43.4%, an increase of 147% compared to the last quarter, positively impacted by the reduction in COGS in the period.

 

Logistics Result

 

Railway Logistics: In 2Q23, net revenue reached BRL 668 million, with an Adjusted EBITDA of BRL 362 million and Adjusted EBITDA margin of 54.2%. Compared to 1Q23, net revenue increased 28.8% due to the seasonality of the operation and the normalization of MRS's operations. In the same line of comparison, Adjusted EBITDA was 54.7% higher.

 

Port Logistics: In 2Q23, 221 thousand tons of steel products were shipped by Sepetiba Tecon, in addition to 15 thousand containers, 2 thousand tons of general cargo and 56 thousand tons of bulk. In comparison with the previous quarter, the Company had its change in the mix of shipments, with the decrease in the volume of steel products and the increase in the volume of bulk. On the other hand, the net revenue of the port segment was 22.4% lower than the previous quarter, reaching BRL 54 million in 2Q23, with a negative impact also on the Adjusted EBITDA of the period, which was BRL 3 million, with an EBITDA margin of 5%.

 

 

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ESG – Environmental, Social & Governance

 

ESG PERFORMANCE – CSN GROUP

Since the beginning of 2023, CSN has adopted a new format for disclosing its ESG actions and performance, providing its performance in ESG indicators on an individual basis. The new model allows stakeholders to have access to the main results and indicators on a quarterly basis and to monitor them effectively and even more quickly. Access can be made through the results center on CSN's IR website: https://ri.csn.com.br/informacoes-financeiras/central-de-resultados/

The information included in this release was selected based on relevance and materiality to the company. Quantitative indicators are presented compared to the period that best represents the metric for monitoring them. Thus, some are compared to the same quarter of the previous year, and others will be compared to the average of the previous period, ensuring a comparison based on seasonality and periodicity. Additionally, it is important to highlight that the ESG Performance Report also incorporates the performance indicators of the new assets of CSN Cimentos, acquired in 2022, so that some absolute indicators will change significantly when compared to the previous period.

More detailed historical data on CSN's performance and initiatives can be found in the 2022 Integrated Report, released in April 2023 (esg.csn.com.br/nossa-empresa/relatorio-integrado-gri). ESG indicator assurance occurs annually for the Integrated Report's closing, so the information contained in quarterly releases is subject to adjustments resulting from this process.

It is also possible to track CSN's ESG performance in an agile and transparent manner on our website through the following electronic address: esg.csn.com.br.

 

 

 

 

 

 

 

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Capital Markets

 

In the second quarter of 2023 CSN shares appreciated by 21.4%, while the Ibovespa Index rose by 15.9%. The daily average value (CSNA3) traded on B3, in turn, was BRL 117.1 million in 2Q23. On the New York Stock Exchange (NYSE), the Company's American Depositary Receipts (ADRs) were down 15.6% in dollars, while the Dow Jones Industrial Average rose 3.4%. The average daily trading with ADRs (SID) on the NYSE in 2Q23 was US$9.8 million.

 

                          2Q23
Number of shares in thousands   1.326.094
Market Value    
Closing Quote (BRL/share)   12.13
Closing Quote (US$/ADR)   2.59
Market Value (BRL million)   16,086
Market Value (US$ million)   3,435
Change in period    
CSNA3 (BRL)   -21.4%
SID (USD)   -15.6%
Ibovespa (BRL)   15.9%
Dow Jones (USD)   3.4%
Volume    
Daily average (thousand shares)   8,768
Daily average (BRL thousand)   117,124
Daily average (thousand ADRs)   3,578
Daily average (US$ thousand)   9,815

Source: Bloomberg

 

   
     

 

Result Conference Call:

 

Earnings Presentation Webcast of the 2Q23

Investor Relations Team

Conference Call in Portuguese with Simultaneous Translation into English

August 03, 2023

11:30 a.m. (Brasilia time)

9:30 a.m. (New York time)

+55 11 3181-8565 / +55 11 4210-1803

Code: CSN

Phone Replay: +55 11 4118-5151

Replay code: 219011#

Webcast: click here

Marcelo Cunha Ribeiro – CFO and IR Executive Director

Pedro Gomes de Souza (pedro.gs@csn.com.br)

Danilo Dias (danilo.dias.dd1@csn.com.br)

Rafael Byrro (rafael.byrro@csn.com.br)

 

 

 

 

Some of the statements contained herein are forward-looking statements that express or imply expected results, performance or events. These perspectives include future results that may be influenced by historical results and the statements made in 'Outlook'. Current results, performance and events may differ materially from assumptions and prospects and involve risks such as: general and economic conditions in Brazil and other countries; interest and exchange rate levels, protectionist measures in the U.S., Brazil, and other countries, changes in laws and regulations, and general competitive factors (on a global, regional, or national basis).

 

 

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INCOME STATEMENT

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 

 

 

 

 

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BALANCE SHEET

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 


 

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CASH FLOW

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 

 

 

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Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS
(In thousands of reais, unless otherwise noted)

 

1.DESCRIPTION OF BUSINESS

 

Companhia Siderúrgica Nacional (“CSN”, also referred to as “Company” or “Parent company”), is a publicly held company incorporated on April 9, 1941, under the laws of the Federative Republic of Brazil (Companhia Siderúrgica Nacional, its subsidiaries, joint ventures, joint operations and associates are collectively referred to herein as the "Group”). The Company’s registered office is located in São Paulo, SP, Brazil.

 

CSN is listed on the São Paulo Stock Exchange (B3 S.A. - Brasil, Bolsa, Balcão) and on the New York Stock Exchange (“NYSE”), reporting its information to the Brazilian Securities and Exchange Commission (“CVM”) and to the U.S. Securities and Exchange Commission (“SEC”).

 

The Group's main operating activities are divided into five 5 segments as follows:

 

·Steel:

 

The Company’s main industrial facility is the Presidente Vargas Steelworks (“UPV”), located in the city of Volta Redonda, State of Rio de Janeiro. This segment consolidates all operations related to the production, distribution and sale of flat steel, long steel, metallic containers and galvanized steel. In addition to the facilities in Brazil, CSN has commercial operations in the United States and operations in Portugal and Germany in order to gain markets and provide excellent services to final consumers. Its steel is used in home appliances, civil construction, package and automobile industries.

 

·Mining:

 

The production of iron ore is developed in the cities of Congonhas, Belo Vale and Ouro Preto, State of Minas Gerais, by its subsidiary CSN Mineração S.A. (“CSN Mineração”). The Company’s mining activities also include tin exploration in the state of Rondônia by CSN's subsidiary Estanho de Rondônia S.A. (“ERSA”), to supply the needs of the UPV. The surplus of this raw material is sold to subsidiaries and third parties.

 

Iron ore is sold basically in the international market, especially in Europe and Asia. The prices charged in these markets are historically cyclical and subject to significant fluctuations over short periods of time, driven by several factors related to global demand, strategies adopted by the major steel producers, and the foreign exchange rate. All these factors are beyond the Company’s control. The ore is transported by rail to the Terminal de Carvão e Minérios from the Itaguaí Port (“TECAR”), a solid bulk terminal, one of the four terminals that comprise the Itaguai Port, located in the State of Rio de Janeiro and from TECAR to customers around the world. The imports of coal and coke are also carried out through this terminal by provision of services by CSN Mineração to CSN.

 

As a pioneer in the use of technologies that result in the possibility of stacking the tailings generated in the iron ore production process, the CSN Mineração has its iron ore production, since January 2020, 100% independent of tailings dams. After significant investments in recent years to raise the level of reliability, disposal and dry stacking, the CSN Mineração has advanced to a scenario in which 100% of our tailings goes through a dry filtering process and are stacked in piles, geotechnically controlled, in areas exclusively destined for stacking.

 

As a consequence of these measures, decommissioning of dams is the natural path for processing filtered tailings. All of our mining dams are positively certified and comply with the environmental legislation in force.

