Usinas Siderúrgicas de Minas Gerais S.A. (USIM5) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to our yearly public yearly meeting with APIMEC. I'm Leonardo Karam, IR Manager. We have the VP of Finance and Relations with Investor, Thiago Rodrigues and Marco Saravalle from APIMEC Brasil. Before we continue, we would like to clarify that future statements during this conference call regarding the company's prospects as well as projections, operational and financial targets regarding the growth potential are forecast based on the management's expectations regarding the future of the company. These expectations depend on the performance of the steel industry, the country's situation and the situation of international markets. Therefore, they're subject to changes. Initially, Thiago will give you a presentation, and then we would hand it over to Marco Saravalle from APIMEC. Thiago, you have the floor.

Thank you, Leo. Good afternoon to everyone. It's a pleasure to be here to talk about Usiminas, what we are doing and our future view. I will try to be brief in my presentation so that we have more space for a Q&A session. We will initiate our presentation. Usiminas this year celebrated its 63 years of history, a history that has almost 13,000 employees in the Usiminas enterprises and also and I would like to say that we're very proud of being the only steel company that is part of the sustainability index from the B3. Here, we have our geographic distribution. That is one of our strength, the sound base of assets and geographic presence close to the industrial areas. Our mining unit is located in Minas Gerais, Itatiaiuçu, where we extract over 9 million tonnes of iron ore a year. This is why we're amongst the five best mining companies of the country. The integration of mining and the steel unit provides us a great competitive advantage. 1/3 of what we produce in iron ore is consumed in our industrial center of Ipatinga and also Minas Gerais. Our main steel unit where we have also crude steel where we have slabs, plates and everything through hot-dip galva. Another industrial center is in Cubatão, where we have one of the most modern blast furnaces. Cubatão is strategic for the future of Usiminas, not only because of its location, but also because of the port and the great area available for new investments when we think about the future of Usiminas. Cubatão has a relevant role. These two combined plants have an installed capacity of over 6 million tonnes of flat steel of high quality. Currently, we're running around 4.3 million tonne. And we have seven steel and processing units through Usiminas Solutions that allows us to provide better services to our customers, offering a diversified portfolio of products. We have Usiminas mechanics that supports our operations with maintenance service and industrial assembly services. Here, our next slide. Safety and environment are a priority at Usiminas, all our upper management meetings and the operational meetings start talking about safety and environment where we outlined the main KPIs, and we discuss lessons learned of incidents throughout the period. Regarding safety, we have a robust training program in 2025, over 60,000 hours of training in addition to a number of projects of technology and automation and control of critical activities that help us with our safety. We do have -- we have projects of TV cameras to identify deviations and to detect behaviors. We can track people through virtual senses, so we can stop unduly access. We have a number of projects in this sense that make our operations more safe. And in the environment, I would like to outline some points. We are ending the de-characterization of the MUSA dam. We follow the world still to be signatories of the letter of sustainability. We also participate in the greenhouse gas effect inventory. We are also making available information for customers and investors. Another subject that is relevant, and we continue focus in order to improve is the relationship with the communities where we operate. We are committed in progress and be better neighbors. We do not only support investments in sports education and cultural projects. through incentive laws and our own resources that were almost BRL 20 million this year, but we are also closer and more present to these communities this year, we performed over 400 in-person meetings to discuss and to see how we can be better neighbors and to support the development of the areas where we're present. Now we will talk about the global scenario and the scenario in Brazil regarding steel. As everybody is aware, and this is a subject that has been repeated, there is a complete situation in the steel sector throughout the world. The drop of the growth of China in the last years was great. So China that was growing around 10% a year in the beginning of the century today grows half of this. And this is one of the main factors that creates the excess of capacity in terms of steel production in the world and will not be absorbed in our view, neither in the mid and long run. So these are over 500 million tonnes of steels that are a surplus in terms of capacity. When you compare it to the Brazilian production that are 12 million tons a year, you can see the size of the problem. Now we will go to our next slide where you can see that despite this slowdown, China continues growing, the demand of steel in China has been dropping, and we can see this in the green line. The Chinese demand dropping and the productive level remains stable. This means an excess of steel in China and that is sent to other regions in the world, and we will see this in brief. Here on the right, we have an interesting chart with an information that shows the margin of the hot coil produced in China. Here, you can see the price of the main raw materials and the price of the steel. And so the margin is negative. And this proves and this demonstrates the unfair practice from China because they're selling steel products below the production cost. Now during the next slide, you will see how this is affecting the industry and the steel market in a number of regions of the world with this amount of China steel sold below the price affecting a number of regions in the planet, well, the country started using available and legitimate mechanisms to defend themselves from unloyal practices. Here, we can see in white what these