Dividend Payout Decision
Q: Why was the dividend payout lower than expected?
A: Management explained that they maintained a conservative dividend payout due to challenges in generating BRL-denominated cash from Brazilian operations, which have been impacted by high import volumes and uncertainties in the domestic market. They are cautious given the need to fund significant CapEx of BRL 9 billion in Brazil. They also noted there's room to revisit dividends in future quarters.

CapEx Plans Amid Lower EBITDA
Q: Will you adjust CapEx plans given lower EBITDA?
A: Management affirmed their commitment to ongoing CapEx plans, emphasizing the importance of strategic investments, particularly in the Ouro Branco mill and mining operations. These investments are deemed essential for long-term competitiveness and they do not intend to postpone or cancel projects despite current lower EBITDA levels.

Profitability in Brazil
Q: How will you address low profitability in Brazil?
A: The company is reducing fixed costs and capacity, swiftly adjusting operations to navigate the challenging market. They are also advocating for government action to combat the surge of imported steel from China, which has led to overcapacity and depressed profitability.

Impact of Chinese Steel Imports
Q: What is the impact of Chinese steel imports on your business?
A: The influx of low-cost Chinese steel has increased import penetration in Brazil to 23% in September, causing significant competitive pressures. The company is reducing capacity, including letting go of almost 700 workers, and is urging the government to implement measures like a 25% tariff to restore fair competition.

Impact of U.S. Automotive Strikes
Q: How are U.S. automotive strikes affecting your operations?
A: While Q3 results were unaffected, the extended strikes are expected to impact specialty steel operations starting in October and November. Management is adapting operations accordingly and anticipates that once strikes end, delayed orders may lead to increased deliveries, offsetting some impact.

Cost Dynamics: Coal and Iron Ore
Q: How will coal and iron ore prices impact your costs?
A: Rising coal prices, with a lead time of about 180 days, are expected to increase variable costs early next year. Combined with a stronger BRL and increased Chinese steel imports, these factors pose challenges to competitiveness and profitability.

Working Capital Reduction
Q: What are your plans for working capital reduction?
A: Management is focused on reducing working capital by decreasing inventory levels and accounts payable. They expect to continue this reduction in the coming quarters, aiming to return to normal levels, assuming stable sales.