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 May, 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____

 
 

 

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 03/31/2023 8
01/01/2022 to 03/31/2022 9
Statement of Value Added 10
Consolidated Financial Statements  
Balance Sheet – Assets 11
Balance Sheet - Liabilities 12
Statement of Income 13
Statement of Comprehensive Income 14
Statement of Cash Flows 15
Statement of Changes in Shareholders’ Equity  
01/01/2023 to 03/31/2023 17
01/01/2022 to 03/31/2022 18
Statement of Value Added 19
Comments on the Company’s Consolidated Performance 20
Notes to the financial information 40
Comments on the Performance of Business Projections 78
Reports and Statements  
Unqualified Independent Auditors’ Review Report 82
Officers Statement on the Financial Statements 84
Officers Statement on Auditor’s Report 85

 

 

 

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Company Information / Capital Breakdown

 

Number of Shares

(Units)

Current Period

3/31/2023

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

 

 
 1

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Parent Company Financial Statements / Balance Sheet - Assets
(R$ thousand)      
       
Code Description  Current Quarter 03/31/2023   Previous Year 12/31/2022 
1 Total Assets 60,096,819 61,196,813
1.01 Current assets 13,765,000 15,264,617
1.01.01 Cash and cash equivalents  2,368,551  2,839,405
1.01.02 Financial investments  1,306,509  1,207,610
1.01.02.01 Financial investments measured a fair value through profit or loss  1,251,771  1,184,895
1.01.02.01.03 Financial investments measured a fair value through profit or loss – Usiminas’ shares  1,251,771  1,184,895
1.01.02.03 Financial investments at amortized cost 54,738 22,715
1.01.03 Trade receivables  1,649,243  1,956,531
1.01.04 Inventory  6,601,195  7,413,421
1.01.06 Recoverable taxes  1,109,755  1,137,460
1.01.08 Other current assets 729,747 710,190
1.01.08.03 Others 729,747 710,190
1.01.08.03.02 Prepaid expenses 233,098 244,416
1.01.08.03.03 Dividends receivable 295,480 295,480
1.01.08.03.04 Others 201,169 170,294
1.02 Non-current assets 46,331,819 45,932,196
1.02.01 Long-term assets  9,071,409  9,167,437
1.02.01.03 Financial investments at amortized cost 143,406 140,510
1.02.01.07 Deferred taxes assets  3,063,055  3,256,712
1.02.01.10 Other non-current assets  5,864,948  5,770,215
1.02.01.10.03 Recoverable taxes 934,275 879,695
1.02.01.10.04 Judicial deposits 222,694 231,627
1.02.01.10.05 Prepaid expenses 65,790 58,950
1.02.01.10.06 Receivable from related parties  3,434,599  3,377,049
1.02.01.10.07 Others  1,207,590  1,222,894
1.02.02 Investments  29,321,128 28,918,775
1.02.02.01 Equity interest 29,181,585 28,778,632
1.02.02.02 Investment Property 139,543 140,143
1.02.03 Property, plant and equipment  7,882,459  7,786,485
1.02.03.01 Property, plant and equipment in operation  6,850,361  6,874,631
1.02.03.02 Right of use in leases 13,538 11,433
1.02.03.03 Property, plant and equipment in progress  1,018,560 900,421
1.02.04 Intangible assets 56,823 59,499

 

 
 2

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Parent Company Financial Statements / Balance Sheet – Liabilities
(R$ thousand)      
       
Code Description  Current Quarter 03/31/2023   Previous Year 12/31/2022 
2 Total Liabilities 60,096,819  61,196,813
2.01 Current liabilities 12,595,683  14,644,052
2.01.01 Payroll and related taxes  157,481 150,192
2.01.02 Trade payables 3,149,636  3,684,793
2.01.03 Tax payables  319,421 397,496
2.01.04 Borrowings and financing 3,767,064  3,419,019
2.01.05 Other payables 5,174,569  6,961,181
2.01.05.02 Others 5,174,569  6,961,181
2.01.05.02.04 Dividends and interests on shareholder´s equity  604,888 598,267
2.01.05.02.05 Advances from customers  96,549 83,300
2.01.05.02.06 Trade payables – Forfaiting and Drawee risk 3,559,084  5,318,425
2.01.05.02.07 Lease liabilities  11,388  8,451
2.01.05.02.08 Other payables  902,660 952,738
2.01.06 Provisions  27,512 31,371
2.01.06.01 Provision for tax, social security, labor and civil risks  27,512 31,371
2.02 Non-current liabilities 28,275,285  27,063,294
2.02.01 Borrowings and financing 19,131,155  17,994,249
2.02.02 Other payables  178,262 148,990
2.02.02.02 Others  178,262 148,990
2.02.02.02.03 Lease liabilities  3,745  4,729
2.02.02.02.04 Derivative financial instruments  54,452 58,005
2.02.02.02.05 Trade payables  11,841 14,352
2.02.02.02.06 Other payables  108,224 71,904
2.02.04 Provisions 8,965,868  8,920,055
2.02.04.01 Provision for tax, social security, labor and civil risks  417,632 390,445
2.02.04.02 Other provisions 8,548,236  8,529,610
2.02.04.02.03 Provision for environmental liabilities and decommissioning of assets  161,714 158,213
2.02.04.02.04 Pension and healthcare plan  537,290 537,290
2.02.04.02.05 Provision for losses on investments 7,849,232  7,834,107
2.03 Shareholders’ equity 19,225,851  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 8,988,442  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  1,614,000
2.03.05 Accumulated earnings (losses) (926,396) - 
2.03.08 Other comprehensive income  891,085 228,305

 

 
 3

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Parent Company Financial Statements / Statement of Income  
(R$ thousand)    
       
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
3.01 Revenues from sale of goods and rendering of services                 4,470,067                   6,398,502
3.02 Costs from sale of goods and rendering of services                (4,090,964)                  (4,867,733)
3.03 Gross profit                    379,103                   1,530,769
3.04 Operating (expenses)/income                   (778,233)                   1,048,886
3.04.01 Selling expenses                   (211,489)                     (242,330)
3.04.02 General and administrative expenses                    (53,904)                       (49,666)
3.04.04 Other operating income                      47,947                        19,570
3.04.05 Other operating expenses                   (790,485)                     (179,454)
3.04.06 Equity in results of affiliated companies                    229,698                   1,500,766
3.05 Income before financial income (expenses) and taxes                   (399,130)                   2,579,655
3.06 Financial income (expenses)                   (601,338)                     (755,685)
3.06.01 Financial income                    190,324                     (124,762)
3.06.02 Financial expenses                   (791,662)                     (630,923)
3.06.02.01 Net exchange differences over financial instruments                    (86,932)                     (131,875)
3.06.02.02 Financial expenses                   (704,730)                     (499,048)
3.07 Income before income taxes                (1,000,468)                   1,823,970
3.08 Income tax and social contribution                       74,072                     (617,568)
3.08.01 Current                    (13,988)                     (112,383)
3.08.02 Deferred                      88,060                     (505,185)
3.09 Net income  from continued operations                   (926,396)                   1,206,402
3.11 Net income for the year                   (926,396)                   1,206,402
3.99 Earnings per share – (Reais / Share)                             -                                  -   
3.99.01 Basic earnings per share    
3.99.01.01 Common shares                   (0.69859)                      0.90747
3.99.02 Diluted earnings per share                             -                                  -   
3.99.02.01 Common shares                   (0.69859)                      0.90747

 

 
 4

(In thousands of reais - R$, unless otherwise stated)

  
   
Parent Company Financial Statements / Statement of Comprehensive Income
(R$ thousand)  
       
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
4.01 Net income for the year (926,396)  1,206,402
4.02 Other comprehensive income 662,780 740,154
4.02.01 Actuarial gains over pension plan of subsidiaries, net of taxes 672 31
4.02.02 Reflex treasury shares acquired by subsidiary (28,802) (741,052)
4.02.03 (Loss)/gain cash flow hedge accounting, net of taxes 313,746  1,426,909
4.02.04 Cash flow hedge reclassified to income upon realization, net of taxes 233,114  52,335
4.02.05 (Loss)/gain cash flow hedge accounting, net taxes,from investments in subsidiaries 144,050  1,931
4.03 Comprehensive income for the year (263,616)  1,946,556

 

 
 5

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Parent Company Financial Statements / Statements of Cash Flows – Indirect Method
(R$ thousand)
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
6.01 Net cash from operating activities        (1,577,532)                545,747
6.01.01 Cash from operations           (234,210)              1,207,751
6.01.01.01 Net income for the period           (926,396)              1,206,402
6.01.01.02 Financial charges in borrowing and financing raised            363,806                279,179
6.01.01.03 Financial charges in borrowing and financing granted             (57,781)                 (37,333)
6.01.01.04 Depreciation, amortization and depletion            274,393                252,629
6.01.01.05 Equity in results of affiliated companies           (229,698)            (1,500,766)
6.01.01.06 Deferred taxes assets             (88,060)                505,185
6.01.01.07 Provision for tax, social security, labor, civil and environmental risks              23,328                   (6,883)
6.01.01.08 Monetary and exchange variations, net            494,770                269,269
6.01.01.10 Charges on lease liabilities                   296                       391
6.01.01.11 Write-off of property, plant and equipment right of use and Intangible assets              (1,902)                       156
6.01.01.13 Provision for environmental liabilities and decommissioning of assets                3,501                    2,386
6.01.01.16 Updated shares – Fair value through profit or loss            (109,086)                209,747
6.01.01.17 Accrued/(reversal) for consumption and services              24,907                  13,779
6.01.01.19 Receivables by indemnity                     -                      (7,381)
6.01.01.20 Other provisions              (6,288)                  20,991
6.01.02 Changes in assets and liabilities        (1,343,322)               (662,004)
6.01.02.01 Trade receivables - third parties              41,982                  54,132
6.01.02.02 Trade receivables - related party            248,824                156,760
6.01.02.03 Inventory            726,666                  57,686
6.01.02.04 Receivables - related parties/dividends              81,999                314,473
6.01.02.05 Recoverable taxes             (26,875)                420,327
6.01.02.06 Judicial deposits                8,933                   (9,089)
6.01.02.07 Receipt/(payment) in derivative transactions              15,340                         -   
6.01.02.09 Trade payables           (537,665)               (353,876)
6.01.02.10 Trade payables – Forfaiting and Drawee risk        (1,759,341)               (624,148)
6.01.02.11 Payroll and related taxes                7,288                    5,611
6.01.02.12 Tax payables             (18,389)               (464,003)
6.01.02.13 Payables to related parties                 4,153                    1,476
6.01.02.15 Interest paid            (182,536)               (210,299)
6.01.02.16 Interest received                   802                         -   
6.01.02.19 Others              45,497                 (11,054)
6.02 Net cash investment activities           (485,461)               (545,309)
6.02.01 Investments / AFAC / Acquisitions of Shares                      -                  (130,400)
6.02.02 Purchase of property, plant and equipment, intangible assets and  investment  property           (328,591)               (308,737)
6.02.05 Intercompany loans granted            (123,248)               (123,069)
6.02.11 Intercompany loans received                1,296                         -   
6.02.13 Financial Investments, net of redemption             (34,918)                  16,897
6.03 Net cash used in financing activities          1,592,139               (365,293)
6.03.01 Borrowings and financing raised         2,855,087                600,000
6.03.02 Transactions cost - Borrowings and financing                   (78)                   (5,203)
6.03.03 Borrowings and financing – related parties                     -                   753,825
6.03.04 Amortization of borrowings and financing        (1,032,913)            (1,276,046)
6.03.05 Amortization of borrowings and financing - related parties           (227,707)                 (44,326)
6.03.06 Dividends and interest on shareholder’s equity                      -                          (18)
6.03.07 Amortization of leases              (2,250)                   (2,005)
6.03.08 Share repurchase                     -                  (391,520)
6.05 Increase (decrease) in cash and cash equivalents           (470,854)               (364,855)
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         2,368,551              3,520,410

 

 
 6

(In thousands of reais - R$, unless otherwise stated)

  
   

 

6.03 Net cash used in financing activities  1,592,139 (365,293)
6.03.01 Borrowings and financing raised 2,855,087  600,000
6.03.02 Transactions cost - Borrowings and financing (78) (5,203)
6.03.03 Borrowings and financing – related parties -   753,825
6.03.04 Amortization of borrowings and financing  (1,032,913)  (1,276,046)
6.03.05 Amortization of borrowings and financing - related parties (227,707) (44,326)
6.03.06 Dividends and interest on shareholder’s equity  -  (18)
6.03.07 Amortization of leases  (2,250) (2,005)
6.03.08 Share repurchase -  (391,520)
6.05 Increase (decrease) in cash and cash equivalents (470,854) (364,855)
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 2,368,551  3,520,410

 

 
 7

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2023 to 03/31/2023
(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
5.05 Total comprehensive income  -   -   -   (926,396)  662,780  (263,616)
5.05.01 Net income for the period  -   -   -   (926,396)  -   (926,396)
5.05.02 Other comprehensive income  -   -   -   -   662,780  662,780
5.05.02.04 Cumulative translation adjustments for the year  -   -   -   -   (28,802)  (28,802)
5.05.02.07 Actuarial gains/(losses) on pension plan, net of taxes  -   -   -   -   672  672
5.05.02.13 (Loss) / gain on cash flow hedge accounting, net of taxes  -   -   -   -   690,910  690,910
5.07 Closing balance 10,240,000 32,720 8,988,442  (926,396)  891,085 19,225,851

 

 
 8

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Parent Company Financial Statements / Statement of Changes in Equity - 01/01/2022 to 03/31/2022
(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  -  -  (378,225)  -   -  (378,225)
5.04.04 Treasury shares acquired  -  -  (378,225)  -   -  (378,225)
5.05 Total comprehensive income  -  -  -  1,206,402 740,154 1,946,556
5.05.01 Net income for the period  -  -  -  1,206,402  -  1,206,402
5.05.02 Other comprehensive income  -  -  -   -  740,154  740,154
5.05.02.04 Cumulative translation adjustments for the year  -  -  -   -   (741,052) (741,052)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes  -  -  -   -  31  31
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes  -  -  -   -   1,481,175 1,481,175
5.07 Closing balance  10,240,000  32,720  9,714,663 1,206,402 689,544 21,883,329

 

 
 9

(In thousands of reais - R$, unless otherwise stated)

  
   
Parent Company Financial Statements / Statement of Value Added
(R$ thousand)
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
7.01 Revenues 5,427,122 7,745,101
7.01.01 Sales of products and rendering of services 5,377,801 7,727,102
7.01.02 Other revenues 51,056  14,734
7.01.04 Allowance for (reversal of) doubtful debts  (1,735)  3,265
7.02 Raw materials acquired from third parties (5,277,632)  (5,755,260)
7.02.01 Cost of sales and services (4,669,385)  (5,415,492)
7.02.02 Materials, electric power, outsourcing and other  (597,405) (327,594)
7.02.03 Impairment/recovery of assets  (10,842) (12,174)
7.03 Gross value added  149,490 1,989,841
7.04 Retentions  (274,230) (252,489)
7.04.01 Depreciation, amortization and depletion  (274,230) (252,489)
7.05 Value added created  (124,740) 1,737,352
7.06 Value added received  394,493 1,912,548
7.06.01 Equity in results of affiliates companies  229,698 1,500,766
7.06.02 Financial income  190,324  97,593
7.06.03 Others  (25,529)  314,189
7.07 Value added for distribution  269,753 3,649,900
7.08 Value added distributed  269,753 3,649,900
7.08.01 Personnel  311,242  300,549
7.08.01.01 Salaries and wages  223,471  225,446
7.08.01.02 Benefits 72,045  60,770
7.08.01.03 Severance payment (FGTS)  15,726  14,333
7.08.02 Taxes, fees and contributions  117,872  974,579
7.08.02.01 Federal 73,971  871,178
7.08.02.02 State 43,901  103,401
7.08.03 Remuneration on third-party capital  767,035 1,168,370
7.08.03.01 Interest  604,877  292,468
7.08.03.02 Rental  903 903
7.08.03.03 Others  161,255  874,999
7.08.04 Other and passive exchange variations  (926,396) 1,206,402
7.08.04.03 Retained earnings (accumulated losses)  (926,396) 1,206,402

 

 
 10

(In thousands of reais - R$, unless otherwise stated)

  
   
Consolidated Financial Statements / Balance Sheet - Assets
(R$ thousand)      
Code Description  Current Quarter 03/31/2023   Previous Year 12/31/2022 
1 Total assets  86,595,892 85,354,359
1.01 Current assets  31,671,613 30,612,360
1.01.01 Cash and cash equivalents  13,673,017 11,991,356
1.01.02 Financial investments  1,540,366 1,456,485
1.01.02.01 Financial investments measured a fair value through profit or loss  1,251,771 1,184,895
1.01.02.01.03 Financial investments measured a fair value through profit or loss – Usiminas’ shares  1,251,771 1,184,895
1.01.02.03 Financial investments at amortized cost 288,595 271,590
1.01.03 Trade receivables  3,546,962 3,233,164
1.01.04 Inventory  10,234,004 11,289,229
1.01.06 Recoverable taxes  1,878,824 1,865,626
1.01.08 Other current assets 798,440 776,500
1.01.08.03 Others 798,440 776,500
1.01.08.03.02 Prepaid expenses 399,677 347,870
1.01.08.03.03 Dividends receivable 77,377 77,377
1.01.08.03.05 Others 321,386 351,253
1.02 Non-current assets  54,924,279 54,741,999
1.02.01 Long-term assets  12,504,261 12,364,418
1.02.01.03 Financial investments at amortized cost 159,557 156,185
1.02.01.05 Inventory  1,140,571 1,045,665
1.02.01.07 Deferred taxes assets  4,935,307 5,095,718
1.02.01.10 Other non-current assets  6,268,826 6,066,850
1.02.01.10.03 Recoverable taxes  1,404,413 1,317,132
1.02.01.10.04 Judicial deposits 537,168 533,664
1.02.01.10.05 Prepaid expenses 86,949 82,586
1.02.01.10.06 Receivable from related parties  2,995,963 2,869,532
1.02.01.10.07 Others  1,244,333 1,263,936
1.02.02 Investments   5,216,846 5,219,082
1.02.02.01 Equity interest  5,058,533 5,060,002
1.02.02.02 Investment Property 158,313 159,080
1.02.03 Property, plant and equipment  26,478,076 26,370,445
1.02.03.01 Property, plant and equipment in operation  21,476,568 21,700,015
1.02.03.02 Right of use in leases 660,416 644,880
1.02.03.03 Property, plant and equipment in progress  4,341,092 4,025,550
1.02.04 Intangible assets  10,725,096 10,788,054

 

 
 11

(In thousands of reais - R$, unless otherwise stated)

  
   
Consolidated Financial Statements / Balance Sheet – Liabilities
(R$ thousand)
       
Code Description  Current Quarter 03/31/2023   Previous Year 12/31/2022 
2 Total Liabilities 86,595,892  85,354,359
2.01 Current liabilities 19,817,534  22,475,119
2.01.01 Payroll and related taxes 422,399  422,495
2.01.02 Trade payables  5,854,229 6,596,915
2.01.03 Tax payables 826,466  870,333
2.01.04 Borrowings and financing  5,201,790 5,193,636
2.01.05 Other payables  7,466,860 9,318,651
2.01.05.02 Others  7,466,860 9,318,651
2.01.05.02.04 Dividends and interests on shareholder´s equity 620,447  611,307
2.01.05.02.05 Advances from customers  1,094,442 1,120,072
2.01.05.02.06 Trade payables – Forfaiting and Drawee risk  4,042,904 5,709,069
2.01.05.02.07 Lease liabilities 168,336  177,010
2.01.05.02.08 Derivative financial instruments 350,632  416,935
2.01.05.02.09 Other payables  1,190,099 1,284,258
2.01.06 Provisions 45,790  73,089
2.01.06.01 Provision for tax, social security, labor and civil risks 45,790  73,089
2.02 Non-current liabilities 45,085,507  41,063,196
2.02.01 Borrowings and financing 37,155,431  35,725,106
2.02.02 Other payables  4,622,647 2,216,418
2.02.02.02 Others  4,622,647 2,216,418
2.02.02.02.03 Advances from customers  3,335,052  943,919
2.02.02.02.04 Lease liabilities 546,245  516,836
2.02.02.02.05 Derivative financial instruments 106,092  69,472
2.02.02.02.06 Trade payables 23,505  46,269
2.02.02.02.07 Other payables 611,753  639,922
2.02.03 Deferred taxes assets 284,941  216,950
2.02.04 Provisions  3,022,488 2,904,722
2.02.04.01 Provision for tax, social security, labor and civil risks  1,504,532 1,411,736
2.02.04.02 Other provisions  1,517,956 1,492,986
2.02.04.02.03 Provision for environmental liabilities and decommissioning of assets 962,627  937,657
2.02.04.02.04 Pension and healthcare plan 555,329  555,329
2.03 Shareholders’ equity 21,692,851  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  8,988,442 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 1,614,000
2.03.05 Accumulated earnings (losses)  (926,396) - 
2.03.08 Other comprehensive income 891,085  228,305
2.03.09 Earnings attributable to the non-controlling interests  2,467,000 2,326,577

 

