Companhia Siderurgica Nacional S.A.

everyone to the CSN conference call to release results for the fourth quarter 2022. Today, we have with us the company's executive officers. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation. ensuing this there will be a question and answer section when further instructions will be given should any participant need assistance during this call please press star zero to reach the operator We have simultaneous webcasts that may be accessed through CSN's Investor Relations website at ri.csn.com.br, where the presentation is also available. The replay of this event will be available as soon as the call ends for one week. Once again, you can flip through the slides at your own convenience. Please bear in mind that some of these statements made herein are mere expectations or trends and are based on the current assumptions and opinions of the company management. Future results, performance, and events may differ materially from those expressed herein as they do not constitute projections. In fact, actual results, performance, or events may differ materially from those expressed or implied by forward-looking statements as a result of several factors such as overall and economic conditions in Brazil and other countries. interest rates and exchange rate levels, future rescheduling or prepayment of debt pegged in foreign currencies, protectionist measures in the U.S., Brazil, and other countries, changes in laws and regulations, and general competitive factors at a global, regional, or national basis. I would now like to turn the floor over to Mr. Marcelo Cunha Ribeiro, the CFO and the IR Executive Officer, who will present the financial and operational highlights for CSN. Mr. Ribeiro, you may proceed. A good morning to all of you, and thank you for attending our results call for the fourth quarter 2022 for CSN. Before beginning the presentation, I would like to thank all of you for your attendance and The CEO and Chairman of CSN is with us as well as other executive officers that will participate in the question and answer session. Let's begin with the highlights for the period, the acceleration in our financial results for the fourth quarter. We had important frameworks and some impacts, especially because of the rainfall in mining, but we were able to come up with a good response and we had a speed up in volumes, prices and costs in mining. And in terms of steel, we had the traditional good performance and which enabled us to increase our EBITDA by 15% at the end of the year, a growth that should increase its pace throughout 2023. Secondly, we highlight the conclusion of the acquisition process of CEEE, with the acquisition of 66% of the capital of the company and also a transaction at the end of the year when we acquired an additional 32% from Eletrobras. We're now owners of 99% of the capital of CEEE. an important player in the electrical sector. It enables us to be self-sufficient and we can also sell energy at present. The third important impact, a jump in our ESG indicators, work that has been done by putting in place policies and goals, but also enhancing the disclosure of our historical practices, we have attained two important indicators. The first, we have been called an industry mover, the company that most improved ESG throughout the year. And secondly, Sustainalytics has included us as the fourth best company in the segment throughout the world, thanks to the endeavors and efforts that CSN carries out on that front. We go on to page number four and show you our evolution of our EBITDA quarter on quarter. Of course, we had volatility throughout the year. We were impacted by the strong prices of iron ore and steel in the first half of the year. We then saw a normalization in the price of these commodities impacting our profitability. At the end of the year, at operational level, we were able to obtain better margins, 27%, and ended the year with 13.8 million reais in EBITDA, the second best year of CSN. although it represents a drop of 30% vis-a-vis 2021. With this, we had a growth of 15% in the quarter in this sequential comparison. At the right in the graph, you can see that the great difference lies in the mining sector, where we practically increased the results twofold in terms of prices and volumes as mentioned, still also operational but with a gradual reduction of prices causing that drop in the EBITDA. We go on to page number five where we will speak about our cash beginning with our investments. We accelerated our CAPEX in the fourth quarter going from 839 million to 1 billion 036. especially investing strongly in segments besides steel and mining. We had some factors that were not part of our initial forecast, the consolidation of Holstein and the rights of use. bringing us a new level of capex in the segment of 1 billion reais, raising our capex of 3.4 million reais for the year, still below what we expect to do in 2023. And of course, we will have a speed up in the mining sector with the evolution of the P15 sector in working capital. quarter, we had a very strong demand in our inventories. We had been reducing inventories of raw material because of the normalization of prices abroad, as you will see in the steel results. We had production. We ended our inventory, which was of course part of our strategy. We increased production and accounts