countries -- how these countries tariff import steel. Mexico has 25%, 35%, the U.S. 50%, the U.K. 25% and these tariffs impact any imports. In Brazil, we have an average tariff of almost 11%. With the quota system, therefore, when you surpass this level, you pay 25% of tariffs, but this hasn't been made effective. Here in the chart, we can see which countries have adopted antidumping measures enforced. And here, we can see Mexico, the U.S., Canada, the U.K. and other countries and even Southeast Asian countries adopting measures for -- here, we have galvanized cold-rolled, hot-rolled plates, and they have -- Brazil has an antidumping measure for the -- for thick plates. And Brazil is vulnerable. And here, you can see the consequence of this. Brazil is the main destination of Chinese steel in the Western world. So this is the first country. So with almost 4 million tonnes. And this meant an increase of 300% vis-a-vis 2020. This is a country that presented the highest increase of import products from China. Brazil, if you see here, you can see other countries from the Western world, but with volumes and an increase in imports at levels that are levels below what we see in Brazil, what is in practice today has not been affected to defend our industry from loyal practices. During the next slide, you can see more details. And you can see the volume of imports of flat steels year-on-year in Brazil. There has been a great increase in the past years, and you can also see that the origin of the import steel comes from China, 75% China, and second Korea with 11%. Here in the next slide, you can see that this commercial situation, well, this stops Brazilian companies to benefit themselves from a resilient and strong demand. This is something that we're receiving in Brazil. So the demand for steel is strong despite the slowdown of the economic growth that we see here in our GDP. And we can also see that the apparent consumption went from 22% to 25%, 19%. Therefore, there's a strong demand for steel. Nonetheless, well, the importers have benefited themselves from this because this increased 94%. The amount of imported material practically doubled and what is produced locally only increased 5%, and we can see the same thing on the lower chart regarding steel sales, where we have a stability of the total sales and a drop in exports and a slight increase in domestic sales. All of this to show you what is important and to show you what is relevant not only for Usiminas, but for all the Brazilian steel industries, we want correct measures to be adopted by Brazilian authorities. This is important for the sustainability of this industry in the country. Therefore, we have three investigations underway between February and March, two investigations will end. Their deadline is coming to an end that is cold rolled. Now the preliminary report show the dumping margin of $600 per tonne in a number of products and the impact that this has on the industry. So this is why the technical conditions exist. So the Brazilian authorities adopt the right measures, and we believe that the Brazilian authorities will adopt these measures to stop this unloyal competition because the industry by itself does not have another mechanism. The industry does not have tools to fight against these unloyal practices. So we do trust that the authorities will adopt the right measures, everything aligned with everything that was outlined in terms of evidence and technical points. Now when we look at the future, now the main industries, the main industries that we supply steel, well, the automobile industry expects a growth of 6% during the next year and '24, '25, we saw strong growth. This shows that the industry does trust the next years, especially here, we have motorcycle, spare parts and light vehicles, industries, there are different sectors. Some sectors expect a stability regarding 2025 and mainly the agro and oil and gas with a more positive prospect for next year. And commercial and distribution industries, by and large, we expect a stability in terms of consumptions and sales with a bias from the construction sector that is better. And how can Usiminas prepare itself to service this demand and to improve its performance and its results? We have a tripod that is important, and it is a focus of the Usiminas management. So we have innovation. We have the efficiency pillar that is something that we focus on, on the day by day. This is permanent, and we will continue making progress in terms of efficiency. And we also have our investments to gain more competitiveness and these are structural investments that will eliminate a number of industrial bottlenecks. Number one, innovation, which is important. Today, we have a research and development center that is the biggest one in Latin America. We're a reference in terms of R&D, in terms of steel, we had over 1,600 studies concluded in 70 types of steels that were owned and developed and investments at BRL 117 million, and we've had over 500 registered patents, and we have a senior and trained team. We have over 75 professionals working in our research centers together with our customers that provide a differential to the company in terms of steel development, especially special steels. This is why we are a leader in this sector. Here, you can see here, we have a number of examples. So the automobile industry where we spearhead this market, we're leaders. We do not only have a broad portfolio of products, but we also have steel development capacity of high-resistant steel, and this is recognized by our main customers. And this is why we maintain this leadership position in this market. The continuous development of products together with our customers is important and technical support, not only in products but in services is important oil and gas. We also have a broad portfolio of heavy plates with customized solutions that are competitive. We participate in oil and gas bids and we provide a differentiated service. This is why we have an advantage in addition to our team that guarantees differentiated service in the industrial sector. We also have we have steel that we only have the production capacity. The steel lasts much more than similar seals, and it is good for the yellow line. Innovation is our differential and goes hand by hand with customer development, not only to maintain our customers, but to gain a greater