SAO PAULO, Nov 24 (Reuters) - Net income at Votorantim Industrial jumped in the third quarter in spite of the challenging outlook for steel, mining and metals in the period, as Brazil’s largest diversified industrial group stepped up efforts to curb costs and reduce debt.
The São Paulo-based group, whose interests range from cement and mining to steel and pulp, earned net income of 578 million reais ($230 million) in the quarter, up 52 percent from a year earlier, a statement showed on Monday. Boosting results, revenue rose at each of the group’s five segments, the statement said.
The results underscore the group’s efforts to adapt their business to challenging global and domestic conditions as the Ermirio de Moraes family continues to enhance governance in the conglomerate. The group took advantage of faster cash generation and smaller-than-expected volatility in capital markets to keep cutting its debt burden.
“The results are positive, especially when taking into account the economic situation, which is very challenging for industry,” Chief Executive Officer João Miranda said in the statement. “That reflects Votorantim Industrial’s focus on operational excellence and selectivity on picking investments.”
Revenue rose 4 percent to 7.4 billion reais in the quarter from the year-earlier period, while climbing 8 percent from the second quarter.
Even as spending on fixed assets went up 19 percent to 594 million reais in the quarter, Votorantim Industrial generated 1.1 billion reais in free cash flow, or the money left for holders of bonds and shares after all operating and financial expenses are paid.
That allowed the conglomerate to trim net debt to 2.51 times earnings before interest, tax, depreciation and amortization, or EBITDA, at the end of September, from 2.85 times EBITDA in June. EBITDA is an indicator that gauges the ability of a firm to generate profits from its core operations.
EBITDA totaled 2.38 billion reais in the quarter, or the equivalent to 32.2 percent of revenue. In the same period a year earlier and the second quarter of this year, the so-called EBITDA margin was 21.3 percent and 21.6 percent, respectively.
Revenue at the cement division, which accounts for more than half of Votorantim Industrial’s revenue, rose alongside proceeds at the long steel unit even as demand for both commodities sank in Brazil during the quarter. A weaker Brazilian currency helped boost revenue at the mining division, the statement added
$1 = 2.5152 Brazilian reais Reporting by Guillermo Parra-Bernal Editing by W Simon