 
 12

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Consolidated Financial Statements / Statements of Income  
(R$ thousand)  
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
3.01 Revenues from sale of goods and rendering of services               11,318,690               11,769,866
3.02 Costs from sale of goods and rendering of services               (8,073,476)               (7,287,285)
3.03 Gross profit                 3,245,214                 4,482,581
3.04 Operating (expenses)/income               (2,664,693)                  (927,247)
3.04.01 Selling expenses                  (860,513)                  (443,996)
3.04.02 General and administrative expenses                  (159,881)                  (143,330)
3.04.04 Other operating income                     94,729                     23,401
3.04.05 Other operating expenses               (1,760,537)                  (382,581)
3.04.06 Equity in results of affiliated companies                     21,509                     19,259
3.05 Income before financial income (expenses) and taxes                   580,521                 3,555,334
3.06 Financial income (expenses)               (1,189,627)               (1,125,237)
3.06.01 Financial income                   344,819                    (35,859)
3.06.02 Financial expenses               (1,534,446)               (1,089,378)
3.06.02.01 Net exchange differences over financial instruments                  (247,298)                  (121,324)
3.06.02.02 Financial expenses               (1,287,148)                  (968,054)
3.07 Income before income taxes                  (609,106)                 2,430,097
3.08 Income tax and social contribution                   (213,442)               (1,066,154)
3.08.01 Current                  (357,393)                  (578,874)
3.08.02 Deferred                   143,951                  (487,280)
3.09 Net income  from continued operations                  (822,548)                 1,363,943
3.11 Consolidated net income for the year                  (822,548)                 1,363,943
3.11.01 Earnings attributable to the controlling interests                  (926,396)                 1,206,402
3.11.02 Earnings it attributable to the non-controlling interests                   103,848                   157,541
3.99 Earnings per share – (Reais / Share)                            -                               -   
3.99.01 Basic earnings per share                            -                               -   
3.99.01.01 Common shares                  (0.69859)                   0.90747
3.99.02 Diluted earnings per share                            -                               -   
3.99.02.01 Common shares                  (0.69859)                   0.90747

 

 
 13

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Consolidated Financial Statements / Statement of Comprehensive Income
(R$ thousand)  
       
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
4.01 Consolidated net income for the year (822,548) 1,363,943
4.02 Other comprehensive income  699,355  740,757
4.02.01 Actuarial gains over pension plan of subsidiaries, net of taxes 679  97
4.02.02 Cumulative translation adjustments for the year  (28,802) (741,052)
4.02.03 Gain cash flow hedge accounting, net of taxes  313,746 1,426,909
4.02.04 Cash flow hedge reclassified to income upon realization, net of taxes  233,114  52,335
4.02.05 (Loss)/gain cash flow hedge accounting, net taxes,from investments in subsidiaries  180,618  2,468
4.03 Consolidated comprehensive income for the year (123,193) 2,104,700
4.03.01 Earnings attributable to the controlling interests (263,616) 1,946,556
4.03.02 Earnings it attributable to the non-controlling interests  140,423  158,144

 

 
 14

(In thousands of reais - R$, unless otherwise stated)

  
   
Consolidated Financial Statements / Statements of Cash Flows – Indirect Method
(R$ thousand)      
       
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
6.01 Net cash from operating activities  554,104  (3,859,664)
6.01.01 Cash from operations 1,444,076  1,997,764
6.01.01.01 Earningsattributable to the controlling interests  (926,396)  1,206,402
6.01.01.02 Earnings attributable to the non-controlling interests  103,848 157,541
6.01.01.03 Financial charges in borrowing and financing raised  760,817 458,222
6.01.01.04 Financial charges in borrowing and financing granted  (44,554) (32,028)
6.01.01.05 Depreciation, amortization and depletion  803,002 657,803
6.01.01.06 Equity in results of affiliated companies  (21,509) (19,259)
6.01.01.07 Charges on lease liabilities  19,032  16,150
6.01.01.08 Deferred taxes assets  (143,951) 487,280
6.01.01.09 Provision for tax, social security, labor, civil and environmental risks  49,780  2,155
6.01.01.10 Monetary, exchange and cash flow hedge  908,653  (1,150,473)
6.01.01.13 Write-off of property, plant and equipment right of use and Intangible assets  (2,176)  7,963
6.01.01.14 Accrued/(reversal) for consumption and services  11,804 (2,777)
6.01.01.17 Receivables by indemnity  -  (7,381)
6.01.01.18 Provision for environmental liabilities and decommissioning of assets  24,971  26,972
6.01.01.19 Updated shares – Fair value through profit or loss   (109,086) 209,747
6.01.01.20 Other provisions 9,841 (20,553)
6.01.02 Changes in assets and liabilities  (889,972)  (5,857,428)
6.01.02.01 Trade receivables - third parties  (392,516)  (2,599,802)
6.01.02.02 Trade receivables - related party  48,827  37,822
6.01.02.03 Inventory  859,920 234,052
6.01.02.05 Recoverable taxes  (100,479) 417,063
6.01.02.06 Judicial deposits  (3,504) (7,049)
6.01.02.07 Trade payables  (763,035) (488,796)
6.01.02.08 Trade payables – Forfaiting and Drawee risk  (1,666,165) (433,645)
6.01.02.09 Payroll and related taxes  151  23,976
6.01.02.10 Tax payables  (40,074)  (2,391,121)
6.01.02.11 Payables to related parties   (21,485) (2,871)
6.01.02.12 Advance from Minerals and Electric Energy contracts 2,392,433 (144,851)
6.01.02.14 Interest paid   (614,997) (516,222)
6.01.02.15 Receipt/(payment) of cash flow hedge operations and derivative transactions  (608,219) - 
6.01.02.17 Others  19,171  14,016
6.02 Net cash investment activities  (838,393) (928,345)
6.02.01 Investments / AFAC / Acquisitions of Shares   -  (129,499)
6.02.02 Purchase of property, plant and equipment, intangible assets andinvestmentproperty  (735,829) (700,988)
6.02.03 Intercompany loans granted   (84,286) (108,705)
6.02.04 Intercompany loans received 2,098 - 
6.02.05 Financial Investments, net of redemption  (20,376)  10,847

 

 
 15

(In thousands of reais - R$, unless otherwise stated)

  
   

 

6.03 Net cash used in financing activities  1,961,456  1,397,090
6.03.01 Borrowings and financing raised 3,907,413  5,647,241
6.03.02 Transactions cost - Borrowings and financing  (5,119) (58,421)
6.03.04 Share repurchase  -  (391,520)
6.03.05 Amortization of borrowings and financing  (1,891,962)  (3,685,038)
6.03.06 Amortization of leases  (48,876) (32,729)
6.03.07 Dividends and interest on shareholder’s equity   -  (82,443)
6.04 Exchange rate on translating cash and cash equivalents 4,494  45,143
6.05 Increase (decrease) in cash and cash equivalents 1,681,661  (3,345,776)
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 13,673,017  13,300,704

 

 
 16

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Consolidated Financial Statements / Statements of Changes in Equity - 01/01/2023 to 31/03/2023
(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
5.05 Total comprehensive income                 -                          -                  -              (926,396)             662,780            (263,616)              140,423            (123,193)
5.05.01 Net income for the year                 -                          -                  -              (926,396)                     -               (926,396)              103,848            (822,548)
5.05.02 Other comprehensive income                 -                          -                  -                        -                662,780              662,780               36,575              699,355
5.05.02.04 Cumulative translation adjustments for the year                 -                          -                  -                        -                (28,802)              (28,802)                      -                 (28,802)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes                 -                          -                  -                        -                      672                    672                        7                    679
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes                 -                          -                  -                        -                690,910              690,910               36,568              727,478
5.07 Closing balance   10,240,000                32,720   8,988,442           (926,396)             891,085         19,225,851           2,467,000         21,692,851

  

 
 17

(In thousands of reais - R$, unless otherwise stated)

  
   

 

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                  -                               -          (378,225)                           -                           -             (378,225)                       -             (378,225)
5.04.04 Treasury shares acquired                  -                               -          (378,225)                           -                           -             (378,225)                       -             (378,225)
5.05 Total comprehensive income                  -                               -                    -                  1,206,402               740,154        1,946,556              158,144        2,104,700
5.05.01 Net income for the year                  -                               -                    -                  1,206,402                        -           1,206,402              157,541        1,363,943
5.05.02 Other comprehensive income                  -                               -                    -                              -                  740,154           740,154                     603           740,757
5.05.02.04 Cumulative translation adjustments for the year                  -                               -                    -                              -                 (741,052)          (741,052)                       -             (741,052)
5.05.02.06 Actuarial gains/(losses) on pension plan, net of taxes                  -                               -                    -                              -                          31                   31                       66                   97
5.05.02.07 (Loss) / gain on cash flow hedge accounting, net of taxes                  -                               -                    -                              -               1,481,175        1,481,175                     537        1,481,712
5.07 Closing balance    10,240,000                     32,720     9,714,663               1,206,402               689,544      21,883,329            3,217,535      25,100,864

 

 
 18

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Consolidated Financial Statements / Statements of Value Added
(R$ thousand)
Code Description  Year to date 01/01/2023 to 03/31/2023   YTD previous year 01/01/2022 to 03/31/2022 
7.01 Revenues                12,864,500                13,364,372
7.01.01 Sales of products and rendering of services                12,761,746                13,346,434
7.01.02 Other revenues                     103,020                      16,151
7.01.04 Allowance for (reversal of) doubtful debts                          (266)                        1,787
7.02 Raw materials acquired from third parties               (10,188,053)                (8,071,060)
7.02.01 Cost of sales and services                (7,851,510)                (7,227,509)
7.02.02 Materials, electric power, outsourcing and other                (2,058,484)                   (815,970)
7.02.03 Impairment/recovery of assets                   (278,059)                     (27,581)
7.03 Gross value added                  2,676,447                  5,293,312
7.04 Retentions                   (801,178)                   (656,137)
7.04.01 Depreciation, amortization and depletion                   (801,178)                   (656,137)
7.05 Value added created                  1,875,269                  4,637,175
7.06 Value added received                     485,944                  2,158,987
7.06.01 Equity in results of affiliated companies                      21,509                      19,259
7.06.02 Financial income                     344,819                     186,496
7.06.03 Others                     119,616                  1,953,232
7.06.03.01 Other and exchange gains                     119,616                  1,953,232
7.07 Value added for distribution                  2,361,213                  6,796,162
7.08 Value added distributed                  2,361,213                  6,796,162
7.08.01 Personnel                     800,683                     590,729
7.08.01.01 Salaries and wages                     605,938                     452,693
7.08.01.02 Benefits                     155,873                     113,766
7.08.01.03 Severance payment (FGTS)                       38,872                      24,270
7.08.02 Taxes, fees and contributions                     725,573                  1,575,170
7.08.02.01 Federal                     550,329                  1,441,758
7.08.02.02 State                     159,779                     119,931
7.08.02.03 Municipal                      15,465                      13,481
7.08.03 Remuneration on third-party capital                  1,657,505                  3,266,320
7.08.03.01 Interest                  1,046,335                     568,854
7.08.03.02 Rental                        3,444                        1,355
7.08.03.03 Others                     607,726                  2,696,111
7.08.03.03.01 Other and exchange losses                     607,726                  2,696,111
7.08.04 Remuneration on Shareholders' capital                   (822,548)                  1,363,943
7.08.04.03 Retained earnings (accumulated losses)                   (926,396)                  1,206,402
7.08.04.04 Non-controlling interests in retained earnings                     103,848                     157,541

 

 
 19

  
   

 

 
 20

  
   

 

São Paulo, May 3, 2023 - Companhia Siderúrgica Nacional ("CSN") (B3: CSNA3) (NYSE: SID) discloses its first quarter of 2023 (1Q23) 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 consolidated results of the Company in the first quarter of 2023 (1Q23) and the comparisons are relative to the fourth quarter of 2022 (4Q22) and the first quarter of 2022 (1Q22). The exchange rate was BRL 4.74 on 03/31/2022; BRL 5.22 on 12/31/2022 and BRL 5.08 on 03/31/2023.

 

1Q23 Operational and Financial Highlights

 

 

 
 21

  
   

 

 

Consolidated Table - Highlights

¹ Adjusted EBITDA is calculated from net income (loss), plus depreciation and amortization, taxes on income, net financial result, income from investment participation, income from other operating income/expenses and includes a proportional participation 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 Cashed Risk transactions.

 

Consolidated Results

 

·Net revenue totaled BRL 11,319 million in 1Q23, representing an increase of 1.7% when compared to 4Q22. This performance is the result of better prices achieved in the mining sector, in line with the Platts' increase and with the solid commercial activity observed during the period. These factors ended up offsetting the weaker dynamics observed in the domestic steel market at the beginning of the year and the lower rentability in the cement segment.

 

·The cost of goods sold (COGS) totaled BRL 8,073 million in 1Q23, 2.9% up from the previous quarter, as a result, mainly due to higher volumes in the steel and cement industries.

 

·The combination of revenue growth and a small cost pressure resulted in a roughly flat gross margin in the quarter, reaching 28.7% in 1Q23.

 

·Selling, general and administrative expenses totaled BRL 1,020 million in 1Q23, 16% lower than in 4Q22, as a consequence of the lower volume traded in mining, generating lower freight expenses, as well as the greater budget control carried out by the Company.

 

·The group of other operating revenues and expenses was negative at R$ 1.655 million in 1Q23, mainly due to iron ore hedging operations (R$ 568 million) carried out during the period, and cash flow hedge accounting (R$ 362 million).

 

·In 1Q23, the financial result was negative by BRL 1,190 million, which represents a stability in relation to the previous quarter, as a consequence of the maintenance of the cost of debt and lower impact of Usiminas shares.

 

 
 22

  
   

 

·The equity result was positive at BRL 22 million in 1Q23, a reduction of 69% compared to last quarter, as a consequence of seasonality and the weaker performance of MRS that was impacted by the rains recorded in the period.

 

 

·In 1Q23, CSN recorded a net loss of R$ 823 million, reversing the profit seen in the previous quarter, as a result of non-recurring impacts, such as iron ore hedge and hedge accounting for exchange rates, with no cash impact. It is also important to note that the effect of the iron ore hedge is only temporary, since the sharp drop in Platts prices after the end of 1Q23 should bring a positive impact to the open position, largely offsetting the impact the Company had in 1Q23.

 

Adjusted EBITDA

 

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

 
 23

  
   

 

·Adjusted EBITDA in 1Q23 was BRL 3,203 million, with an adjusted EBITDA margin of 27.5% or 0,5 p.p. up from last quarter. This increase in profitability is a direct consequence of the improvement in mining results, which even with a lower sales volume, ended up presenting a higher EBITDA due to the realized prices, compensating for the weaker dynamics observed in the steel and cement segments.

 

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

 

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

 

Adjusted Cash Flow

 

Adjusted Cash Flow in 1Q23 was negative at BRL 2,134 million, mainly affected by one-off changes in working capital and the effect of the iron ore hedge realized in the period.

 

Adjusted Cash Flow¹ in 1Q23 (BRLMM)

 

¹ The concept of adjusted cash flow is calculated from adjusted Ebitda, subtracting Ebitda from Jointly Controlled Companies, CAPEX, IT, Financial Results and Changes in Assets and Liabilities², excluding the effect of the Glencore advance.

² Adjusted Working Capital is composed by the change in Net Working Capital, plus the change in accounts of long-term assets and liabilities and disregarding the net change in IT and SC

 

 
 24

  
   

Indebtedness

 

On 03/31/2023, consolidated net debt reached BRL 30,158 million, with the leverage indicator measured by the Net Debt/EBITDA LTM ratio reaching 2.5x. This temporary increase in leverage is a consequence of the exclusion from the calculation base of the strong results from the beginning of 2022 due to the effects of the war in Ukraine. However, when looking at the prospects for results and cash generation for 2023, including the normalization of working capital conditions, a gradual reduction in leverage is expected to be achieved within the target established by the Company, which reinforces the transitory and exceptional effect of this leverage above the top of the guidance. Additionally, CSN has maintained its policy of carrying a high cash balance, which reached R$ 14.3 billion in this quarter.

 

 


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 highly active in its goal of extending the amortization term, focusing on long-term operations and the local capital market. Among the main movements in 1Q23, the CSN Mineração signed a Pre-Payment Export Financing Agreement in the total amount of up to US$ 1.4 billion and a final term of 12 years, with up to US$ 980 million to be granted by the JAPAN BANK FOR INTERNATIONAL COOPERATION, and up to US$ 420 million to be granted by a bank syndicate, secured by Nippon Export and Investment Insurance ("NEXI"). This operation aims to support the Company in its project to build a new pellet feed plant (P15) in the Casa de Pedra mine, aiming to ensure the supply of high-quality iron ore for its customers, helping them in their decarbonization strategies in the steel industry.

 

Amortization Schedule (BRL Bi)

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

² Gross Debt/Management Net considers participation in MRS (37.27%) and gross interest.

3 Medium term after completion of the Liability Management Plan.

 

 
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Foreign Exchange Exposure

 

The accumulated net foreign exchange exposure in the consolidated balance sheet up to 1Q23 was US$ 812 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.

 

 

Investments

 

A total of BRL 746 million was invested in 1Q23, a 28% lower value when compared to the amount invested in 4Q22, as a consequence of seasonality and the fact that the previous quarter was impacted by equipment acquisitions for Tecon (RTGs), fleet rebuild for Casa de Pedra, and replacement of part of the Arcos fleet (cement). Most of the investment made in this quarter was directed to the steelmaking operation, with emphasis on the recovery and preservation of coke batteries and operational continuity projects. In mining, there was progress in the P15 expansion project, and for cement, recurrent repairs on furnaces and mills during this time of the year, as well as the completion of the Arcos fleet acquisition.

 

 

 
 26

  
   

Net Working Capital

 

The Net Working Capital applied to the business totaled BRL 4,486 million in 1Q23, in line with 1Q22 figures, however, an increase of 81% compared to 4Q22, as a consequence of a reduction in the Company's supplier line, in addition to lower inventory volume. The punctual and temporary reduction of the average payment period to suppliers is mainly related to changes in the raw material mix and tends to be reversed in the coming quarters.

 

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

¹ Other CCL Assets: Considers advance employees 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 losses. For the calculation of the SME are not considered the balances of warehouse stocks.

 

Dividends

 

As approved at the General Meeting and disclosed in the Notice to Shareholders on April 28, 2023, the Company decided to distribute dividends in the amount of (i) R$ 836,854,548.00 from the profit reserve, corresponding to R$ 0.63106731615 per share, and (ii) R$ 777,145,451.90, referring to the 2022 fiscal year, corresponding to the amount of R$ 0.58604102195 per share, totaling an amount of R$ 1.6 billion to be distributed. Both payments will be made on May 17th, 2023.

 

 
 27

  
   

Results by Business Segments

 

 

 
 28

  
   

 

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
                 
4Q22 Results (BRL million) Steel Mining Logistics (Porto) Logistics (Rail) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue 6,055 3,529 86 608 154 1,181 (483) 11,129
Domestic Market 4,501 336 86 608 154 1,181 (949) 5,917
Foreign Market 1,554 3,193 - - - - 466 5,212
COGS (5,214) (1,878) (58) (382) (139) (900) 724 (7,847)
Gross profit 840 1,651 28 226 15 281 241 3,282
DGA/DVE (341) (139,23) (9) (52) (17) (148) (507) (1,213)
Depreciation 326 268 11 96 29 132 (38) 825
Proportional EBITDA of joint contr -   - - - - 229 229
Adjusted EBITDA 826 1,779 30 270 27 265 (75) 3,123
                 
1Q22 Results (BRL million) Steel Mining Logistics (Porto) Logistics (Rail) Energy Cement Corporate Expenses/Elimination Consolidated
                 
Net Revenue 7,882 3,861 76 458 44 386 (938) 11,770
Domestic Market 5,185 515,38 76 458 44 386 (991) 5,673
Foreign Market 2,697 3,346 - - - - 53 6,097
COGS (5,827) (1,595) (55) (342) (47) (272) 850 (7,287)
Gross profit 2,055 2,266 21 117 (3) 114 (88) 4,483
DGA/DVE (327) (62,42) (10) (31) (9) (69) (80) (587)
Depreciation 295 242 9 123 4 54 (92) 635
Proportional EBITDA of joint contr -   - - - - 187 187
Adjusted EBITDA 2,024 2,445 20 209 (7) 99 (72) 4,718

 

Steel Result

According to the World Steel Association (WSA), global crude steel production totaled 459.3 million tons (Mt) in the first three months of 2023, which represents a stability when compared to the same period in 2022, with the reopening of the Chinese economy being offset by the more challenging scenario found in the international economy, with reduced growth rates, credit crises and high inflation and interest rate pressures. In 1Q23, the European Union reduced its production by 10.1%, still impacted by high energy prices and the closure of steel plants over the past year. China, on the other hand, produced 57% of the global volume (261.6 Mt) in the same period, representing a 6.1% increase in production compared to 1Q22, as a result of the direct impact of the end of the Covid-0 policy in the country and economic stimuli in the real estate and consumer markets. The prospects for the next quarters of 2023 remain positive as total steel demand is expected to increase by 2% for the year. Brazil produced 8.0Mt in 1Q23, which corresponds to a 6.8% decrease compared to the same period in 2022, impacted by operational problems faced in some plants, as well as the increase of imported products in the country. The prospects for the local market in 2023 are somewhat more challenging as uncertainties still loom regarding economic growth due to restrictive monetary policy.

 
 29

  
   

Steel Production (thousand tons)

 

In the case of CSN, plate production in 1Q23 totaled 784,000 tons, a performance 22% lower than the previous quarter. In turn, the production of flat rolled products, our main market, reached 702 kton, which represents a 20% decrease compared to 4Q22, reflecting the seasonality and unscheduled maintenance shutdowns, which limited volumes during the quarter.