market share. Now efficiency. As it was mentioned, once again, this is something of our day by day in all our management meetings. Our routine focuses in following the main production KPIs in order to improve and make progress in all of them. We know that there is room for improvement, but this is a constant and permanent effort. that we will realize this gain throughout time. Here, we have some examples that show what we have done throughout the years. Here in terms of production volume after blast furnace three refurbishment, we disconnected blast furnace one, so with two blast furnaces, we can produce more steel than what we would produce with three blast furnaces. We continue focused on labor productivity being more efficient when we use our labor, but also contractors, and we've made progress almost by 50% between 2023 and 2025. Now another KPI that is relevant in terms of costs is the fuel level that we use in the blast furnaces. And we've also we have a better distribution of this fuel dropping the coke volume in the blast furnace and improving PCI. And here, we see a potential of improving regardless of the investments of the future. So we are reassured regarding the gain of efficiency because of the fuel consumption of blast furnaces and also a drop of COGS. And these gains of efficiency are constantly pursued in the company, and we see excellent results. And another important pillar, especially here would be investments, structural investments that are important to eliminate a number of bottlenecks that we observe and prevent us from offering the level of competitiveness that we would like to have and something that we've had in the past, especially regarding the coke plants. But the main point is that the road map has already been defined. We already developed, we studied and we've approved the investments, which are of most importance to recover our competitiveness. We have a major investment portfolio. These are just a few examples, but this is a major portfolio, and there are a number of investments underway simultaneously. And these are the investments that will make the difference in the mid-run. Now these investments account for BRL 3.5 billion that have been approved and announced. We will talk about them one by one. Here, we have the hot repair of battery #3 of the coke we started the repair in 2024. It's a complex process because the coke plant battery is in operation during the repair. During this period, we dropped the level of production. The coke plant is not producing at its maximum capacity. And we also have interventions in the operations that increase costs. This investment is important to maintain the lifespan of this battery. And once this is concluded, we expect to conclude it in 2028. We -- this battery will go back to its nominal capacity, and we will eliminate the interference and we will drop costs regarding the coke that is produced in the battery. Another investment. One of the most relevant investments approved this year is the partial reconstruction of battery #4 at the coke plant. And we stopped the coke plant, one of the coke plants that was in operation during 2023. And throughout this period, we conducted studies to adopt the best investment, the best investments in order to be self-sufficient. So we decided the investment is underway. We are still in an initial state. The expectation is to conclude this construction and this coke plant in 2029 when Usiminas will become self-sufficient in coke. It depends on the productive level, but our coke production level will be compatible with the production, eliminating an efficiency that is the need to buy coke from third parties. So we are very happy with the approval, the decision to approve this investment that will eliminate a bottleneck, and we will regain our competitive level in 2029. We also have we have an investment in our PCI plant. This investment is underway, the expectation that this plant will become operational in 2026. And with this investment, we will be able to increase coal, pulverized coal injection, and this impacts the cost and this reduces the greenhouse gas effect emissions. So, as of 2026, especially during the second half of the year, we will see the impacts of this investment in the company's results. And at last, here, the new gas meter that was approved this year. The expectation is for it to become operational in 2027. We can store more processed gas, and this enable us to reduce the purchase of natural gas. And this has a very important effect on our costs. The main message here would be the road map has been defined. The pathway to eliminate the bottlenecks and to regain the competitive level that we want for Usiminas has been defined. And now we have to focus in order to deliver these investments in the short run with the expected quality and to be able to see these effects and to see a regain in competitiveness in the mid-run. And well -- and at last, we have our financial soundness. Our position today is sound, and we're at a comfortable position to face all the investments of the future. In addition to investments that are still being studied, it is important to have a sound financial position. And because the market is complex, it is desirable to be in the situation that we are today that is low leverage. And with this, we feel reassured, therefore, we can focus on our investment plans in our operations, I mean to gain more efficiency in our operations so that in the mid-run, we can see results that are more compatible with the Usiminas of the past, something that we expect from a capital-intensive steel industry. This briefly was a presentation. I want to highlight the priority, safety, sustainability are always priority #1. They are part of our agenda, our daily routine in all the areas. Commercial defense is important to regulate the market situation in Brazil so that local producers can benefit themselves from a resilient demand situation for steel. Customer service and product development is very important. Now also, this is how we differentiate ourselves, and we will continue developing this part. Operational efficiency is part of our route and the gain of competitiveness with the investment road map underway and financial discipline that will guarantee the materialization of the investment plan with returns in the mid and long run. So after the APIMEC presentation, we will go to our Q&A session.

