Good morning ladies and gentlemen. At this time, we would like to welcome everyone to CSN's Conference Call to present Results for the Third Quarter 2022. Today, we have with us the company 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 presentation. Ensuing this, there will be a question-and-answer section at which time further instructions will be provided. [Operator Instructions] We have a simultaneous webcast that may be accessed through CSN's Investor Relations' website ri.csn.com.br/english where the presentation is also available. The replay of this event will be available on the website for a week. You can flip through the slides at your own convenience. Before proceeding, we would like to clarify that some of the statements herein are mere expectations or trends and are based on 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 projection. In fact, actual results performances or events may differ materially from those expressed or implied by forward-looking statements as a result of several factors, such as general and economic conditions in Brazil and other countries, interest rate and exchange rate levels, future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in the U.S., Brazil, and other countries, changes in laws and regulations and general competitive factors at globally, regionally or national bases. I will now turn the conference over to Mr. Marcelo Cunha Ribeiro, CFO and Investor Relations Executive Officer, who will present the company's operating and financial highlights for the period. Mr. Ribeiro, you may proceed.

Good morning, and thank you all for participating in our results call for the third quarter. Our quarter highlights, first of all, I would like to mention that this was a pretty turbulent period due to the change of prices in commodities, especially in the international market, iron ore, the impacts of the Chinese economy that is going into a slowdown impacted by the global markets have just and the prices of steel and mining at domestic level. We did our part in this very complicated period. We obtained a good operational result of growth and volumes and a reduction in the cost of production of our main business. It shows that we are quite resilient in our figures. Secondly, we were able to conclude our strategy that transform cement business. Integrating plants and assets of LafargeHolcim, now called CSN Cement Brazil, it has been consolidated in our figures during September. The good news is that we have a company with ever stronger results and more promising synergies in the third place and as a subsequent event, we were able to conclude two acquisitions that will also transform CSN in terms of energy. We concluded the acquisition of Quebra-Queixo and ensuing this the inclusion of control of CEEE-G. And this is a step of the growth towards renewable and competitive self-energy, but also poses a low risk and is an excellent segment. These are the highlights for the period. We go on to page three with our consolidated operating and financial indicators. A normalization of our profitability based on a change of all of that exuberance that you observed in prices and commodities at the beginning of the pandemic. This allows us to have representative margins in all segments. This quarter, we had an evolution with a drop of EBITDA…

Good morning, everybody. Here we are, again to present results for the third quarter. The full material is being presented here towards offering you a very transparent vision of ESG and the company. In the last quarter, for the eighth consecutive year, we received an award, because this is the highest level of qualification of our inventories. During this period, because of a better understanding of our actions, we were able to improve our performance and the rating went up to 55 points, the average of the world is 20 points. And we also began our study on climate changes, we're analyzing our processes to detect some opportunities. Now, this construction of scenario is based on the best market practices. And they will enable us to make more assertive decision when it comes to climate changes. To continue speaking about climate and our emissions for the quarter, the accrued results for the nine months of the year going to adherence to the plan set forth for each segment. Improvements in the production of steel and a slight increase in the level of emissions in the production of iron ore. And, of course, we do have great expectations in terms of performance and the implementation of projects that have been set forth. We spoke about renewable energy of course, when it comes to speaking about climate changes, and this is so important for the company, it is through the company strategy that we will be able to stand out and also work with new innovation projects. We will have clean energy that can be scaled up in several of our new developments. Now, speaking about our dam management, we're continuing the de-characterization works on the Vigia Dam. We have completed the structural building and officially we're seeing acknowledged as being a characterized and then there is nothing reported in terms of our license. We have had a significant evolution in operational terms. Quarter-on-quarter, we speak about our security, which is also under evolution. We have reduced the number of accidents. The problem of parties always presenting the best results are historical series. This quarter we reached the best figure and we end up the quarter with Zero fatalities. And in terms of social and diversity, of course, we're under constant evolution. We have increased the representation of women in leadership positions. In nine months, we have significant advances compared to 2021.