 

 

Sales Volume (Kton) – Steel Industry

 

 

Total sales reached 1,033 thousand tons in the first quarter of 2023, volume 2% higher than in 4Q22. When analyzing the behavior in the different markets, it is noticed that the foreign market was the main responsible for this increase, with a strong performance in all 3 operations. In total, sales totaled 364,000 tons in 1Q23 and were 35% higher than in 4Q22. During the quarter, 8,000 tons were exported directly, and 356,000 tons were sold by subsidiaries abroad, 72,000 tons by LLC, 173,000 tons by SWT and 111,000 tons by Lusosider. On the other hand, domestic sales totaled 669 thousand tons of steel products in 1Q23, which represents a reduction of 9.5% compared to 4Q22, as a result of the increase in imported steel products in the period, in addition to the lower volume produced and a lessen heated demand in the first two months of the year.

 

In relation to the total sales volume in 1Q23, all segments showed a decrease compared to the previous quarter, with Industry (-12%) and Distribution (-11%) appearing among the main highlights. In the year-on-year comparison, there was an important recovery for the white goods (home appliance) and construction, but the declines in industry and distribution ended up having a greater weight.

 
 30

  
   

 

According to ANFAVEA (National Association of Automotive Vehicle Manufacturers), production in 1Q23 reached 536 thousand units, an increase of 8% compared to the previous quarter. According to the Association, vehicle sales volume increased by 16.3% in the first quarter.

 

According to data from the Brazilian Steel Institute (IABr), crude steel production in 1Q23 reached 8.04 million tons, a 6.8% decline compared to the same period in 2022 and 0.3% higher than in 4Q22. Apparent consumption was 5.92 million tons, a 3.4% increase compared to the previous year and 5.7% higher than in 4Q22. The Steel Industry Confidence Index (ICIA) for March was 32.7 points, 16.9 points decrease compared to December and below the 50-point dividing line, indicating lower confidence for the next six months in the domestic market. On the other hand, there was already a significant improvement in the confidence index for April (41.7 points).

 

According to data from IBGE, the production of household appliances for March 2023 registered an increase of 14% compared to the previous year, which reinforces the recovery of the white goods sector after the weak performance observed in 2022.

    

 

 

·Net revenue in the steel industry reached BRL 5,777 million in 1Q23, a performance 4.6% lower than in 4Q22, as a result of lower commercial dynamism in the domestic market, in addition to lower prices. In this sense, the 1Q23 average price in the domestic market was 3.0% lower than in 4Q22, a performance driven mainly by the fall in the prices of long steel and products whose import is more relevant. In turn, the price of the foreign market was 12.7% lower compared to the previous quarter, mainly impacted by the metal profiles that did not follow the positive price trend due to the Chinese reopening and lower supply resulting from the earthquake in Turkey.

 

·The plate cost in 1Q23 reached BRL 4,147/t, representing an increase of 5.7% over the previous quarter, as a result of lower dilution of the plant's fixed costs and an increase in raw material costs, mainly iron ore.

 

 

·The steel segment Adjusted EBITDA reached BRL 754 million in 1Q23 and was 9% lower than in 4Q22, with an EBITDA margin of 13.0% (-0.6 p.p.). This result reflects the lower dynamism of the domestic market and the lower dilution of production costs, which ultimately compromised the profitability of the period.

 

 
 31

  
   

 

Adjusted EBITDA and Steel Margin

(BRL MM and %)

 

 

Mining Result

 

In the mining sector, the beginning of the year was impacted by several factors that had consequences for both supply and demand for the product. On the supply side, the high incidence of rain in Brazil and obstacles that affected the production flow, mainly in the southeastern region of Brazil, had an impact on the availability of iron ore for the transoceanic market. On the demand side, the first quarter of 2023 was marked by the easing of Covid-related restrictions in China and the beginning of economic stimulus that raised expectations regarding Chinese demand for steel products. As a result, we had a strong recovery in iron ore prices since the beginning of the year, which exceeded the US$130/ton level throughout the quarter. In this context, the price of iron ore ended 1Q23 with a price above US$127.0/ton, with an average of US$125.5/dmt (Platts, Fe62%, N. China), 26.8% higher than 4Q22 (US$99.0/dmt), but 11.4% lower than 1Q22 (US$141.6/dmt).

 

Regarding maritime freight, the BCI-C3 route (Tubarão-Qingdao) had an average of US$ 18.2/wmt in 1Q23, which represents a reduction of 11% compared to the freight cost of the previous quarter, reflecting the lower pressure on fuel costs and the greater availability of ships in the transoceanic market.

 

 

 

·Iron ore production totaled 8,939 thousand tons in 1Q23, this represents a 38% growth compared to 1Q22 and a 4% decrease compared to 4Q22, in line with the seasonality of the period. Additionally, it is worth noting that after going through the most critical period of rains without major issues in the production process, the Company has maintained its production and procurement guidance for 2023, set in a range of 39-41 million metric tons.

 

 
 32

  
   
·Sales volume reached 8,618 thousand tons in 1Q23, a performance that was 24.3% higher than 1Q22 and 11.4% lower compared to 4Q22. In addition to seasonality, 1Q23 sales were also limited by operational problems in rail transportation and a decrease in sales to the domestic market.

 

·In 1Q23, net revenue totaled BRL 4,141 million and was 17.3% higher than in 4Q22, even with a lower volume of shipments. This result reflects the strong price realization observed in the period. As a consequence, the net unit revenue was US$ 91.9 per wet metric ton, representing a solid increase of 34% against 4Q22, in line with the upward trajectory of the Platts price.

 

·In turn, the cost of products sold from mining totaled BRL 2,247 million in 1Q23, an increase of 19.6% compared to the previous quarter, as a result of a higher volume of third-party ore purchases and price increases during the period. Similarly, the C1 cost reached USD 22.9/t in 1Q23, which was 7.9% higher than that seen in 4Q22, reflecting the lower dilution of fixed costs both at the mine and at the port, as well as the higher cost of leasing Tecar, as a consequence of higher realized prices.

 

·Adjusted EBITDA reached BRL 2,025 million in 1Q23, with a quarterly EBITDA margin of 48.9% or 1.5 p.p. down from last quarter. This slight drop in profitability reflects the seasonal nature of the business, with lower fixed cost dilution.

 

 

Cement Result

According to the National Union of the Cement Industry (SNIC), cement sales in Brazil fell by 1.2% in the first quarter of this year compared to the same period in 2022, totaling 14.7 million tons of sales. The combination of a period with high rainfall and a slower economy due to high interest rates and inflationary pressure led to a slowdown in the real estate and construction sectors, resulting in a decline in cement sales. On the other hand, the reformulation of the Minha Casa, Minha Vida program and the government's commitment to advancing the growth agenda open up new opportunities for investments in housing and infrastructure and could stimulate the entire supply chain of the construction industry in the coming quarters. The Industrial Entrepreneur Confidence Index (ICEI) for the Construction Industry, measured by the Brazilian Chamber of the Construction Industry (CBIC), averaged 51.1 in the quarter, reinforcing this expectation and showing a greater confidence of entrepreneurs regarding the future prospects of the construction sector.

Sales in 1Q23 totaled 3,091 kton, a result 7% higher than the previous quarter, as a reflection of a more assertive commercial policy, already reaping the benefits of integration with the Lafarge Holcim acquired plants.

 
 33

  
   

Sales Volume - Cements (thousand tons)

 

 

* The operations of LafargeHolcim were integrated in September 2022.

 

·Net revenue reached the result of BRL 1,119 million in 1Q23, a 5.2% lower performance compared to the previous quarter, which reflects the lower prices in the period, which ultimately offset the higher sales volume.

 

·In turn, it is already possible to observe a decrease in the unit cost of cement, even with the pressure of raw material and fuel prices.

 

·The segment's adjusted EBITDA decreased by 16% compared to the previous quarter, reaching BRL 222 million in 1Q23 and with an adjusted EBITDA margin of 19.9%, a level of 2.6 p.p. lower than in 4Q22. This decrease in profitability observed in the period reflects, mostly, the lower prices practiced. On the other hand, when projecting performance for the next quarters, a more positive outlook is perceived as the capture of synergies advances with a better market dynamic.

 

Energy Result

In 1Q23, the high volume of rainfall and consequently the high level of water in the reservoirs have kept energy prices significantly below the average of recent years. As a result, the volume of energy traded in the quarter generated a net revenue of R$ 139 million, representing a 9.3% decrease compared to the previous quarter. On the other hand, the adjusted EBITDA remained practically stable in the period at R$ 28 million, generating an EBITDA margin of 20% or 2.3 p.p. higher than that recorded in 4Q22.

Logistics Result

Railway Logistics: In 1Q23, net revenue reached BRL 519 million, with adjusted EBITDA of BRL 234 million and adjusted EBITDA margin of 45.1%. Compared to 4Q22, net revenue fell 15% due to the seasonality of the operation and the impact of rainfall, resulting in a reduction of goods transported. In the same line of comparison, adjusted EBITDA was 13% lower.

Port Logistics: In 1Q23, Sepetiba Tecon shipped 302,000 tons of steel products, as well as 16,000 containers, 24,000 tons of general cargo and 197,000 tons of bulk. Compared to the previous quarter, the Company had a change in its shipment mix, with the decrease in bulk volume being offset by a higher volume of steel products. As a result, net revenue from the port segment was 18.9% lower than in the previous quarter, reaching BRL 70 million in 1Q23, also with a negative impact on adjusted EBITDA for the period, which was BRL 19 million in the quarter, with EBITDA margin of 26.8%.

 
 34

  
   

ESG – Environmental, Social & Governance

 

ESG PERFORMANCE – CSN GROUP

 

Starting in the first quarter of 2023, CSN is introducing a new format for reporting on its actions and ESG performance, providing its ESG performance indicators in an individualized manner. The new model allows stakeholders to access the main results and indicators quarterly and track them effectively and even more quickly. The access can be made through the results center of CSN's IR website:

 

https://ri.csn.com.br/en/financial-information/results-center/

This is the first ESG Performance Report that incorporates performance indicators for CSN Cimentos' new assets, acquired in 2022, meaning that some absolute indicators will undergo significant changes when compared to the previous period when these operations had not yet been incorporated.

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.

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.

 

 
 35

  
   

Capital Markets

 

In the first quarter of 2023, CSN's shares recorded an appreciation of 6.1%, while Ibovespa presented a decline of 7.2%. The daily average value (CSNA3) traded on B3 was R$ 147.1 million in 1Q23. On the New York Stock Exchange (NYSE), the Company's American Depositary Receipts (ADRs) showed a dollar appreciation of 11.2%, while the Dow Jones index rose 0.4%. The average daily trading volume with ADRs (SID) on the NYSE in 1Q23 was US$ 10.0 million.

 

                          1Q23
Number of shares in thousands   1,326,094
Market Value    
Closing Quote (BRL/share)   15.44
Closing Quote (US$/ADR)   3.07
Market Value (BRL million)   20,475
Market Value (US$ million)   4,071
Change in period    
CSNA3 (BRL)   6.1%
SID (USD)   11.2%
Ibovespa (BRL)   -7.2%
Dow Jones (USD)   0.4%
Volume    
Daily average (thousand shares)   8,935
Daily average (BRL thousand)   147,112
Daily average (thousand ADRs)   3,129
Daily average (US$ thousand)   10,001
Source: Bloomberg    
     

 

Result Conference Call:

 

1Q23 Earnings Presentation Webcast Investor Relations Team

Conference Call in Portuguese with Simultaneous Translation into English

04 May of 2023

11:30 a.m. (Brasilia time)

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

EUA DI +1 412 717-9627 / EUA TF +1 844 204-8942

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).

 

 
 36

  
   

 

INCOME STATEMENT

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 

 

 
 37

  
   

BALANCE SHEET

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 


 
 38

  
   

CASH FLOW

CONSOLIDATED – Corporate Law – In Thousands of Reais

 

 

 
 39

(In thousands of reais - R$, unless otherwise stated)

  
   

 

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.

 

All our mining dams are adequately suited to existing environmental legislation.

 

·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.

 

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.

 

 

 
 40

(In thousands of reais - R$, unless otherwise stated)

  
   
·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 March 31, 2023, have been prepared on a going concern basis.

 

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”)

 
 41

(In thousands of reais - R$, unless otherwise stated)

  
   

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 May 3, 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 March 31, 2023, US$1.00 was equivalent to BRL5.0804 (BRL5.2177 on December 31, 2022) and €1.00 was equivalent to BRL5.5244 (BRL5.5694 on December 31, 2022), according to the rates obtained from Central Bank of Brazil website

 

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.

 

 
 42

(In thousands of reais - R$, unless otherwise stated)

  
   

 

3.CASH AND CASH EQUIVALENTS

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Cash and banks              
In Brazil  69,695    85,120    20,137    49,794
Abroad  6,659,478    6,310,338    135,209    136,756
   6,729,173    6,395,458    155,346    186,550
               
Investments              
In Brazil  5,295,245    5,110,749    2,213,205    2,652,855
Abroad  1,648,599    485,149    
   6,943,844    5,595,898    2,213,205    2,652,855
   13,673,017    11,991,356    2,368,551    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
    03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022
Investments (1)    288,595   271,590    16,151    15,675    54,738   22,715        
Usiminas shares (2)   1,251,771    1,184,895         1,251,771    1,184,895        
Bonds (3)            143,406    140,510            143,406    140,510
    1,540,366    1,456,485    159,557    156,185   1,306,509    1,207,610    143,406    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
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Trade receivables              
Third parties              
Domestic market 1,472,063   1,636,804   795,971   860,942
Foreign market 2,169,921   1,720,056   78,512   92,679
  3,641,984   3,356,860   874,483   953,621
Allowance for doubtful debts (227,393)   (232,830)   (124,607)   (122,872)
  3,414,591   3,124,030   749,876   830,749
Related parties (Note 20 a)  132,371   109,134   899,367   1,125,782
  3,546,962   3,233,164   1,649,243   1,956,531

 

 

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

 

 
 43

(In thousands of reais - R$, unless otherwise stated)

  
   
        Consolidated       Parent Company
    03/31/2023   12/31/2022   03/31/2023   12/31/2022
Current   3,277,183   2,934,057    686,761    781,406
Past-due up to 30 days    54,788    163,959    15,070    37,036
Past-due up to 180 days    95,457    54,452    58,048    28,526
Past-due over 180 days    214,556    204,392    114,604    106,653
    3,641,984   3,356,860    874,483    953,621

 

The changes in estimated credit losses are as follows:

 

        Consolidated       Parent Company
    03/31/2023   12/31/2022   03/31/2023   12/31/2022
Opening balance   (232,830)   (236,927)   (122,872)   (133,227)
(Loss)/Reversal estimated   (779)   (87)   (5,118)    1,623
Recovery and write-offs of receivables    6,216    13,197    3,383    8,732
Consolidation in the acquisition of companies     (9,013)    
Closing balance   (227,393)   (232,830)   (124,607)   (122,872)

 

 

6.INVENTORIES

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Finished goods 3,815,626   4,421,166   1,978,765   2,308,211
Work in progress 3,580,304   3,501,145   2,106,059   2,123,539
Raw materials 2,740,227   3,297,213   1,922,317   2,492,779
Storeroom supplies 1,288,865   1,174,244   563,967   474,846
Advances to suppliers 60,537   37,619   49,023   30,170
Provision for losses (110,984)    (96,493)    (18,936)    (16,124)
  11,374,575   12,334,894   6,601,195   7,413,421
               
Classified:              
Current 10,234,004   11,289,229   6,601,195   7,413,421
Non-current (1) 1,140,571   1,045,665        
  11,374,575   12,334,894   6,601,195   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
    03/31/2023   12/31/2022   03/31/2023   12/31/2022
Opening balance   (96,493)   (98,730)   (16,124)   (14,426)
(Estimated losses) / Reversal of inventories with low turnover and obsolescence (14,491)    3,621   (2,812)   (1,698)
Consolidation in the acquisition of companies       (1,384)        
Closing balance   (110,984)   (96,493)   (18,936)   (16,124)

 

 
 44

(In thousands of reais - R$, unless otherwise stated)

  
   
7.RECOVERABLE TAXES

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2021
State Value-Added Tax 1,121,366   1,130,843   792,718   793,761
Brazilian federal contributions (1) 1,955,679   1,862,828   1,131,193   1,094,392
Other taxes 206,192   189,087   120,119   129,002
  3,283,237   3,182,758   2,044,030   2,017,155
               
Classified:              
Current 1,878,824   1,865,626   1,109,755   1,137,460
Non-current 1,404,413   1,317,132   934,275   879,695
  3,283,237   3,182,758   2,044,030   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.

 

The accumulated tax credits arise basically from ICMS, PIS and COFINS credits on purchases of raw materials and fixed assets used in production. The realization of these credits normally occurs through offset with debits of these taxes, generated by sales operations and other taxed expenses.

 

8.OTHER CURRENT AND NON-CURRENT ASSETS

 

Other current and non-current assets are as follows:

 

  Consolidated   Parent Company
  Current Non-current   Current Non-current
  03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022
Judicial deposits (note 18)         537,168   533,664           222,694   231,627
Prepaid expenses 311,686   311,087   51,472   47,109   233,098   244,416   37,718   30,878
Prepaid expenses with sea freight 87,991   36,783                        
Actuarial asset (note 20 a)         35,477   35,477           28,072   28,072
Trading securities 8,592   9,596           8,483   9,488        
Loans with related parties (note 20 a ) 5,427   5,383   1,511,204   1,384,773   5,427   5,383   1,847,268   1,668,382
Other receivables from related parties (note 20 a) 1,858   1,858   1,484,759   1,484,759   141,033   101,695   1,587,331   1,708,667
Eletrobrás bonds and compulsory loan         48,359   58,030           45,825   55,336
Dividends receivables (note 20 a) 77,377   77,377           295,480   295,480        
Employee debts 80,480   59,578           46,226   28,101        
Receivables by indemnity (1)         979,292   974,863           979,292   974,863
Other 225,029   274,838   216,682   231,043       25,627   182,473   192,695
  798,440   776,500   4,864,413   4,749,718   729,747   710,190   4,930,673   4,890,520

 

(1)This is a net, certain and enforceable amount, resulting from the final and unappealable decision of the Court in favor of the Company in 2020, due to losses and damages resulting from the sinking of the voltage in the supply of energy in the periods from January/1991 to June/2002. Additionally, 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

 

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 March 31, 2023.

 

 

 
 45

(In thousands of reais - R$, unless otherwise stated)

  
   
    Equity interests (%)    
Companies   03/31/2023   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 NacionalS.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 (8)    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
             
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
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
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.(1)        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. (1)        10.00   Electric power generation
Ventos do Litoral Energia S.A. (1)        10.00   Electric power generation
Ventos dos índios Energia S.A. (1)        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) 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.