Thank you, Thiago. Now I will hand it all over to Marco Saravalle from APIMEC Brasil. Marcos?

Regarding while people prepare their questions, there are a number of questions in the queue. This is make the best of the contact that you have with the management. You were talking about the recognition in terms of sustainabilities and perhaps this is a matter that is more present on the day-by-day sustainable and entrepreneurial sustainability. And for us, analysts, we need sustainability that provides transparency and access for all investors. On behalf of APIMEC, we would like to congratulate you. This is not a relationship that is new. We are talking about 22 years of meetings together with investors. using this channel. And this is a public accessible open channel. There are many people watching this live. It is important. So my opinion as an analyst and perhaps the participation in ISE because it's the only company that represents the sector and is present at the ISE. And this is a great -- this is -- of course, this is part of the seal. So congratulations. All the Usiminas team, is a complete team, but especially Thiago, Leo. This is a team that is always connected and it's transparent. Congratulations for the seal and in the ISE and everything regarding governance, which is important for investors. And now we can go to our Q&A session. That is the main reason why we're here. We want people to have contact with the management. And we know that this is the team that allows the company to be successful in all of its aspects.

So thank you very much, Marco. We are very honored -- we're honored with the 22 years of partnership that we have with APIMEC, and we expect even more years of partnership with you. We will start a Q&A session.

Please identify yourself to organize ourselves. Our first question, Thiago, there are a number of questions, a number of people that want to know about the Compactos project, that is the expansion of the lifespan of our mining unit, Caio Ribeiro, Ricardo Monegaglia, Safra, Marcelo Furlan from Itau and someone from XP regarding the expansion of MUSA, what would be the CapEx value, the timing for approval? How much production would this generate? And what would be the breakeven EBITDA? And if this decision is -- if this decision is for 2026 or when is the right moment to adopt this decision? How is the plan here?