 

·Cements:

 

CSN entered the cement production market boosted by the synergy between this activity and CSN’s current business. Beside the UPV facilities, in Volta Redonda/RJ, the Company installed a business unit, which produces CP-III type cement using the slag produced by the UPV’s own blast furnaces. It also explores limestone and dolomite at the Arcos/MG unit, to meet the needs of the steel and cement plants. Additionally, in Arcos/MG, the clinker production operation is located.

 

On August 31, 2021, the Company completed the acquisition of control of Elizabeth Cimentos S.A. ("Elizabeth Cimentos") and Elizabeth Mineração S.A. ("Elizabeth Mineração"), with operations in the Northeast region, especially in Paraíba and Pernambuco. On May 1, 2022, Elizabeth Mineração was merged into CSN Cimentos S.A.

 

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On September 9, 2021, CSN Cimentos entered into the Agreement for the Sale and Purchase of the Shares in LafargeHolcim (Brasil) S.A., for the acquisition of 100% of the shares issued by LafargeHolcim (Brasil) S.A. (“LafargeHolcim”). On August 17, 2022, the transaction was approved by the Administrative Council for Economic Defense ("CADE"), and on September 6, 2022, the acquisition of all shares issued by LafargeHolcim S.A. was completed, changing LafargeHolcim's name to "CSN Cimentos Brasil S.A.", which is now controlled by CSN Cimentos. The main activities of the Company are: production, industry and general trade of cement, lime, mortar, minerals and metals in general and complementary products for civil construction, in natura with industrial plants, warehouses and branches in much of the national territory.

 

·Logistics:

 

Railroads:

 

CSN has interests in three railroad companies: MRS Logística S.A. (“MRS”), which manages the former Southeast Railway System of Rede Ferroviária Federal S.A. (“RFFSA”), Transnordestina Logística S.A. (“TLSA”) and FTL - Ferrovia Transnordestina Logística S.A. (“FTL”), which holds the concession to operate the former Northeast Railway System of RFFSA, in the States of Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas - stretches from São Luís to Altos, Altos to Fortaleza, Fortaleza to Sousa, Sousa to Recife/Jorge Lins, Recife/Jorge Lins to Salgueiro, Jorge Lins to Propriá, Paula Cavalcante to Cabedelo, Itabaiana to Macau (Mesh I) and TLSA is responsible for the stretches from Eliseu Martins-Trindade, Trindade-Salgueiro, Salgueiro-Missão Velha and Missão Velha-Pecém (Mesh II), under construction.

 

Ports:

 

The Company operates in the State of Rio de Janeiro, by means of its subsidiary Sepetiba Tecon S.A., the Container Terminal (“TECON”) and by means of its subsidiary CSN Mineração, the TECAR, both located at the Itaguaí Port. Established in the harbor of Sepetiba, the mentioned port has a privileged highway, railroad, and maritime access.

 

TECON is responsible for the movement and storage of containers, vehicles, steel products, general cargo, among other products, and TECAR performs the operational activities of loading and unloading of solid bulk ships, storage and distribution (road and rail) of coal, coke, petroleum coke, clinker, zinc concentrate, sulfur, iron ore and other bulk, intended for the seaborne market, for our own operation and for different customers.

 

·Energy:

 

Since the energy supply is fundamental in CSN”s production process, the Company has electricity generation assets to mitigate costs, aiming at greater competitiveness.

 

On June 30, 2022, the Company's subsidiaries, CSN Cimentos and CSN Energia S.A. ("CSN Energia"), completed the acquisition of Santa Ana Energética S.A. (“Santa Ana”), as well as Topázio Energética S.A. ("Topázio") and, indirectly, Brasil Central Energia Ltda. ("BCE"), a subsidiary of Topázio, under the terms of the Share Purchase Agreement entered into on April 8, 2022 with Brookfield Americas Infrastructure (Brazil Power) Fundo de Investimento em Participações Multiestratégia, managed by Brookfield Brasil Asset Management Investimentos Ltda. On October 7, 2022, subsidiaries CSN Mineração and CSN Energia S.A. concluded the acquisition of 100% of the shares of Companhia Energética Chapecó – CEC, holder of the grant of Quebra-Queixo Hydroelectric Power Plant (“Chapecó”), as provided for in the Agreement for the Purchase and Sale of Shares and Other Covenants and in the Private Instrument of Assignment of Rights and Obligations entered into on July 1, 2022 and July 25, 2022, respectively.

 

In July 2022, The Company won the auction held by the State of Rio Grande do Sul, for the sale of 100% of the shares in its possession, 6,381,908 equivalent to 66.23% of the share capital, of Companhia Estadual de Energia Elétrica - CEEE-G, as part of the CEEE Group privatization program, in accordance with State Law 15.298/19.On October 21, 2022, the transaction was completed with payment by the company of the auction winning price. On December 22, 2022, the acquisition of Eletrobras' 32.74% interest in CEEE-G was concluded, and the Company currently holds 99% of the share capital of CEEE-G.

 

·Going Concern:

 

Management understands that the Company has adequate resources to continue its operations. Accordingly, the Company's interim financial information for the period ended June 30, 2023, have been prepared on a going concern basis.

 

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2.BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

 

2.a)Statement of compliance

 

The parent company and consolidated interim financial information (“interim financial information”) have been prepared and are being presented in accordance with the accounting practices adopted in Brazil issued by the Brazilian Accounting Pronouncements Committee (“CPC”), approved by the Brazilian Securities and Exchange Commission (“CVM”) and by the Brazilian Federal Accounting Council (“CFC”), and in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (“IASB”) and disclose all the relevant information of the interim financial information, and only this information, which corresponds to that used by the Company's management in its activities. The consolidated interim financial information are identified as “Consolidated” and the parent company's individual interim financial information are identified as “Parent Company”.

 

2.b)Basis of presentation

 

The interim financial statements were prepared based on the historical cost and were adjusted to reflect: (i) the fair value measurement of certain financial assets and liabilities (including derivative instruments), as well as pension plan assets; and (ii) impairment losses.

 

When IFRS and CPCs allows the option between cost or another measurement criterion, the cost of acquisition criterion was used.

 

The preparation of these interim financial statements requires Management to use certain accounting estimates, judgments and assumptions that affect the application of Accounting Polices and the amounts reported on the balance sheet date of assets, liabilities, income, and expenses may differ from actual future results. The assumptions used are based on history and other factors considered relevant and are reviewed by the Company’s management.

 

The interim financial information has been prepared and is being presented in accordance with CPC 21 (R1) - “Interim Financial Reporting” and IAS 34 - “Interim Financial Reporting”, consistently with the standards issued by the CVM.

 

This interim financial information does not include all requirements of annual or full financial statements and, accordingly, should be read in conjunction with the Company’s financial statements for the year ended December 31, 2022.

 

Therefore, in this interim financial information the following notes are not repeated, either due to redundancy or to the materiality in relation to those already presented in the annual financial statements:

 

Note 10 - Basis of consolidation and investments

Note 12 - Intangible assets

Note 18 - Income tax and social contribution

Note 19 - Installment taxes

Note 20 - Tax, social security, labor, civil, environmental provisions and judicial deposits

Note 29 - Information by business segment

Note 30 - Employee benefits

Note 31 - Commitments

 

The consolidated financial statements were approved by Board of Directors on August 2, 2023.

 

2.c)Functional currency and presentation currency

 

The accounting records included in the interim financial statements of each of the Company’s subsidiaries are measured using the currency of the principal of the economic environment in which each subsidiary operates (“the functional currency”). The consolidated and parent company interim financial statements are presented in BRL(reais), which is the Company’s functional and reporting currency.

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the transaction or valuation dates, in which the items are remeasured. The balances of the asset and liability accounts are converted using the exchange rate on the balance sheet date. As of June 30, 2023, US$1.00 was equivalent to BRL4.8192 (BRL5.2177 on December 31, 2022) and €1.00 was equivalent to BRL5.2626 (BRL5.5694 on December 31, 2022), according to the rates obtained from Central Bank of Brazil website

 

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2.d)Statement of value added

 

Pursuant to Law 11,638/07, the presentation of the statement of added value is required for all publicly held companies. These statements were prepared in accordance with CPC 09 - Added Value Statement, approved by CVM Resolution 557/08. The IFRS does not require the presentation of this statement and for IFRS purposes is presented as additional information.