Well, thank you. We will now go on to the question-and-answer session for investors and analysts. [Operator Instructions] Our first question is from Daniel Sasson from Itau BBA. You may proceed Mr. Sasson.

Good morning to everybody. Thank you for taking my question. Marcelo, if you could remark on CapEx, the reduction in your guidance is coming from something that will continue on the next year, what is your expectation of CapEx for 2023? At this moment of greater certainty, it seems that you're revising the execution of some projects when it comes to steel. If you could speak about your expectations for volume and the guidance for 2022 was given 1.6 million tonnes if you could remark on this? and perhaps Martinez [Indiscernible], if you're comfortable with these levels, and give us more color in terms of volumes and prices for their short-term? Thank you.

Thank you for the question. I will begin to answer the question on CapEx and then give the floor to Martinez for his outlook on volume. Regarding CapEx in the medium term, we still don't have anything. We're carrying out this exercise now. We're going to share this during CSN Investor Day in the middle of December. But of course, we're working with priorities as we have during 2022. This gave us a savings of BRL1 million because of the moment of uncertainty. And we're trying to increase the cadence of projects that will be delivered in a different timeframe. We're thinking of productivity gains in steel, growth in mining, but we do have to respect the environment and liquidity and leverage issues. This doesn't mean that we're changing our direction in steel. We're going to work with changes and centering, have some shutdowns and in terms of mining, the great project is the expansion of P15 and PK expansion. In the other projects, we do have a master plan and part of our trajectory is to de-characterize the dams and of course, work with the tailings. This is a subsequent enrichment, and their timeframe might become somewhat more flexible. We're going to maintain the annual CapEx but far from the levels of BRL10 million that we had in 2022. Of course, we will have significant expenses in these projects. But so far, we do not have a precise figure for the medium term. Very soon we will be sharing this with you in the following 30 days. I give the floor to Martinez. Should you have any more doubts, we can continue speaking.

Daniel, good morning and thank you for the questions. I will begin speaking about the market. The Brazilian market for flat steel this year will end at 4.4 -- I'm sorry 14.4 million, 14.6 million tons, vis-à-vis the other years and in 2021, there will be a small drop. And from the viewpoint of volume, we should reach a very interesting figure, of course, because of the market conditions that we have had this year. Still speaking about the fourth quarter and the outlook for the sectors, some continue to be very positive, agri business, for example, construction, agricultural implements, machines deployment, packaging trucks, although these sectors are operating very well in terms of skill in Brazil. We have trucks with a percent machines with 12%. Some sectors that leaves a bit to be desired that should improve our automotive sector. Although, it did improve in the third quarter, the outlook is more positive for the fourth quarter and the white line. Also, it suffered significant seasonality in the third quarter, but they're getting ready for Black Friday, another end of the year activities from the viewpoint of guidance. In the domestic market, that fixture is 3.3 million tons for the year. And totaling for the group, a figure of 4.7 million tons considering Lusso sider with 300,000 Wt60 Long in Brazil 240,000 and in the US approximately 230,000. Approximately this would be the guidance of volumes that we have for the year, a very positive piece of information, strong penetration this year will drop to levels of 14% to 15%. This is good news. It will return significant volumes to the domestic market. And when it comes to prices, we have focused on. I mentioned this in the previous call that we were focused on recovering market share and…

Thank you so much, Marcelo, and Martinez.

Our next question is from Rafael Barcellos from Santander Bank. You may proceed, sir.

Good morning. Thank you for taking my question. I have a question about the leverage that you have spoken about. Will you speak about the price of iron ore or the same prices, you spoke about steel? Now, regarding cement with the consolidation of Lafarge, what is your outlook for profitability? And if you could detail the growth that you're going to have an investment? Thank you.