receivables because of the possible evolution of the mining cost. And all of this was fully offset with the receivables from suppliers. But this led to an increase in our working capital with an impact on our cash flow. In the next page, you can see the volatility that we face in free cash flow, the operational cash flow that you can see to the left of the page. Ending the year with good operational results, but with a high level of inventories. That is why we have a negative cash flow. We enhanced cash generation and ended the quarter Well, we had an EBITDA of $3.4 billion used in these variations of working capital, a higher KBITS, higher interest rates as well, and taxes that seasonally were somewhat higher for 2023. we will stabilize this cash flow. We have a positive result in EBITDA, and this will offset the higher investments. So a positive cash flow will enable us to reduce our indebtedness that we see in the following page. In page number seven, we observe that this cash flow for the fourth quarter was insufficient to allow us to reduce our indebtedness. Subsequently, it went from 24 million to 30 million for very obvious reasons. The acquisition in the electrical sector an increase of 3.3 million reais besides an important payment that we carried out. All of this adding up to the totality of our net debt that grew 25% to 30 million reais. With this, we ended the quarter with 2.2 times leverage pro forma for the prepayment of mining that we announced in the first days of January. And in truth, this leverage would have been two times, which is the range in which we would like to operate for 2023. We will see a sequential improvement of EBITDA and cash flow. And of course, we will tend to fall within that range with minor variations through the coming quarters. On the following slide, our liquidity and our debt amortization, which is quite lengthened. Liquidity remains comfortable at 12 billion reais. And because of the prepayment of the $500 million, this would be very close to our target liquidity, a good coverage in the short term. We highlight our activity in the capital market, especially the local capital markets. We took advantage of a very sound window. We debentured for more than 4 billion reais, helping us to lengthen out our indebtedness and making it more efficient. before we were working in a more volatile and more expensive capital market than in this quarter now we had debentures in each of the businesses we had a good year in 2022 Our volumes were very close to 2021, especially in the domestic market. We had a minor drop of 3%, smaller than the drop of the market that was close to 10%, showing our endeavors to... conquer the market, we grew in important sectors in construction and others more than leveraging what had happened in other sectors, the automotive line, the white line, and We had a quarter with prices that internationally were weakened. Therefore, we were very careful, privileging volumes and not prices. We had a slightly higher drop, but better than 2021. Regarding prices, they have a drop of approximately 8% in line with the international prices. The positive issue, as announced, is that the international market has given way for new price increases. And as we will see in questions and answers, we have the opportunity of holding new rounds. We still see very high prices. and this should allow us new incursions. We had an EBITDA with a marginal drop a drop of 13% despite a good operational performance and dropping prices. On page number 11, as you can see, we had a production of 7% below 2021. We took the most of some opportunities buying slabs in the international market. taking advantage of the drop in average prices. We also had a drop of 5% in slabs and we had a drop in the cost of the final product. This has enabled us to maintain average prices, the floor of our profitability that would be higher than our historical average, 819 reais, which is above $150, which is the average cost. what we saw in 2022, we intend to improve upon with that attempt of increasing prices and of course a better quality in mining on page 13, a very strong quarter from the viewpoint of results and operation. We were able to have an increase of sales of a quarter, which typically is a slower quarter because of seasonality. We produce somewhat less because of seasonality, but we were able to sell more. and impact working capital because of the improvement in prices. We began the quarter with low prices with a price improvement in December. We made the most of this price improvement, sold out our inventory during the period, and we had a slight increase. In volume vis-a-vis 2021, our forecast for 2023 is even better. We will buy from third parties and improvement in the market at higher prices. And we're quite enthusiastic about the margins. In 2023, all of this should speed up to what we saw in the fourth quarter above 50% and higher EBITDAs that we saw of 1.8 million reais for the fourth quarter. On page 14, this is an x-ray, a comparison among quarters. We had an improvement in all of the areas in volume, in the mix. of our own mix, vis-a-vis that of third parties and improvement in prices, great. And with this, we got to attain this growth also bolstered by the provision of what had been sold in previous quarters, leading us to 1.8 billion reais of EBITDA Now, to speak about cement