All right. Thank you for the question. Thank you, Marcos, for your kind words, representing APIMEC. Now regarding Compactos. Before talking about Compactos, I would like to underscore the commitment that we have with the Friable operation. With MUSA we are pursuing alternatives and right conditions to extend the lifespan or the production of the cold process that generates the center feed consumed by Usiminas. This has always been MUSA's target. It never stopped being its target. But many people, we talk more about Compactos than the coal operation. So here, we are pursuing alternatives in order to liberate areas where we can process more material. We can have other partnerships with regional producers. And to -- this is an array of actions that we are undertaking to maintain the coal production for a longer period of time. Today, the lifespan is expected up to 2031, but we believe that we will be able to extend the lifespan. Now regarding Compactos, many of the breakeven questions, investment value questions, we still cannot answer these questions because we are assessing and we want to see what the setting is like or what is the best setting for this type of investments during a long period of time, we thought about 10 million tonnes, 12 million tonnes of Compactos a year. Today, we assess -- we want to know. We want to see if this is the best pathway and size of investment in operation. So because -- and if it makes sense to stage this investment, this is still being studied and discussed. Therefore, we cannot just give you figures without having a definition. Regarding the setting of these investments, regarding decision timing, we do understand that we will not adopt a decision until mid-'26. It's unlikely to make a decision until the middle of 2026. So we believe that any decisions will be adopted after the second half of 2026, but perhaps also 2027. Timing is still not a bottleneck or a challenge for us. And we want to carry out the studies and to be strongly based and to see which is the best configuration, the best size of investment and what operation we will have with Compactos.

Our next question. We -- lots of people want to know more about antidumping. We have Caio Ribeiro, Gabriel Barra, Citi, Marcelo Furlan, Itau, Gabriel Barra from Citi again with a compliment here, and Guilherme Nippes from XP. They want to know the following regarding the antidumping measures expected for February and March. Do you believe they will be enough to contain the pressure of imported products? Or do you believe that this can be triangulated to other countries harming Brazil. In terms of quality, we see a premium -- is it -- do you believe that this antidumping will not be sufficient to transfer price? Is this a concern? And how do we -- and what tariff antidumping levels can we increase? And will this be 100% reflected on the price? And if this is approved, how will you see volume and margin here? And if these measures will be sufficient or if this will be inefficient like the quota and tariff system.

I'm going to try to cover these points. We do understand that antidumping measures are correct measures to resolve the problem that we are facing in the Brazilian market. This is an instrument that can actually provide the expected effect because we want this prevent this material to reach the Brazilian market below the production cost. The entire process is detailed from investigation where the authorities visit the enterprises fickly, they raise a great amount of data, and they can determine what dumping margin is being practiced by each Chinese industry or whatever country. So this tends to be it tends to be very accurate. When we see the example of antidumping measures of other industries or even heavy plates, these measures are accurate, they're correct, and there is an effect that is an expected effect in terms of heavy plates that has antidumping measures in effect for a number of years. We do not see a supply of products that is subsidized in the Brazilian market. We believe that this is the correct measure. It is a measure that if applied, will have an objective effect, and it is to prevent the entry of the steel in the Brazilian market. Well, generally, these measures are connected to the dumping margins that already have been observed. So there are a number of margins of $600, and we expect that this will be applied. Our expectation is once we have measures for the identified cases, we expect this to reflect on the market. It is not something immediate because we still see material in the market in the ports. Therefore, this will take a number of months to absorb this, but we do feel confident that this material will not exit from this -- will not come here at subsidized prices. The material can come in Brazil. We're not against imports. What we cannot see is a loyal competition, paying the dumping margin. The market is here for everybody, everyone to compete at equal levels in the same playing field.

