CEO of Brazil’s Best Stock Says It Still Has Room to Grow

(Bloomberg) -- Brazilian steelmaker CSN, the country’s best-performing stock this year, still has plenty of room to advance on robust iron ore prices and progress at reducing debt, Chief Executive Officer Benjamin Steinbruch said in an interview.

Companhia Siderurgica Nacional SA, as it is formally known, continues to pursue an asset sale in Germany to improve its balance sheet, and is also looking at additional opportunities to get up front payments for future iron ore supplies, Steinbruch said. In February Glencore Plc agreed to pay CSN $500 million in advance for a five-year iron ore supply contract.

“CSN shares were hurt by the company’s leverage, as investors didn’t believe I would sell the assets. But we’ll continue with the divestments,” Steinbruch said.

Global iron ore prices have surged to multiyear highs after Vale SA’s fatal dam collapse in Brazil hurt production and shipments, and Australian miners have also flagged lower output after a cyclone. Steinbruch sees average iron ore prices of $80 to $90 a ton this year. The supportive price scenario has contributed to CSN’s 93 percent rally this year, about double the second-best performer on Brazil’s benchmark Ibovespa index.

Steinbruch said CSN’s net debt to Ebitda ratio will fall to 2.5 times this year as a result of asset sales. CSN’s subsidiary in Germany, Stahlwerk Thüringen GmbH, has the capacity to produce about 1.1 million tons a year of long steel.

"I want to leave CSN resolved this year,” Steinbruch said. “When the market accepts this willingness, we can double again.”

To contact the reporter on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Peter Millard, Luzi Ann Javier

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