3.CASH AND CASH EQUIVALENTS

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
Cash and banks              
In Brazil              71,711                85,120                23,469                49,794
Abroad          8,034,186            6,310,338              147,671              136,756
           8,105,897            6,395,458              171,140              186,550
               
Investments              
In Brazil          3,329,362            5,110,749            1,469,425            2,652,855
Abroad            540,164              485,149                  3,602                           
           3,869,526            5,595,898            1,473,027            2,652,855
         11,975,423          11,991,356            1,644,167            2,839,405

 

Our investments are basically in private and public securities with yields linked to the variation of Interbank Deposit Certificates (CDI) and repo operations backed by National Treasury Notes, respectively. The Company invests part of the funds through exclusive investment funds which have been consolidated in this interim financial information.

 

Our investments are in private securities in top-rated banks and are remunerated at pre-fixed rates.

 

4.FINANCIAL INVESTMENTS

 

                Consolidated               Parent Company
    Current   Non-current   Current   Non-current
    06/30/2023   12/31/2022   06/30/2023   12/31/2022   06/30/2023   12/31/2022   06/30/2023   12/31/2022
Investments (1)            37,542                 271,590            16,400            15,675            35,688                   22,715        
Usiminas shares (2)       1,167,137              1,184,895                                  1,167,137              1,184,895        
Bonds (3)                  110,842          140,510                  110,842          140,510
        1,204,679              1,456,485          127,242          156,185       1,202,825              1,207,610          110,842          140,510
(1)These are restricted financial investments and linked to a Bank Deposit Certificate (CDB) to guarantee a letter of guarantee from financial institutions and financial investments in Public Securities (LFT - Letras Financeiras do Tesouro) managed by their exclusive funds.
(2)A guarantee (fiduciary alienation) was constituted over a portion of the shares of Usiminas Siderúrgica de Minas Gerais S.A. held by the Company.
(3)Bonds with Banco Fibra maturing in February 2028 (see note 20.a).

 

5.      TRADE RECEIVABLES

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
Trade receivables              
Third parties              
Domestic market 1,542,952   1,636,804   862,301   860,942
Foreign market 1,235,320   1,720,056   39,555   92,679
  2,778,272   3,356,860   901,856   953,621
Allowance for doubtful debts       (216,033)         (232,830)         (114,113)         (122,872)
  2,562,239   3,124,030   787,743   830,749
Related parties (Note 20 a)        109,373   109,134   757,187   1,125,782
  2,671,612   3,233,164   1,544,930   1,956,531

 

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The composition of the gross balance of accounts receivable from third party consumers is shown as follows:

 

        Consolidated       Parent Company
    06/30/2023   12/31/2022   06/30/2023   12/31/2022
Current       2,482,828       2,934,057          739,683          781,406
Past-due up to 30 days            79,666          163,959            42,483            37,036
Past-due up to 180 days            23,238            54,452            12,418            28,526
Past-due over 180 days          192,540          204,392          107,272          106,653
        2,778,272       3,356,860          901,856          953,621

 

The changes in estimated credit losses are as follows:

 

        Consolidated       Parent Company
    06/30/2023   12/31/2022   06/30/2023   12/31/2022
Opening balance         (232,830)         (236,927)         (122,872)         (133,227)
(Loss)/Reversal estimated              7,964                 (87)              5,293              1,623
Recovery and write-offs of receivables               8,833            13,197              3,466              8,732
Consolidation in the acquisition of companies                                    (9,013)                                              
Closing balance         (216,033)         (232,830)         (114,113)         (122,872)

 

6.INVENTORIES

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
Finished goods 3,558,698   4,421,166   1,921,276   2,308,211
Work in progress 3,096,257   3,501,145   1,531,503   2,123,539
Raw materials 2,717,227   3,297,213   1,663,188   2,492,779
Storeroom supplies  1,425,872   1,174,244   600,522   474,846
Advances to suppliers 34,740   37,619   8,575   30,170
Provision for losses             (92,820)              (96,493)              (20,151)              (16,124)
        10,739,974         12,334,894           5,704,913           7,413,421
               
Classified:              
Current 9,508,614   11,289,229   5,704,913   7,413,421
Non-current (1) 1,231,360   1,045,665        
        10,739,974         12,334,894           5,704,913           7,413,421
(1)Long-term iron ore inventories that will be used after the construction of the processing plant, which will produce pellet feed.

 

The changes in estimated losses on inventories are as follows:

 

        Consolidated       Parent Company
    06/30/2023   12/31/2022   06/30/2023   12/31/2022
Opening balance           (96,493)           (98,730)           (16,124)           (14,426)
Reversal/(Estimated losses)  of inventories with low turnover and obsolescence            3,673              3,621             (4,027)             (1,698)
Consolidation in the acquisition of companies                 (1,384)        
Closing balance           (92,820)           (96,493)           (20,151)           (16,124)

 

 

42 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  
7.RECOVERABLE TAXES

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
State Value-Added Tax         1,205,189           1,130,843             864,968             793,761
Brazilian federal contributions (1)         2,005,140           1,862,828           1,111,799           1,094,392
Other taxes           203,343             189,087             119,522             129,002
          3,413,672           3,182,758           2,096,289           2,017,155
               
Classified:              
Current         1,986,314           1,865,626           1,129,359           1,137,460
Non-current         1,427,358           1,317,132             966,930             879,695
          3,413,672           3,182,758           2,096,289           2,017,155
(1)In a judgment finalized on September 24, 2021, the Federal Supreme Court, with general repercussion, decided for the unconstitutionality of the levy of IRPJ and CSLL on amounts of interest on arrears at the SELIC rate received because of the repetition of undue tax payment. Although the decision is still pending publication, and the Company's specific lawsuit is still pending judgment, based on its best estimate to date CSN reassessed the judgment on this lawsuit, as required by ICPC 22/IFRIC 23 and recorded a credit in the amount of R$229,000. After the final and unappealable court decision of the Company's legal action, these amounts will be considered in the tax assessments, in accordance with Federal Tax Authorities of Brazil.

 

Credits arise mainly from ICMS, PIS and COFINS on purchases of raw materials and fixed assets, in accordance with current legislation. These credits are naturally realized through offsetting with debts of the same nature or with other federal taxes, in the cases authorized by law. Based on analyses and projections made by Management, the Company does not expect risks of non-realization of these tax credits.

 

8.OTHER CURRENT AND NON-CURRENT ASSETS

 

Other current and non-current assets are as follows:

 

              Consolidado               Controladora
  Circulante   Não Circulante   Circulante   Não Circulante
  6/30/2023   12/31/2022   6/30/2023   12/31/2022   6/30/2023   12/31/2022   6/30/2023   12/31/2022
Judicial deposits (note 18)               537,525             533,664                 218,218              231,627
Derivative financial instruments (note 13)      140,928                            
Dividends receivables (note 20 a)        77,377          77,377                235,782        295,480        
Prepaid expenses      382,556        347,870           80,208               82,586        237,446        244,416           60,229                58,950
Prepaid expenses      294,862        311,087           44,731               47,109        237,446        244,416           32,157                30,878
Prepaid expenses with sea freight        87,694          36,783                        
Actuarial asset (note 20 a)                 35,477               35,477                   28,072                28,072
Receivables from related parties        85,601            7,241      3,168,120           2,869,532        237,891        107,078      3,641,847            3,377,049
Loans with related parties (note 20 a )          5,340            5,383      1,572,739           1,384,773            5,340            5,383      1,943,894            1,668,382
Other receivables from related parties (note 20 a)        80,261            1,858      1,595,381           1,484,759        232,551        101,695      1,697,953            1,708,667
Other assets       249,935        344,012      1,262,520           1,263,936          44,418          63,216      1,223,036            1,222,894
Trading securities          8,325            9,596                    8,203            9,488        
Compulsory loans from Eletrobrás                 59,606               58,030                   56,885                55,336
Employee debts        71,512          59,578                  36,215          28,101        
Receivables by indemnity (1)        37,486          1,165,066           1,166,353              1,165,066            1,166,353
Term of Agreement GSF DFESA        14,264          14,264           23,774               30,906                
Advances from Suppliers        17,132          12,335                        
Others      101,216        248,239           14,074                 8,647              25,627             1,085                  1,205
  936,397   776,500   5,048,373   4,749,718   755,537   710,190   5,143,330   4,890,520