Will do you think this will be effective? Or can we circumvent this?

Well, we have to see step by step. There are two investigations underway that have already that have important conclusions, but we expect measures to be adopted after the investigation. Now if we confirm that Brazil continues receiving subsidized material from other origins, well, we will adopt the measures that exist in order to resolve this problem. Now regarding impact on pricing. Price in our view, it is not the main point. What is important is a loyal competition. If the measures implemented and if this volume does not come in the country with a price gap or this will provide more competitiveness that will be more balanced or this will represent lower imports in the country, which means an opportunity for local enterprises, and they can increase their productive level. With this, they can gain productivity scale. And this benefits the enterprises in job creation. But the affected expect is not an increase in price by no means. But yes, good competition and potential increase of volumes from local producers. Did I answer everything?

I think that you touched all the points. Our next question regarding the -- Gabriel Barra from Citi wants to know how do you see domestic steel demand for 2026? A number of data demonstrated a drop of apparent consumption if we have seen a slowdown in the order portfolio.

During my presentation, I showed a slide with an optimistic view from the automobile sector and from the industry. with different signals from different industries and the distribution and construction industry slightly flatter. I would like to remind you that we are in a moment -- we're in a complex moment in the country with high interest rates. We had a more pessimistic view in 2025 regarding the demand, we started the year with the optimate seeing optimism from these industries. And throughout the years, what we saw is that, by and large, the demand maintained itself resilient. So we still are concerned. We are paying attention. And we may see a slowdown in demand in industries that have a more positive view, but we cannot ignore what the industry is seeing. So yes, we continue cautiously optimistic for 2026, but our view, but we still do not have a pessimistic view. We still continue with -- we're cautiously optimistic.

Our next question, Thiago. Regarding negotiation with the industries, mainly the automobile. Ricardo Monegaglia, Safra, Marcelo Furlan, Itau, Guilherme Nippes, XP, he wants to know about the contracts for the automobile sector. If you can break it out in January and April because these negotiations take place during two different periods. Will there be a positive price transfer considering the antidumping actions. And Furlan is asking what to expect from these industrial negotiations?

Well, number one, regarding the automobile industry in January, the volume that was renegotiated in terms of price, we -- the indication is that we will not readjust the price. So we expect price stability in the automobile industry. We will maintain the current price during the next quarter and the negotiation volume and we will renegotiate prices in April. But April is still too far away. Any value would be speculative because many things can happen up till April. Negotiations start beforehand, but generally, we only conclude the negotiation close to the end of the period that would be March. So a lot can happen until March and also antidumping measures being adopted. It is difficult to give you an answer right now. Now of course, the pressure is always to reduce prices. And on one side, we don't want this to happen, demonstrating that we don't expect to drop prices. This is a negotiation process, and it will still take -- it will -- there's still a long time until March. And industrial distribution. So our last price readjustment was in October. That was an increase of 4%, 4.5% in distribution. And this increase in our view, will maintain the price level. We always say that the industry price has a lag of 3.5 months. And now we want to transfer this price to the industry, but this is done little by little. There we see no additional movements to comment on right now. But when we see the historic prices and the margins of the industry, we do understand that increases are necessary and are desired. Nonetheless, we do not have anything specific to say right now.

So we're reaching the end. Now regarding coal, Marcelo Furlan, Itau, Guilherme Nippes from XP, Victor Vidal from Charles River, they want to know the follow what can we expect for the cost dynamic for steel for Q4 of 2025 and Q1 of 2026, considering the current coal and slab prices. And Guilherme wants to know about the expectation of cost improvements because of the efficiencies that will be captured in the upcoming quarters. And I would also like to know and the coke projects and the new PCI plant, what about the benefits? What benefits will be reaped from these projects?