on page 16, for the first time, we consolidated La Salle Holcine of Brazil, now called CSN Cements of Brazil. We got to 3 million tons this quarter and ended the year with 7.2 million tons. Of course, if we look at 2023, these are figures that will change quite drastically as happens every year, but we also expect a significant growth in certain environment. At the end of the year, we implemented some actions within our CSN plant in Brazil to reconnect capacity. And this led to a slight reduction in margin, the reconnection of some operations. And because of the cost of fuel that is higher, it led to a profitability that is a one time effect that was somewhat lower. We have prices of coke and oil dropping in 2023. We won't have these reconnection costs. And of course, we have an abundance of synergies to make the most of. A control of the LaFleur's Holcim plant that has proven to be better than we had imagined. We have, for example, the cost of our own energy, something we had forced in for July, we have anticipated to April. We're quite enthusiastic with the cement business in 2023. This ends our presentation of segments. We would now like to speak about ESG. Good morning, everybody. We are here again to present to you the results for the second, for that fourth quarter of ESG. And of course, this is something under constant evolution with the aim of offering you greater transparency in terms of what is done in the company. I'm just going to give you a bird's eye view in terms of governance, great strides. We concluded the impact and dependency matrix on ecosystem services. We're following the guidelines of TNFD, mapping of risks and opportunities, setting forth some parameters, especially that relate to nature. And in April, in our report, we're going to approach all of these topics. We ended the year with CSN mining, with all of its dams renewed. The BG Adam has completed, of course, the works and recharacterization. And we continue to evolve in terms of our operational performance quarter on quarter. We ended the year of 2022 with a reduction of 25% in our accident frequency rate. And Compared to 2021, this is the best result in our historical series. A significant reduction, 19%, in the number of accidents as well, with employees in our third parties. Our cement plant began with the 14,001 certification. We're working on sewage projects for the reduction in the consumption of water and the emission of CO2. Of course, this has been done for each segment in steel minus 5% versus the baseline in 2018 and improvement of CO2 emissions in cement minus 7% versus the baseline in 2020. A slight increase in the emissions of mining. So you can see that all of these trends have been carefully forecast segment per segment and we have mapped out our initiatives through time. It's also important mentioned that we have identified all of the risks in the company and all of this will be part of the next integrated report of the company. When it comes to diversity in the social area, we have a growth of women in leadership growing year on year. We have had a 50% growth Of course, we would like to reach 2025 with 28% of women in leadership position in the social area. We concluded two projects in the last quarter, a partnership with the Getulio Vargas Foundation, and the conclusion of our theory of change, which will enable us a new instrument in terms of social investment. As has been mentioned, there has been a constant evolution in the company in terms of our main ratings, especially in sustainability, where we had the fourth best score in the segment among 155 companies. We are the only Brazilian company with steel and mining that was indicated into these categories. We are the steel company with the greatest evolution in terms of its ESG practices. Thank you very much. Ladies and gentlemen, we will now go on to the question and answer session for investors and analysts. Should you have a question, please press star 1. If your question has been responded, you can withdraw from the queue by pressing star 2. We request that you please pick up your phones when posing your question to allow for optimal sound quality. Please hold while we pool for questions. Our first question is from Rafael Barcelos from Santander Bank. You may proceed. Good morning to everybody. Thank you for taking my question. My question refers to steel. We imagine what the purchase of slabs has been quarter on quarter and what you are doing in the first quarter, considering that we're already in March. If you could speak about your priorities at present in terms of your capital spending, what would be ideal for the company at present? Good morning, Rafael. This is Martinez speaking to you. In terms of cost, as mentioned by Marcelo, we had a significant reduction in the cost of slabs in the fourth quarter. Our efforts are strong to continue on with this cost reduction. The first half of the year, we're going to ensure that this cost reduction continues. It's fundamental to preserve our EBITDA margins. In the fourth quarter, we got to 3,900, but we're going to work to reduce this cost even further for SLAPs. We carried out a strategic acquisition of slabs, approximately 400,000. We have already used up 300,000 tons of slabs. We have 100,000 tons that we can still utilize. And we're also analyzing other possible acquisitions of slabs to balance