 

 
 46

(In thousands of reais - R$, unless otherwise stated)

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

 

The positions presented as of March 31, 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 03/31/2023
             
             
Investments under the equity method                            
Joint-venture, Joint-operation and Affiliate                            
MRS Logistica   2,054,898        54,374   3       2,109,275
Fair Value MRS    480,622                  480,622
Fair Value MRS amortization    (82,225)       (2,934)           (85,159)
Transnordestina Logística S.A.   1,184,514       (3,677)           1,180,837
Fair Value -Transnordestina    659,106                  659,106
Arvedi Metalfer do Brasil (affiliate)   25,782       246        (2,132)    23,896
Equimac S.A   18,482       480            18,962
Indirect interest in affiliates - CEEE-G (1)    216,307        12,530        (47,611)    181,226
Fair Value indirect participation CEEE-G (2)    359,024       (39,314)            319,710
Fair Value amortization indirect participation CEEE-G    (25,889)        15,957           (9,932)
    4,890,621        37,662   3    (49,743)   4,878,543
                             
Equity interests evaluated by the cost method (3)   41,093                      
Investments at fair value through profit or loss (note 14)   94,700                 42,209    136,909
Others   33,588                  (31,600)    1,988
     169,381                 10,609    179,990
                             
Total shareholdings   5,060,002        37,662   3    (39,134)   5,058,533
                             
Classification of investments in the balance sheet                            
Equity interests   5,060,002                       5,058,533
Investment Property    159,080                        158,313
Total investments in the asset   5,219,082                       5,216,846

(1) In the first quarter of 2023 CEEE-G sold its equity interest in the 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., consequently, these investments were written off in the amount of (R$47,611);

(2) The balance of R$359,024 refers to the fair value generated on the acquisition of CEEE-G. With the disposals mentioned in the item above, the Fair Value in the amount of (R$39,314) was written off, referring to the capital gains of the disposed companies;

(3) Refer to the investments in the companies CSN Inova Ventures, strategic investments were made in startups, as follows: Alinea Health Holdings Ltda. I. Systems Aut. Ind., 2D Materials, H2Pro Ltda., 1S1 Energy, Traive INC., OICO Holdings and Clarke Software which are evaluated by the cost method;

(4) 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
  03/31/2023   03/31/2022
   
Equity in results of affiliated companies      
MRS Logística S.A.  54,374    37,423
Transnordestina  (3,677)    (6,967)
Arvedi Metalfer do Brasil  246    - 
Equimac S.A  480    469
       
Fair Value Amortization (26,291)   (658)
   37,662    30,267
Other adjustments      
Cost of sales (21,240)   (12,229)
To taxes 7,222   4,158
Others  (2,135)    (2,937)
Equity in results  21,509    19,259

 

 
 47

(In thousands of reais - R$, unless otherwise stated)

  
   

 

(1) The operating margin of intercompany transactions with group companies classified as joint ventures 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:

 

                             Parent Company 
Companies   Final balance on 12/31/2022   Capital increase   Dividends    Equity Income    Comprehensive income   Others    Final balance on 03/31/2023 
             
             
                             
Subsidiaries                            
CSN Steel S.L.U.    5,028,262         (79,859)   (28,799)     4,919,604
Sepetiba Tecon S.A.   294,460          426          294,886
Minérios NacionalS.A.   121,242         6,571          127,813
Fair Value - Minérios Nacional    2,123,507                   2,123,507
Companhia Metalúrgica Prada   371,342         (18,112)          353,230
Goodwill - Companhia Metalúrgica Prada    63,509                    63,509
CSN Mineração S.A.    9,086,716          411,370    144,052     9,642,138
CSN Energia S.A.    56,736         3,150          59,886
FTL - Ferrovia Transnordestina Logística S.A.   163,740         (7,526)          156,214
Companhia Florestal do Brasil    1,300,726         (71,702)    666     1,229,690
CBSI - Companhia Brasileira de Serviços de Infraestrutura    29,057         (16,208)          12,849
Goodwill - CBSI - Companhia Brasileira de Serviços de Infraestrutura    15,225                    15,225
CSN Cimentos S.A.    6,991,797         (59,829)         6,931,968
Others   120         1          121
     25,646,439          168,282    115,919      25,930,640
Joint-venture, Joint-operation and Affiliate                            
Itá Energética S.A.   189,513         2,533          192,046
MRS Logística S.A.    1,027,709         27,194   1     1,054,904
Transnordestina Logística S.A.    1,184,512         (3,677)         1,180,835
Fair Value -Transnordestina   659,106                    659,106
Equimac S.A    18,482          480          18,962
Arvedi Metalfer do Brasil (affiliate)    25,783         (1,884)          23,899
     3,105,105         24,646   1     3,129,752
Other participations                            
Fair value investments through profit or loss (note 13)    94,700                 42,210    136,910
Profits on subsidiaries' inventories    (67,640)         51,895         (15,745)
Other investments    28                    28
Total shareholdings    28,778,632          244,823    115,920   42,210    29,181,585
                             
Subsidiaries with unsecured liabilities                            
CSN Islands VII Corp.    (2,661,734)         71,006         (2,590,728)
CSN Inova Ventures    (1,755,949)         (115,135)         (1,871,084)
CSN Islands XII Corp.    (3,340,129)         36,719         (3,303,410)
Estanho de Rondônia S.A.    (76,295)         (7,715)         (84,010)
Total subsidiaries with unsecured liabilities    (7,834,107)         (15,125)         (7,849,232)
                             
Equity Income            229,698          
                             
Classification of investments in the balance sheet                      
Equity interests    28,778,632                    29,181,585
Investment Property   140,143                    139,543
Total active investments    28,918,775                    29,321,128
Provision for Investments with Unsecured Liabilities (liabilities)    (7,834,107)                   (7,849,232)
Total active and passive investments    21,084,668                    21,471,896

 

 
 48

(In thousands of reais - R$, unless otherwise stated)

  
   
9.b)Joint ventures and joint operations financial information

 

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

 

                03/31/2023               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%   47.26%   50.00%   48.75%
Balance sheet                                
 Current Assets                                
Cash and cash equivalents    889,833    2,121   6,003    70,990   867,937    1,164    8,983    46,946
Advances to suppliers   94,301    12,236   1,240    1,297   29,500    21,036    1,384    1,273
Other current assets    849,536    94,488   10,661    21,041    1,351,335    78,777    11,648    30,735
Total current assets   1,833,670    108,845   17,905    93,328    2,248,772    100,977    22,015    78,954
 Non-current Assets                                
Other non-current assets    742,551    220,544    487    18,626   887,987    255,367    1,643.00000    19,007
Investments, PP&E and intangible assets   11,684,062    11,272,258   45,231    317,674   11,541,779    11,029,525    41,709    325,911
Total non-current assets   12,426,613    11,492,802   45,718    336,300   12,429,766    11,284,892    43,352    344,918
Total Assets   14,260,283    11,601,647   63,623    429,628   14,678,538    11,385,869    65,367    423,872
                                 
Current Liabilities                                
Borrowings and financing    856,085    155,950   9,303     735,231    142,073    5,497  
Lease liabilities    482,102     1,195     472,129     701.00000  
Other current liabilities   1,330,687    87,394   3,781    16,487    1,682,928    150,268    5,777    14,326
Total current liabilities   2,668,874    243,344   14,279    16,487    2,890,288    292,341    11,975    14,326
 Non-current Liabilities                                
Borrowings and financing   3,415,867    7,356,384   9,417      3,604,793    7,142,895    14,446  
Lease liabilities   1,803,640      177      1,928,931     630.00000  
Other non-current liabilities    712,364    1,543,827   1,827    19,201   740,892    1,484,884    1,353.00000    18,914
Total non-current liabilities   5,931,871    8,900,211   11,421    19,201    6,274,616    8,627,779    16,429    18,914
Shareholders’ equity   5,659,538    2,458,092   37,923    393,940    5,513,634    2,465,749    36,963    390,632
Total liabilities and shareholders’
equity		   14,260,283    11,601,647   63,623    429,628   14,678,538    11,385,869    65,367    423,872

 

                03/31/2023               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%   47.26%   50.00%   48.75%
Balance sheet                                
 Current Assets                                 
Cash and cash equivalents    889,833    2,121   6,003    70,990   867,937    1,164    8,983    46,946
Advances to suppliers   94,301    12,236   1,240    1,297   29,500    21,036    1,384    1,273
Other current assets    849,536    94,488   10,661    21,041    1,351,335    78,777    11,648    30,735
Total current assets   1,833,670    108,845   17,905    93,328    2,248,772    100,977    22,015    78,954
 Non-current Assets                                 
Other non-current assets    742,551    220,544    487    18,626   887,987    255,367    1,643    19,007
Investments, PP&E and intangible assets   11,684,062    11,272,258   45,231    317,674   11,541,779    11,029,525    41,709    325,911
Total non-current assets   12,426,613    11,492,802   45,718    336,300   12,429,766    11,284,892    43,352    344,918
Total Assets   14,260,283    11,601,647   63,623    429,628   14,678,538    11,385,869    65,367    423,872
                                 
Current Liabilities                                 
Borrowings and financing     856,085    155,950   9,303     735,231    142,073    5,497  
Lease liabilities    482,102     1,195     472,129     701  
Other current liabilities   1,330,687    87,394   3,781    16,487    1,682,928    150,268    5,777    14,326
Total current liabilities   2,668,874    243,344   14,279    16,487    2,890,288    292,341    11,975    14,326
 Non-current Liabilities                                 
Borrowings and financing    3,415,867    7,356,384   9,417      3,604,793    7,142,895    14,446  
Lease liabilities   1,803,640      177      1,928,931     630  
Other non-current liabilities    712,364    1,543,827   1,827    19,201   740,892    1,484,884    1,353    18,914
Total non-current liabilities   5,931,871    8,900,211   11,421    19,201    6,274,616    8,627,779    16,429    18,914
Shareholders’ equity   5,659,538    2,458,092   37,923    393,940    5,513,634    2,465,749    36,963    390,632
Total liabilities and shareholders’
equity		   14,260,283    11,601,647   63,623    429,628   14,678,538    11,385,869    65,367    423,872

 

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, the first amendment to the Concession Agreement was signed, 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:

 

 
 49

(In thousands of reais - R$, unless otherwise stated)

  
   
    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 23)      (767)   (767)     (600)   (600)
Balance at March 31, 2023   101,513    56,800    158,313   94,257    45,286   139,543
Cost   101,513    87,977    189,490   94,257    74,392   168,649
Accumulated depreciation     (31,177)    (31,177)     (29,106)    (29,106)
Balance at March 31, 2023   101,513    56,800    158,313   94,257    45,286   139,543

 

 

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 March 31, 2023, and December 31, 2022 is R$2,055,976 and in the parent company R$1,992,956.

 

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

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   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 (*)   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  (267)   (1,654)   (3,803)   (107)   (495)    (851)    (34)   (7,211)
Acquisitions 223    3,151    52,144    239   687,815   917    1,321    745,810
Capitalized interest (1) (note 25)           44,198        44,198
Write-offs (note 24)      2,223    (4)          (43)    2,176
Depreciation (note 23)   (69,862)   (620,850)    (3,146)       (35,454)   (9,052)   (738,364)
Transfers to other asset categories    109,964    242,343   9    (426,679)      74,363  
Transfers to intangible assets            (2,425)       (2,425)
Right of use - Remesurement                50,924      50,924
Others      (605)       13,128        12,523
Balance at March 31, 2023 485,063   4,492,713    16,196,745   37,873   4,341,092   660,416   264,174   26,478,076
Cost 485,063   8,855,321    36,107,683    284,706   4,341,092    1,090,743    1,253,272   52,417,880
Accumulated depreciation    (4,362,608)   (19,910,938)   (246,833)        (430,327)    (989,098)    (25,939,804)
Balance at March 31, 2023 485,063   4,492,713    16,196,745   37,873   4,341,092   660,416   264,174   26,478,076
                                 
    Parent Company
    Land   Buildings and Infrastructure   Machinery, equipment and facilities   Furniture and fixtures   Construction in progress   Right of use (i)   Other (*)   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   -     -    32,486   -     296,030    3,907   75   332,498
Capitalized interest (1) (note 25)    -    -    -     -     17,505    -     -    17,505
Write-offs (note 24)    -     -     1,902    -    -     -     -    1,902
Depreciation (note 23)    -    (4,393)   (262,565)   (460)   -     (1,802)    (1,491)    (270,711)
Transfers to other asset categories    -     393    203,982    -     (210,782)    -    6,407    
Transfers to intangible assets    -    -    -     -     (406)    -     -     (406)
Others    -    -     (606)    -     15,792    -     -    15,186
Balance at March 31, 2023   25,618    283,746    6,508,341   9,741    1,018,560   13,538   22,915   7,882,459
Cost   25,618    520,765    15,471,835    100,323    1,018,560   41,997    138,555    17,317,653
Accumulated depreciation    -    (237,019)   (8,963,494)    (90,582)   -     (28,459)   (115,640)    (9,435,194)
Balance at March 31, 2023   25,618    283,746    6,508,341   9,741    1,018,560   13,538   22,915   7,882,459

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

 

 
 50

(In thousands of reais - R$, unless otherwise stated)

  
   

- 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 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      (715)    (27)   (109)   (851)
Addition               917    917
Remesurement 4,264   40,430   3,673   2,557   50,924
Depreciation  (6,550)    (4,390)    (18,630)    (5,884)    (35,454)
Transfers to other asset categories  (2,701)   2,340    (1,526)   1,887    
Balance at March 31, 2023 460,061   100,096   66,651   33,608    660,416
Cost  553,220   145,191    275,627    116,705   1,090,743
Accumulated depreciation  (93,159)    (45,095)   (208,976)   (83,097)   (430,327)
Balance at March 31, 2023 460,061   100,096   66,651   33,608    660,416

 

 

    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
Addition   3,907            3,907
Depreciation   (1,543)    (197)    (62)   (1,802)
Transfers to other asset categories    201    (203)   2  
Balance at March 31, 2023    11,965   1,470    103    13,538
Cost    37,414   2,393   2,190    41,997
Accumulated depreciation   (25,449)    (923)    (2,087)   (28,459)
Balance at March 31, 2023    11,965   1,470    103    13,538

 

 

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

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Buildings and Infrastructure 34   34   31   31
Machinery, equipment and facilities 18   18   20   20
Furniture and fixtures 12   12   13   13
Others 11   9   11   12

 

 

11.   INTANGIBLE ASSETS

 

 
 51

(In thousands of reais - R$, unless otherwise stated)

  
   
  Consolidated   Parent Company
  Goodwill   Customer relationships   Software   Trademarks
and
patents		   Rights and licenses (*)   Others   Total   Software   Total
Balance at December 31, 2021  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, 2021  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   (868)   (29)    (1,521)     (19)   (2,437)      
 Acquisitions     929             929      
 Transfer of property, plant and equipment      2,342   83          2,425    406   406
 Amortization (note 23)   (19,407)   (4,969)    (678)   (38,817)        (63,871)    (3,082)   (3,082)
Others     (4)              (4)      
Balance at March 31, 2023  4,131,483    132,209    86,115   223,071   6,149,837   2,381    10,725,096   56,823    56,823
 Cost  4,371,890    747,505    299,518   225,143   6,400,593   2,381    12,047,030    179,153   179,153
 Accumulated amortization  (131,077)   (615,296)   (213,403)    (2,072)   (250,756)       (1,212,604)   (122,330)    (122,330)
 Adjustment for accumulated recoverable value  (109,330)                  (109,330)      
Balance at March 31, 2023  4,131,483    132,209    86,115   223,071   6,149,837   2,381    10,725,096   56,823    56,823

 

(*) 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
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Software 10   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 March 31, 2023.

 

12.BORROWINGS, FINANCING AND DEBENTURES

 

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

 

      Consolidated   Parent Company
      Current Liabilities     Non-current Liabilities    Current Liabilities   Non-current Liabilities 
      03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022 03/31/2023   12/31/2022
                                 
Foreign Debt                                
Floating Rates:                                
Prepayment     831,007    1,571,208    6,429,805    5,474,359   590,844   956,219 1,849,266    1,147,894
Fixed Rates:                                
Bonds, Perpetual bonds, Facility, CCE and ACC      1,563,822    1,189,717    16,091,285    16,790,284   926,316   616,954  508,040   782,655
Intercompany             89,164   43,196 7,777,394    8,216,508
Fixed interest in EUR                                
Intercompany             16,241    858 1,753,255    1,767,536
Facility     120,831   62,187   154,782   166,302        
       2,515,660    2,823,112    22,675,872    22,430,945    1,622,565    1,617,227 11,887,955    11,914,593
                                 
Debt agreements in Brazil                                
Floating Rate Securities in R$:                                
BNDES/FINAME/FINEP, Debentures, NCE and CCB      2,766,548    2,446,840    14,904,752    13,740,051    2,167,915    1,827,077 7,272,611   6,110,174
       2,766,548    2,446,840    14,904,752    13,740,051   2,167,915   1,827,077 7,272,611   6,110,174
Total Borrowings and Financing      5,282,208    5,269,952    37,580,624    36,170,996    3,790,480    3,444,304 19,160,566    18,024,767
Transaction Costs and Issue Premiums      (80,418)    (76,316)    (425,193)    (445,890)    (23,416)    (25,285)  (29,411)    (30,518)
Total Borrowings and Financing + Transaction cost     5,201,790   5,193,636   37,155,431   35,725,106   3,767,064   3,419,019 19,131,155   17,994,249

 

 
 52

(In thousands of reais - R$, unless otherwise stated)

  
   

 

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

 

The following table shows amortization and funding during the period:

 

    Consolidated   Parent Company
    03/31/2023   12/31/2022   03/31/2023   12/31/2022
Opening balance   40,918,742   32,507,522   21,413,268    20,432,844
New debts    3,917,406   20,248,223    2,855,087   9,922,074
Repayment   (1,891,962)    (10,782,858)   (1,260,620)    (8,270,606)
Payments of charges    (614,997)    (2,315,586)    (182,536)    (1,128,874)
Accrued charges (note 25)   805,015   2,595,011   381,311   1,270,946
Consolidation of companies       81,978      
Others (1)    (776,983)    (1,415,548)    (308,291)   (813,116)
Closing balance   42,357,221   40,918,742   22,898,219    21,413,268
                 

 

(1)Including unrealized exchange and monetary variations and funding cost.

 

The Company raised and amortized borrowings, financing and debentures during in the first quarter of 2023, as shown below:

 

                Consolidated
                03/31/2023
Nature   New debts   Maturities   Repayment   Interest payment
Pre-Payment    1,037,451   2023 to 2028   (586,143)   (60,152)
Bonds, ACC, CCE e Facility   679,997   2023 to 2024   (516,549)   (228,719)
BNDES/FINAME/FINEP, Debentures, NCE, Facilitye CCB    2,199,958   2023 to 2025   (789,270)   (326,126)
     3,917,406        (1,891,962)   (614,997)
                 

 

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

 

            Consolidated           Parent Company
            03/31/2023           03/31/2023
    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 6.70% in Euro 4.64%   in Real 15.57%     in Dollar 6.70% in Euro 3.41%   in Real 15.72%  
2023    1,726,715    2,412,604    4,139,319    1,195,630    1,827,325    3,022,955
2024    1,335,385    4,011,575    5,346,960    2,131,225    1,380,789    3,512,014
2025    3,365,493    1,632,185    4,997,678    3,475,192    1,246,386    4,721,578
2026    2,404,266    2,210,583    4,614,849   376,452    1,738,386    2,114,838
2027   775,546    2,204,169    2,979,715        1,758,386    1,758,386
2028 to 2031    12,650,196    2,701,062    15,351,258    3,119,490    1,040,325    4,159,815
After 2031    2,933,931    2,499,122    5,433,053    3,212,531   448,929    3,661,460
     25,191,532    17,671,300    42,862,832    13,510,520    9,440,526    22,951,046

 

 

·      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

 

 
 53

(In thousands of reais - R$, unless otherwise stated)

  
   

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.

 

·Classification of financial instruments

 

                                    Consolidated
Consolidated           03/31/2023       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          13,673,017    13,673,017            11,991,356    11,991,356
Short-term investments   4     1,251,771   288,595    1,540,366       1,184,895   271,590    1,456,485
Trade receivables   5          3,546,962    3,546,962            3,233,164    3,233,164
Dividends and interest on equity   8         77,377    77,377           77,377    77,377
Trading securities   8     8,592      8,592       9,596      9,596
Loans - related parties   8          5,427    5,427            5,383    5,383
Total         1,260,363    17,591,378    18,851,741       1,194,491    15,578,870    16,773,361
                                     
Non-current                                    
Investments   4         159,557    159,557           156,185    156,185
Other trade receivables   8          7,467    7,467            8,059    8,059
Eletrobrás compulsory loan   8         48,359    48,359           58,030    58,030
Receivables by indemnity   8         979,292    979,292           974,863    974,863
Loans - related parties   8          1,511,204    1,511,204            1,384,773    1,384,773
Investments   9      136,910      136,910        94,700      94,700
Total          136,910    2,705,879    2,842,789        94,700    2,581,910    2,676,610
                                     
Total Assets         1,397,273    20,297,257    21,694,530       1,289,191    18,160,780    19,449,971
                                     
Liabilities                                
Current                                    
Borrowings and financing   12          5,282,208    5,282,208            5,269,952    5,269,952
Leases   14         168,336    168,336           177,010    177,010
Trade payables   15          5,854,229    5,854,229            6,596,915    6,596,915
Trade payables -drawee risk   16          4,042,904    4,042,904            5,709,069    5,709,069
Dividends and interest on capital   16         620,447    620,447           611,307    611,307
Derivative financial instruments       350,632          350,632   416,935          416,935
Total       350,632        15,968,124    16,318,756   416,935        18,364,253    18,781,188
                                     
Non-current                                    
Borrowings and financing   12          37,580,624    37,580,624            36,170,996    36,170,996
Leases   14         546,245    546,245           516,836    516,836
Trade payables   15         23,505    23,505           46,269    46,269
Derivative financial instruments   16      106,092      106,092        69,472      69,472
Total          106,092    38,150,374    38,256,466        69,472    36,734,101    36,803,573
                                     
Total Liabilities       350,632    106,092    54,118,498    54,575,222   416,935    69,472    55,098,354    55,584,761

 

 
 54

(In thousands of reais - R$, unless otherwise stated)

  
   
    Parent Company
Parent Company   03/31/2023   12/31/2022
  Notes   Fair value through profit or loss   Measured at amortized cost   Balances   Fair value through profit or loss   Measured at amortized cost   Balances
             
Assets                            
Current                            
Cash and cash equivalents   3        2,368,551    2,368,551        2,839,405    2,839,405
Short-term investments   4   1,251,771   54,738    1,306,509   1,184,895   22,715    1,207,610
Trade receivables   5        1,649,243    1,649,243        1,956,531    1,956,531
Dividends and interest on equity   8       295,480    295,480       295,480    295,480
Trading securities   8   8,483      8,483   9,488      9,488
Loans - related parties   9        5,427    5,427        5,383    5,383
Total       1,260,254    4,373,439    5,633,693   1,194,383    5,119,514    6,313,897
                           
Non-current                          
Investments   4       143,406    143,406       140,510    140,510
Other trade receivables   8        1,003    1,003        1,003    1,003
Eletrobrás compulsory loan   8       45,825    45,825       55,336    55,336
Receivables by indemnity   8       979,292    979,292       974,863    974,863
Loans - related parties   8        1,847,268    1,847,268        1,668,382    1,668,382
Investments   9    136,910      136,910    94,700      94,700
Total        136,910    3,016,794    3,153,704    94,700    2,840,094    2,934,794
                             
Total Assets       1,397,164    7,390,233    8,787,397   1,289,083    7,959,608    9,248,691
                             
Liabilities                          
Current                          
Borrowings and financing   12        3,790,480    3,790,480        3,444,304    3,444,304
Leases   14       11,388    11,388        8,451    8,451
Trade payables   15        3,149,636    3,149,636        3,684,793    3,684,793
Trade payables -drawee risk   16        3,559,084    3,559,084        5,318,425    5,318,425
Dividends and interest on capital   16       604,888    604,888       598,267    598,267
Total            11,115,476    11,115,476        13,054,240    13,054,240
                             
Non-current                          
Borrowings and financing   12        19,160,566    19,160,566        18,024,767    18,024,767
Derivative financial instruments   16    54,452      54,452    58,005      58,005
Leases   14        3,745    3,745        4,729    4,729
Trade payables   15       11,841    11,841       14,352    14,352
Total        54,452    19,176,152    19,230,604    58,005    18,043,848    18,101,853
                             
Total Liabilities        54,452    30,291,628    30,346,080    58,005    31,098,088    31,156,093

 

 

·Fair value measurement

 

The following table shows the financial instruments recorded at fair value through profit or loss, classifying them according to the fair value hierarchy:

 

 
 55

(In thousands of reais - R$, unless otherwise stated)

  
   
Consolidated           03/31/2023           12/31/2022
  Level 1   Level 2   Balances   Level 1   Level 2   Balances
Assets                        
Current                        
Financial investments   1,251,771        1,251,771   1,184,895        1,184,895
Trading securities   8,592        8,592   9,596        9,596
Non-current                    
Investments    136,910        136,910    94,700        94,700
Total Assets   1,397,273        1,397,273   1,289,191        1,289,191
                         
Liabilities                        
Current                        
Derivative financial instruments                 416,935    416,935
Non-current                        
Derivative financial instruments       106,092    106,092       69,472    69,472
Total Liabilities       106,092    106,092       486,407    486,407

 

Level 1 - Data prices are quoted in an active market for items identical to the assets and liabilities being measured.

