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Gerdau Reports Third Quarter Increases in Net Revenue, Sales

11/14/2011 - Gerdau reported consolidated net revenue to R$ 9 billion, an increase of 9% against the same period last year, on a 10% increase in sales and a 14% increase in consolidated steel production.

Gerdau reported consolidated net revenue to R$ 9 billion, an increase of 9% against the same period last year. The company attributed the increase to a 10% increase in sales, reflecting a higher global demand for steel. Consolidated steel production reached 5 million tonnes, an increase of 14% over the year-ago third quarter.
 
Despite the increase in net revenue, the company’s consolidated operating cash flow (EBITDA) declined by 4% over the same period, reaching R$ 1.2 billion, due to rising raw material costs. Net profit, in turn, grew 17%, reaching R$ 713 million, due to lower financial expenses, foreign exchange effects, and tax benefits resulting from the payment of interest on capital.
 
"Even against the high volatility of financial markets, Gerdau performed well in the third quarter, reflecting the growing demand for steel in the countries where we operate and the good management of our teams, which allowed cash growth and reduction of net debt and general, administrative, and financial expenses," said Gerdau chief executive officer (CEO), André B. Gerdau Johannpeter. “The outlook for the global steel market shows growth in demand, but we remain cautious about the uncertainties of the global economic scenario. In this sense, we will seek the continuous improvement of our operations, mainly focusing efforts to reduce the impact of raw material costs on our business.”
 
Year-to-date (from January to September) Results — Consolidated net revenue totaled R$ 26.3 billion, an increase of 12% over the first nine months of 2010. Consolidated sales reached 14.5 million tonnes, also showing an increase of 12%. In the same period, the consolidated steel production was 11% higher, reaching 14.9 million metric tons. The EBITDA, in turn, was R$ 3.6 billion and the net profit reached R$ 1.6 billion.
 
Regional and Division Results —All of Gerdau's operations reported increase in sales for the quarter. In Brazil (except the special steel mills), 1.8 million tonnes of steel were sold, a 9% increase in volume over the same period of 2010 due to increased domestic demand. Of this total, 1.4 million tonnes of Gerdau steel were marketed in Brazil, an increase of 13% against the same period last year. Conversely, exports from the country reached 417,000 tonnes, a reduction of 2%.
 
The other Latin American countries (except Brazil) totaled 711,000 tonnes of steel sold, 26% more compared to the same period last year, with outstanding performance in Colombia, Mexico, and Argentina. The plants located in Canada and the United States (excluding special steel mills) reported an 8% increase in sales due to increased demand from the industrial and energy sectors, reaching 1.6 million tonnes.
 
Sales of the Special Steel Business Division (including mills in Brazil, the United States, and Spain) showed a 2% increase, totaling 725, 000 tonnes, due to stability of the automotive sector in the United States and Brazil, the high volume of sales and the recovery of this segment in the markets served by Gerdau in Spain, mainly Germany and France.
 
Investments — In the third quarter, Gerdau’s investments in fixed assets (CAPEX) totaled R$ 616 million, according to the planned schedule of disbursements. Of this total, 79% were allocated to plants located in Brazil and 21% to operations in other countries. Investment highlights in Brazil included the ongoing installation of flat steel rolling mills and expansion of iron ore production, both at Gerdau Açominas (MG), and to increase the production capacity of rolled steel at the long steel mill Cosigua (RJ) and the special steel mill Pindamonhangaba (SP).
 
During the first nine months of the year, considering the countries where it operates, Gerdau invested R$ 1.3 billion in fixed assets.
 
In relation to the monetization of part of its mineral resources located in Minas Gerais, Gerdau informs that the studies are still being conducted, as previously announced.
 
Gerdau is a leader in the long steel sector in the Americas and a leading supplier of special long steel in the world. The company has 45,000 employees and industrial plants in 14 countries – in the Americas, Europe, and Asia – which have a total installed capacity exceeding 25 million tonnes per year. Gerdau is the largest recycler in Latin America and turns millions of tonnes of scrap into steel every year around the world.