out the price of slabs at the plants. We have additional efforts to reduce the cost of conversion and manufacture as well in the transition between hot and cold slabs. and for upstream products as well for efforts ahead to continue to reduce our costs. Now, regarding our capital spending, minimum cash was the question. We continue with that vision that because of the volatility in Brazil, it's important to increase cash. The ideal range would be 15 billion. This is important insurance, of course, in present days. And we're making all possible efforts to reduce this, making our fundraising and investments ever more efficient. And we're enhancing our facilities to receive that special check that it is called to work with lower cash levels. For the time being, here's our instruments only available for companies of our investment grade. We have got an investment grade and throughout 2023, we're going to take that minimum volume of 15 billion. I hope that has answered your question. Is anything missing? Do you think it's possible to have additional cost reductions here in the first half of the year simply to complete this? In the first quarter, the cost will become more stable. In the second quarter, we do foresee the possibility of having a greater cost reduction. I will speak about our price pillar in the first quarter. We do have the ability to improve this, But in terms of cost, we will reach stability in the first quarter with a possibility of a further reduction because of the lower cost of acquisition of raw material, which we have already acquired. This has allowed us to reduce our costs for raw materials that are in inventory. We'll have more sales in the second quarter. And with the use of slabs, this will offset some variations that we might have in the first quarter. Our acquisitions were quite interesting in terms of cost reduction. Thank you. That was very clarifying. Thank you. Our next question comes from Danielle Dassault from Itaú BBA. Good afternoon to all of you. Thank you for taking my questions. My first question is to Martinez. Now in Europe, everything is slower. Last year, they ended at 7.5 million of capacity in terms of steel. It's coming back slowly. The prices are recovering as a counterpart. The situation will be very positive in terms of the demand of rebar. We will need 4 million tons to build this coming from Turkey. And when we come to Brazil, And we look at the pillars that you are conversing about. Coal continues at 375. Iron ore, 129, 130. Exchange, 129, 130. With these price levels in Brazil, a BQ at 4,700 and a Chinese BQ at 680, the premium Danielle will be slightly negative. The scenario, if we take into account a slightly stronger demand, which I do believe will materialize, In March and January and February, the sector was quite well behaved. We saw an improvement in March. We could increase between 7.5% to 10% beginning in April, which is possible because of the market dynamic. In the long-steal scenario, the premiums are negative. Nowadays, if you look at a Turkish rebar that was the cheapest and no longer exists, the premiums are minus 14%. So summarizing, if the demand begins to increase somewhat with growth as of March, stabilizing and if the market becomes stronger in the automotive sector in civil construction in the white line where we observe an improvement i think that as of april we could have that increase of 7.5 to 10 percent In long steel, the situation is somewhat more difficult because supply and demand is somewhat more complicated. In flat steel, the equation is different. There's the maintenance of some plants, especially our own Uzi Minas. This is not a secret. We're remodeling the blast furnaces. We also had some problems in special steel that are being retraced and everything will have been done as of March. Perhaps the prices will drop a bit more than the market as well as the volume beginning in the fourth quarter. So, I see that the scenario is very positive. And if we look at the world situation, Brazil cannot lag behind. Everything is increasing. And I believe Brazil will accompany the world trends. And Brazil has to give itself a chance. The government has to help us help Brazil so that it can go back to growing. Now, they're saying that the growth will be 1.5 to 2%. Last year, Brazil had a drop of 10% in flat steel. If we're able to grow 1.5 to 2%, we can recover prices and return to historical margins of over 20%. Very approximately, this is the scenario. And the cost of slab produced and purchased in Brazil the people were exploiting the world market yesterday I was looking at some reports and there was a Slabs sold to the U.S. and Mexico in an isolated way at $750, $780. Now, the Brazilian slab producers in a more orderly market were selling at prices below $650, our normalized slab cost. with the cost initiative will be below $700 for sure. And we have to calculate to see if it's worthwhile buying. We're going to look at this surgically to see if it's the right moment to buy. We're privileging our operational moments and trying to make the best of what we have in the company. We will only make use of opportunities if they're positive for us. I hope to have responded your question. Yes, yes, absolutely. That was very good. Thank you, Martinez. Our next question comes from the English room from Mr. Carlos de Alba, Morgan Stanley.