 

Level 2 - Consider inputs observable in the market, such as interest rates, exchange rates, etc., but are not prices negotiated in active markets.

 

Level 3 - There are no assets and liabilities classified as level 3.

 

13.b)Financial risk management

 

The Company uses risk management strategies with guidance on the risks incurred by us.

The nature and general position of financial risks are regularly monitored and managed in order to assess results and the financial impact on cash flow. Credit limits and hedge quality of counterparties are also reviewed periodically.

 

Market risks are hedged when we consider necessary to support the corporate strategy or when it is necessary to maintain the level of financial flexibility.

 

We are exposed to exchange rate, interest rate, market price and liquidity risks.

 

The Company may manage some of the risks through the use of derivative instruments not associated with any speculative trading or short selling.

 

·Exchange rate risk

 

The exposure arises from the existence of assets and liabilities denominated in Dollar or Euro, since the Company’s functional currency is substantially the Real and is referred to as natural exchange exposure. The net exposure is the result of the offsetting of the natural exchange exposure by the instruments of hedge adopted by CSN.

 

The consolidated net exposure as of March 31, 2023, is shown below.

 

    03/31/2023   12/31/2022
Foreign Exchange Exposure   (Amounts in US$’000)   (Amounts in US$’000)
Cash and cash equivalents overseas    1,472,762    1,191,036
Trade receivables    371,460   315,920
Financial investments    28,227    26,930
Borrowings and financing    (4,739,528)   (4,594,471)
Trade payables   (349,155)    (366,149)
Others   (18,618)   (23,079)
Natural Gross Foreign Exchange Exposure (assets - liabilities)   (3,234,852)   (3,449,813)
Cash flow hedge accounting    4,229,770    4,409,760
Exchange rate swap CDI x Dollar    (67,000)   (67,000)
Exchange rate swap Real x Dollar   (115,000)    (115,000)
Net foreign exchange exposure    812,918   777,947

 

 

 
 56

(In thousands of reais - R$, unless otherwise stated)

  
   

 

CSN uses Hedge Accounting strategy, as well as derivative financial instruments to protect future cash flows.

 

Sensitivity analysis of Derivative Financial Instruments and Consolidated Foreign Exchange Exposure

 

The Company considered scenarios 1 and 2 to be 25% and 50% deterioration for currency volatility, using the exchange rate closing rate as of March 31, 2023, as a reference.

 

The currencies used in the sensitivity analysis and their respective scenarios are shown below:

 

                03/31/2023
Currency   Exchange rate   Probable scenario   Scenario 1   Scenario 2
USD    5.0804   5.0595   6.3505   7.6206
EUR    5.5244   5.5791   6.9055   8.2866
USD x EUR    1.0874   1.1027   1.3593   1.6311

 

 

The effects on the result, considering scenarios 1 and 2, are shown below:

 

                    03/31/2023
Instruments   Notional   Risk   Probable scenario (*) R$   Scenario 1 R$   Scenario 2 R$
                     
Gross exchange position    (3,234,852)   Dollar    67,608    (4,108,586)   (8,217,171)
                     
Cash flow hedge accounting   4,229,770   Dollar   (88,402)   5,372,231    10,744,462
                     
Exchange rate swap CDI x Dollar    (67,000)   Dollar    1,400    (85,097)    (170,193)
                     
Exchange rate swap Real x Dollar    (115,000)   Dollar    2,404    (146,062)    (292,123)
                     
Net exchange position   812,918   Dollar   (16,990)   1,032,486    2,064,975

 

(*) The probable scenarios were calculated considering the following variations for the risks: Real x Dollar – valuation of the Real by 0.41% / Real x Euro - devaluation of the Real by 0.99% / Euro x Dollar – devaluation of the dollar by 1.4%. Source: Central Bank of Brazil and European Central Bank quotations on April 24, 2023.

 

·Interest rate risk

 

This risk arises from financial investments, borrowings and financing and debentures linked to the fixed and floating interest rates of the CDI, TLP and LIBOR, exposing these financial assets and liabilities to interest rate fluctuations as shown in the sensitivity analysis table below.

 

 

With the modification of the global financial market in recent years and in line with the recommendations of international regulatory bodies, the market began to transition from the Libor rate (London Interbank Offered Rate) to the SOFR (Secured Overnight Financing Rate) as of 2022. The Company has not yet migrated its contracts to SOFR, as it is awaiting guidance from the financial market to transition the rate of its contracts.

 

Sensitivity analysis of changes in interest rates

 

We present below the sensitivity analysis for interest rate risks. The Company considered scenarios 1 and 2 to be 25% and 50% deterioration for interest rate volatility using the closing rate as of March 31, 2023, as a reference.

 

The interest rates used in the sensitivity analysis and their scenarios are shown below:

 

 
 57

(In thousands of reais - R$, unless otherwise stated)

  
   
            Consolidated
            03/31/2023
Interest   Interest rate   Scenario 1   Scenario 2
CDI   13.65%   17.06%   20.48%
TJLP   7.37%   9.21%   11.06%
LIBOR   5.31%   6.64%   7.97%
SELIC   13.75%   17.19%   20.63%

 

The effects on profit and loss, considering scenarios 1 and 2, are shown below:

 

                        Consolidated
Changes in interest rates   % p.a   Assets   Liabilities   Probable scenario (*)   Scenario 1   Scenario 2
CDI   13.65   5,222,341    (15,489,369)   (11,668,477)   (12,018,840)   (12,369,202)
TJLP   7.37       (1,127,321)    (1,210,405)   (1,231,175)   (1,251,946)
Libor   5.31       (7,202,992)    (7,585,687)   (7,681,361)   (7,777,034)
Selic   13.75        (15,384)   (17,499)    (18,028)    (18,557)

 

(*) The sensitivity analysis is based on the premise of maintaining the market values as of March 31, 2023 as a probable scenario recorded in the company´s assets and liabilities.

 

·Market price risk

 

The Company is also exposed to market risks related to the volatility of commodity and input prices. In line with its risk management policy, risk mitigation strategies involving commodities can be used to reduce cash flow volatility. These mitigation strategies may incorporate derivative instruments, predominantly forward transactions, futures, and options.

 

Below are the instruments for price risk protection, as shown in the following topics:

 

a) Cash flow hedge accounting - “Platts” index

 

The Company had derivative operations for iron ore, contracted by the subsidiary CSN Mineração, with the objective of reducing the volatility of its exposure to the commodity.

 

In order to better reflect the accounting effects of the Platts hedge strategy in the result, CSN Mineração opted to make the formal designation of the hedge and consequently adopted hedge accounting of the iron ore derivative as a hedge accounting instrument of its highly probable future iron ore sales. With this, the mark-to-market resulting from the volatility of Platts will be temporarily recorded in shareholders' equity and will be taken to the result when the referred sales occur according to the contracted period of assessment, thus allowing the recognition of the volatility of Platts on the sales of iron ore to be recognized at the same moment.

 

The table below shows the result of the derivative instrument until March 31, 2023:

 

                03/31/2023   03/31/2023   03/31/2022   03/31/2023   03/31/2022   03/31/2023   03/31/2022
        Appreciation (R$)   Fair value (market)   Other income and expenses (note 24)   Other comprehensive income   Exchange variation
Maturity   Notional   Asset position   Liability position   Amounts receivable / (payable)      
05/31/2022 (Settled)   Platts   -    -    -    -     -    -     3,739   -     (202)
01/01/2023 to 01/31/2023 (Settled)   Platts   -    -      (196,908)    -    -    -    (1,107)    - 
02/01/2023 to 02/28/2023 (Settled)   Platts   -    -      (212,418)    -    -    -     2,423    - 
03/01/2023 to 03/31/2023   Platts    754,049   (913,151)   (159,102)   (158,699)    -    -    -     1,982    - 
04/01/2023 to 04/30/2023   Platts   1,050,064    (1,128,526)   (78,463)   -     -    (81,454)   -     2,991    - 
05/01/2023 to 05/31/2023   Platts   1,152,081    (1,219,234)   (67,153)   -     -    (69,346)   -     2,193    - 
06/01/2023 to 06/30/2023   Platts   1,222,128    (1,285,656)   (63,528)   -     -    (65,514)   -     1,986    - 
07/01/2023 to 07/31/2023   Platts    358,387   (355,608)    2,779   -     -     2,912   -     (133)    - 
08/01/2023 to 08/31/2023   Platts    192,217   (185,287)    6,930   -     -     7,193   -     (263)    - 
09/01/2023 to 09/30/2023   Platts    191,379   (183,474)    7,905   -     -     8,205   -     (299)    - 
        4,920,304    (5,270,936)   (350,632)   (568,025)    -    (198,004)    3,739    9,773    (202)

 

 
 58

(In thousands of reais - R$, unless otherwise stated)

  
   

The changes in the amounts related to cash flow hedge accounting - Platts index recorded in shareholders' equity on March 31, 2023, are shown as follows:

 

               
  12/31/2022   Movement   Realization   03/31/2023
Cash flow hedge accounting–“Platts” 341,269    424,760   (568,025)    198,004
 Income tax and social contribution on cash flow hedge accounting  (116,031)   (144,418)    193,129   (67,321)
Fair Value of cash flow accounting - Platts, net 225,238    280,342   (374,897)    130,683

 

The cash flow hedge accounting - Platts index - has been fully effective since the derivative instruments were contracted.

 

To support the above-mentioned designations, the Company prepared formal documentation indicating how the designation of cash flow hedge accounting - Platts index is aligned with CSN's risk management objective and strategy, identifying the hedge instruments used, the hedge object, the nature of the risk to be protected and demonstrating the expectation of high effectiveness of the relations designated. Iron ore derivative instruments (“Platts” index) were designated in amounts equivalent to the portion of future sales, comparing the amounts designated with the amounts expected and approved in the Management and Board budgets.

 

Sensitivity analysis for Platts price risks

 

We present below the sensitivity analysis for Platts price risks. The Company considered scenarios 1 and 2 to be 25% and 50% devaluation in the share price using the closing rate on March 31, 2023, as a reference.

 

The effects on the result, considering probable scenarios 1 and 2, are shown below:

 

     
 Maturity    Probable scenario (*) R$    Scenario 1 R$    Scenario 2 R$
04/01/2023 to 04/30/2023    (222,800)   (278,500)    (334,200)
05/01/2023 to 05/31/2023    (243,320)   (304,150)    (364,980)
06/01/2023 to 06/30/2023    (259,202)   (324,003)    (388,804)
07/01/2023 to 07/31/2023   (72,424)    (90,530)    (108,636)
08/01/2023 to 08/31/2023   (38,118)    (47,648)   (57,177)
09/01/2023 to 09/30/2023   (38,118)    (47,648)   (57,177)
     (873,982)    (1,092,478)   (1,310,973)

 

(*) The probable scenario was calculated considering the Platts quotation for maturities from April 01, 2023 to September 30, 2023.

 

b) Cash flow hedge accounting

 

Foreign exchange hedge

 

The Company and its subsidiary CSN Mineração formally designates relations of hedge of cash flows to protect highly probable future flows exposed to the dollar related to sales made in dollars.

 

With the objective of better reflecting the accounting effects of the hedge exchange rate in the result, CSN and its subsidiary CSN Mineração designated part of their dollar liabilities as an instrument of future hedge exports. As a result, the exchange rate variation resulting from the designated liabilities will be temporarily recorded in shareholders’ equity and will be reflected in the income statement when said exports occur, thus allowing the recognition of dollar fluctuations on liabilities and on exports to be recorded at the same time. It is noteworthy that the adoption of this hedge accounting does not imply the contracting of any financial instrument.

 

The table below presents a summary of the relations of hedge as of March 31, 2023:

 

 
 59

(In thousands of reais - R$, unless otherwise stated)

  
   
                                    03/31/2023
Designation Date   Hedging Instrument   Hedged item   Type of hedged risk   Hedged period   Exchange rate on designation   Designated amounts (US$’000)   Amortizated part (USD'000)   Effect on Result (*) (R$'000)   Impact on Shareholders' equity (R$'000)
2/4/2018   Bonds   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    July 2018 - February 2023    3.3104    1,170,045    (1,170,045)   (281,258)    - 
07/31/2019   Bonds and Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    January 2020 - April 2026    3.7649    1,342,761   (871,761)   (57,873)   (619,601)
10/1/2020   Bonds   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    March 2027 - January 2028    4.0745    1,416,000    (1,287,000)    -     (1,344,361)
01/28/2020   Bonds   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    March 2027 - January 2028    4.2064    1,000,000    -     -    (874,000)
1/6/2022   Bonds and Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    June 2022 - April 2032    4.7289    1,145,300   (88,800)   (12,697)   (371,360)
1/6/2022   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    June 2022 - May 2033    4.7289   878,640   (10,000)    (1,375)    (21,312)
1/12/2022   Bonds   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    December 2022 - June 2031    5.0360   490,000           5,034
1/12/2022   Advance on foreign exchange contract   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    December 2022 - November 2023    5.1643    60,000           17,610
1/12/2022   Advance on foreign exchange contract   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    December 2022 - December 2025    5.2565   100,000           9,280
1/12/2022   Advance on foreign exchange contract   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    December 2022 - January 2024    5.2660    50,000           4,932
1/12/2022   Advance on foreign exchange contract   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    December 2022 - November 2023    5.3270    20,000   (85,370)    (9,295)   (278,834)
1/12/2022   Export prepayments in US$ to third parties   Part of the highly probable future monthly iron ore exports   Foreign exchange - R$ vs. US$ spot rate    December 2022 - June 2027    5.0360    70,000            (3,108)
Total                        7,742,746    (3,512,976)   (362,498)    (3,475,720)

 

(*) The realization of Hedge accounting cash flow is recognized in Other operating income and expenses, note 24.

 

The net balance of amounts designated and already amortized in dollars totals US$4,229,776.

 

In the hedging relationships described above, the amounts of the debt instruments were fully designated for equivalent iron ore export portions.

 

As of March 31, 2023, the hedging relationships established by the Company were effective according to the retrospective and prospective tests performed. Thus, no reversal for cash flow hedge accounting ineffectiveness was recognized.

 

c) Net investment hedge in foreign subsidiaries

 

The information related to the net investment hedge did not change in relation to that disclosed in the Company's interim financial information as of December 31, 2022. The balance recorded as of March 31, 2023 and December 31, 2022 is R$6,293.

 

d) Hedge accounting movements

 

The changes in the amounts related to cash flow hedge accounting recorded in shareholders’ equity as of March 31, 2023 are shown as follows:

 

  Consolidated
  12/31/2022   Movement   Realization   03/31/2023
Cash flow hedge accounting  4,434,697    (596,479)   (362,498)    3,475,720
Income tax and social contribution on cash flow hedge accounting (1,507,797)   202,803    123,249   (1,181,745)
Fair Value of cash flow accounting, net taxes  2,926,900    (393,676)   (239,249)    2,293,975
               
  Parent Company
  12/31/2022   Movement   Realization   03/31/2023
Cash flow hedge accounting  4,022,353    (475,375)   (353,203)    3,193,775
Income tax and social contribution on cash flow hedge accounting (1,367,600)   161,628    120,089   (1,085,883)
Fair Value of cash flow accounting, net taxes  2,654,753    (313,747)   (233,114)    2,107,892

 

 
 60

(In thousands of reais - R$, unless otherwise stated)

  
   
·Credit risk

 

The exposure to credit risks of financial institutions considers the parameters established in the financial policy. The Company practices a detailed analysis of the financial situation of its customers and suppliers, the determination of a credit limit and the permanent monitoring of its outstanding balance.

 

With regard to financial investments, the Company only invests in institutions with low credit risk assessed by credit rating agencies. Since part of the funds is invested in repo operations that are backed by Brazilian government bonds, there is also exposure to the credit risk of the country.

 

As for the exposure to credit risk in accounts receivable and other receivables, the Company has a credit risk committee, in which each new customer is analyzed individually regarding their financial condition, before granting the credit limit and payment terms, and periodically reviewed based on procedures and circumstances of each business area.

 

·Liquidity risk

 

It is the risk that the Company may not have sufficient net funds to honor its financial commitments as a result of the mismatch of term or volume between expected receipts and payments.

 

Future receipt and payment premises are established to manage cash liquidity in domestic and foreign currencies, which are monitored on a day-to-day basis by the Treasury Department. The payment schedules for long-term installments of borrowings, financing and debentures are shown in note 12.

 

The following are the contractual maturities of financial liabilities including interest.

 

  Consolidated
At March 31, 2023 Less than one year   From one to two years   From two to five years   Over five years   Total
Borrowings, financing and debentures (note 12)  5,282,208    9,200,893    15,500,468    12,879,263    42,862,832
Lease Liabilities (note 14) 168,336   189,585   136,069   220,591   714,581
Derivative financial instruments (note 13 a)   106,092       106,092
Trade payables (note 15)  5,854,229    18,013    5,305   187    5,877,734
Trade payables - Drawee Risk (note 16)  4,042,904          4,042,904
Dividends and interest on equity (note 16) 620,447         620,447
   15,968,124    9,514,583    15,641,842    13,100,041    54,224,590

 

IV - Fair values of assets and liabilities in relation to the book value

 

Financial assets and liabilities measured at fair value through profit or loss are recorded in current and non-current assets and liabilities and gains and losses are recorded as financial income and expenses, respectively.

 

The amounts are recorded in the interim financial information at their book values, which are substantially similar to those that would be obtained if they were traded on the market. The fair values of other long-term assets and liabilities do not differ significantly from their book values, except for the amounts below.

 

The estimated fair value for certain consolidated long-term borrowings and financing was calculated at current market rates, considering the nature, term and risks similar to those of the registered contracts, as follows:

 

      03/31/2023       12/31/2022
  Closing Balance   Fair value   Closing Balance   Fair value
Fixed Rate Notes  15,248,953    13,162,059    15,656,088    13,782,836

 

(*) Source: Bloomberg

 

13.c)Protection instruments: Derivatives

 

· Derivative financial instruments portfolio position

 

Swap exchange rate CDI x Dollar

 
 61

(In thousands of reais - R$, unless otherwise stated)

  
   

 

The Company has derivative transactions to protect its debt in NCE raised in September 2019 with maturity in October 2023 in the amount of US$67 million (equivalent to R$278 million) at a cost compatible with that usually practiced by the Company.

 

Swap exchange rate Real x Dollar

 

The subsidiary CSN Cimentos, after contracting a borrowing in foreign currency of US$115,000, contracted derivative operations to protect its exposure to the dollar, maturing on June 10, 2027.

 

Swap exchange rate CDI x IPCA

 

The subsidiaries CSN Mineração and CSN Cimentos issued debentures during 2021 and 2022, respectively, and entered derivative transactions to hedge their exposure to the IPCA. CSN Mineração's contracts have maturities scheduled from 2031 to 2037, while CSN Cimentos' contracts mature in 2032.

 

Below is the position of the derivatives:

 

                                 
                            03/31/2023   03/31/2022
                Appreciation (R$)   Fair value (market)   Impact on financial income (expenses) (note 25)
Instrument   Maturity   Functional Currency   Notional amount   Asset position   Liability position   Amounts receivable / (payable)  
Exchange rate swap                                
                                 
Exchange rate swap CDI x Dollar    10/02/2023    Dollar    67,000   283,214   (337,667)    (54,453)   18,893   65,396
Exchange rate swap Real x Dollar   06/10/2027    Dollar    115,000   613,678   (665,317)    (51,639)    (40,172)    (80,748)
Total Swap            282,000   896,892   (1,002,984)    (106,092)    (21,279)    (15,352)
                               
Interest rate swap                              
Interest rate (Debentures) CDI x IPCA   07/15/2031    Real    576,448   623,215   (628,123)    (4,908)   13,868   4,147
Interest rate (Debentures) CDI x IPCA   07/15/2032    Real    745,000   825,106   (831,256)    (6,150)    (2,226)    
Interest rate (Debentures) CDI x IPCA   07/15/2036    Real    423,552   453,359   (475,562)    (22,203)   20,287    751
Interest rate (Debentures) CDI x IPCA   07/15/2037    Real    655,382   698,717   (700,739)    (2,022)    (18,089)    
Interest rate (Debentures) CDI x IPCA   02/16/2032    Real    600,000   666,304   (644,065)   22,239   6,554   23,764
Interest rate (Debentures) CDI x IPCA   02/12/2032    Real    600,000   666,153   (643,613)   22,540   22,749   14,206
Total interest rate (Debentures) CDI x IPCA            3,600,382    3,932,854   (3,923,358)   9,496   43,143   42,868
                                 
                 4,829,746   (4,926,342)    (96,596)   21,864   27,516

 

·Classification of derivatives in the balance sheet and income statement

 

            03/31/2023   03/31/2022
Instruments   Liabilities   Financial income (expenses), net (note 25)
  Non-current   Total  
Exchange rate swap Real x Dollar   (51,639)   (51,639)   (40,172)   (80,748)
Exchange rate swap CDI x Dollar   (54,453)   (54,453)    18,893    65,396
Iron ore derivative    (350,632)   (350,632)    9,773    (202)
Interest rate swap CDI x IPCA    9,496    9,496    43,143    42,868
     (447,228)   (447,228)    31,637    27,314

 

 

Derivative instruments Swap CDI x IPCA are fully classified in the borrowings and financing group, since they are linked to debentures in order to protect exposure to the IPCA.

