Brazil's Votorantim posts $597 mln Q1 loss, hit by Nexa mine
21/05/2020 13:30
By Carolina Mandl
SAO PAULO, May 21 (Reuters) - Votorantim SA, one of Brazil's
biggest diversified holding companies, posted a first-quarter
net loss of 3.4 billion reais ($597 million), reversing a 4.4
billion real profit from a year earlier, as a weaker currency
boosted debt servicing costs.
The quarter's results were also hit by a $485 million
impairment charge for reduced cash generation expectations for
its Nexa Resources SA NEXA.N unit's Cerro Pasco zinc mine in
Peru, Votorantim said in a statement.
Mainly due to a sharp depreciation in the Brazilian real,
Votorantim's net debt - much of it denominated in dollars -
skyrocketed more than 60%, ending March at 16.2 billion reais.
That is equivalent to 3.55 times adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), up from
a multiple of 1.95 in December.
The holding's Votorantim Cimentos and Nexa units also
decided to draw down revolving credit lines totaling $500
million. While Votorantim Cimentos used the proceeds to prepay
bonds and extend its debt maturities, Luxembourg-domiciled Nexa
boosted its cash position to help weather the coronavirus
pandemic.
Votorantim Chief Financial Officer Sergio Malacrida said the
indebtedness ratio is likely to fall by end-year, as a weaker
real will tend to favor most of the group's sales in the coming
quarters. Still, he declined to provide an estimate, as the
consequences of the virus outbreak on demand remain unclear.
Still, Votorantim's first-quarter revenues rose 2%
year-on-year, to 6.8 billion reais, as higher cement sales and a
weaker Brazilian currency offset lower metal prices.
Malacrida said operations in Peru and Argentina, which had
been partially halted in the first quarter due to the
coronavirus-related lockdown, are resuming operations.
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($1 = 5.6929 reais)
(Reporting by Carolina Mandl
Editing by Chizu Nomiyama)
((carolina.mandl@thomsonreuters.com; +55 11 5644 7703; +55 11
97116-3806;))