Thank you very much. Just wanted to discuss a couple of things on the cash regeneration, the CAPEX and working capital for 2023. I just want to see, Marcelo, if the CAPEX guidance still remains intact for mining and steel and for the overall company this year. And working capital, you alluded to the fact that you want to reduce it, obviously, the fourth quarter. wasn't exactly what the market was expecting, but if you can potentially tell us if this is something that the company believes can be achieved already in the first quarter, or if it's going to take a little bit longer to bring the working capital and to what levels to something that is more comfortable. And then, if I may ask, on the cement profitability, EBITDA per ton came down in the quarter. I don't know if this is a result of the consolidation of the Lafarge business or if it is just the market being a little bit more difficult, more challenging right now. But if you can talk about how do you see the profitability of that business in Q1 and maybe in 2023, that would be really useful. Thank you very much.

Well, thank you, Carlos, for the question. We're addressing your question on the CAPEX. In the guidance, it is 4.4 million with the main use in mining because of the acceleration of the P15 project. So the answer is yes. this guidance will not undergo revision, not in mining or in other businesses. It was simply impacted in the fourth quarter because of some issues referring to the segment, our RTGs, our cranes, the right of use. and the acquisition of products in our cement business. But these were a one-time effect that ended at the end of the fourth quarter. What we will see in 2023 is an increase in mining, increasing this figure during the year to 4.4, as stated in the guidance. Regarding our working capital, we ended up with our stocks above 11 billion. We hope for a normalization of the inventories. removing 600 million from that line item and also in the line item of raw material costs we still have coal and coke that are quite expensive we have inventories of this so we're hoping to reduce these lines by two million reais throughout the coming quarters of course This won't have a direct impact on cash generation. We have a proportional impact on suppliers, but the cash flow line item, the variation of working capital should be well-behaved throughout 2023. We're not expecting the volatility we had in 2022 regarding the EBITDA per ton of cement and the consolidation of the cement Brazil plants. This will tend to reduce the EBITDA percentage per ton. Yes, because we're speaking of a capacity integrated plants, what perhaps caused the instability in the fourth quarter was not that consolidation. It was what was mentioned in the presentation, the cost of oil that was higher, the higher cost of fuel, somewhat lower volumes. because of the heavy rainfall with lower volumes and because of reconnection of some of our capacity in the plant in Sorocaba and Bajoso. These are one-time costs that increased our fixed costs, reducing the percentage. Now going forward with the integrated company, we think we will be able to navigate above 30%. Go back to the results we had in the past.

Thank you, Marcelo.

