(Adds Usiminas’ Q2 guidance, share performance, byline)
By Walter Brandimarte and Alberto Alerigi
RIO DE JANEIRO/SAO PAULO, April 24 (Reuters) - Usinas Siderúrgicas de Minas Gerais SA, Brazil’s largest producer of flat steel products, on Thursday posted a sharply higher first-quarter profit on currency gains and cost cuts, although revenue was little changed.
Profit at Usiminas, as the company is known, was 222 million reais ($99.8 million) during the first three months of the year, compared to 47 million reais in the fourth quarter, according to a securities filing. In the first quarter of 2013, Usiminas posted a loss of 122.7 million reais.
Sales and production volumes for iron ore fell more than 20 percent in the comparison to the fourth quarter, while production of raw steel remained unchanged, the company said. Still, total net revenue was stable from the previous quarter at 3.1 billion reais as average prices for steel and iron ore rose.
Usiminas’ shares jumped as much as 2.6 percent following its earnings release. They erased gains in the afternoon to trade more than 3 percent lower after company executives forecast steel prices and sales will remain little changed in the next few months.
Prices have little room to go higher as car makers, one of Usiminas’ largest clients, are expected to cut output in the second quarter, said Sergio Leite, senior vice president for sales.
Cost cuts across all businesses areas allowed Usiminas to boost its adjusted earnings before interest, taxes, depreciation and amortization in the beginning of the year. The EBITDA margin rose to 20.9 percent of revenue in the first quarter, compared to 16.1 percent in the previous period.
In the same comparison, Usiminas’ financial costs fell 93 percent to 18 million reais as the Brazilian real strengthened 4 percent, curbing expenses related to the company’s dollar-denominated debt.
$1 = 2.225 Brazilian reais Editing by Sofina Mirza-Reid and Meredith Mazzilli