Well, thank you for the questions. Regarding the leverage, we do have that range, but it's more focused on a goal. We're aware of the challenges that are necessary to broaden that leverage and work with a drop of prices of commodities, which is important for CSN. In this forecast, we have already included in iron ore at a different level that we saw this quarter between $80 and $90. And if the iron ore continues to drop in terms of price, the intention of CSN is to maintain indebtedness below that level of 1.95. We're going to seek out other initiatives to make this a ceiling a limit. In terms of management, whenever we see the leverage increasing, we seek alternatives to reduce the leverage to get back to the levels that we deem acceptable. Now, I will give the floor for a fuller response. I'm sorry, I'm a bit hoarse. In terms of the evolution of profitability of cement, nowadays, CSN is the most competitive platform in Brazil. We work with margins of 130% Lafarge operates with lower levels. Marcelo has already mentioned that we found a very well structured company with excellent assets, and that we're seeking out opportunities on synergies that are greater than we had imagined initially. We're quite convinced that in the short or medium-term, we will bring Lafarge into operation with these very high levels of EBITDA. We're working on this. Now and for this, of course, we have several synergies that go from A to Z in the commercial area, the logistic area, operationally and then the commercial area. We're going to replicate the model of success that we have with CSN, our pricing strategy. In logistics, we work with optimization and our services to the market, focusing on regions, municipalities or…

Thank you. Thank you very much.

Our next question will be an English from Mr. Carlos de Alba from Morgan Stanley.

Thank you. Good morning, everyone. Just a couple of questions. One is when do you expect, when do the hedges that you had in place in Germany for energy cost or energy inputs will expire? And if you could give us a sense of how much below current spot prices were you purchasing energy at in Germany? That will be useful. And then the other question is on the benefit of the energy acquisitions that you recently did on the steel sector in particular, have you quantify how much dollars per ton of a slab reduction in respect to reduce or cost per ton? And however you have quantify that will also help us. Thank you.

Thank you for the questions, Carlos. Speaking about Germany, we have had that hedging policy for 10 years. There hasn't been any alteration and the policy is to hedge 100% during the short-term period. And then quarter-on-quarter, we work with a scale with a percentage drop this year. We had more than 80%, logs had 74 hours per megawatt hour, and the coming year 25% to 30% of our volume will stand at that same price. We would be working with those spot market where the prices are much higher 300, for example, but even with these lower hedge levels for the coming year, we are looking at a result that will be double our historical results. €50,000, €60,000 for the unit, and we will pay double of that, because gas and energy will be more expensive. This is the combination of limited supply. There are production problems there. And gas perhaps we'll go down. We will work according to the policies with lower prices. And we hope to have a very strong market for the coming year. Regarding CEEE, it brings us BRL 300 million in terms of benefits reduction in the cost of energy for steel, mining and cement. And approximately half of this refers to steel, was speaking of BRL 650 million, or $30 million, $10 per ton. This is what improves in terms of our margin because of this synergy.

Thank you. Thank you very much.

Our next question is from Caio Ribeiro, Bank of America. You may proceed, Mr. Ribeiro.

Good morning, and thank you for taking my question. My first question is about the expansions in the steel sector. If you could speak about the growth that you're contemplating here, and perhaps convey some details in terms of volume and CapEx? Secondly, you spoke about the results that you think there will be a drop in the price of some inputs during the fourth quarter and a drop in the price of the slab. Could you give us an outlook, which will be the margin that you expect in the steel sector for the fourth quarter? Thank you.

Well, regarding the expansion, it would be interesting for Martinez to mention what we announced recently. Martinez?

Hi. Good morning. This new painting line is another steps that we're taking in our strategy towards a value chain. To give you an idea, we have a line in Paraná that produces 120,000 tons a year. This new line was acquired is a line that was in operation in Korea. Japanese lines state-of-the-art, also producing 160,000 tons. And we're now disassembling and working with engineering. I think that in the first quarter of 2024, this line will be operational in Brazil. Obviously, this is another step. We're going to work with more zinc material and work more with painting and the focus is export. The market here is given what comes in here in terms of pre-painting represents the capacity of our line, we're very comfortable that this line will arrive full. It is for simple construction on the white line that chosen markets. When it comes to the expansion of CSN what is more important is consolidation. We're working on steel sheets in the domestic market with 350,000 tons a year. We have capacity with a low CapEx of reaching 600,000 tons, but we do count upon the eventual opening of the North American market to exploit this. So we're focusing more on this market and it will depend on what we're doing with the American market. In terms of other types of growth, we're working with an exercise that's present. We're making investments upstream. And we have engineering production, that commercial team jointly deciding what we're going to do upstream. Of course, we have analyzed the possibility of increasing capacity and volume. In Brazil, there is another line that comes in of imports. And we think that we can also increase the capacity of the same products. This is still under -- and we're working with this in how we're going to keep away from hot rolled products are going to work more with coated products, products with added value to be closer to the end consumer and ending steel per kilo instead of selling it for 10. This is the goal of CSN, Marcelo, I don't know if you're going to add whatever it is that we're serving outside of Brazil.