Our next question is from Vanessa Quiroga from Credit Suisse. Hey, good morning and thank you for taking my question. My question is about the cement business. To speak about synergies, which are the factors that will be able to point to the synergies and disintegration? What is the stride that you have made here? And if you can give some guidance for the year 2023 in the field of cement. Thank you. Hello, Vanessa. Good afternoon. This is Ejivaldo to speak about the synergies. And at CSN Day in December, presented our expectation for the capture of synergies was of course much greater than we had imagined originally. These synergies are concentrated in some drivers in the self production of energy with a reduction in the cost of energy and all of our operations, a better distribution logistic, a more intelligent logistic, more competitive in the market. We also have a commercial strategy that is historical for CSN, a pulverization of clients, and this enables us to capture results on the table. We have synergies in terms of acquisitions. a larger volume of raw material in the shorter term. And in the field of operations, a range of opportunities in operation, alternative teams, new capacities, as mentioned by Marcelo in the presentation, we're already working on this. And everything will come into operation in some weeks. Therefore, we have a very broad range of synergies that will fall within that chart that we showed you at CSN Investor Day. And we're going to put together two companies into a single company with a margin of 30%. Do you believe that 2023, we will already see this increase in margins? Oh, certainly, yes, we will. The results of the fourth quarter. was perhaps a one-time effect, but we are going to navigate above 30%. In the last three years, CSN has concentrated on that 30%, and with the capture of synergies, we will doubtlessly return to that level, and we're working in that direction. Thank you very much. Our next question comes from Thiago Losiego from Bradesco BBI. Good morning, everybody. My first question to harp upon the topic of cement still, which is your outlook in terms of demand and prices throughout the year? It could be a somewhat more challenging market and how are you going to balance out this increase in utilization with a market that is not simple to operate in? And as part of CEMENT, Marcelo, What is your mindset once you're operating at an interesting level with margins and synergies? What's going to happen in terms of your IPO? The second question, to go back to capital allocation. which is the greenfield potential in the United States? And which is the type of growth that you're expecting? If we could hear your comments, it would be very appreciated. Good morning, Thiago. This is Martinez. I'm going to speak about cement and the origins when we began the cement business. And we have to be prepared for a war. This is what our chairman has always said when we began in the cement business. we had, and this is what we're seeking now with the integration of both St. Lafarge, is a better cost. This is the best challenge we had when we had CSN business. This cost enabled us to enter the market, participate in a very competitive market with other large market players with the acquisition of Lafarge Holstein. Besides the excellent surprises we had that Evaldo can refer to, logistics, policy, energy issue, which is very important. In the near future, this will be it will be worth a great deal because of modern techniques and energy. This will be of great value to the company. In the commercial strategy, we have a regional strategy, a strong regional strategy. We have an interesting share in the southeast in the retail markets. We're going to continue to sell more for to sell more for less implement the portfolio strategy from la farge itself we have recovered and grown in some markets here in the southeast despite the high share in the northeast we also had room to occupy the retail market a fragmented market for construction material for example they buy small amounts in a market that was poorly supplied there's room to grow there and in the market where Lafarge has the technical cement which is the great strength both were entering very strongly we have already grown our market share we have a strong market here in the region we have selected of course the competition is harsher last year we were able to recover 18 of the price throughout the year in cement the market stands at 2.7 with specificity of some regions and There are some regions where we have been able to work very well. Although the competition was harsher in January and February, the market in truth began on March 1st because of the rainfalls. And we see very positive signs in residential construction, in commercial construction, and a carryover of the works that were launched in the past. and we could have a somewhat better market commencing now until the end of the year. We can only grow and occupy new positions. Now the price position is fundamental. Regarding prices, the greater emphasis now is on cost. The petco has reached very high levels and we're going to have to work better with the crop throughout the world. The price will not have the same strength it had in last year. The increases in price were very strong. We're now more concerned about cost and market occupation. This is our strategy. Now, regarding the IPO, and the question on projects in the United States. Our guidance is to look for growth that is profitable and sustainable, always keeping a very prudent leverage. And I think this has been sufficiently