Good morning, ladies and gentlemen, and thank you for holding. At this time, we would like to welcome you to CSN's conference call to present results for the second quarter 2023. 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 a listen-only mode during the Company presentation. Ensuing this, there will be a question-and-answer section will further instructions will be provided. [Operator Instructions] We have simultaneous webcast that may be accessed through CSN's Investor Relations website at ri.csn.com.br, where the presentation is also available. The replay service will be available soon after closing. Now once again, you may flip through the slides at your own convenience. Before proceeding, we would like to state that some of the forward-looking statements herein are mere expectations or trends and are based on the current assumptions of the Company management. And there could be differences materially from those expressed herein as they do not constitute projections. 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 rates 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 a global, regional or domestic basis. I will now turn the floor over to Mr. Marcelo Cunha Ribeiro, CFO and IRO Executive Officer, who will present the operating and financial highlights for the period. Mr. Ribeiro, you may proceed, sir.

Good morning. Thank you, and thank you for attending one more results call for CSN. We will begin with the highlights of the period. We would like to underscore the strong commercial activity in all segments, highlighting the all-time records even in markets that are decelerating an all-time record and volumes sold in mining. And all of this despite the operational difficulties. Secondly, we would like to highlight the strong cash flow, even with the result below our historical averages. Thanks to the excellent performance and the use of our working capital, we were able to sell our finished inventories with a boost to cash flow, and this will be sustainable. So we have a sound cash flow that will be reflected in coming quarters. We would also like to highlight the Company effort in BRL3.5 billion in prepayments for energy and mining. So as to soften the onetime increase in leverage because of the payment of payout, we get to a leverage of 2.57x. And starting now, we will see a gradual reduction closer to our guideline. We will speak more about this during the presentation. We show you that we reached an EBITDA of [BRL2.2 billion] in the quarter, a drop of approximately 29% sequential compared to the first quarter because of a lower price realization this quarter, along with a moment in the steel mill where the costs continue to be high because of the operating situation and in cement prices below those at the beginning of the year. Because of this quarter, we reached a level lower than we had attend in the last four quarters. Now this confluence of negative factors is a onetime event. And from now onwards, we will return to our average levels of previous quarters. We continue to speak about cash…

Good morning, everybody. Here we are once again to speak about the highlights of the quarter. As you can see in this first quarter, we are working independently in terms of ESG. We are showing you our qualitative and quantitative indicators and our performance in each of these areas. Once again, these grants are performance in ESG greater transparency. In this first quarter, of course, we have a stability in mining. We continue to evolve in our operational performance. In 2022, we had the lowest rate of accidents in our history, and we ended the year 2023 with results that are even better than in 2022, had a reduction in the [areas of] accidents when compared to 2022.The greenhouse effects are only 40% at present, and we have already incorporated everything that refers to CSN cement with a reduction of 8% compared to 2022. We have also had a reduction of lower consumption compared to the six months of '22 greater operational efficiency when it comes to water consumption and advance in terms of social and diversity. Especially, when it comes to women representation, we have reached 47% of women in CSN Group compared to 2020.And finally, the evolution of the Company and the main ESG ratings in the world. This quarter, we also have an evolution in MSCI rating from B to BB. We were listed on the FTSE4Good Index going from 2.5 to 3.4 in 2023, because of our sustainability. We are a listed company, and this is very important. And all of this was based on stringent criteria of almost 300 indicators. And this is used as a reference for the indication of the most important companies. Thank you very much, and that is it.

Well, thank you, Helena. Now, we will now go on to the questions. And before this, I would like to give the floor to Benjamin Steinbruch for his remarks.

Good morning, everybody, and thank you for participating in the presentation of results for CSN. I would quickly like to summarize my assessment of where we stand at present basically looking at the efforts that were deployed in the past going through the steel area as part of what we had already presented regarding the difficulties of production. We began the year with a bit of difficulties during the first half of the year, we addressed and balanced out production. And we are beginning the second half of the year with a more balanced production and with the vision that there will be recovery, thanks to all of the measures that have been adopted. What is more important was to stabilize the process. And now that it has been stabilized. We will go on to recovery and the growth in production. As a result, this will lead to a reduction in cost, not only because of the improvements in production, productivity as a whole and also because of what is happening with raw material, there has been a drop in the cost of raw material. And beginning in the second half of the year, this, of course, will benefit us in all of the segments in which we work. This drop will achieve a very interesting combination. It will enhance production and reduce costs. Well, sales has never been a problem for us. We had a surplus and excess of orders. We had a certain delay because of this break in production. We were able to offset this by purchasing outside products such as the hot slabs. And in the second semester, we're seeking normalcy with a better production, a drop in costs, an increase in productivity and consequently, an enhancement in our margins. In terms of mining, the situation…

[Operator Instructions] The first question comes from Caio Greiner from BTG Pactual.