 

13.d)Investments in securities measured at fair value through profit or loss

 

The Company has common shares (USIM3), preferred shares (USIM5) of Siderúrgica de Minas Gerais S.A. (“Usiminas”) and shares of Panatlântica S.A. (PATI3), which are designated as fair value through profit or loss.

 

Usiminas shares are classified as current assets in financial investments and Panatlântica shares are classified as non-current assets under the investment line item. They are recorded at fair value, based on the market price quote in B3.

 

 
 62

(In thousands of reais - R$, unless otherwise stated)

  
   

In accordance with the Company’s policy, the gains and losses arising from the variation in the share price are recorded directly in the income statement as financial result in the case of financial investments, or as other operating income and expenses in the case of long-term investments.

 

                                         
Class of shares   03/31/2023   12/31/2022   03/31/2023   03/31/2022
  Quantity   Equity interest (%)   Share price   Closing Balance   Quantity   Equity interest (%)   Share price   Closing Balance   Profit or loss (notes 24 and 25)
USIM3    106,620,851   15.12%   7.97   849,768    106,620,851   15.12%   7.41   790,061    59,707   (156,733)
USIM5    55,144,456   10.07%   7.29   402,003    55,144,456   10.07%   7.16   394,834    7,169   (65,622)
                 1,251,771               1,184,895    66,876   (222,355)
PATI3    2,705,726   11.31%   50.60   136,910    2,705,726   11.31%   35.00   94,700    42,210    12,608
                 1,388,681               1,279,595    109,086   (209,747)

 

 

·Stock market price risks

 

The Company is exposed to the risk of changes in the stock price due to the investments measured at fair value through profit or loss that have their quotations based on the market price on the B3.

 

Sensitivity analysis for stock price risks

 

We present below the sensitivity analysis for the stock price risks. The Company considered scenarios 1 and 2 with 25% and 50% devaluation in the stock price using as reference the closing price on March 31, 2023. The probable scenario considered a 5% devaluation in the stock price.

 

The effects on the result, considering probable scenarios, 1 and 2 are demonstrated below:

 

        03/31/2023
Class of shares   Probable scenario   Scenario 1   Scenario 2
    5%   25%   50%
 USIM3          (42,488)        (212,442)         (424,884)
 USIM5          (20,100)        (100,501)         (201,002)
 PATI3            (6,845)          (34,227)           (68,455)

 

 

13.e)Capital management

 

The Company seeks to optimize its capital structure in order to reduce its financial costs and maximize the return to its shareholders. The table below shows the evolution of the Company’s consolidated capital structure, with financing by equity and third-party capital:

 

Thousands of reais   03/31/2023   12/31/2022
Shareholder's equity (equity)          21,692,851          21,816,044
Borrowings and Financing (Third-party capital)          42,357,221          40,918,742
Gross Debit/Shareholder's equity                    1.95                    1.88

 

 

14.   LEASE LIABILITIES

 

Lease liabilities are shown below:

 

 
 63

(In thousands of reais - R$, unless otherwise stated)

  
   
      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Leases 1,920,807   1,916,636   16,214   14,306
Present value adjustment - Leases  (1,206,226)    (1,222,790)    (1,081)    (1,126)
   714,581    693,846   15,133   13,180
Classified:              
Current  168,336    177,010   11,388   8,451
Non-current  546,245    516,836   3,745   4,729
   714,581    693,846   15,133   13,180

 

 

The Company has lease agreements for port terminals in Itaguaí, the Solid Bulk Terminal - TECAR, used for loading and unloading iron ores and others and the Container Terminal - TECON, with remaining terms of 24 and 28 years, respectively, and lease agreement for railway operation using the Northeast network with a remaining term of 7 years.

 

Additionally, the Company has operating equipment lease agreements, used mainly in the mining and steel operations, and real estate, used as operating facilities and administrative and sales offices, in several locations where the Company operates, with remaining terms of 1 to 12 years.

 

The present value of the future obligations was measured using the implicit rate observed in the contracts and for the contracts that did not have a rate, the Company applied the incremental borrowing rate - IBR, both in nominal terms.

 

The movement of lease liabilities is shown in the table below:

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Opening balance 693,846   611,551    13,180    17,941
New leases 978    29,633    3,907    2,808
Present Value Adjustments - New leases  (61)   (3,300)      (508)
Contract review  50,924    99,419       201
Write-off    (781)      
Payments (48,876)    (155,995)   (2,250)   (8,836)
Interest appropriated  19,032    69,510   296    1,574
Acquisition of companies    45,352    
Exchange variation (1,262)   (1,543)    
Net balance 714,581   693,846    15,133    13,180

 

 

The estimated future minimum payments for the lease agreements include determinable variable payments, which are certain to occur, based on minimum performance and contractually fixed rates.

 

As of March 31, 2023, the expected minimum payments are the following:

 

              Consolidated
  Less than one year   Between one and five years   Over five years   Total
 Leases 175,000   449,023    1,296,784    1,920,807
 Present value adjustment - Leases  (6,664)    (123,369)   (1,076,193)   (1,206,226)
  168,336   325,654   220,591   714,581

 

 

·Recoverable PIS / COFINS

 

Lease liabilities were measured at the amount of consideration with suppliers, that is, without considering the tax credits incurred after payment. The potential right of PIS and COFINS embedded in the lease liability is shown below.

 

 
 64

(In thousands of reais - R$, unless otherwise stated)

  
   
      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Leases  1,806,242    1,835,101    15,453    13,466
Present value adjustment - Leases (1,204,481)   (1,221,378)   (1,034)   (1,066)
Potencial PIS and COFINS credit 167,077   169,747    1,429    1,246
Present value adjustment – Potential PIS and COFINS credit  (111,414)    (112,977)    (96)    (99)

 

 

·Lease payments not recognized as a liability:

 

The Company chose not to recognize lease liabilities in contracts with a term of less than 12 months and for low value assets. Payments made for these contracts are recognized as expenses when incurred.

 

The Company has contracts for the right to use ports (TECAR) and railways (FTL) which, even if they establish minimum performance, it is not possible to determine its cash flow since these payments are fully variable and will only be known when they occur. In such cases, payments will be recognized as expenses when incurred.

 

The expenses related to payments not included in the measurement of the lease liability during the period are:

 

      Consolidated       Parent Company
  03/31/2023   03/31/2022   03/31/2023   03/31/2022
 Contract less than 12 months       465      
 Lower Assets value 3,211    880   1,667   255
 Variable lease payments 1,842   81,836    -    314
  5,053   83,181   1,667   569

 

 

15.   TRADE PAYABLES

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Trade payables  5,960,262    6,723,077   3,222,867   3,750,724
(-) Adjustment present value  (82,528)    (79,893)    (61,390)    (51,579)
   5,877,734    6,643,184    3,161,477    3,699,145
               
               
Classified:              
Current  5,854,229    6,596,915    3,149,636    3,684,793
Non-current 23,505   46,269   11,841   14,352
   5,877,734    6,643,184    3,161,477    3,699,145

 

 

16.OTHER PAYABLES

 

The other payables classified in current and non-current liabilities are comprised as follows:

 

  Consolidated   Parent Company
  Current Non-current   Current Non-current
  03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022
Payables to related parties (note 20 a) 82,588   109,087   34,236   53,356   382,423   406,583   16,141   41,694
Derivative financial instruments (note 13 a) 350,632   416,935   106,092   69,472           54,452   58,005
Dividends and interest on capital 620,447   611,307           604,888   598,267        
Advances from customers (1) 1,094,442   1,120,072   3,335,052   943,919   96,549   83,300        
Taxes in installments 244,696   280,721   222,888   184,106   6,987   9,173   61,807    
Profit sharing - employees 274,432   266,705           149,600   136,909        
Taxes payable         10,991   10,925           9,028   8,962
Provision for consumption and services 253,769   241,965           135,817   110,910        
Third party materials in our possession 217,923   303,858           201,245   286,805        
Trade payables - Drawee Risk and forfaiting (2) 4,042,904   5,709,069           3,559,084   5,318,425        
Trade payables (note 15)     23,505   46,269           11,841   14,352
Lease Liabilities (note 14)  168,336    177,010   546,245   516,836   11,388   8,451   3,745   4,729
Other payables  116,691    81,922   343,638   391,535    26,588    2,358   21,248   21,248
  7,466,860   9,318,651   4,622,647   2,216,418    5,174,569    6,961,181   178,262   148,990

 

 
 65

(In thousands of reais - R$, unless otherwise stated)

  
   

(1) Advances from Customers: On December 31, 2022 the subsidiaries CSN Mineração and CSN Cimentos entered into advance contracts for the sale of electricity with national operators in the sector to be executed up to 8 years. Additionally, the subsidiary CSN Mineração S.A. received in advance the total amount of US$500 million (R$2,599) referring to supply contracts of approximately 13 million tons of iron ore signed with a major international player, to be executed within 4 years, with supply expected to begin in 2024.

 

(2) The Company classifies drawee risk and forfaiting transactions with suppliers under other liabilities. These transactions are negotiated with financial institutions by which suppliers to anticipate receivables arising from sales of goods and, consequently, lengthen the payment terms of the Company's own obligations. The actual anticipation of receivables depends on the acceptance by its suppliers, since their participation is not compulsory. The Company is not reimbursed and/or benefited by the financial institution for discounts for payment executed before the due date agreed with the supplier, there is no alteration in the degree of subordination of the title in the case of judicial execution and no alteration in the existing commercial conditions between the Company and its suppliers.

 

17.INCOME TAX AND SOCIAL CONTRIBUTION

 

17.a) Income tax and social contribution recognized in profit or loss:

 

The income tax and social contribution recognized in net income for the period are as follows:

 

              Parent Company
  03/31/2023   03/31/2022   03/31/2023   03/31/2022
Income tax and social contribution income (expense)            
Current (357,393)   (577,715)    (13,988)   (112,383)
Deferred  143,951   (488,439)   88,060   (505,185)
  (213,442)    (1,066,154)   74,072   (617,568)

 

 

The reconciliation of income tax and social contribution expenses and income of the consolidated and parent company and the product of the current tax rate on income before income tax and social contribution are shown below:

 

  Consolidated   Parent Company
  03/31/2023   03/31/2022   03/31/2023   03/31/2022
Income before income tax and social contribution (609,106)   2,430,097    (1,000,468)   1,823,970
Tax rate 34%   34%   34%   34%
Income tax and social contribution at combined statutory rate  207,096   (826,233)    340,159   (620,150)
Adjustment to reflect the effective rate:              
Equity in results of affiliated companies 24,519   11,885   78,097    510,260
Difference Tax Rate in companies abroad  (74,582)    250,494        
Tax incentives 5,167   9,536       2,759
Recognition/(reversal) of tax credits (364,833)   (505,251)   (341,302)   (502,295)
Other permanent deductions (additions)  (10,809)    (6,585)    (2,882)    (8,142)
Income tax and social contribution in net income for the period (213,442)    (1,066,154)   74,072   (617,568)
Effective tax rate -35%   44%   7%   34%

 

 

17.b)Deferredincome tax and social contribution:

 

Deferred income tax and social contribution balances are as follows:

 

 
 66

(In thousands of reais - R$, unless otherwise stated)

  
   
        Consolidated       Parent Company
    03/31/2023   12/31/2022   03/31/2023   12/31/2022
Deferred                
Income tax losses    2,955,632    2,679,028    1,515,516    1,279,792
Social contribution tax losses   994,028   894,183   566,965   482,104
Temporary differences   700,706    1,305,557   980,574    1,494,816
Tax, social security, labor, civil and environmental provisions   609,118   584,834   214,651   205,440
Estimated losses on assets   371,639   369,826   149,860   143,926
Gains/(Losses) on financial assets   439,063   468,813   410,455   442,333
Actuarial Liabilities (Pension and Health Plan)   229,566   226,875   222,745   222,745
Provision for consumption and services   213,919   205,880   180,775   172,566
Cash Flow Hedge Accounting and Unrealized Exchange Variations   851,054    1,459,012   696,853    1,206,064
(Gain) on loss of control of Transnordestina    (224,096)    (224,096)    (224,096)    (224,096)
Fair Value SWT/CBL Acquisition    (143,659)    (149,489)        
Business combination   (1,231,296)   (1,632,370)    (718,498)    (721,992)
Others    (414,602)   (3,728)    47,829    47,830
Total    4,650,366    4,878,768    3,063,055    3,256,712
                 
Total Deferred Assets    4,935,307    5,095,718    4,039,360    4,219,717
Total Deferred Liabilities    (284,941)    (216,950)    (976,305)    (963,005)
Total Deferred    4,650,366    4,878,768    3,063,055    3,256,712

 

 

The Company has in its corporate structure subsidiaries abroad, whose income is taxed by the income tax in the respective countries where they were constituted at rates lower than those in force in Brazil. In the period between 2019 and 2023, these subsidiaries generated income in the amount of R$156,367. If the Brazilian tax authorities understand that this income is subject to additional taxation in Brazil for income tax and social contribution, these, if due, would reach approximately R$53,165. The Company, based on the position of its legal advisors, assessed only the likelihood of loss as possible in the event of possible tax questioning and, therefore, no provision was recognized in the interim financial information.

 

In addition, management evaluated the precepts of IFRIC 23 - “Uncertainty Over Income Tax Treatments” and recognized in 2021 the credit for the unconstitutionality of the levy of the IRPJ and CSLL on the amounts of default interest referring to the SELIC rate received due to the repetition of tax undue payment.

 

17.c)Changes in deferred income tax and social contribution

 

The changes in deferred taxes is shown below:

 

    Consolidated   Parent Company
    03/31/2023   03/31/2022
Balance at January 1, 2021    4,569,011    4,843,653
Recognized in the result    (420,773)    (988,588)
Recognized in other comprehensive income    (322,876)    (598,353)
Acquisition of companies    1,053,406  
Balance at December 31, 2022    4,878,768    3,256,712
Recognized in the result   143,951    88,060
Recognized in other comprehensive income    (372,353)    (281,717)
Balance at March 31, 2023    4,650,366    3,063,055

 

17.d)Incometax and social contribution recognized in equity:

 

The income tax and social contribution recognized directly in equity are shown below:

 

  Consolidated   Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Income tax and social contribution              
Actuarial gains on defined benefit pension plan  100,811   100,139    99,288   99,288
Exchange differences on translating foreign operations (325,350)    (325,350)   (325,350)    (325,350)
Cash flow hedge accounting 1,216,028    1,571,953   1,085,884    1,367,601
   991,489    1,346,742    859,822    1,141,539

 

 
 67

(In thousands of reais - R$, unless otherwise stated)

  
   

 

18.PROVISIONS FOR TAX, SOCIAL SECURITY, LABOR, CIVIL AND ENVIRONMENTAL RISKS AND JUDICIAL DEPOSITS

 

Claims of different nature are being challenged at the appropriate courts. Details of the accrued amounts and related judicial deposits are as follows:

 

    Consolidated   Parent Company
    Accrued liabilities   Judicial deposits   Accrued liabilities   Judicial deposits
    03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022
Tax   227,356   219,196   188,829   184,687   95,371   96,865   56,928   57,316
Social security   3,033   1,567   4       1,579   1,549        
Labor   380,620   375,416   297,565   297,507   172,903   177,902   150,367   160,983
Civil   899,168   851,305   27,194   25,502   158,402   130,250   14,246   12,174
Environmental   40,145   37,341   2,859   2,859   16,889   15,250   1,153   1,154
Deposit of a guarantee           20,717   23,109                
    1,550,322   1,484,825   537,168   533,664   445,144   421,816   222,694   231,627
                                 
Classified:                                
Current   45,790   73,089           27,512   31,371        
Non-current   1,504,532   1,411,736   537,168   533,664   417,632   390,445   222,694   231,627
    1,550,322   1,484,825   537,168   533,664   445,144   421,816   222,694   231,627

 

 

The changes in tax, social security, labor, civil and environmental provisions in the year ended March 31, 2023 can be summarized as follows:

 

    Consolidated
                    Current + Non-current
Nature   12/31/2022   Additions   Accrued charges   Net utilization of reversal   03/31/2023
Tax   219,196    5,839    4,539    (2,218)   227,356
Social security    1,567    1,431   35       3,033
Labor   375,416    14,608    18,555    (27,959)   380,620
Civil   851,305    7,443    44,126    (3,706)   899,168
Environmental    37,341    3,241   870    (1,307)   40,145
     1,484,825    32,562    68,125    (35,190)   1,550,322

 

    Parent Company
                    Current + Non-current
Nature   12/31/2022   Additions   Accrued charges   Net utilization of reversal   03/31/2023
Tax    96,865   324   626    (2,444)   95,371
Social security    1,549     30       1,579
Labor   177,902    4,614    7,903    (17,516)   172,903
Civil   130,250   611    28,390   (849)   158,402
Environmental    15,250    1,667   40    (68)   16,889
    421,816    7,216    36,989    (20,877)   445,144

 

 

The provision for tax, social security, labor, civil and environmental risks was estimated by Management and is mainly based on the legal advisors’ assessment. Only lawsuits for which the risk is classified as probable loss are provisioned. Additionally, tax liabilities from actions initiated by the Company is included in this provision and is subject to SELIC (Central Bank’s policy rate).

 

§Possible administrative and judicial proceedings

 

The Company does not make provisions for lawsuits, which Management’s expectations, based on the opinion of legal counsel, is a possible loss. The following table shows a summary of the balance of the main matters classified as possible risk compared to the balance as of March 31, 2023 and December 31, 2022.

 

 
 68

(In thousands of reais - R$, unless otherwise stated)

  
   
        Consolidated
    03/31/2023   12/31/2022
Assessment Notice and imposition of fine (AIIM) / Tax Enforcement - Income tax and social contribution - Capital gain on sale of NAMISA's shares    14,648,004    14,174,838
         
Assessment Notice and Imposition of fine (AIIM) / Tax Enforcement - Income tax and Social contribution - Disallowance of deductions of goodwill generated in the reverse incorporation of Big Jump by NAMISA.    5,089,980    4,920,177
         
Assessment Notice and Imposition of fine (AIIM) / Tax Enforcement- Income tax and Social contribution - Disallowance of interest on prepayment arising from supply contracts of iron ore and port services    2,486,539    2,388,423
         
Assessment Notice and imposition of fine (AIIM) - Income tax and social contribution due to profits from foreign subsidiaries for years 2008, 2010, 2011, 2012, 2014, 2015 and 2016.    4,218,770    4,104,626
         
Notice of Violation and Imposition of Fine (AIIM) - IRPJ/CSLL - Disallowance of deductions of goodwill generated in the acquisition of Cimentos Mauá (1)   745,154   715,152
         
ICMS - SEFAZ/RJ - Electricity Credits   989,061   950,469
         
Offset of taxes that were not approved by the Federal Revenue Service - IRPJ/CSLL, PIS/COFINS and IPI    2,201,430    2,138,608
         
ICMS - SEFAZ/RJ- Disallowance of the ICMS credits - Transfer of iron ore   688,165   666,816
         
ICMS - Refers to the transfer of imported raw material at an amount lower than the price disclosed in the import documentation   369,517   357,006
         
Disallowance of the tax loss and negative basis of social contribution arising from the adjustments in the SAPLI   689,194   663,594
         
Assessment Notice and imposition of fine (AIIM)/ Action for annulment - IRRF- Capital Gain of CFM vendors located abroad   298,698   289,406
         
CFEM – difference of understanding between CSN and ANM on the calculation basis    1,187,030    1,143,275
         
ICMS - SEFAZ/RJ - Assessment Notice -questions about sales for incentive area    1,301,333    1,255,251
         
Other tax lawsuits (federal, state, and municipal) (1)    6,130,014    5,579,232
         
Assessment Notice and imposition of fine (AIIM) -Charge of IRRF- RFB- Business Combinations of CSN Mineração held in 2015.    1,026,434   986,196
         
ICMS - SEFAZ/RJ - Disallowance of credits on acquisitions of Intermediate Products   649,177   623,748
         
Assessment Notice and imposition of fine (AIIM) - RFB -Disallowance of credits PIS/COFINS of inputs and freight    1,288,532    1,238,018
         
Social security lawsuits   193,197   187,338
         
Action to discuss the balance of the construction contract – Tebas   593,716   560,638
         
Action related to power supply payment’s charge - Light   417,243   386,834
         
         
Action that discusses Negotiation of energy sales - COPEN - CEEE-G (1)   197,713   193,469
         
Collection of defaulted amounts of contracts for the execution of the Presidente Médici Thermoelectric Power Plant - SACE - CEEE-G (1)   197,847   192,212
         
Enforcement action applied by Brazilian antitrust authorities (CADE)   113,479   109,206
         
Other civil lawsuits (1)    1,226,552    1,168,591
         
Labor and social security lawsuits (1)    1,820,516    1,726,517
         
Tax foreclosures – Fine – Volta Redonda IV   131,823   122,639
         
ACP landfill Márcia   306,389   306,389
         
Other environmental lawsuits (1)   601,732   539,410
     49,807,239    47,688,078

 

 

In the first quarter of 2021, the Group was notified of an arbitration proceeding based on an alleged unfulfillment of iron ore supply contracts. The counterparty asks for approximately US$1 billion, and the Company has no knowledge of the basis for the estimates of the amount asked. Finally, the Company informs that has responded the arbitration requirements in conjunction with its legal counselors and is currently at the initial stage of its defense. The Company expects the arbitration will be concluded in 2 to 3 years. The relevance of the arbitration to the Company is related to the amount attributed to the cause and its eventual financial impact. The discussion involves arbitration disputes initiated by both parties.