emphasized. Benjamin was very clear about our priorities on CSN investor day. Now, working with that IPO would be in accordance with reducing our leverage. Now, in-house, we're doing very well. We not only have growth, we have synergy, we have profitability gains. This is a story that progressed quite well in the market now, but we know that the market is completely closed at this point in time. We're going to be ready and watchful. Regarding the United States, we would like to continue to make moves in it. This is a strategy because of the geographic location, but we look upon leverage. We have been gauging the definite launch of these projects. ensuring that our capital structure will not go beyond the levels that are both sound and sustainable. We're going to work on that balance in the coming quarters. And once we're within the range that is expected, once we have sufficient confidence in our capital, we're going to accelerate our organic growth in the United States. Well, thank you. Thank you very much. Our next question comes from from Bank of America. Good afternoon. Good afternoon. Thank you for taking my question. A question to Martinez, which is the difficulty of increasing prices here compared to the prices in Europe, United States, and China? Now, will the export levels of CSN be higher than they were last year, importing steel from Turkey, for example? And another question to Marcelo regarding capital allocation, which are your priorities in the coming quarters? Is there room for growth? Is your cash position acceptable? There is a general assembly coming. So what will happen with all this? Well, in the first quarter, we should have a carryover because we did increase the prices this year between 3% to 5% regarding the fourth quarter, which is already positive. Now in the case of the price increase for flax field, what I was saying is that the demand in March has already improved. We have positive signs and this might improve the environment to increase prices. Now the premium is negative. In my opinion, with a negative premium, it doesn't make sense regardless of the demand. The level of exports is still very high, 18%. Now regarding exports from CSN, to give you an idea, last year we exported to the USA our whole quota, 250,000 tons of galvanized steel. We're thinking of sending 400,000 in 2023. This is part of the project. And the BQ, because of the sunset review, I could send a bit of this. It is more of an advantage at $1,200 instead of sending it here. And the laminated steel. But there could be greater exports to the USA in terms of other long steel markets. I would like to have more rebar to sell in the domestic market. We're completely sold out in the Brazilian market, which is quite fragmented. Exports would not make sense. We're going to focus on the domestic market. In terms of capital allocation, we're always in a situation of balance, leveraging, and much more, as Benjamin mentioned on CSN Day. With our leverage at two or up to 2.2 times, we're going to keep our eye on generating cash. The situation is given at the General Ordinary Assembly, the dividends that had already been disclosed in November. Well, that situation is a given and the growth will come about Because of a capital allocation we carried out last year in September and December, almost 8 billion reais invested in Lafarge Holcine and the electrical companies. This will have an impact on the consolidated results in 2023. We hope to deliver all of this by leveraging dividends and growth. Of course, everything in a sustainable way. Thank you. Thank you very much. That was very clear. Our next question comes from Diya Grainer from BTG Pactual. Good day or good afternoon to all of you. A quick question and a follow up. We have heard from your clients and distributors recently that CSN has delayed some deliveries because of some reported problems, operational problems at Volta Redonda. If you could clarify this. If there truly was a factor reducing your delivery rate, impacting your deliveries, if this happened, if it has been resolved, if it could have an impact in the first quarter in the domestic market, a follow-up for Martinez. Martinez mentioned that we expect potentially stable costs in the first half of the year. Is this for the slab that you produce or would this be the total cogs per ton, including the slabs of third parties that you have been purchasing? Thank you. Well, in truth, it refers to the cogs. That's what we are referring to. The cost of the slabs is more stable at 3.900 reais per ton presented in the fourth quarter. Regarding the problems, they're true. There's more noise than there should be. We had one-time problems that had an impact that are being resolved. We did have an impact on the first quarter. In the second quarter, they will have been fully resolved. At the beginning of March, the problem has practically been resolved. We continue forward. It had a greater impact in special steel linked to other markets and not that of distribution. It indirectly impacts distribution that is a channel, not a market. And there are small clients selling to assembly pants, the white line, and buildings that did suffer an impact, but the impact was minor. We have to address the problem and they will be fully solved. Thank you. Thank you very much, Martinez. And that informal guidance of cost per cob will extend during the first half of the year, despite this minor impact. Yes, all of this has been taken into account. Wonderful. Thank you very much. Our next question. comes from the room in English. Mr. Hello from Santander Bank.

