Usiminas: margin back at 9.5%, but revenue has not grown for three quarters

Usiminas reported third-quarter 2026 results: revenue of $1,140.7 million, EBITDA of $108.2 million, net profit of $44.8 million. Year on year revenue fell 7.0% after a 1.6% rise a quarter earlier – a deceleration, not an acceleration. The 9.5% EBITDA margin against minus 26.5% a year earlier reflects a collapsed comparison base rather than a sharp recovery. Our conclusion: fairly valued – an EV/EBITDA of 2.0 with net cash and a P/E of 3.2 leave no margin of safety but do not demand a risk premium. Our view: the share is fairly valued.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue fell 7.0% year on year after a 1.6% rise a quarter earlier – a deceleration, not an acceleration

— The 9.5% EBITDA margin is repaired from minus 26.5% a year earlier but remains below the levels of the first half of 2026

— Net profit of $44.8 million holds at 3.9% of revenue, against a loss of 53.0% of revenue a year earlier

— Net cash of $104.1 million and a net debt/EBITDA of minus 0.21 – a level, not an improvement

— Operating cash flow of $45.9 million was almost entirely absorbed by capital expenditure of $48.3 million

— An EV/EBITDA of 2.0 and a P/E of 3.2 – a valuation below its own history but without a margin of safety

Key figures, USD bn

Revenue fell 7.0% year on year after a 1.6% rise a quarter earlier – a deceleration, not an acceleration

In the third quarter of 2026 revenue was $1,140.7 million, 7.0% below the same quarter a year earlier. In the second quarter of 2026 revenue grew 1.6% year on year, so the dynamics decelerated. This is the second consecutive quarter of no year-on-year revenue growth: in the first quarter of 2026 the decline was 4.1%.

The quarterly sequence shows that the revenue peak came in the first quarter of 2026 at $1,170.1 million, after which it declined for two consecutive quarters: to $1,207.4 million in the second and to $1,140.7 million in the third. A $66.7 million drop over a quarter is not a seasonal fluctuation but a sustained contraction in volumes or prices.

The year-ago base remains distorted: in the third quarter of 2025 revenue was $1,227.1 million, but the company posted a loss. The current 7.0% decline means that even against a weak quarter sales are falling. For assessing business resilience, what matters more than the absolute revenue level is that it has not grown for three quarters.

The 9.5% EBITDA margin is repaired from minus 26.5% a year earlier but remains below the levels of the first half of 2026

EBITDA in the third quarter of 2026 was $108.2 million on revenue of $1,140.7 million, a margin of 9.5%. A year earlier, in the third quarter of 2025, EBITDA was negative at minus $324.6 million with a margin of minus 26.5%. Such a sharp contrast is explained not by operational improvement but by a collapsed comparison base: at that time the company posted an operating loss of $384.6 million.

Relative to the previous quarters of 2026 the margin declined: in the first quarter EBITDA was $130.5 million on revenue of $1,170.1 million, in the second $157.3 million on revenue of $1,207.4 million. In the third quarter absolute EBITDA fell to $108.2 million and operating profit to $64.8 million. A $49.1 million quarter-on-quarter drop in EBITDA on a $66.7 million revenue decline means the company is losing operating leverage.

Operating profit of $64.8 million is positive, but its ratio to revenue is 5.7%. That is a modest level for a steel company and below the first and second quarters of 2026. Profitability has recovered from the 2025 collapse but has not yet returned to a sustainable level.

Net profit of $44.8 million holds at 3.9% of revenue, against a loss of 53.0% of revenue a year earlier

Net profit in the third quarter of 2026 was $44.8 million, or 3.9% of revenue. A year earlier, in the third quarter of 2025, there was a loss of $650.9 million, equal to minus 53.0% of revenue. The $695.7 million swing is explained mainly by the recovery in operating profit from minus $384.6 million to $64.8 million.