 

(1)In April 2023, the subsidiary CEEE-G recognized the amount of R$ 37,486, referring to the Taxes and Contributions Amounts (VIC) of the Hydroelectric Plants committed to Physical Guarantee Quota Contracts (CCGFs).In the 3rd quarter of 2022, the uncontroversial amount of R$422,254 was recognized in the same account, as a refund of the amounts overpaid for railroad freight from April 1994 to March 1994 and March 1996 to the company RFFSA, and that after its extinction, the Federal Government became a defendant. Additionally, in 2020, a credit was recognized, which is a net, certain and payable amount, arising from the final and unappealable decision of a court in favor of the Company, due to losses and damages arising from voltage sinking in the energy supply in the periods from January/1991 to June/2002, in the amount of R$ 561,466.

 

9.BASIS OF CONSOLIDATION AND INVESTMENTS

 

The information related to the activities of jointly controlled subsidiaries, joint operations, associates and other investments did not change in relation to what was disclosed in the Company's financial statements as of December 31, 2022. Therefore, Management decided not to repeat them in the accounting information interim of June 30, 2023.

 

43 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  
    Equity interests (%)    
Companies   06/30/2023   12/31/2022   Core business
Direct interest in subsidiaries: full consolidation            
CSN Islands VII Corp.          100.00          100.00   Financial transactions
CSN Inova Ventures          100.00          100.00   Equity interests and Financial transactions 
CSN Islands XII Corp.          100.00          100.00   Financial transactions
CSN Steel S.L.U.          100.00          100.00   Equity interests and Financial transactions 
TdBB S.A (*)          100.00          100.00   Equity interests
Sepetiba Tecon S.A.            99.99            99.99   Port services
Minérios Nacional  S.A.            99.99            99.99   Mining and Equity interests
Companhia Florestal do Brasil            99.99            99.99   Reforestation
Estanho de Rondônia S.A.            99.99            99.99   Tin Mining 
Companhia Metalúrgica Prada             99.89            99.89   Manufacture of containers and distribution of steel products
CSN Mineração S.A.            79.75            79.75   Mining 
CSN Energia S.A.             99.99            99.99   Sale of electric power
FTL - Ferrovia Transnordestina Logística S.A.             92.71            92.71   Railroad logistics
Nordeste Logística S.A.            99.99            99.99   Port services
CSN Inova Ltd.           100.00          100.00   Advisory and implementation of new development projec
CBSI - Companhia Brasileira de Serviços de Infraestrutura            99.99            99.99   Equity interests and product sales and iron ore
CSN Cimentos S.A.             99.99            99.99   Manufacturing and sale of cement 
Berkeley Participações e Empreendimentos S.A.           100.00          100.00   Electric power generation and equity interests
CSN Inova Soluções S.A.             99.99            99.99   Equity interests
CSN Participações I             99.99            99.99   Equity interests
Circula Mais Serviços de Intermediação Comercial S.A.              0.01              0.01   Commercial intermediation for the purchase and sale of assets and materials in general
CSN Participações III             99.99            99.99   Equity interests
CSN Participações IV            99.99            99.99   Equity interests
CSN Participações V            99.99            99.99   Equity interests
             
Indirect interest in subsidiaries: full consolidation            
Lusosider Projectos Siderúrgicos S.A.          100.00          100.00   Equity interests and product sales
Lusosider Aços Planos, S. A.            99.99            99.99   Steel and Equity interests
CSN Resources S.A.          100.00          100.00   Financial transactions and Equity interests
Companhia Brasileira de Latas             99.88            99.88   Sale of cans and containers in general and Equity interests
Companhia de Embalagens Metálicas MMSA             99.87            99.87   Production and sale of cans and related activities
Companhia de Embalagens Metálicas - MTM             99.87            99.87   Production and sale of cans and related activities
CSN Productos Siderúrgicos S.L.          100.00          100.00   Financial transactions, product sales and Equity interests
Stalhwerk Thüringen GmbH           100.00          100.00   Production and sale of long steel and related activities
CSN Steel Sections Polska Sp.Z.o.o           100.00          100.00   Financial transactions, product sales and Equity interests
CSN Mining Holding, S.L.U.            79.75            79.75   Financial transactions, product sales and Equity interests
CSN Mining GmbH            79.75            79.75   Financial transactions, product sales and Equity interests
CSN Mining Asia Limited            79.75            79.75   Commercial representation
Lusosider Ibérica S.A.           100.00          100.00   Steel, commercial and industrial activities and equity interests
CSN Mining Portugal, Unipessoal Lda.             79.75            79.75   Commercial and representation of products
Companhia Siderúrgica Nacional, LLC          100.00          100.00   Import and distribution/resale of products
Elizabeth Cimentos S.A.            99.98            99.98   Manufacturing and sale of cement 
Santa Ana Energética S.A.            99.99            99.99   Electric power generation
Topázio Energética S.A.             99.99            99.99   Electric power generation
Brasil Central Energia Ltda.             99.99            99.99   Electric power generation
Circula Mais Serviços de Intermediação Comercial S.A.            99.99            99.99   Commercial intermediation for the purchase and sale of assets and materials in general
CSN Cimentos Brasil S.A.             99.99            99.99   Manufacturing and sale of cement 
Metalgráfica Iguaçu S.A             99.89            99.89   Metal packaging manufacturing
Companhia Energética Chapecó             79.75            79.75   Electric power generation
Companhia Estadual de Geração de Energia Elétrica - CEEE-G             98.96            98.96   Electric power generation
Ventos de Vera Cruz S.A.             98.95            98.95   Electric power generation
Ventos de Curupira S.A             98.95            98.95   Electric power generation
Ventos de Povo Novo S.A.             98.95            98.95   Electric power generation
MAZET - Maschinenbau Zerspanungstechnik GmbH (1)          100.00       Production and sale of long steel and related activities
             
Direct interest in joint operations: proportionate consolidation            
Itá Energética S.A.            48.75            48.75   Electric power generation
Consórcio da Usina Hidrelétrica de Igarapava            17.92            17.92   Electric power consortium
Consórcio Itaúba(2)            36.60       Electric power generation
Consórcio Passo Real (2)            46.97       Electric power generation
             
Direct interest in joint ventures: equity method            
MRS Logística S.A.            18.64            18.64   Railroad transportation
Aceros Del Orinoco S.A. (*)            31.82            31.82   Dormant company
Transnordestina Logística S.A.             48.04            47.26   Railroad logistics
Equimac S.A             50.00            50.00   Rental of commercial and industrial machinery and equipment
Consórcio Itaúba(2)            63.40       Electric power generation
Consórcio Passo Real (2)            53.03       Electric power generation
             
Indirect interest in joint ventures: equity method            
MRS Logística S.A.             14.86            14.86   Railroad transportation
             
Direct interest in associates: equity method            
Arvedi Metalfer do Brasil S.A.             20.00            20.00   Metallurgy and Equity interests
             
Indirect interest in affiliates: equity method            
Ventos da Lagoa Energia S.A.  (3)                10.00   Electric power generation
Jaguari Energética S.A.             10.50            10.50   Electric power generation
Chapecoense Geração S.A.               9.00              9.00   Electric power generation
Parques Eólicos Palmares S.A. (3)                10.00   Electric power generation
Ventos do Litoral Energia S.A. (3)                10.00   Electric power generation
Ventos dos índios Energia S.A. (3)                10.00   Electric power generation
Companhia Energética Rio das Antas - Ceran             30.00            30.00   Electric power generation
Ventos do Sul S.A.             10.00            10.00   Electric power generation
Foz Chapecó Energia S.A.               8.91              8.91   Electric power generation
             
Exclusive funds: full consolidation            
Diplic II  - Private credit balanced mutual fund          100.00          100.00   Investment fund
Caixa Vértice - Private credit balanced mutual fund          100.00          100.00   Investment fund
VR1 - Private credit balanced mutual fund          100.00          100.00   Investment fund

(*) Dormant companies.