Good morning to everybody, and we have two questions. A question for Martinez. If you could share with us the general panorama of the steel market in Brazil, I think that we're still suffering from problems. There is a high import parity. We're below that. There has been a drop in prices in the last few weeks. So what is your outlook because of these variables? If you could share these with us your forecast of demand for steel this year, that would be very helpful. The second question for our short-term discussion from Benjamin, I would like to hear somewhat more about your strategic plan for the long run. We see that the capital market has become ever more active in the last few weeks. And does this mean you're going to return to the CSN plants for the long term? You had spoken of becoming a holding with several subsidiaries. And perhaps this is relevant because the leverage is somewhat above your goal. Can we begin in the coming months, perhaps to think about those plans that you had for IPOs in cement, energy or even steel or a primary injection to aid and abet your growth in the market? Or if you are waiting for a greater deleveraging of the Company to [195 or perhaps below 195]. If this could be done with the help of the capital market. So if you could share your long-term strategy so that we can better foresee this evolution. And if you could share with us other plans or strategies that you are planning for the coming months to help you in the reduction of leverage.

Good morning, Caio. And I will speak a bit more to give you a general understanding of what is happening in the import markets and much more. And I have very good news happening in China. Today, particularly, we received a CRU report beginning with an important figure for BQ. And this is something that came today. It's not referring to the last week. It is an increase of $30 in the price of BQ went from [45 to 563, 564]. A very good piece of news. And I have spoken to our personnel in Hong Kong and our traders about what is already doing well in China. The production in the first half of the year was good, but they're going to restrict production in the second half of the year to combat pollution. This is one of the reasons. The second reason is that there is a problem with margins. Most of the Chinese companies, the broad majority is operating with a negative margin with losses, and this includes the government and the private and mix companies. This is a given. There's nothing to debate here. Another important thing is the package that they normally prepare for the commodities market. Everything points to the fact and this will be announced soon that there will be a cut in interest rate. That is a given. And it seems that this stimuli will be for the construction and automotive segments, particularly, and to help us in Brazil, it also seems that the level of exports they foresee will return to the pre-pandemic levels. All of this jointly will conspire to help achieve a more balanced market internationally. We are considering a scenario for China of the market with higher prices. This has already materialized in the CRU. This is a…

You made a question for Benjamin, Caio, is there any follow-up that you require after what Martinez mentioned?

No, that was very good.

Very well, Caio. Regarding your question. Nothing changes after what we have said and our commitment with the market. I can say that we do have some assumptions, some pillars that are fundamental and priorities for us: ESG and technology in the first place; secondly, deleveraging; in the third place, a sound capital structure; fourth, a more adjusted operation and adequate operating margins; and fifth, growth opportunities that we have organically and also through merchants and acquisitions. And this is the order through which we guide ourselves and this is how we work to be able to achieve the growth and development of the Company. By following these parameters, I would like to remind you that last year, we brought in the [indiscernible]. We also paid dividends and the disbursement was of BRL3 billion. Now we should have done all of this with ABS, in terms of technology at the last moment, EDS dropped out. We thought that this was a unique opportunity. We had to mobilize and in 48 hours, we were able to replace this surprise of the exit of EDS by preparing our proposal as part of the auction, and we ended up with 100% of CEEE. Subsequently, we had the purchase of our share in Eletrobras. We ended up with 100% of the Company. And in cement, we also deployed great efforts that we do not regret. This has led to a great deal of synergy, synergy that is being delivered now as foreseen. And we think this was a valid necessary effort, highly promising when it comes to our cement business. So we leveraged those BRL13 billion. It was not our strategy, in the part of cement, as our priority strategically was to find opportunities outside of Brazil. We do believe we have to have…

Our next question comes from Daniel Sasson from Itau BBA.

Good afternoon to all of you. My question perhaps is [geared to] Benjamin. If you could remark on what changes in your [indiscernible] as one of the main domestic competitors have controllers. And what will happen in the market and what will happen with the plans that you continue to have in Usiminas. Does this change anything? And what is your vision on the change of structure in the industry? My second question to Martinez. You spoke about the synergies of your integration with Lafarge Holcim, the margins continue to be stable at 20%. If you can give more color in terms of your expectations for the second half of the year, what can be improved in terms of costs and prices?