Hi, good afternoon and thank you for the call. On a different topic, just looking at balance sheet metrics and considering, I think, the fact that here today the local markets in Brazil have become more credit constrained. Given the amount of amortizations that are scheduled I guess it's around $8 billion or so between now and the end of next year. Have you changed your thought process in thinking of tackling that? Can you talk a little bit about how you see market access? I believe it's three-quarters bank, one-quarter capital markets, but if you give a bit more detail given how the market has changed in Brazil and given to the extent there's market access, it's also not relatively as cheap versus the international markets as it was, say, last year. So any kind of details there would be helpful. And if you're kind of contemplating accessing the dollar markets at some point to address this, if you've gotten to that stage yet. Thank you.

Thank you for the question, Decon. Now, regarding market access, it's completely open. We have access to the international capital markets. The good ones are back with a limitation in China. We have a good market here. And there's a debenture market as well that will be back. Now, all of them at a slightly higher level. were being quite selective, were not concerned with the amortizations that have all been fully addressed. We do have special fundraising, specific fundraising for use in our cash for investments in Chimpic Lines, for example, Japanese lines that are our partners in mining. and they're going to enable us to complete the P15 project more than a million dollars. We have spoken with multilateral agencies to fund our projects on cement because they have that green characteristic hundreds of millions of dollars and for the very long term we have a more efficient cost now regarding the capital markets they're completely open we're being very selective because at this point in time the costs are higher thank you for for that that's it for me As we have no further questions, we will return the floor to Mr. Marcelo Ribeiro, the CFO and IR Executive Director for his closing remarks. You may proceed, Mr. Ribeiro. Well, thank you all for the comments. I will give the floor to our CEO and Chairman Benjamin Steinbrook for closing remarks. I would like to thank all of you for your at our fourth year 2022 conference call for CSN mining and CSN. I would like to reiterate the commitments we made formerly regarding leveraging. We're at two times. And if we consider the prepayment of iron ore and that... quest to be at one, 1.2 times. We have had expressive growth in the last half of the year, in the last semester, and we count upon significant synergies that will be proven in our results because of the acquisition. And along with this, we're also hoping for an opportunity of an eventual capital opening in cements and also in energy and or perhaps a participation as a strategic partner. If there's any other market operation in terms of capital for our new assets, we will have the certainty that everything will go back to normalcy in terms of our leverage. Well, this has been reiterated in the past. It's a commitment of having it stand at one time or two times at the very most. Now, in terms of ESG and technology and the growth of our results, we have had significant evolution in ESG. In fact, we're working strongly on that. We are fully committed to the use of technology as well. We use it broadly. We're working with the green steel that causes less aggression in the production of iron ore, steel and cement. We had a year of 2022 that of course could have been better. We did not make the most of some opportunities. We faced some operational difficulties that were quickly overcome and in the fourth quarter, we were able to show the improvements and enhancements. We believe that beginning in the first quarter, we will have stronger results because of the synergies that we are capturing in cement and the integration of energy into our units. And along with mining, We will have better prices than those that have been foreseen. in submit the prices are still low in the market and we have an excellent outlook of results for the second half of the year now the price of raw materials is given the market prices already are given as well so we're quite convinced that we will harvest the results of all of the efforts carried out formerly we overcome the difficulties that exist in the market attain global profitability as well as local profitability and we're quite optimistic regarding the year 2023 as all of the necessary measures have been adopted and our idea at present is to make the most of what has already been done and to work at full steam with margins that have always been our mark that have set us aside in the market. We hope to be able to show these results very soon beginning in the second quarter of 2023. We reiterate our commitment with delivering full production in that quest for greater productivity, a commitment with the use of technology, and we're convinced that we're on the right path. As in a large company, we're moving towards growth in a very complicated market. Everything tends to be somewhat more difficult because of the peculiarities of our day-to-day. But we have gotten it right in terms of acquisitions. And, well, if we make minor mistakes in 2023, I'm convinced we will have excellent results. Once again, I would like to thank all of you for your attendance at our conference call. And we will very soon be disclosing the results of the first quarter. Thank you once again to all of you. Thank you for attending our conference call for CSN. And here you can now disconnect your lines and have an excellent afternoon. Thank you very much.