(1) On June 1, 2023, MAZET - Maschinenbau Zerspanungstechnik GmbH was acquired by the indirect subsidiary Stalhwerk Thüringen GmbH.

 

 

(2) On December 26, 2022, the Itaúba Consortium was formed, with Companhia Siderúrgica Nacional S.A., with a 63.4% stake, and CSN Cimentos Brasil S.A., with a 36.6% stake. Additionally, on January 17, 2023, the Passo Real Consortium was formed, with the consortium members Companhia Siderúrgica Nacional S.A., Elizabeth Cimentos S.A., CSN Mineração S.A. and Minérios Nacional S.A., with stakes of 46.97%, 28.18%, 23.29% and 1.56%, respectively.

 

 

(3) CEEE-G sold its ownership interest in affiliated companies Ventos Lagoa Energia S.A., Parques Eólicos Palmares S.A., Ventos do Litoral Energia S.A. and Ventos dos Índios Energia S.A.

 

 

44 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

 

9.a)Changes in investments in subsidiaries, joint ventures, joint operations, associates and other investments

 

 

The positions presented as of June 30, 2023 and the changes refer to the interest held by CSN in these companies:

                            Consolidated
Companies   Final balance on 12/31/2022   Capital increase   Dividends   Equity Income (2)   Comprehensive income   Others   Final balance on 06/30/2023
             
             
Investments under the equity method                            
Joint-venture, Joint-operation and Affiliate                            
MRS Logistica   2,054,898               179,367    8       2,234,273
Fair Value MRS   480,622                       480,622
Fair Value MRS amortization   (82,225)               (5,870)            (88,095)
Transnordestina Logística S.A.   1,184,514             (11,163)           1,173,351
Fair Value -Transnordestina   659,106                       659,106
Arvedi Metalfer do Brasil (affiliate)    25,782   11,037          (1,373)             35,446
Equimac S.A    18,482             1,306             19,788
Indirect interest in affiliates - CEEE-G (1)   216,307          (33,608)    24,732        (44,396)   163,035
Fair Value indirect participation CEEE-G (2)   359,024             (39,314)           319,710
Fair Value amortization indirect participation CEEE-G   (25,889)              11,303            (14,586)
    4,890,621   11,037     (33,608)     158,988    8    (44,396)   4,982,650
                             
Equity interests evaluated by the cost method (3)    41,093     9,000                     50,093
Investments at fair value through profit or loss (note 13)    94,700                          94,700
Other (4)    33,588   21,747                (32,293)     23,042
                             
Total shareholdings   5,060,002   41,784     (33,608)     158,988    8    (76,689)   5,150,485
                             
Classification of investments in the balance sheet                            
Equity interests   5,060,002                       5,150,485
Investment Property   159,080                       157,547
Total investments in the asset   5,219,082                       5,308,032

(1) Refers mainly to the alienation by CEEE-G in the first quarter of its equity interest in affiliates Ventos Lagoa Energia S.A., Parques Eólicos Palmares S.A., Ventos do Litoral Energia S.A. and Ventos dos Índios Energia S.A., consequently, there was a write-off of these investments in the amount of (R$47,611), the effect of the operation was classified under the category of other operating expenses and revenues;

 

(2) The balance of R$359,024 refers to the Fair Value generated in the acquisition of the company CEEE-G, with the disposals mentioned in the item above, the Fair Value was written off in the amount of (R$39,314) referring to the capital gains of the companies sold, the effect of the write-off was classified under the equity method category;

 

(3) These are strategic investments in startups made by the subsidiary CSN Inova Ventures, which are valued using the cost method, in the following companies: Alinea Health Holdings Ltda. I.Systems Aut. Ind., 2D Materials, H2Pro Ltda, 1S1 Energy, Traive INC., OICO Holdings, Clarke Software and Global Dot, the latter acquired on June 5, 2023;

 

(4) On June 1, 2023, Stalhwerk Thüringen GmbH acquired the company from MAZET - Maschinenbau Zerspanungstechnik GmbH, for the amount of R$ 21,747, an investment that is currently being evaluated;

 

 

45 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

The reconciliation of equity in earnings of companies with shared control classified as joint ventures and associates and the amount presented in the income statement is presented below and results from the elimination of the results of CSN's transactions with these companies:

 

 

      Consolidated
  06/30/2023   06/30/2022
   
Equity in results of affiliated companies      
MRS Logística S.A.            179,367              114,541
Transnordestina             (11,163)               (15,872)
Arvedi Metalfer do Brasil              (1,373)                 2,514
Equimac S.A               1,306                 1,369
Indirect interest in affiliates - CEEE-G              24,732                      -   
Fair Value Amortization             (33,881)                (5,873)
             158,988                96,679
Other adjustments      
Cost of sales             (47,716)               (33,968)
To taxes              16,223                11,549
Others               1,316                   (595)
Equity in results             128,811                73,665

(1) The operating margin of intercompany transactions with group companies classified as joint ventures, which are not consolidated, are reclassified in the Statement of Income from the Investment group to the costs and income tax and social contribution groups.

 

The changes in the Parent Company's investment are presented below:

 

 

46 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  
                         Parent Company 
Companies   Final balance on 12/31/2022   Capital increase   Dividends    Equity Income    Comprehensive income    Final balance on 06/30/2023 
           
           
Investments under the equity method                        
Subsidiaries                        
CSN Steel S.L.U.              5,028,262                                                                                  (97,735)                (198,091)               4,732,436
Sepetiba Tecon S.A.                 294,460                                                                                   (13,142)                                                 281,318
Minérios Nacional  S.A.                   121,242                                                   6,390                       19,263                                                 146,895
Fair Value - Minérios Nacional               2,123,507                                                                                                                                             2,123,507
Companhia Metalúrgica Prada                  424,317                                                                                   (41,413)                                                382,904
Goodwill - Companhia Metalúrgica Prada                   63,509                                                                                                                                                 63,509
CSN Mineração S.A.               9,086,716                                           (1,963,023)                    805,499                 416,784               8,345,976
CSN Energia S.A.                   56,736                                                                                   (13,371)                                                  43,365
FTL - Ferrovia Transnordestina Logística S.A.                  163,740                                                                                  (13,398)                                                 150,342
Companhia Florestal do Brasil               1,300,726                                                 (4,270)                       (6,028)                     1,333                 1,291,761
CBSI - Companhia Brasileira de Serviços de Infraestrutura                   29,057                                                    (933)                        4,347                                                   32,471
Goodwill - CBSI - Companhia Brasileira de Serviços de Infraestrutura                    15,225                                                                                                                                                  15,225
CSN Cimentos S.A.              6,938,822                                                                                  (62,314)                                             6,876,508
Others                         120                        160                                                      (1,691)                                                    (1,411)
        25,646,439                  160       (1,961,836)              580,017          220,026       24,484,806
Joint-venture, Joint-operation and Affiliate                        
Itá Energética S.A.                   189,513                                                                                      5,317                                                 194,830
MRS Logística S.A.               1,027,709                                                                                   89,706                           4                  1,117,419
Transnordestina Logística S.A.                1,184,512                                                                                    (11,163)                                              1,173,349
Fair Value -Transnordestina                  659,106                                                                                                                                                659,106
Equimac S.A                    18,482                                                                                      1,306                                                   19,788
Arvedi Metalfer do Brasil (affiliate)                   25,783                    11,037                                                     (1,372)                                                  35,448
           3,105,105              11,037                                      83,794                    4          3,199,940
Other participations                        
Investments at fair value through profit or loss (note 13)                   94,700                                                                                                                                                 94,700
Profits on subsidiaries' inventories                  (67,640)                                                                                    81,478                                                   13,838
Other investments                          28                                                                                           (3)                                                         25
              27,088                                                              81,475                                   108,563
                         