Well, I'm sure being shown me will also make remarks on the company's strategy. There it is important to internationalize, in the more developed markets, especially in North America. But we're now reviewing the timing to put in place these projects. We do -- we have -- we have made strides in terms of long steel. Because of this internationalization, we truly do like this project, but it will be put in place at the right moment, it will all depend on the context. I will give the floor to Benjamin to remark on this.

Regarding your second question cost. Simply to clarify what was said during the presentation, we had the cost of flat of 40,100 in the third quarter. In the fourth quarter the cost is 8% below that the average points to the trend, there will be a greater drop in the fourth quarter here, which means that as part of price expectations, our margin per ton may increase marginally. There are too many variables involved. There's a seasonality of the quarter, but our margin increases marginally because of this drop in prices.

Well, thank you. Thank you very much, Marcelo, and Martinez.

Our next question is from Isabella Vasconcelos from Bradesco BBI. You may proceed, ma'am.

Good afternoon. Thank you for taking my question. We have two questions, the first referring to costs. You're going to enhance productivity. Several comments have already been made of this. But if you could give us more color, in terms of other initiatives that you're surveying in the value chain for the company? The second question simply to confirm this with Martinez, the strategy and the -- strategy is that you have worked on more, if that has changed, if most of your volumes will continue to do what they were doing in the past. This is our question. Thank you very much.

Isabella, if I can begin answering the second question. This is Martinez. Regarding the contracts, nothing has changed quite the contrary. In the United States, we have seen that the negotiations continue to close annual volumes without any problem and revising the price every quarter or every six months according to the market. Our strategy is the same in Brazil, in typical construction and industry in some sectors, and then the white line and automotive sectors. We do this quarter-on-quarter. Basically this is what we're thinking of regarding the negotiations with these sectors there beginning once again now, in a month or a month and a half, we'll have an idea of which will be the negotiations for 2023. In the case of coated material, where I have 51% of my portfolio, we're going to continue to fight against imported products, we want to grow more and sell to more customers, there's no other way out. And commercially, we're working on all fronts. Trying to go from the sunset review from hot to cold, the metal, cheater, metal folio, because we do find a great deal of Chinese coated material in Brazil, it's very difficult to compete with this, and the supervisors to tend to prefer the import of materials in this area. So we're going to focus on pricing in the fourth quarter, as Marcelo mentioned, we're imagining that we will maintain our margins through a cost reduction. Marcelo mentioned the word marginally. But we're going to work on costs so that we're able to marginally maintain our margins.

Thank you. To speak about cost, our main costs are raw material energy and services, maintenance contracts, followed ICT support. Now, in logistics, we do have a strategy. And the strategy is virtual utilization, and working with premiums. And this has given us good results. We have subsidiaries that are no longer suppliers of CSN. They're working with competitive products, the entire segment, came with this company as well. Where we work with very tight costs, and in energy, we're doing what we can. We're reaching indices of high production, to work with natural gas is also something that we could do we have projects for the longer term. So it's a combination of things and partnership with as Casa de Pedra looking for greater yields for the blast furnace working less with pellets. We are seeking activities to increase our sale rate, and we're working just statistically in this market where we still have a great deal of opportunities. And all of these, we're able to have a very competitive cost.

That's very clear. Thank you.

