May 12, 2016 / 1:47 PM / 2 years ago

UPDATE 1-Brazil steelmaker CSN reports Q1 loss as economy slows

(Updates with additional first-quarter earnings information)

BRASILIA/RIO DE JANEIRO, May 12 (Reuters) - Brazilian steelmaker Cia Siderurgica Nacional reported on Thursday a first quarter loss as lower sales, higher tax payments and weaker returns from investment reversed a year-ago profit.

The consolidated net loss at the Sao Paulo-based company was 831.3 million reais ($241.32 million) in the period compared with a 391.8 million real profit a year earlier.

The loss comes as Brazil’s economy struggles through its worst recession in at least eight decades. Industrial output has fallen sharply as key clients in the auto and appliance industry cut output and employees. The outlook for improvement has been clouded by a corruption scandal and political crisis that led to the impeachment of Brazilian president Dilma Rousseff.

Earlier on Thursday, Brazil’s Senate ousted Rousseff from power to conduct a trial that could last up to six months. Few expect she will be acquitted and allowed to return.

CSN shares were little changed in early trading on Thursday in Sao Paulo while the exchange’s main index gained 1 percent.

Net sales, or total sales minus sales taxes, fell 4.2 percent to 3.844 billion reais. This helped contribute to a 20 percent drop in earnings before interest, taxes, depreciation and amortization, or EBITDA to 733 million reais. EBITDA is a measure of profit from operations.

Because of the sluggish Brazilian economy, CSN was forced to rely on export markets to maintain revenue.

Foreign sales jumped to 55 percent of total revenue from 44 percent a year ago. This helped CSN keep its gross margin, or operating profit as a percentage of sales, at 24 percent, only one percentage point lower than a year earlier.

Losses were also driven by an increase in costs related to sales by 50 percent in the same period. Investment returns fell 89 percent to 45 million reais, using the equity accounting method.

Financial losses rose 8.4 percent to 943 million reais and income tax and social contributions rose to 122.2 million in the first quarter compared with a 502.5 million credit a year earlier.

$1 = 3.4448 Brazilian reais Reporting by Silvio Cascione and Jeb Blount; Editing by Chizu Nomiyama

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