Total shareholdings       28,778,632              11,197       (1,961,836)              745,286          220,030       27,793,309
                         
Subsidiaries with unsecured liabilities                        
CSN Islands VII Corp.             (2,661,734)                                                                                  188,642                                           (2,473,092)
CSN Inova Ventures             (1,755,949)                                                                                 (110,669)                                             (1,866,618)
CSN Islands XII Corp.             (3,340,129)                                                                                  170,253                                            (3,169,876)
Estanho de Rondônia S.A.                  (76,295)                                                                                  (15,366)                                                  (91,661)
Total subsidiaries with unsecured liabilities        (7,834,107)                                                            232,860                               (7,601,247)
                         
Equity Income                                                                                    978,146                                               
                         
Classification of investments in the balance sheet                                                                                                                         
Equity interests            28,778,632                                                                                                            27,793,309
Investment Property                   140,143                                                                                                                  138,944
Total active investments       28,918,775                                                                                                      27,932,253
Provision for Investments with Unsecured Liabilities (liabilities)             (7,834,107)                                                                                                             (7,601,247)
Total active and passive investments       21,084,668                                                                                 20,331,006

 

9.b)Joint ventures and joint operations financial information

 

The balance sheet and income statement balances of the companies with shared control are shown below and refer to 100% of the companies’ results:

 

 

47 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

                06/30/2023               12/31/2022
    Joint-Venture    Joint-Operation    Joint-Venture   Joint-Operation
Equity interest (%)   MRS Logística   Transnordestina Logística   Equimac S.A.   Itá Energética   MRS Logística   Transnordestina Logística   Equimac S.A.   Itá Energética
  37.27%   48.04%   50.00%   48.75%   37.27%   48.04%   50.00%   48.75%
Balance sheet                                
 Current Assets                                 
Cash and cash equivalents   1,225,069   1,800    8,730    84,824     867,937   1,164   8,983     46,946
Advances to suppliers    87,300   3,689   26   1,290    29,500    21,036   1,384    1,273
Other current assets   977,999    71,293     13,194    20,856     1,351,335    78,777    11,648     30,735
Total current assets   2,290,368    76,782     21,950     106,970     2,248,772     100,977    22,015     78,954
 Non-current Assets                                 
Other non-current assets   660,569     222,898    599    18,039     887,987     255,367   1,643     19,007
Investments, PP&E and intangible assets    11,826,172    11,563,307     44,023     310,372    11,541,779    11,029,525    41,709   325,911
Total non-current assets    12,486,741    11,786,205     44,622     328,411    12,429,766    11,284,892    43,352   344,918
Total Assets    14,777,109    11,862,987     66,572     435,381    14,678,538    11,385,869    65,367   423,872
                                 
Current Liabilities                                 
Borrowings and financing    934,842     173,048    8,034       735,231     142,073   5,497    
Lease liabilities   491,369      1,235       472,129     701    
Other current liabilities   1,378,452    69,518    6,230    16,509     1,682,928     150,268   5,777     14,326
Total current liabilities   2,804,663     242,566     15,499    16,509     2,890,288     292,341    11,975     14,326
 Non-current Liabilities                                 
Borrowings and financing    3,544,456   7,504,241    9,417       3,604,793   7,142,895    14,446    
Lease liabilities   1,679,058      253       1,928,931     630    
Other non-current liabilities   754,004   1,673,672    1,827    19,221     740,892   1,484,884   1,353     18,914
Total non-current liabilities   5,977,518   9,177,913     11,497    19,221     6,274,616   8,627,779    16,429     18,914
Shareholders’ equity   5,994,928   2,442,508     39,576     399,651     5,513,634   2,465,749    36,963   390,632
Total liabilities and shareholders’
equity
   14,777,109    11,862,987     66,572     435,381    14,678,538    11,385,869    65,367   423,872

 

                01/01/2023 a 06/30/2023               01/01/2022 a 06/30/2022
    Joint-Venture   Joint-Operation       Joint-Venture   Joint-Operation
Equity interest (%)   MRS Logística   Transnordestina Logística   Equimac S.A.   Itá Energética   MRS Logística   Transnordestina Logística   Equimac S.A.   Itá Energética
  37.27%   48.04%   50.00%   48.75%   37.27%   48.04%   50.00%   48.75%
Statements of Income                                
Net revenue   2,873,214     499    22,926   96,010    2,543,969     340    16,639   94,428
Cost of sales and services     (1,589,318)     (13,006)     (42,394)   (1,673,615)     (10,417)     (46,173)
Gross profit   1,283,896     499   9,920   53,616    870,354     340   6,222   48,255
Operating (expenses) income      (227,070)   (21,842)     (2,128)     (39,463)    (69,477)   (22,861)     (1,587)     (36,376)
Financial income (expenses), net     (325,469)     (1,895)     (1,402)     2,510   (333,712)   (11,063)     (1,308)    (139)
Income before income tax and social
contribution
  731,357   (23,238)   6,390   16,663    467,165   (33,584)   3,327   11,740
Current and deferred income tax
and social contribution
    (250,085)      (626)    (5,756)   (159,831)      (590)    (4,242)
Profit / (loss) for the period   481,272   (23,238)   5,764   10,907    307,334   (33,584)   2,737     7,498

 

9.c)TRANSNORDESTINA LOGÍSTICA S.A. (“TLSA”)

 

TSA is primarily engaged in the public service operation and development of a railroad network in the Northeast of Brazil, comprising the rail links Velha-Salgueiro, Salgueiro-Trindade, Trindade-Eliseu Martins, Salgueiro- Porto de Suape, and Missão Velha-Porto de Pecém (“Malha II”). On December 23, 2022, after extensive negotiations involving ANTT, TCU and the then Ministry of Infrastructure, signed first amendment to the Concession Agreement , which redefined the scope and deadlines for completion of the TLSA sections, notably to provide for the return of the section Salgueiro-Porto de Suape, which results in a project with the current 1,206 km of rail network and completion deadline up to December 2029.

 

Management relies on resources from its shareholders and third parties to complete the work, which is expected to be available, based on previously conducted agreements and recent discussions between the parties involved. After evaluating this matter, Management concluded that the use of the project’s business continuity accounting basis in the preparation of the interim financial information was considered appropriate.

 

9.d)Investment properties

 

The balance of investment properties is shown below:

 

 

48 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  
            Consolidated           Parent Company
    Land   Buildings    Total   Land   Buildings    Total
Balance at December 31, 2022    101,513   57,567     159,080   94,257     45,886     140,143
Cost    101,513   87,977     189,490   94,257     74,392     168,649
Accumulated depreciation         (30,410)     (30,410)        (28,506)   (28,506)
Balance at December 31, 2022    101,513   57,567     159,080   94,257     45,886     140,143
Depreciation (note 24)        (1,533)    (1,533)       (1,199)     (1,199)
Balance at June 30, 2023    101,513   56,034     157,547   94,257     44,687     138,944
Cost    101,513   87,977     189,490   94,257     74,392     168,649
Accumulated depreciation         (31,943)     (31,943)        (29,705)   (29,705)
Balance at June 30, 2023    101,513   56,034     157,547   94,257     44,687     138,944

 

The Company’s estimate of the fair value of investment properties was made for December 31, 2022. The fair value of investment property in the consolidated balance as of June 30, 2023, and December 31, 2022 is R$2,163,610 and in the parent company R$2,097,290.