Our next question is from Leonardo Correa from BTG Pactual. You may proceed.

Good afternoon. Can you hear me? I hope you're all well.

Yes, we can hear you well.

I have a single question. To clarify some points in the same question, leveraging capital strategy. If we look at the evolution many things have been done. Large -- well these are large acquisitions. And now there's that period where you have to absorb captors synergies and of course this has to be well done. Additionally, to the -- all of the IPO to process of the CE, there were also several projects, and a great deal of things on the table of a company things to be delivered and that were under evolution. The question, therefore, that we have is that, of course, this is having an impact on the leverage of the company. For many years, CSN has been deploying a great deal of efforts in terms of reducing the leverage. And I think the market as a whole has been very appreciative when we look at the leverage there is almost two times this is a level that you had in the past. It puts the company into a different situation when it comes to global industries in Latin America, United States, Europe and Asia. Leverage is 1.5 times above the average. It was up there, that ceiling and your leverage and your objective the impression that we're under is that you don't have much room for maneuvering here. I know that, you have spoken about your desire to make a company International, but all of your movements have been done domestically. If we think about all of this, if we think about your strategy, the leverage the risks of the scenario, the price of commodities, things are still rather hazy. This is just a time perhaps to start to integrate everything to continue on with what you have been doing. I would simply like to hear from you. Because this is very important to the market and the market is very focused on this? This would be my question.

Leo, this is Benjamin. I'm going to respond to some of these questions at the end. But as this question involves strategy, I would like to respond to it. And the other questions will be answered by others. First of all, a good day to all of you, thank you for participating in our results call. We truly have prepared the company for a deleveraging that was done very successfully. And because of this, we have prepared the company for organic growth and for acquisitions. You truly never know what will come first. We were ready to participate in mergers and acquisitions. And of course, we're continuing on with our investment plan. Our priority our strategic priority is to invest outside of Brazil, you are correct. We continue on with that strategy. The conclusion that we have come to is that despite having very good margins in our businesses in Brazil, we are penalized by the multiples, which are much lower than those of our peers abroad, or even among our Brazilian peers, and because of an issue of reliability regarding our assets. Now, this effort towards internalization and each of the businesses continues to be a priority for us. At the same time, we're making organic investments and investment for growth. And what came up was a Lafarge Holcim and because there were no internal buyers. And because there was a need to sell off the company in the short term because of senior leveraging because of an acquisition they had done. It was, well, this opportunity was left for us. We analyzed it. We analyzed it very speedily, because it was not part of our strategy. And because of what was presented to us in terms of the quality of the asset, the geographical diversification, the potential for…

Thank you. Thank you very much.

[Operator Instructions] Thank you. As we have no further questions, we will return the floor to Mr. Marcelo Ribeiro, the CFO and Executive Investor Relations Officer.

I would like to thank you for your attendance and I would like to give the floor to Benjamin Steinbruch for the closing remarks.

Thank you for participating in our call very few words in terms of our strategy and the priorities of the company in our business and share some information in terms of what we're thinking about and doing, We think that this moment, is very similar with 2020, when the pandemic came about, we have very aggressive measures, preparing the company for this and for a significant change in production and consumption. We're presently doing the same the company is being prepared for a highly competitive market, something that is different from what we had participated in. As all of you know, the price of raw materials and prices in general and the level of economy as a whole are dropping, and we have to be prepared for a new type of market. And what we have to do is to work with a lower competitive price to make the most of the market in which we operate. We cannot predict the market. But yes, we can participate actively working with a low cost and this is what we're doing. The company is ready to produce at a low cost and to continue to truly participate in a consumer market. We are going to have this drop in cause that began in the second quarter already as you know. The prices from the -- for the and when you see everything package the raw material and the services and the payroll and have some effect of inertia the price has dropped the cost because you have already bought raw material, the products are being manufactured and when you have an inventory, it leads to a margin decrease initially, but it then has a benefit -- the benefit of the drop of costs and raw materials and services. It did have an…

Thank you.

The CSN results call end here. You can now disconnect. And have a very good afternoon.