Now regarding costs regarding Q4 during the last earnings results, the expectation was to follow to continue dropping our costs, and we've seen this in the past quarters. We still have this expectation. Now when we see the future, we need to provide you a new expectation during our next earnings result based on the updated information and the update of the price of raw material. So we will continue our trajectory during the next quarter. And here, we have to consider that there is a relevant impact of the cost of raw material and coal, coke, iron ore has increased at price, and this will affect the COGS. Now the cost per efficiency, yes, we continue focusing and with an expectation of improving efficiency, but this is gradual. We will see this throughout time, and we will see this through the daily operations. Don't expect a significant cost drop from one quarter to the other. As a result of this gradual process, what we will see in terms of improvements are connected to the investments that we showed during the presentation. Possibly, we will see an impact from the PCI project at the end of 2026 and the impacts of the other projects between 2028 and 2029. Now what would we expect? We expect -- what kind of returns do we expect from these projects? We do not disclose this projection because this is a guidance that we would have to communicate correctly. I cannot mention this right now. It is important always to mention what Usiminas' competitive level was before the coke plant problems in 2022. We are doing everything to regain the level of competitiveness from the part. Today, our level of competitiveness is limited. It is suffering impacts because of the bottlenecks in the coke plants, and we've been seeing this in 2022. And between 2028 and 2029, we expect to overcome this problem. And therefore, we will go back to the levels of competitiveness that we had in the past.

Thank you, Thiago. Our next question is regarding capital allocation. To elaborate what about CapEx distribution throughout the year and what are the potential benefits in terms of costs regarding the projects? I think you answered this.

So CapEx distribution to detail the BRL 3.5 billion CapEx, I think it's in the presentation, what are the yearly expectations between 2026 and 2028. And let's separate this for CapEx. There are three brief questions here. All right. Number one, regarding CapEx. This year, the initial guidance, BRL 1.5 billion. And throughout the year, we readjusted it to BRL 1.3 billion. We still have not announced a guidance for 2026. We're in the process to approve our budget, but the expectation is not to see a significant increase in this CapEx vis-a-vis the initial guidance of this year. So yes, we do not expect nothing above BRL 1.5 billion. This is an expectation. As soon as we approve the budget, we will communicate this CapEx guidance to the market. And for the upcoming years, in addition to the potential of the Compactos projects with our investments, we don't see a significant increase of the CapEx level. Now as we make progress in the approval of relevant investments, of course, every year, we update the guidance of the CapEx for the next years. The Compactos project being it a project of 10 billion or 5 billion tonnes has a different effect on the level of CapEx.

Now regarding capital allocation, [ Willian Jose Tibúrcio ] he asks, what about share buyback? Does the company see a buyback of shares?

Well, share buyback is not being analyzed. It's not being discussed. But yes, internally, we discussed the possibility of distributing dividends, but we are focused on what is important for Usiminas in the long term that is the investment plan, the gain of competitiveness to continue sustainable in the current scenario of margins below expected. It is important to maintain a conservative position to maintain the liquidity of the company and to deliver the investment plan that we have during the upcoming years.

So, with this, you answered a question from Willian Jose Tibúrcio. He was going to ask if you were going to distribute dividends. Now we have Henrique Braga from Morgan Stanley. How does -- how does the internal dynamic of Usiminas change after the exit of Nippon?

Henrique, this question I think this has to be given to Ternium. What we see in Usiminas is a strong commitment with Usiminas with the Brazilian market, great will to develop everything that we're doing to gain competitiveness, to increase market share and at a given moment to develop growth plans. So the commitment that we see from Ternium and the support that we've received in all areas is enormous. And these actions of additional investments in Usiminas is a clear demonstration. And we are happy to see the support, the investments, this commitment. We are reassured and we do believe that we will make progress in the upcoming years with their support.

So excellent. With this, we bring our Q&A session to an end. And I would like to thank all of you for your participation, and thank you very much to Marco Saravalle and APIMEC Brasil for their partnership. Our IR team is at your disposal if your questions haven't been answered. And have an excellent afternoon.