 

The average estimated useful lives for the periods are as follows (in years):

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
Buildings 27   27   28   28

 

10.PROPERTY, PLANT AND EQUIPMENT

 

                              Consolidated
  Land   Buildings and Infrastructure   Machinery, equipment and facilities   Furniture and fixtures   Construction in progress   Right of use (i)   Other (4)   Total
Balance at December 31, 2022 485,107   4,451,114   16,525,293   40,882     4,025,550    644,880    197,619     26,370,445
Cost 485,107   8,741,911   36,373,386    284,863     4,025,550    1,057,566    643,304     51,611,687
Accumulated depreciation       (4,290,797)     (19,848,093)   (243,981)        (412,686)   (445,685)    (25,241,242)
Balance at December 31, 2022 485,107   4,451,114   16,525,293   40,882     4,025,550    644,880    197,619     26,370,445
Effect of foreign exchange differences (5,054)     (7,268)     (23,607)   (508)    (3,440)   (3,638)   (108)     (43,623)
Acquisitions   39,694    35,022   65,665    861     1,586,309   65,997    8,277    1,801,825
Capitalized interest (1) (notes 26)                94,342           94,342
Write-offs (note 25)   (575)   (10)   (68)     (26)              (46)   (725)
Depreciation (note 24)      (137,833)    (1,244,533)   (4,938)          (74,169)     (26,730)   (1,488,203)
Transfers to other asset categories 951    48,443     1,692,804    209    (2,008,525)        266,118     
Transfers to intangible assets                 (2,713)            (2,713)
Right of use - Remesurement                     68,613       68,613
Others     (90)    (688)       13,353           12,575
Balance at June 30, 2023 520,123   4,389,378   17,014,866   36,480     3,704,876    701,683    445,130     26,812,536
Cost 520,123   8,599,991   37,355,497    282,891     3,704,876    1,168,256    1,729,238     53,360,872
Accumulated depreciation       (4,210,613)     (20,340,631)   (246,411)        (466,573)   (1,284,108)    (26,548,336)
Balance at June 30, 2023 520,123   4,389,378   17,014,866   36,480     3,704,876    701,683    445,130     26,812,536

 

 

 

                                Parent Company
    Land   Buildings and Infrastructure   Machinery, equipment and facilities   Furniture and fixtures   Construction in progress   Right of use (i)   Other (4)   Total
Balance at December 31, 2022   25,618     287,746     6,533,142   10,201    900,421   11,433   17,924   7,786,485
Cost   25,618     520,372   15,233,464    100,323    900,421   38,133    132,073     16,950,404
Accumulated depreciation        (232,626)    (8,700,322)     (90,122)         (26,700)   (114,149)     (9,163,919)
Balance at December 31, 2022   25,618     287,746     6,533,142   10,201    900,421   11,433   17,924   7,786,485
Acquisitions            51,316         666,128     3,906    75   721,425
Capitalized interest (1) (note 26)                   38,810             38,810
Write-offs (note 25)             1,314                    1,314
Depreciation (note 24)         (8,790)    (534,017)   (908)       (4,340)   (3,343)     (551,398)
Transfers to other asset categories       393     997,704       (1,008,054)        9,957    
Transfers to intangible assets                   (408)             (408)
Others           (34)                    (34)
Balance at June 30, 2023   25,618     279,349     7,049,425    9,293    596,897   10,999   24,613   7,996,194
Cost   25,618     520,765   16,283,791    100,323    596,897   41,997    142,104    17,711,495
Accumulated depreciation        (241,416)    (9,234,366)     (91,030)   -     (30,998)   (117,491)     (9,715,301)
Balance at June 30, 2023   25,618     279,349     7,049,425    9,293    596,897   10,999   24,613   7,996,194

(*) Refer substantially to: i) in the consolidated table: assets for railway use, such as yards, rails, mines, and sleepers; and ii) in the parent company's table: improvements to third-party assets, vehicles and hardware.

 

(1) The costs of capitalized borrowing are basically determined for the projects in Steelmaking and Mining and refer substantially, to:

 

49 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

- CSN: Technological updates and acquisition of new equipment for maintenance of the production capacity of UPV Plant (RJ);

- CSN Mineração: Expansion of Casa de Pedra (MG) and TECAR (RJ).

 

(i)Right of use

 

Below are the movements of the right of use:

 

                  Consolidated
  Land   Buildings and Infrastructure   Machinery, equipment and facilities   Others   Total
Balance at December 31, 2022               465,048                   62,431                     83,161                 34,240                    644,880
Cost               548,756                 107,782                   277,865                123,164                 1,057,567
Accumulated depreciation                (83,708)                  (45,351)                  (194,704)                (88,924)                   (412,687)
Balance at December 31, 2022               465,048                   62,431                     83,161                 34,240                    644,880
Effect of foreign exchange differences                      (2,716)                          124                  (1,046)                      (3,638)
Addition                 65,081                              917                     65,998
Remesurement                   4,264                   41,977                     19,131                   3,240                     68,612
Depreciation                 (14,427)                    (9,358)                    (38,426)                (11,958)                    (74,169)
Transfers to other asset categories                  (2,701)                     2,340                       2,296                  (1,935)                                
Balance at June 30, 2023               517,265                   94,674                     66,286                 23,458                    701,683
Cost            617,729             143,484                294,582            112,461             1,168,256
Accumulated depreciation           (100,464)              (48,810)               (228,296)             (89,003)               (466,573)
Balance at June 30, 2023               517,265                   94,674                     66,286                 23,458                    701,683

 

 

                Parent Company
    Land   Machinery, equipment and facilities   Others   Total
Balance at December 31, 2022             9,400                     1,870                    163                11,433
Cost            33,307                     2,639                 2,187                38,133
Accumulated depreciation           (23,907)                      (769)                (2,024)               (26,700)
Balance at December 31, 2022             9,400                     1,870                    163                11,433
Remesurement          3,906                          3,906
Depreciation          (3,828)                      (389)                   (123)                 (4,340)
Transfers to other asset categories                202                      (204)                       2                           
Balance at June 30, 2023             9,680                     1,277                     42                10,999
Cost            37,414                     2,392                 2,191                41,997
Accumulated depreciation           (27,734)                    (1,115)                (2,149)               (30,998)
Balance at June 30, 2023             9,680                     1,277                     42                10,999

 

The average estimated useful lives are as follows (in years):

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
Buildings and Infrastructure 34   34   31   31
Machinery, equipment and facilities 18   18   19   20
Furniture and fixtures 12   12   13   13
Others 11   9   11   12

 

 

 

 

 

 

50 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

11.    INTANGIBLE ASSETS

                          Consolidated       Parent Company
  Goodwill   Customer relationships   Software   Trademarks
and
patents
  Rights and licenses (*)   Others   Total   Software   Total
Balance at December 31, 2022 4,131,483    152,484     87,846   225,187     6,188,654   2,400   10,788,054   59,499   59,499
 Cost   4,371,890     753,307    296,456    226,581   6,400,593    2,400    12,051,227     178,747     178,747
 Accumulated amortization  (131,077)    (600,823)   (208,610)   (1,394)     (211,939)         (1,153,843)    (119,248)    (119,248)
 Adjustment for accumulated recoverable value  (109,330)                         (109,330)    
Balance at December 31, 2022 4,131,483    152,484     87,846   225,187     6,188,654   2,400   10,788,054   59,499   59,499
 Effect of foreign exchange differences     (5,643)   (185)    (10,368)       (132)   (16,328)          
 Acquisitions          995             995          
 Transfer of property, plant and equipment          2,630     83         2,713     408     408
 Amortization (note 24)      (38,641)    (10,090)   (1,569)   (74,827)      (125,127)    (6,164)    (6,164)
Others         281             281          
Balance at June 30, 2023 4,131,483    108,200     81,477   213,333     6,113,827   2,268   10,650,588   53,743   53,743
 Cost  4,371,890    713,759   298,899   216,296     6,400,610   2,268   12,003,722     179,155     179,155
 Accumulated amortization    (131,077)   (605,559)     (217,422)   (2,963)    (286,783)      (1,243,804)    (125,412)    (125,412)
 Adjustment for accumulated recoverable value    (109,330)                     (109,330)          
Balance at June 30, 2023 4,131,483    108,200     81,477   213,333     6,113,827   2,268   10,650,588   53,743   53,743

(*) Composed mainly of: (i) mining rights whose amortization is based on production volume and (ii) Concession agreement for the use of water resources in the acquisition of control of Companhia Estadual de Geração de Energia Elétrica, amortized over the agreement term (note 3.c).