Well, to begin with the synergies, Daniel, we had detailed this in our Investor Day of more than [BRL500 million], and we're quite confident that we will obtain this because of the commercial synergies, the increase in volume we already see, as Benjamin mentioned, we are able to provide that nominal capacity in energy as well because of our own synergies and the cost of our self-production inbound logistics and outbound as well, a better reach of our customers and purchase of raw material. So luckily, all of this has happened at the right pace and the amount that we expect. We will now be awarded with two things, an important drop in pet coke, more than 25% of drop in six months, which will help our cash that we use as a metric. It is almost BRL200 per ton when we began the year, and we're going to get to the end of the year at BRL160, important reductions of 20% [underway]. The price, we don't control, but we do think it will increase because of the performance of the construction sector. We have already made some movements [in this May]. So thanks to this combination. We think [indiscernible] 20% margins will increase the levels we had in the past of 30%. That is the magnitude that we would like to deliver with an increase in sales not only a growth of 50% in percentages, but also an increase in sales. And in nominal terms, EBITDA should increase more than that in coming quarters. In terms of cement, this is what I would like to convey. Now to complement Marcelo, Daniel and you cover that sector, and I read a great deal about the reports saying that we have price over volume, volume over price. And at CSN, we…

That was very good.

Daniel, regarding Usiminas, there's nothing [normal in this]. We're convinced that they materialize something that we had been speaking about since the entry of Usiminas with a change in control and the change in management. We knew that -- well, we knew who was a manager of Usiminas and nothing changes. Everything continues the same. They have activated publicly what we already knew was happening in-house. And what we had said materialized that they were the managers and that they were responsible for Usiminas. We were left outside of this process. We're just investors, and we continue to wish them much luck, and we hope that they will have good results for the valuation and to pay out dividends for the shareholders.

The next question comes from Thiago Lofiego from Bradesco BBI.

Good morning or good afternoon. Very quick questions to Martinez. Martinez, which is the evolution of your contracts? Are you working with semestral contracts because of price variation. Secondly, a question on cost. You mentioned the cost reduction for the steel in the second half of the year. If you could quantify this, please.

Thiago, how are you? Good day. Now, the -- I think the market has changed as well. Our competitors are negotiating semesters or continue to speak about quarters. Our share in the sector was never very large. We have one or two players in the sector. I believe it's the automotive sector. We're more focused on spare parts. This is where we negotiate spot prices for two or three months. So in the case of assembly plants, we had already aligned the prices in the last semester. We had a minor discount of 5% that we communicated in the last call. There's nothing else left to do. There are no more discounts, quite the contrary, depending on what will happen in the market, perhaps we will have to converse again in the fourth quarter. But in the fourth quarter, we will begin to negotiate only in -- at the end of August or beginning of September. We always leave this to the very last minute, waiting to see what happens in the market.

Will this impact the third quarter?

No, there will be no impact whatsoever in the third quarter, Thiago. What we have to do is hold on to the prices because there is enormous pressure because of imports pressure to reduce prices. It wasn't easy to hold on to these prices in the second quarter. We had to work very much to be able to hold on to those prices. The premium was never so high as in the second quarter. It was 40%, 41%, 36%. It has now dropped. But I'm more optimistic with what will happen in China now, not even the Chinese can bear those low prices and they need to improve them. They can continue with that situation much longer. These negative margins are not healthy. I think we will go into a situation with greater stability. And I say that as Brazil, where the backyard of China for everything, we -- everything that we have for still comes to Brazil from China and our commercial defense is a trade remedy that the entire world uses. This is something that Brazil needs to truly improve.

Well, very quickly has anything similar happened in the automotive market or with other industrial clients?

We do have white line appliances, but the dynamic is somewhat different. We had to do something that was a onetime thing in white line. They follow the market prices and not the spot market, but they follow this with a delay of 1 month, 1.5 month, whatever happens in the spot market. This is the dynamic. Now the steel price, the less distortions we have, the better. Distribution is not the market. It's a channel, it sells to the same clients in lower amounts. So the less distortion, the better. We continue to believe that these gaps of prices in negotiations will have to shrink ever more to have a more balanced market. When it comes to fare prices for the entire value chain, it's difficult to achieve this. It's not one of the banners of the market as a whole or of competition.

Regarding cost very quickly. We have a guidance, Thiago, were in July, and in July, we had a drop of a low double digit that was the average for the second quarter. And more importantly, we think that until the end of the year, there will be a significant drop, a low double digit to reflect the higher productivity and the drop of raw materials as well.

The next question comes from Caio Ribeiro from Bank of America.

Good afternoon, everybody. First of all, I would like to return to the discussion of the Brazilian steel market. Martinez has added quite a bit of color speaking about the imported products. Could you also speak about the impact that you foresee with the return of the high furnace in -- the blast furnace in September and because of the timing of the ramp-up, this will reach a period that tends to be weaker in terms of the industrial park.The second question regarding your energy, part of the deleveraging you are bringing a partner for the structure, especially for the CEEE asset? Is this still an option? And which would be the timing for this option?