 
 69

(In thousands of reais - R$, unless otherwise stated)

  
   

 

The Company has been offering judicial guarantees (Guarantee Insurance/Letter of Guarantee) in the total amount updated to March 31, 2023, of R$6,326,601 (December 31, 2022, R$4,939,419), as determined by the procedural legislation in force.

 

The assessments made by legal advisors define these administrative and judicial proceedings as a possible risk of loss and, consequently, no loss provisions have been recognized in accordance with Management's judgment and with the accounting practices adopted in Brazil.

 

19.PROVISION FOR ENVIRONMENTAL LIABILITIES AND ASSET RETIREMENT OBLIGATIONS

 

The balance of provisions for environmental liabilities and asset retirement obligation is as follows:

 

      Consolidated       Parent Company
  03/31/2023   12/31/2022   03/31/2023   12/31/2022
Environmental liabilities 176,214   172,574   161,714   158,213
Asset retirement obligations 786,413   765,083        
  962,627   937,657   161,714   158,213
               

 

 

20.RELATED-PARTY BALANCES AND TRANSACTIONS

 

20.a)Transactionswith subsidiaries, jointly controlled entities, associates, exclusive funds and other related parties

 

·Consolidated

 

    Consolidated
    03/31/2023   12/31/2022
    Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties   Total   Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties   Total
Assets                                
 Current Assets                                
Investments (1)       2,074,371    2,074,371         1,768,915    1,768,915
Trade receivables (note 5) (2)  52,274   1,184   78,913    132,371   48,236   1,182   59,716    109,134
Dividends (note 8) (3)   77,377        77,377     77,377        77,377
Loans (note 8) (4)   5,427        5,427     5,383        5,383
Other receivables (note 8)    30       1,828    1,858   30       1,828    1,858
     52,304   83,988   2,155,112    2,291,404   48,266   83,942   1,830,459    1,962,667
 Non-current Assets                                
Investments (1)        143,406    143,406          140,510    140,510
Loans (note 8) (4)  3,691   1,507,513        1,511,204    3,678   1,381,095        1,384,773
Actuarial asset (note 8)         35,477    35,477         35,477    35,477
Other receivables (note 8) (5)   1,484,759        1,484,759     1,484,759        1,484,759
     3,691   2,992,272    178,883    3,174,846    3,678   2,865,854    175,987    3,045,519
     55,995   3,076,260   2,333,995    5,466,250   51,944   2,949,796   2,006,446    5,008,186
                                 
Liabilities                                
Current Liabilities                                
Trade payables      161,249   20,576    181,825     93,115   37,448    130,563
Accounts payable     21,190        21,190     23,555   24,134    47,689
Provision for consumption     61,398        61,398     61,398        61,398
       243,837   20,576    264,413      178,068   61,582    239,650
 Non-current Liabilities                                
Accounts payable     34,236        34,236     53,356        53,356
      34,236        34,236     53,356        53,356
       278,073   20,576    298,649      231,424   61,582    293,006
                                 
    Consolidated
    03/31/2023   03/31/2022
    Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties   Total   Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties   Total
P&L                                
Sales    61,987   3,892    353,513    419,392   73,922   8,120    750,864    832,906
Cost and expenses   (51)   (377,377)    (58,604)   (436,032)     (309,924)    (28,674)   (338,598)
Financial income (expenses)                        
Interest (note 25)     42,949   9,418    52,367     29,454   6,080    35,534
Exchange rate variations andmonetary, net          (17,953)   (17,953)            
Financial investments (1)         66,876    66,876         (222,355)   (222,355)
     61,936   (330,536)    353,250    84,650   73,922   (272,350)    505,915    307,487

 

 
 70

(In thousands of reais - R$, unless otherwise stated)

  
   

 

·Parent Company

 

    Parent Company
    03/31/2023   12/31/2022
    Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties and exclusive funds   Total   Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties and exclusive funds   Total
Assets                                
 Current Assets                                
Investments (1)     1,358,039    1,358,039       1,125,578    1,125,578
Trade receivables (note 5) (2) 841,099     58,268   899,367    1,066,375     59,407    1,125,782
Loans (note 8) (4)    5,427       5,427      5,383       5,383
Dividends (note 8) (3) 255,859   39,621       295,480   255,859   39,621       295,480
Other receivables (note 8)   139,204     1,829   141,033    99,866     1,829   101,695
     1,236,162   45,048   1,418,136    2,699,346    1,422,100   45,004   1,186,814    2,653,918
 Non-current Assets                                
Investments (1)      143,406   143,406        140,510   140,510
Loans (note 8) (4) 431,767    1,411,810   3,691    1,847,268   380,913    1,287,469        1,668,382
Actuarial asset (note 8)       28,072   28,072       28,072   28,072
Other receivables (note 8) (5) 102,572    1,484,759        1,587,331   223,908    1,484,759        1,708,667
    534,339    2,896,569    175,169    3,606,077   604,821    2,772,228    168,582    3,545,631
     1,770,501    2,941,617   1,593,305    6,305,423    2,026,921    2,817,232   1,355,396    6,199,549
                                 
Liabilities                                
Current Liabilities                                
Intercompany Loans (note 12) (6) 105,348         105,348    43,806         43,806
Trade payables   371,950   12,353   19,943   404,246   269,264   41,654   36,289   347,207
Accounts payable    98,873         98,873   103,012     24,134   127,146
Provision for consumption   283,550         283,550   279,437         279,437
    859,721   12,353   19,943   892,017   695,519   41,654   60,423   797,596
 Non-current Liabilities                                
Intercompany Loans (note 12) (6)  9,530,649          9,530,649    9,984,044          9,984,044
Accounts payable    16,141         16,141    41,694         41,694
     9,546,790          9,546,790    10,025,738         10,025,738
     10,406,511   12,353   19,943   10,438,807    10,721,257   41,654   60,423   10,823,334
                                 
    Parent Company
    03/31/2023   03/31/2022
    Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties and exclusive funds   Total   Subsidiaries and associates   Joint-ventures and Joint Operation   Other related parties and exclusive funds   Total
Net revenue and cost                                
Sales    1,195,030   -     353,476    1,548,506    1,587,128   70    750,860    2,338,058
Cost and expenses    (695,228)    (103,448)    (71,637)    (870,313)    (781,200)    (121,169)    (29,058)    (931,427)
Financial income (expenses)                                
Interest (note 25)   (45,725)   42,212   9,327   5,814   (8,793)   29,602   5,646   26,455
Exclusive funds (note 25)       5,307   5,307       2,287   2,287
Financial investments (1)       66,877   66,877       (222,355)    (222,355)
Exchange rate variations andmonetary, net   227,439      (3,158)   224,281    1,233,695          1,233,695
    681,516    (61,236)    360,192   980,472    2,030,830    (91,497)    507,380    2,446,713

 

 

Consolidated and Parent Company Information:

 

(1)Financial investments: Refers mainly to investments in Usiminas shares, cash and cash equivalents and Bonds with Banco Fibra and government bonds and CDBs with the exclusive funds.

 

(2)Accounts receivables: refers mainly to sales transactions of steel products from the Parent Company to related parties.

 

(3)Dividends receivable: In the Parent Company as of March 31, 2023, and December 31, 2022, this refers mainly to interest on own capital from CSN Mineração S.A in the amount of R$ 59,469, Mineração Nacional S.A in the amount of R$ 14,785 and dividends from the subsidiary CSN Cimentos S.A in the amount of R$ 178,348. In Consolidated as of March 31, 2023, and December 31, 2022, refers to dividends from MRS Logística S.A in the amount of R$ 77,377.

 

(4)Loans (Assets):
   
  Long term: In Consolidated refers mainly to loan agreements with Transnordestina Logística amounting to R$1,504,163 as of March 31,2023 (R$1,384,773 as of December 31, 2022) with an average rate of 125.0% to 130.0% of CDI.

 

(5)Others (Assets): In Consolidated as of March 31, 2023, and December 31, 2022, advance for future capital increase with Transnordestina Logística S.A. of R$1,484,759.

 

 
 71

(In thousands of reais - R$, unless otherwise stated)

  
   
(6)Borrowings (Liabilities):

 

Foreign currency: In the Parent Company these are intercompany contracts amounting to R$9,635,997 as of March 31, 2023 (R$10,027,850 as of December 31, 2022).

 

20.b)Key management personnel

 

The key management personnel with authority and responsibility for planning, directing, and controlling the Company’s activities include members of the Board of Directors and statutory officers. The following is information on the compensation of such personnel and the related balances as of March 31, 2023 and 2022.

 

         
    03/31/2023   03/31/2022
    P&L
Short-term benefits for employees and officers   7,395   5,620
Post-employment benefits    102   63
    7,497   5,683

 

 

20.c)Guarantees

 

The Company is liable for guarantees of its subsidiaries and jointly controlled entities as follows:

 

                                       
  Currency   Maturities   Borrowings Tax foreclosure Others Total
          03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022   03/31/2023   12/31/2022
Transnordestina Logísitca R$   Up to 09/19/2056 and Indefinite    2,096,291    2,096,291    9,365    9,365   3,853   3,853    2,109,509    2,109,509
                                       
Controladas do Grupo R$   Up to 12/21/2024 and indefinite       197   197   2,163   2,163    2,360    2,360
                                       
CSN Mineração R$   Up to 12/21/2024    540,946   540,946               540,946   540,946
                                       
                                       
Total in R$          2,637,237    2,637,237    9,562    9,562   6,016   6,016    2,652,815    2,652,815
                                       
CSN Inova Ventures US$   01/28/2028    1,300,000    1,300,000                1,300,000    1,300,000
                                       
CSN Resources US$   Up to 04/17/2026    1,150,000    1,150,000                1,150,000    1,150,000
                                       
CSN Cimentos US$   Indefinite    115,000   115,000.000            -    115,000   115,000
                                       
Total in US$          2,565,000    2,565,000                2,565,000    2,565,000
                                       
Lusosider Aços Planos EUR   Indefinite             75,000   75,000    75,000    75,000
Total in EUR                   75,000   75,000    75,000    75,000
Total in R$          13,031,226    13,867,929       396,780   396,780    13,428,006    14,264,709
           15,668,463    16,505,166    9,562    9,562   402,796   402,796    16,080,821    16,917,524

 

 

21.SHAREHOLDERS’ EQUITY

 

21.a)Paid-up capital

 

The fully subscribed and paid-up capital as of March 31, 2023 is R$10,240,000, divided into 1,326,093,947 common and book-entry shares (as of December 31, 2022 R$10,240,000 divided into 1,387,524,047 common and book-entry shares), with no par value. Each common share entitles to one vote in the resolutions of the General Meeting.

 

21.b)Authorized capital

 

The Company’s bylaws in effect on March 31, 2023 define that the share capital may be increased to up to 2,400,000,000 shares, by decision of the Board of Directors, regardless of amendments to the bylaws.

 

21.c)Legal reserve

 

It is constituted at the rate of 5% of the net income calculated in each fiscal year, before any other allocation, pursuant to art. 193 of Law 6,404/86, up to a limit of 20% of the capital stock.

 

21.d)Ownership structure

 

As of March 31, 2023 and December 31, 2022, the Company’s ownership structure was as follows:

 

 
 72

(In thousands of reais - R$, unless otherwise stated)

  
   
            03/31/2023           12/31/2022
    Number of common shares   % of total shares   % of voting capital   Number of common shares   % of total shares   % of voting capital
Vicunha Aços S.A.   543,617,803   40.99%   40.99%   679,522,254   51.24%   51.24%
Rio Iaco Participações S.A.   45,706,242   3.45%   3.45%   45,706,242   3.45%   3.45%
CFL Participações S.A.   135,904,451   10.25%   10.25%   0   0.00%   0.00%
NYSE (ADRs)   260,550,326   19.65%   19.65%   254,520,040   19.19%   19.19%
Other shareholders   340,315,125   25.66%   25.66%   346,345,411   26.12%   26.12%
Outstanding shares      1,326,093,947   100.00%   100.00%      1,326,093,947   100.00%   100.00%

 

 

As of March 31, 2023, an Asset Restructuring Agreement was entered into between Rio Purus Participações S.A. and CFL Participações S.A. ("CFL"), the shareholders that directly and indirectly hold all the shares of Vicunha Aços S.A. ("Vicunha Aços"). Thus, the implementation of this Transaction results in CFL Ana Participações S.A. ("CFL Ana"), a subsidiary of CFL, holding 135,904,451 common shares, book-entry and without par value issued by CSN, representing on this date 10.25% of its capital stock.

 

21.e)Treasury shares

 

As of March 31, 2023, the position of treasury shares was as follows:

 

Program   Board’s Authorization   Authorized quantity   Program period   Average buyback price   Minimum and maximum buyback price   Number bought back   Share cancelation   Sale of shares   Balance in treasury
  04/20/2018    30,391,000   From 4/20/2018 to 4/30/2018   Not applicable   Not applicable           22,981,500    7,409,500
1º   06/21/2021    24,154,500   From 06/22/2021 to 12/22/2021   R$ 21.82   R$20,06 and R$23,22    24,082,000           31,491,500
2º   6/12/2021    30,000,000   From 12/07/2021 to 6/30/2022   R$ 25.00   R$17,20 and R$26,76    29,938,600           61,430,100
  05/18/2022           Not applicable   Not applicable       61,430,100        
3º   05/18/2022    58,000,000   From 05/19/2022 to 05/18/2023                        

 

 

At a Board of Directors Meeting held on May 18, 2022, the Company approved (i) the closing of the share repurchase program, (ii) cancellation of 61,430,100 common shares held in treasury with no change in the Company's capital stock, which is now represented by 1,326,093,947 common book-entry shares without nominal value.

 

21.f) Earnings per share

 

The earnings per share are shown below:

 

  Parent Company
  03/31/2023   03/31/2022
  Common Shares
(Loss)/profit for the period (926,396)   1,206,402
Weighted average number of shares 1,326,093,947   1,329,407,441
Basic and diluted earnings per share (0.69859)    0.90747

 

 

22.NET REVENUE FROM SALES

 

Net sales revenue is comprised as follows:

 

     Consolidated    Parent Company
    03/31/2023   03/31/2022   03/31/2023   03/31/2022
Gross revenue                
Domestic market   6,709,992   7,217,187   4,883,831   6,553,702
Foreign market   6,172,300   6,203,253    595,957   1,233,838
    12,882,292   13,420,440   5,479,788   7,787,540
Deductions                
Sales returns, discounts and rebates   (120,546)    (74,006)   (101,987)    (60,438)
Taxes on sales    (1,443,056)    (1,576,568)   (907,734)    (1,328,600)
     (1,563,602)    (1,650,574)    (1,009,721)    (1,389,038)
Net revenue   11,318,690   11,769,866   4,470,067   6,398,502
                 

 

 
 73

(In thousands of reais - R$, unless otherwise stated)

  
   

 

23.EXPENSES BY NATURE

 

     Consolidated    Parent Company
    03/31/2023   03/31/2022   03/31/2023   03/31/2022
Raw materials and inputs    (3,082,974)    (3,698,461)    (2,536,554)    (3,387,395)
Outsourcing material    (1,227,283)   (689,833)        
Labor cost   (945,391)   (684,261)   (367,886)   (339,931)
Supplies   (932,240)   (683,332)   (652,143)   (481,616)
Maintenance cost (services and materials)   (100,047)   (299,278)    (51,522)   (150,795)
Outsourcing services   (771,987)   (475,459)   (272,560)   (285,781)
Freight   (993,444)   (494,433)   (194,576)   (191,994)
Depreciation, amortization and depletion   (781,276)   (635,470)   (272,459)   (250,800)
Others   (259,228)   (214,084)    (8,657)    (71,417)
     (9,093,870)    (7,874,611)    (4,356,357)    (5,159,729)
Classified as:                
Cost of sales    (8,073,476)    (7,287,285)    (4,090,964)    (4,867,733)
Selling expenses   (860,513)   (443,996)   (211,489)   (242,330)
General and administrative expenses   (159,881)   (143,330)    (53,904)    (49,666)
     (9,093,870)    (7,874,611)    (4,356,357)    (5,159,729)
                 

 

 

The depreciation, amortization and depletion for the year were distributed as follows.

 

  Consolidated   Parent Company
  03/31/2023   03/31/2022   03/31/2023   03/31/2022
Production costs (1) (770,910)   (624,854)   (267,515)   (245,376)
Selling expenses  (3,836)    (3,210)    (2,153)    (2,037)
General and administrative expenses  (6,530)    (7,406)    (2,791)    (3,387)
  (781,276)   (635,470)   (272,459)   (250,800)
Other operational (2)  (19,902)    (20,667)    (1,771)    (1,689)
  (801,178)   (656,137)   (274,230)   (252,489)

 

(1) The cost of production includes PIS and COFINS credits on lease agreements as of March 31, 2023, in the amount of R$1,824 in the consolidated (R$1,666 as of March 31, 2022) and R$163 in the parent company (R$140 as of March 31, 2022).

(2) They mainly refer to the depreciation of investment properties, paralyzed equipment and amortization of the SWT customer portfolio, classified in other operating expenses, see note 24.

 

24.OTHER OPERATING INCOME AND EXPENSES

 

     Consolidated    Parent Company
    03/31/2023   03/31/2022   03/31/2023   03/31/2022
Other operating income                
Receivables by indemnity   3,955   5,360   3,751   5,359
Rentals and leases   3,527   1,675   1,302   1,515
Contractual fines    950    388    658   8
Updated shares – Fair value through profit or loss (Note 13)   42,210   12,608   42,210   12,608
Other revenues   44,087   3,370    26    80
    94,729   23,401   47,947   19,570
               
Other operating expenses                
Taxes and fees    (31,399)    (13,537)    (18,524)    (7,399)
Expenses/reversal with environmental liabilities, net    (3,119)    515    (1,528)   1,045
Write-off/(Provision) of judicial lawsuits    (81,214)    (28,545)    (43,383)    (19,007)
Depreciation and amortization (note 23)    (19,902)    (20,667)    (1,771)    (1,689)
Reversal/(Write-off) of estimated losses on property, plant and equipment, intangible assets and PPI, net of reversal (notes 9.d, 10 and 11) 2,176    (7,963)   1,902   (156)
Estimated (Loss)/reversal in inventories (1)   (404,373)    (29,267)   (156,013)    (12,236)
Idleness in stocks and paralyzed equipment (2)   (144,193)    (94,628)   (144,193)    
Studies and project engineering expenses    (8,940)    (13,762)    (3,680)    (4,081)
Healthcare plan expenses    (26,705)    (26,182)    (26,382)    (25,950)
Cash flow hedge accounting realized (note 13) (3)   (930,523)    (79,296)   (353,203)    (79,296)
Other expenses   (112,345)    (69,249)    (43,710)    (30,685)
     (1,760,537)   (382,581)   (790,485)   (179,454)
 Other operating income (expenses), net    (1,665,808)   (359,180)   (742,538)   (159,884)

 

 
 74

(In thousands of reais - R$, unless otherwise stated)

  
   

(1) In the Parent Company, refers substantially to losses incurred in the production process at the Presidente Vargas Plant ("UPV") and in Consolidated, losses in inventories in the amount of (R$212,198);

(2) In 2023, unused capacity due to lower than normal production volume at Presidente Vargas Plant ("UPV");

(3) In the Parent Company this is the realization of a Cash Flow Hedge in the amount of (R$353,203) and in Consolidated the realization of a Cash Flow Hedge in the amount of (R$362,946) and a Hedge of Platts in the amount of (R$568,025).