 

The average estimated useful lives are as follows (in years):

 

      Consolidated       Parent Company
  06/30/2023   12/31/2022   06/30/2023   12/31/2022
Software 9   10   10   10
Customer relationships 13   13        

 

11.a)Goodwill impairment test

 

Goodwill arising from expected future profitability of acquired companies and intangible assets with indefinite useful lives (brands) were allocated to CSN’s cash generating units (CGUs) which represent the lowest level of assets or group of assets of the Company. According to NBC TG 01(R4)/IAS36, when a CGU has an intangible asset with no defined useful life allocated, the Company must perform an impairment test.

 

The assumptions used for impairment assessment in December 2022 remain in place and there is no event that would justify recording impairment on June 30, 2023.

 

12.BORROWINGS, FINANCING AND DEBENTURES

 

The balances of borrowings, financing and debentures that are recorded at amortized cost are as follows:

 

 

51 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  
                  Consolidated             Parent Company
      Current Liabilities     Non-current Liabilities    Current Liabilities   Non-current Liabilities 
      06/30/2023   12/31/2022   06/30/2023   12/31/2022   06/30/2023   12/31/2022 06/30/2023   12/31/2022
                                 
Foreign Debt                                
Floating Rates:                                
Prepayment           489,163      1,571,208      6,114,697      5,474,359             194,770         956,219     1,874,669                1,147,894
Fixed Rates:                                
Bonds, Perpetual bonds, Facility, CCE and ACC        1,557,143      1,189,717    16,110,769    16,790,284          1,290,314         616,954     1,323,532                   782,655
Intercompany                                                                                                           685,701           43,196     6,588,755                8,216,508
Fixed interest in EUR                                
Intercompany                                                                                                        1,043,337                858        657,375                1,767,536
Facility           650,314           62,187         134,556         166,302                                                                                                         
         2,696,620      2,823,112    22,360,022    22,430,945          3,214,122      1,617,227   10,444,331              11,914,593
                                 
Debt agreements in Brazil                                
Floating Rate Securities in R$:                                
BNDES/FINAME/FINEP, Debentures, NCE and CCB        3,006,222      2,446,840    14,191,551    13,740,051          2,723,521      1,827,077 6,596,736   6,110,174
         3,006,222      2,446,840    14,191,551    13,740,051   2,723,521   1,827,077 6,596,736   6,110,174
Total Borrowings and Financing        5,702,842      5,269,952    36,551,573    36,170,996          5,937,643      3,444,304   17,041,067              18,024,767
Transaction Costs and Issue Premiums            (87,249)          (76,316)        (497,379)        (445,890)              (22,470)          (25,285)        (26,735)                    (30,518)
Total Borrowings and Financing + Transaction cost     5,615,593   5,193,636   36,054,194   35,725,106   5,915,173   3,419,019 17,014,332   17,994,249

 

12.a)Borrowing and amortization, financing, and debentures

 

The following table shows amortization and funding during the period:

 

        Consolidated       Parent Company
    06/30/2023   12/31/2022   06/30/2023   12/31/2022
Opening balance           40,918,742             32,507,522             21,413,268              20,432,844
New debts            7,352,557             20,248,223              5,279,322               9,922,074
Repayment           (4,435,867)            (10,782,858)             (2,876,581)              (8,270,606)
Payments of charges           (1,672,086)              (2,315,586)                (741,416)              (1,128,874)
Accrued charges (note 26)            1,755,515               2,595,011                 838,367               1,270,946
Consolidation of companies                       81,978                                                             
Others (1)           (2,249,074)              (1,415,548)                (983,455)                 (813,116)
Closing balance           41,669,787             40,918,742             22,929,505              21,413,268
(1)Including unrealized exchange and monetary variations and funding cost.

 

The Company raised and amortized borrowings, financing and debentures during 2023, as shown below:

 

                Consolidated
                06/30/2023
Nature   New debts   Maturities   Repayment   Interest payment
Pre-Payment     1,220,733   2023 to 2028     (1,012,370)     (210,226)
Bonds, ACC, CCE and Facility      2,765,126   2023 to 2024     (1,162,595)     (479,424)
BNDES/FINAME/FINEP, Debentures, NCE, Facility and CCB     3,366,698   2023 to 2025     (2,260,902)     (982,436)
      7,352,557         (4,435,867)     (1,672,086)

 

 

 

52 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

12.b)Maturities of borrowings, financing and debentures presented in current and non-current liabilities

 

            Consolidated           Parent Company
            06/30/2023           06/30/2023
    Borrowings and financing in foreign currency   Borrowings and financing in national currency   Total   Borrowings and financing in foreign currency   Borrowings and financing in national currency   Total
Average rate   in Dollar 6.79%in Euro 5.12%   in Real 15.57%     in Dollar 4.06%in Euro 3.41%   in Real 15.82%  
2023    1,495,825    1,742,702    3,238,527    1,116,454    1,499,560    2,616,014
2024    2,047,296    3,857,504    5,904,800    2,777,174    1,758,585    4,535,759
2025    3,085,184    1,706,466    4,791,650    3,097,818    1,237,101    4,334,919
2026    2,695,451    2,284,861    4,980,312    740,706    1,729,101    2,469,807
2027    854,569    2,527,949    3,382,518   87,709    1,999,101    2,086,810
2028 to 2031     12,090,409    2,673,492     14,763,901    3,196,212    1,003,186    4,199,398
After 2031    2,787,908    2,404,799    5,192,707    2,642,380   93,623    2,736,003
      25,056,642     17,197,773     42,254,415     13,658,453    9,320,257     22,978,710

 

·      Covenants

 

The Company maintains contracts that provide for the fulfillment of certain non-financial obligations, as well as the maintenance of certain parameters and performance indicators, such as the equity ratio disclosure of its audited interim financial information according to regulatory deadlines or payment of commission for risk assumption, if the indicator of net debt to EBITDA reaches the levels foreseen in those contracts.

 

To the moment, the Company is compliant with the financial and non-financial obligations (covenants) of its existing contracts.

 

13.    FINANCIAL INSTRUMENTS

 

13.a)Identification and valuation of financial instruments

 

The Company may operate with several financial instruments, with emphasis on cash and cash equivalents, including financial investments, marketable securities, accounts receivable from customers, accounts payable to suppliers and borrowings and financing. Additionally, we may also operate with derivative financial instruments, such as swap exchange rate swap, swap interest and derivatives with commodities.

 

Considering the nature of these instruments, their fair value is basically determined by the use of quotations in the capital markets in Brazil and the Mercantile and Futures Exchange. The amounts recorded in current assets and liabilities have immediate liquidity or maturity, mostly in the short term. Considering the terms and characteristics of these instruments, the carrying amounts approximate the fair values.

 

 

 

53 

Quarterly Financial Information – June 30, 2023 – Companhia Siderúrgica Nacional – CSN

(CONVENIENCE TRANSLATION INTO ENGLISH FROM THE ORIGINAL PREVIOUSLY ISSUED IN PORTUGUESE)

  

 

·Classification of financial instruments

 

                                    Consolidated
Consolidated           06/30/2023       12/31/2022
  Notes   Fair value through other comprehensive income   Fair value through profit or loss   Measured at amortized cost   Balances   Fair value through other comprehensive income   Fair value through profit or loss   Measured at amortized cost   Balances
Assets                                    
Current                                    
Cash and cash equivalents     3             11,975,423   11,975,423             11,991,356   11,991,356
Short-term investments     4        1,167,137   37,542     1,204,679        1,184,895    271,590     1,456,485
Trade receivables     5            2,671,612     2,671,612            3,233,164     3,233,164
Dividends and interest on equity     8           77,377   77,377           77,377   77,377
Derivative financial instruments     8    140,928            140,928                 
Trading securities     8        8,325         8,325        9,596         9,596
Loans - related parties     8            5,340     5,340            5,383     5,383
Total        140,928    1,175,462     14,767,294   16,083,684        1,194,491     15,578,870   16,773,361
                                     
Non-current                                    
Investments     4             127,242    127,242            156,185    156,185
Other trade receivables     8           12,967   12,967