In the case of Usiminas, the return of the blast furnace will not change everything. It offset the top of blast furnace with something else. They bought slabs. They will stop buying slabs, buy less and produce them in-house. There will be no direct impact in terms of production. The market will remain the same. Now regarding energy, Caio. This is ongoing. We're satisfied with the evolution and the result of CEEE with a performance better than we had imagined during the acquisition, operating a very strong turnaround, investment plans and the management of liabilities that we inherited, all of this is doing quite well. Now we have a use of only half of the energy. The other energy is marketed. In the short term, our decision, our strategic decision going forward is to maximize the value of that other 50% of energy that we can't use in projects in-house to help our growth. Nothing would be better than to use energy for our own self projection. But nothing has truly appeared. And the idea of a partner that was our original idea would also be substituted with an expert in marketing the energy. We have held very interesting conversations. We're trying to see which would be the best design for this without any haste. And we will take a decision in the coming months until the end of the year, we should make a decision.

The next question will be in English from Carlos De Alba from Morgan Stanley.

So the question I have is just a clarification, perhaps, but on explaining the increase in leverage, it's -- the release, and I think your comments mentioned that this was a one-off increase in leverage, mainly because of the result of the dividend impairments, sorry, the payment of dividends of BRL2.7 billion. So my question is if the dividends will stop or will come down because if not, then it's not really in my opinion, a one-off and the dividend payments are going to be recurrent, I would like to understand how is the Company planning on reducing leverage without depending on higher commodity prices. Just -- it wasn't clear to me how that will be achieved. Do you have more options to increase volumes significantly or reduce cost significantly or reduce working capital significantly or maybe it's all of the above. But I just wasn't very clear what that one-off commitment.

That was an extraordinary expense. It was the amount of the dividends that were paid now. We reached the level of BRL2.7 billion. Last year, we were very close to BRL1 billion per semester. So as a plan, we want to return to these previous levels every year, we would be saving that BRL3.4 billion. The difference of BRL2 billion per year, BRL5.4 billion. This is because of that extraordinary nature of what happened in the last six months, and we want to improve our cash flow. And this will reduce our leverage. And of course, we have other projects, the cement IPO, the potential partnership in terms of energy, all of which will guarantee a very rapid deleveraging to the levels of our guidance. And even without these initiatives, as we are generating cash, the leverage -- the deleveraging will come anyway, but we want this to happen before the end of this year. We will have lower dividends in the second half of the year, enhancing results with a cash generation with new initiatives that will help us to attain that 1.95x as mentioned.

All right. And just one question then. So could you repeat what is the level of dividends that you are now targeting? Did I hear you well and it's going to be around BRL1 billion, BRL1.1 billion. Is this per quarter?

Yes, you heard me well, Carlos. That's what I said. We're going to back -- going back to our historical levels that were around that figure. These are not quarterly figures they are for half of the year.

The next question comes from Vanessa Quiroga from Credit Suisse.

My question is about the [prepayment points], which is the percentage of the volume of iron ore that has been closes in that type of contract, which are your maximum volumes. The second question, if you could mention other strategies to attain the deleveraging. You spoke about the IPO of cement, the partnerships? Do you still have other initiatives that you're working on?

In terms of the prepayments, it's important to clarify that although the financial volumes are significant in terms of the iron ore for exports that they represent, these are lower. The anticipated value per ton has increased. So we have committed less and less future tons. And we hope that the coming year, we will have 6.6 million tons of the [40%] that we should sell or more. All of this will be committed in this structure, about 15%. This is what we expect to follow. We don't expect to increase this or increase this percentage. What we did in the past was to reach very similar levels. We're going to amortize them as they mature, and then we go back to work with this balance again, and this is how we're going to continue in the coming years without significant changes in the amounts committed. Regarding other initiatives, once again the search of a partner -- we could go back to our original plan to control the Company, which would leave us to deconsolidating the balance. And if we speak about the cement IPO and speak about successful IPOs, we're thinking of a similar figure, BRL3 billion. These are very robust initiatives highly aligned with our strategy, and that will bring about the deleverage in the short term. I think this is more than sufficient to comply with our guidance.

Well, thank you. As we have no further questions, we will return the floor to Mr. Marcelo Cunha Ribeiro, the CFO and Executive IRO, for the closing remarks.

I would simply like to thank all of you for your attendance in our call, and we hope to see you in the call for the third quarter. Have a good afternoon.

Thank you. The CSN earnings conference has come to an end. You can now disconnect and have a good day.