GERDAU S.A. 
By Press release
- Consolidated physical sales reached 4.7 million metric
tons, which is consistent compared with the first quarter
of 2011.
- Consolidated steel production was up 4% to 4.9 million
metric tons.
- Significant costs with raw materials such as iron ore,
coal, and scrap continue putting pressure on the
Company's operating margins.
- Total investment in mining reaches R$ 838 million in
order to reach 11.5 million metric tons of annual
production capacity, an increase of approximately 80% over
the current volume.
Gerdau closed the first quarter of 2012 with net revenue of
R$ 9.2 billion, which is an increase of 10% against the
same period last year. Consolidated sales of 4.7 million
metric tons remained stable in relation to the first three
months of last year, being positively influenced by
increased demand from civil construction in Brazil and in
the industrial and energy sectors in the United States. On
the other hand, in Brazil sales were impacted by lower
demand for special steels due to the anticipation of
purchases during the fourth quarter of 2011 and the
reduction of exports from the country. Furthermore, there
was a decrease in sales volume of special steels in Europe
due to reduced business activities in the region.
Considering the behavior of the different markets where the
Company operates, consolidated steel production showed a 4%
growth, reaching 4.9 million metric tons.
The generation of cash from operations (EBITDA) of R$ 1
billion in the quarter was impacted by a substantial
increase in the costs of raw materials-iron ore, coal, and
scrap-which continue putting pressure on the Company's
margins. The EBITDA was also influenced, especially in
Brazil, from the process of de-industrialization of the
economy and heavy rains that took place in Minas Gerais,
which affected the production, sales logistics, and the
flow of raw materials at Gerdau Açominas. Despite these
factors, net income was R$ 397 million, roughly in line
with the results of the first quarter of last year,
benefited by the reduction of the financial result.
"The performance of Gerdau in the first quarter shows
that demand continues to be strong in relevant markets, but
the level of profitability of our operations was affected
mainly by the growth of production costs and by the
de-industrialization process of the steel supply chain in
Latin America. In Brazil, the impacts from
de-industrialization have been strongly felt in the
domestic market. Faced with this scenario, we continue to
work on improving our management of costs, especially as it
relates to our own production of iron ore and coal, as well
as for the supply of captive scrap, reinforcing our
commitment to creating sustainable value for our
shareholders," affirms Gerdau's chief executive
officer (CEO), André B. Johannpeter.
During the quarter, the markets supplied by Gerdau
performed differently. In Brazil, sales to the domestic
market (excluding the units producing special steels) grew
8%, adding 1.3 million metric tons, while exports from the
country decreased 21%, reaching 509,000 metric tons. In the
United States and Canada (excluding the units producing
special steels), 1.8 million metric tons were sold, which
is 7% more than in the first quarter of last year. As for
the units in the other countries of Latin America (except
Brazil), they accounted for 671,000 metric tons sold, a
volume 5% higher compared to the first three months of
2011, primarily due to the expansion in the demand of civil
construction in Colombia, Peru, and Chile. The sales closed
by the Business Operation of Special Steels (including
plants in Brazil, the United States, and Spain) totaled
698,000 metric tons, which is a 6% decrease.
Gerdau's investments reach R$ 691 million in first
quarter
Investments in fixed assets (CAPEX) in the first quarter
totaled R$ 691 million with the main investments being for
starting up production of flat steel (hot rolled coils) at
the end of 2012 at Gerdau Açominas (MG). The expansion of
the installed capacity of special steel in Brazil and the
United States was also continued, as well as the increased
production of rolled products at the Cosigua (RJ) plant and
the deployment of the rolling mill and sintering unit in
India.
The Company also continues seeking to achieve
self-sufficiency in iron ore at Gerdau Açominas, which is
the main consumer of this raw material. Also in full swing
is the installation of the second phase of the
Company's investment in the mining sector when its
installed capacity will grow from its current 6.5 million
metric tons to 11.5 million metric tons with the
installation of a second ore processing unit.
The project also involves its own logistics structure with
investments in building a highway in order to facilitate
the transportation of its production, as well as the
installation of a nine kilometer long conveyor belt system
to transport the raw material to the Ouro Branco mill.
Another highlight is the project of implementing a rail
terminal, which is in the final stage of studies. The total
number of investments reaches R$ 838 million in funds and
should be completed in 2014.
Additionally, the project for the commercial exploitation
of the surplus production of iron ore located in Minas
Gerais is still in progress, which is in the phase of
seeking a strategic partner for the venture.
New investments were also approved in the first quarter to
meet the growing demand for special steels in the
automotive market in the United States. A new continuous
casting mill will be installed at the plant in St. Paul
(Minnesota), which will expand its annual production
capacity from 90,000 metric tons to 500,000 metric tons
with an investment of R$ 91 million. The new equipment
should begin operations in the beginning of 2014. A new
inspection line of bars will start operating in 2013 at the
plant in Monroe (Michigan), increasing the processing
capacity of the products. This investment of R$ 39 million
is over and above the unit's expansion plan previously
announced, which will increase the annual production
capacity of rolled products at Monroe from 470,000 metric
tons to 720,000 metric tons in the coming years.
The production capacity of steel and rolled products will
be expanded in Colombia in order to meet the expansion of
the domestic market. With this, the Company will reach an
annual installed capacity of 950,000 metric tons of steel
and 1.1 million metric tons of rolled products by 2015,
representing an investment of R$ 192 million.
Dividends to be paid on May 23
The publicly traded companies Gerdau S.A. and Metalúrgica
Gerdau S.A. shall pay dividends on May 23 for the
performance in the first quarter of 2012. The shareholders
from Gerdau S.A. shall receive R$ 102.1 million (R$ 0.06
per share) and those from Metalúrgica Gerdau S.A. R$ 32.5
million (R$ 0.08 per share).
About Gerdau
Gerdau is the leader in the segment of long steel in the
Americas and one of the main suppliers of special long
steel in the world. With over 45,000 employees, it has
industrial operations in 14 countries-in the Americas,
Europe, and Asia-which together represent an installed
capacity of over 25 million metric tons of steel per year.
It is the largest recycler in Latin America and in the
world, and transforms each year millions of tons of scrap
steel, reinforcing its commitment to sustainable
development in the regions where it operates. Gerdau is
listed on the stock exchanges of São Paulo, New York, and
Madrid and has over 140,000 shareholders.
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