Profit in the current quarter is lower than in the first and second quarters of 2026: $178.6 million and $84.3 million respectively. A quarter-on-quarter decline in profit with positive operating profit points to pressure on the bottom line. A net margin of 3.9% is positive but thin: on revenue of $1,140.7 million any material deterioration in the operating picture would push the company back into loss.

Over the trailing twelve months net profit was $344.4 million on revenue of $4,700.0 million. That corresponds to a P/E of 3.2 on a market capitalisation of $1,097.5 million. The low multiple reflects cyclicality and the risk of a repeat loss-making quarter rather than cheapness alone.

Net cash of $104.1 million and a net debt/EBITDA of minus 0.21 – a level, not an improvement

As of 30 September 2026 the company has net cash of $104.1 million: cash exceeds debt. The ratio of net debt to trailing-twelve-month EBITDA is minus 0.21. That is a level indicating no debt burden, but not a change in trend.

Over the quarter from 30 June to 30 September 2026 net cash moved from minus $104.1 million to minus $104.1 million, i.e. barely changed. Over the twelve months from 30 September 2025 it rose from $0.0 million to minus $104.1 million, a change of minus $0.1 billion. This is moderate cash accumulation, not a radical balance-sheet improvement.

The absence of debt is a strength in a cyclical industry. However, it does not offset weak operating dynamics: net cash does not generate profit, and its presence does not prevent revenue from falling. For an investor, what matters is not the fact of net cash but the ability of the business to multiply it.

Operating cash flow of $45.9 million was almost entirely absorbed by capital expenditure of $48.3 million

In the third quarter of 2026 operating cash flow was $45.9 million and capital expenditure $48.3 million. Free cash flow was therefore negative: investment spending exceeded operating flow by $2.4 million. This means the company did not generate enough cash to fund its investment programme from current operations.

Over the trailing twelve months operating cash flow was $394.0 million. With quarterly capital expenditure of around $48–50 million, annual investment is roughly $200 million, leaving positive free cash flow on an annual horizon. In the third quarter, however, the buffer disappeared.

Negative free cash flow combined with net cash means the company can fund investment from accumulated resources without raising debt. But if operating flow continues to decline along with revenue, the investment programme will come under pressure. Capital expenditure of $48.3 million is not a one-off spike but a sustained level that must be covered.

An EV/EBITDA of 2.0 and a P/E of 3.2 – a valuation below its own history but without a margin of safety

With a market capitalisation of $1,097.5 million and net cash of $104.1 million, trailing-twelve-month EV/EBITDA is 2.0 and P/E is 3.2. These are low multiples reflecting industry cyclicality and the recent loss-making quarter. However, we do not have data on the company's own three-year multiple history to claim the stock trades at a discount to it.

Return on equity (ROE) is 4.0%, a modest figure that does not justify a high valuation. At the same time, the absence of debt and net cash provide resilience if conditions deteriorate. A low P/E of 3.2 can be a trap if trailing-twelve-month profit proves to be a peak.

For comparison: trailing-twelve-month profit of $344.4 million includes a strong first quarter of 2026 with profit of $178.6 million. Excluding that quarter, annual profit would be significantly lower and the multiple higher. The valuation looks fair but not cheap given cyclicality.

Valuation on the latest reported figures

Bottom line

The balance sheet remains the report's strength: net cash of $104.1 million and a net debt/EBITDA of minus 0.21 provide a resilience buffer. The operating picture, however, is weakening: revenue is down 7.0% year on year after a 1.6% rise a quarter earlier, EBITDA is falling quarter on quarter, and free cash flow has turned negative. The margin recovery to 9.5% looks impressive only against the collapsed third quarter of 2025 at minus 26.5%. The real problem for a holder is the absence of revenue growth and a thin 3.9% net margin. Our conclusion: fairly valued – EV/EBITDA of 2.0 and P/E of 3.2 offer no margin of safety but do not demand a risk premium. Our view: the share is fairly valued.