 

 

25.FINANCIAL INCOME (EXPENSES)
        Consolidated       Parent Company
    03/31/2023   03/31/2022   03/31/2023   03/31/2022
Financial income                
Related parties (Note 20 a)   54,429   38,108   72,415   45,265
Income from financial investments    194,545    126,523   30,557   24,984
Updated shares – Fair value through profit or loss (Note 13.d)   66,876   (222,355)   66,876   (222,355)
Other income   28,969   21,865   20,476   27,344
     344,819    (35,859)    190,324   (124,762)
Financial expenses                
Borrowings and financing - foreign currency (note 13)   (302,226)   (293,578)    (36,556)    (49,104)
Borrowings and financing - local currency (note 13)   (502,789)   (272,702)   (283,461)   (226,841)
Capitalised interest (note 10)   44,198   28,077   17,505   7,607
Related parties    (2,062)    (2,574)    (61,294)    (16,523)
Lease liabilities    (17,271)    (14,963)   (256)   (356)
Interest and fines   (100,896)    (31,296)    (85,203)   (793)
Interest on drawn/forfaiting risk operations   (138,363)    (90,188)   (138,363)    (90,188)
(-) Adjustment present value of trade payables    (80,996)    (96,735)    (62,370)    (79,805)
Commission, bank fees, Guarantee and bank fees    (45,032)    (49,902)    (21,284)    (28,954)
PIS/COFINS over financial income    (18,290)    (7,133)    (3,574)    (1,726)
Other financial expenses   (123,421)   (137,060)    (29,874)    (12,365)
     (1,287,148)   (968,054)   (704,730)   (499,048)
Others financial items, net                
Foreign exchange and monetary variation, net   (269,162)   (148,840)    (46,760)   (203,971)
Gains and (losses) on exchange derivatives (*)   21,864   27,516    (40,172)   72,096
    (247,298)   (121,324)    (86,932)   (131,875)
     (1,534,446)    (1,089,378)   (791,662)   (630,923)
                 
Financial income (expenses), net    (1,189,627)    (1,125,237)   (601,338)   (755,685)
                 
(*) Statement of gains and (losses) on derivative transactions (note 13.c)                
Exchange rate swap Real x Dollar    (40,172)    (80,748)        
Interest rate swap CDI x IPCA   43,143   42,868        
Exchange rate swap CDI x Dollar   18,893   65,396    (40,172)   72,096
    21,864   27,516    (40,172)   72,096

 

 

26.SEGMENT INFORMATION

 

The financial information related to the business segments is not changed from that disclosed in the Company's financial statements as of December 31, 2022. Accordingly, management has decided not to repeat them in this condensed interim financial information.

 

Results by segment

 

For the purpose of preparing and presenting the information by business segment, Management decided to maintain the proportional consolidation of the jointly controlled entities as historically presented. For purposes of reconciliation of the consolidated result, the amounts recorded by these companies are not included in the “Corporate expenses/elimination” column.

 

 
 75

(In thousands of reais - R$, unless otherwise stated)

  
   
                                 
                                03/31/2023
P&L   Steel   Mining   Logistics   Energy   Cement   Corporate
expenses/
elimination		   Consolidated
      Port   Railroads        
Net revenues                
Domestic market    3,945,649    282,277    69,903    519,007   139,437    1,119,131    (846,688)    5,228,716
Foreign market    1,831,211    3,859,163           399,600    6,089,974
Cost of sales and services (note 23)   (5,021,041)   (2,246,834)   (59,478)   (339,692)    (123,518)    (959,623)   676,710   (8,073,476)
Gross profit    755,819    1,894,606    10,425    179,315    15,919   159,508   229,622    3,245,214
General and administrative expenses (note 23)   (313,076)   (126,359)   (2,015)   (42,819)   (12,629)   (96,274)    (427,222)   (1,020,394)
Other operating (income) expenses, net (note 24)   (627,475)   (636,454)    3,498    10,568    4,019   (38,263)    (381,701)   (1,665,808)
Equity in results of affiliated companies (note 9)                21,509   21,509
Operating result before Financial Income and Taxes   (184,732)    1,131,793    11,908    147,064    7,309    24,971    (557,792)   580,521
                                 
Sales by geographic area                                
Asia      3,769,149           399,600    4,168,749
North America    402,491               402,491
Latin America    46,759               46,759
Europe    1,381,961    90,014              1,471,975
Foreign market    1,831,211    3,859,163           399,600    6,089,974
Domestic market    3,945,649    282,277    69,903    519,007   139,437    1,119,131    (846,688)    5,228,716
Total    5,776,860    4,141,440    69,903    519,007   139,437    1,119,131    (447,088)    11,318,690
                                 
                                 
                                03/31/2022
P&L   Steel   Mining   Logistics   Energy   Cement   Corporate
expenses/
elimination		   Consolidated
      Port   Railroads        
Net revenues                
Domestic market    5,184,803    515,377    75,891    458,444    44,137   385,981    (991,361)    5,673,272
Foreign market    2,697,270    3,345,939            53,385    6,096,594
Cost of sales and services (note 23)   (5,826,729)   (1,595,142)   (54,780)   (341,637)   (47,037)    (272,246)   850,286   (7,287,285)
Gross profit    2,055,344    2,266,174    21,111    116,807   (2,900)   113,735   (87,690)    4,482,581
General and administrative expenses (note 23)   (327,280)   (62,418)   (9,708)   (30,743)   (8,553)   (68,921)   (79,703)    (587,326)
Other operating (income) expenses, net (note 24)   (101,828)   (150,239)   (1,030)    12,630    (450)   (19,972)   (98,291)    (359,180)
Equity in results of affiliated companies (note 9)                19,259   19,259
Operating result before Financial Income and Taxes    1,626,236    2,053,517    10,373    98,694   (11,903)    24,842    (246,425)    3,555,334
                                 
Sales by geographic area                                
Asia      3,083,261              53,385    3,136,646
North America    537,723               537,723
Latin America    104,572               104,572
Europe    2,053,909    262,678                2,316,587
Foreign market    2,697,270    3,345,939            53,385    6,096,594
Domestic market    5,184,803    515,377    75,891    458,444    44,137   385,981    (991,361)    5,673,272
Total    7,882,073    3,861,316    75,891    458,444    44,137   385,981    (937,976)    11,769,866

 

 

27.ADDITIONAL INFORMATION TO CASH FLOWS

 

The following table provides additional information about transactions related to the statement of cash flows:

 

      Consolidated       Parent Company
  03/31/2023   03/31/2022   03/31/2023   03/31/2022
Income tax and social contribution paid 349,970    2,139,229    -    56,845
Addition to PP&E with interest capitalization (notes 10 and 25) 44,198   28,077   17,505   7,607
Remeasurement and addition – Right of use (note 10 i) 51,841   19,409   3,907   81
Addition to PP&E without adding cash 9,993    -         
  456,002    2,186,715   21,412   64,533

 

 
 76

(In thousands of reais - R$, unless otherwise stated)

  
   
28.STATEMENT OF COMPREHENSIVE INCOME

 

         Consolidated        Parent Company
    03/31/2023   03/31/2022   03/31/2023   03/31/2022
Profit for the period/(Loss)   (822,548)   1,363,943   (926,396)   1,206,402
                 
 Other comprehensive income                
                 
Items that will not be subsequently reclassified to the statement of income                
Actuarial gains/(losses) over pension plan of subsidiaries, net of taxes    679    97    672    31
     679    97    672    31
                 
Items that could be subsequently reclassified to the statement of income                
Cumulative translation adjustments for the year    (28,802)   (741,052)    (28,802)   (741,052)
(Loss)/gain cash flow hedge, net of taxes    313,746   1,426,909    313,746   1,426,909
Cash flow hedge reclassified to income upon realization, net of taxes    233,114   52,335    233,114   52,335
(Loss)/gain cash flow hedge accounting, net taxes,from investments in subsidiaries    180,618   2,468    144,050   1,931
     698,676    740,660    662,108    740,123
                 
     699,355    740,757    662,780    740,154
                 
 Comprehensive income for the year   (123,193)   2,104,700   (263,616)   1,946,556
                 
 Attributable to:                
 Controlling shareholders   (263,616)   1,946,556   (263,616)   1,946,556
 Earnings attributable to the non-controlling interests    140,423    158,144        
    (123,193)   2,104,700   (263,616)   1,946,556

 

29.SUBSEQUENT EVENTS

 

Parent Company:

 

Approval of dividends

 

On April 28, 2023, the Company approved, at an Ordinary General Meeting, the distribution of dividends in the amount of R$ 836,855 to the profit reserve account and R$ 777,145 as proposed additional dividends. Both payments will be made on May 17, 2023.

 

Consolidated:

 

Export Prepayment

 

On March 30, 2023, the subsidiary CSN Mineração entered into an Agreement for a line of credit for export financing with prepayment, in the total amount of up to US$ 1.4 billion and final maturity of 12 years, of which up to US$ 980 million will be granted by Japan Bank, and up to US$ 420 million will be granted by a syndicate of international banks, guaranteed by Nippon Export and Investment Insurance ("NEXI"). This operation aims to support CSN Mineração in its project to build the pellet feed plant (P15) at the Casa de Pedra mine.

 

Approval of dividends

 

On April 28, 2023, the subsidiary CSN Mineração approved, at an Ordinary General Meeting, the distribution of R$631,912 as additional proposed dividends. Additionally, at the Board of Directors Meeting held on May 3, 2023, the subsidiary approved the distribution of interim dividends in the amount of R$1,550,000 to the profit reserve account and interest on own capital in the amount of R$279,434 as an anticipation of the mandatory minimum dividend. All dividends will be paid on May 17, 2023.

 
 77

(In thousands of reais - R$, unless otherwise stated)

  
   

 

11.1 Projections

 

The Company clarifies that the information disclosed in this item represents a mere estimation, with hypothetical data and in no way constitute a promise of performance on behalf of the Company and/or its directors. The projections presented below involve market factors beyond the Company's control and, therefore, may change.

 

a)Projection object.


The Company estimates the following variables below:

 

 

b)Projected period and the validity of the projection.

The projected period and expiration dates can be viewed in the table above in item 11.1 a), and the numbers are always presented at the end of the fiscal year and duly published in the Standardized Financial Statements (DFP) of each fiscal year.

 

c)Assumptions of the projection, with the indication of which ones can be influenced by the administration of the issuer and which escape its control.

 

All the premises of the projections mentioned above are subject to external influence factors, which are outside the control of the Company's management. Therefore, in the event of any material change in these assumptions, the Company may revise its estimates, changing them compared to those originally presented.

 

The main premise that can be influenced by the Company's management would be its production and sales volumes, along with the associated costs.

 

The volume of ore production always considers our 2022 mining plan, with increased pellet feed production. However, key factors such as sales prices and raw material inputs are outside the Company's control.

 

d)Values of the indicators that are the subject of the forecast.

The values can be found above in item 11.1 a).

 

11.2 In the event that the issuer has disclosed, during the last 3 fiscal years, projections on the evolution of its indicators:

 

a) inform which ones are being replaced by new projections included and which are being repeated.

 

Estimates maintained:

 


 
 78

(In thousands of reais - R$, unless otherwise stated)

  
   

Estimates replaced in the last 3 fiscal years:

 

CSN replaced in Dec/20 the projection of reaching 3.0 x to 2.5 x in the Net Debt/Adjusted EBITDA Indicator at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching 2.5 x to 2.0 x the Net Debt/Adjusted EBITDA Indicator at the end of the annual Balance Sheet of 2021.

 

CSN replaced in Dec/20 the projection of reaching a Net Debt of BRL23 billion by BRL20 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of achieving a Consolidated Adjusted EBITDA of BRL9.75 billion by BRL11.2 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection to achieve a Mining segment EBITDA of BRL7.3 billion by BRL7.65 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching a Steel segment EBITDA of BRL1.6 billion by BRL2.3 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the projection of reaching a Consolidated CAPEX of BRL1.5 billion for BRL1.6 billion at the end of the 2020 annual Balance Sheet.

 

CSN replaced in Dec/20 the estimated iron ore production volume in 2020 of 33Mton, against previous expectation of 33-36Mton.

 

CSN replaced in Dec/21 the estimated volume of iron ore production in 2021 to 36-37Mton, against previous expectation of 38-40Mton.

 

CSN replaced in Dec/21 Mining Cash Cost in 2021 to $19.00, against a previous expectation of $16.00.

 

CSN replaced in Dec/21 Mining Expansion Capex in 2021 to BRL560 million, against a previous expectation of BRL1,000 million.

 

CSN replaced in Dec/21 the estimated Mining Expansion Capex between 2022-2026 to BRL12,000 million, against a previous expectation of BRL14,000 million between 2021-2025.

 

CSN replaced in Dec/21 the Steel Capex estimates between 2022-2026 to BRL6,300 million, against a previous expectation of BRL6.100 million between 2021-2025.

 

CSN replaced in Aug/22 Mining Cash Cost in 2022 between $20.00 - $22.00, against a previous expectation of $18.00.

 

CSN replaced in Aug/22 estimated volume of iron ore production in 2022 to 36-38Mton, against previous expectation of 39-41Mton.

 

The Company replaced in October/22 estimated Consolidated CAPEX in 2022 to the amount of BRL3,000 million, against a previous expectation of BRL 4,100 million.

 

The Company replaced in October/22 the leverage projection, measured by the Indicator Adjusted Net Debt/EBITDA from 1.0x in 2022 to a level between 1.75x and 2.0x between the closings of the annual balance sheets for 2022 and 2023.

 

The Company replaced in October/22 estimated iron ore production volume in 2022 to 34Mton, against previous expectation of 36-38Mton.

 

The Company replaced in December 2022, the projected steel sales volume of 4,480Kton for 2022 with the projection of 4,670Kton for 2023.

 

The Company replaced in December 2022, the projected expansion Capex in mining of approximately BRL 13.8 billion for the period of 2023-2027, related to phase 1 of the capacity addition project.

 

The Company, in December 2022, added the projected mining cash cost to a range between US$19/ton and US$21/ton in 2023.

 

The Company, in December 2022, added the projected volume of production and purchases of third-party ores to be between 39-41 Mton in 2023.

 

The Company, in December 2022, added the projected EBITDA in the Energy segment of BRL 23 million for 2022.

 

 
 79

(In thousands of reais - R$, unless otherwise stated)

  
   

The Company replaced in December 2022, the projected Consolidated Capex in the range of BRL 5.5 - BRL 6.5 billion for the period of 2024-2027 with the projection of BRL 4.4 billion for 2023.

 

b) regarding the projections related to periods already elapsed, compare the projected data with the effective performance of the indicators, clearly indicating the reasons that led to deviations in the projections.

2021

 

 

 

Regarding the major deviations above and below the expectation, our evaluations are as follows:

 

The increase in net debt, in millions of reais, compared to the guidance was mainly tied by the share repurchase programs, in addition to the exchange variation observed in the period. However, even with the increase in net debt, the company's leverage was still below the 1.0x Net Debt/EBITDA level.

 

The steel Sales Volume was impacted by the lower sales volume during the third quarter, which was marked by the commercial strategy of prioritizing price, without the application of discounts, to the detriment of the sold volume. This strategy proved to be assertive for the Company's financial results.

 

The company's dollarized Cash Cost annual average was $2.6/t, worse than the guidance presented due to a one-off pressure in November, impacted by the scheduled halts and heavy rainfall in the period, causing a lower dilution of the mine’s and port’s fixed cost. If we discount the month of November from the calculation of the average of the year, the average cash cost would be $19.00, which is in line with what was expected by The Company.

 

2022

 

Regarding the major deviations above and below the expectation, our evaluations are as follows:

 

The volume of ore production was impacted by above-normal rainfall in the Company's operations, which affected the mining and transportation capacity of the ore, and the ramp-up of projects connected to the Central Plant (CMAI 3, spirals, and regrinding).

 

The increase in Capex expenditures, which were above expectations, mainly occurred in the fourth quarter with the integration of Cimentos Brasil's operations.

 

The increase in net debt, in millions of reais, compared to the guidance, was mainly caused by large cash expenditures related to the Company's acquisitions, with the aim of diversifying its business portfolio.

 

c) as of projections for periods still in progress, to inform whether the projections remain valid on the date of delivery of the form and, where appropriate, to explain why they were abandoned or replaced.

 
 80

(In thousands of reais - R$, unless otherwise stated)

  
   


Current and valid estimates:

 

Monitoring and changes in projections disclosed

 

Replaced estimates:

CSN replaced in Aug/22 Mining Cash Cost in 2022 between $20.00 - $22.00, against a previous expectation of $18.00.

 

CSN replaced in Aug/22 estimated volume of iron ore production in 2022 to 36-38Mton, against previous expectation of 39-41Mton.

 

The Company replaced in October/22 estimated Consolidated CAPEX in 2022 to the amount of BRL3,000 million, against a previous expectation of BRL 4,100 million.

 

The Company replaced in October/22 the leverage projection, measured by the Indicator Adjusted Net Debt/EBITDA from 1.0x in 2022 to a level between 1.75x and 2.0x between the closings of the annual balance sheets for 2022 and 2023.

 

The Company replaced in October/22 estimated iron ore production volume in 2022 to 34Mton, against previous expectation of 36-38Mton.

 

The Company replaced in December 2022, the projected steel sales volume of 4,480Kton for 2022 with the projection of 4,670Kton for 2023.

 

The Company replaced in December 2022, the projected expansion Capex in mining of approximately BRL 13.8 billion for the period of 2023-2027, related to phase 1 of the capacity addition project.

 

The Company, in December 2022, added the projected mining cash cost to a range between US$19/ton and US$21/ton in 2023.

 

The Company, in December 2022, added the projected volume of production and purchases of third-party ores to be between 39-41 Mton in 2023.

 

The Company, in December 2022, added the projected EBITDA in the Energy segment of BRL 23 million for 2022.

 

The Company replaced in December 2022, the projected Consolidated Capex in the range of BRL 5.5 - BRL 6.5 billion for the period of 2024-2027 with the projection of BRL 4.4 billion for 2023.

 

 

 

 

 

 

 
 81

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Report on the interim financial information

 

To the Shareholders, Directors and Managers of

Companhia Siderúrgica Nacional

Sao Paulo-SP

 

 

 

Introduction

 

We have reviewed the individual and consolidated interim financial information of Companhia Siderúrgica Nacional ("Company"), contained in the Quarterly Information Form - ITR for the quarter ended March 31, 2023, which comprise the balance sheet as of March 31, 2023 and the related statements of income, comprehensive income, changes in shareholder’s equity and cash flows for the quarter then ended, including a summary of significant accounting policies and notes.

 

The Company's management is responsible for preparing and presenting the individual and consolidated interim financial information, in accordance with technical pronouncement NBC TG 21 - Interim Financial Statements and with the international accounting standard IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission, applicable to the preparation of the Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.

 

Scope of review

 

We conducted our review in accordance with Brazilian and international standards for reviewing interim financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Entity Auditor and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The scope of a review is significantly less than that of an audit conducted in accordance with auditing standards and, as a result, did not enable us to obtain assurance that we have taken knowledge of all significant matters that could be identified in an audit. Therefore, we do not express an audit opinion.

 

Conclusion on the individual and consolidated interim financial information

 

Based on our review, we are not aware of any fact which leads us to believe that the individual and consolidated interim financial information included in the aforementioned quarterly information was not prepared, in all material respects, in accordance with NBC TG 21 and IAS 34, applicable to the preparation of the Quarterly Information - ITR, and presented in accordance with the rules issued by the Brazilian Securities and Exchange Commission.

 

 

 
 82

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Other matters

 

Statement of Value Added

 

The aforementioned quarterly information includes the individual and consolidated Statements of Value Added (DVA), referring to the three-month period ended March 31, 2023, prepared under the responsibility of the Company's management and presented as supplementary information for IAS purposes 34. These statements were submitted to review procedures performed in conjunction with the review of the Company's quarterly information - ITR -, in order to conclude whether they are reconciled with the interim financial information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in NBC TG 09 - "Demonstration of Added Value". Based on our review, we are not aware of any facts that lead us to believe that these statements of value added were not prepared, in all material respects, in accordance with the criteria defined in this standard and in a manner consistent with the interim financial information, individual and consolidated, taken together.

 

 

Barueri, May 03, 2023.

 

 

Mazars Auditores Independentes

CRC 2 SP023701/O-8

 

 

 

 

Éverton Araken Paetzold

Contador CRC 1PR 047.959/O-9

 

 
 83

(In thousands of reais - R$, unless otherwise stated)

  
   

 

 

 

Opinions and Statements / Officers Statement on the Financial Statement

 

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 27, paragraph 1º, item VI, and Article 31, paragraph 1º, item II of CVM Instruction 80, of March 29, 2022, that we reviewed, discussed and agreed with the Company’s Financial Statements for the quarter ended March 31,2023.

 

 

 

 

São Paulo, May 03, 2023.

 

 

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

David Moise Salama

Executive Officer

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

Alexandre de Campos Lyra

Executive Officer

 

 

 

 
 84

(In thousands of reais - R$, unless otherwise stated)

  
   

 

Opinions and Statements / Officers Statement on Auditor’s Report

 

As Executive Officers of Companhia Siderúrgica Nacional, we declare pursuant to Article 27, paragraph 1º, item V and Article 31, paragraph 1º, item II of CVM Instruction 80, of March 29,2022, that we reviewed, discussed and agreed with the opinion expressed on the Independent Auditors’ Report related to the Company’s Financial Statements for the quarter ended March 31,2023.

 

 

 

 

São Paulo, May 03, 2023.

 

 

 

 

Benjamin Steinbruch

CEO

 

 

 

Marcelo Cunha Ribeiro

Executive Officer – CFO and Investors Relations

 

 

 

David Moise Salama

Executive Officer

 

 

 

Luis Fernando Barbosa Martinez

Executive Officer

 

 

 

Stephan Heinz Josef Victor Weber

Executive Officer

 

 

 

Alexandre de Campos Lyra

Executive Officer

 

 

 

 

 
 85
   
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 12, 2023
 
COMPANHIA SIDERÚRGICA NACIONAL
By:
/S/ Benjamin Steinbruch
 
Benjamin Steinbruch
Chief Executive Officer

 

 
By:
/S/ Marcelo Cunha Ribeiro
 
Marcelo Cunha Ribeiro
Chief Financial and Investor Relations Officer

 
 

 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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