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4-Traders Homepage  >  Equities  >  Bolsa de valores de Sao Paulo  >  Gerdau    GGBR4   BRGGBRACNPR8

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05/04/2012 | 11:05pm CEST

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.


Porto Alegre - May 2, 2012
Press Center - +55 (51) 3323-2170
[email protected]
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Financials ( BRL)
Sales 2018 40 875 M
EBIT 2018 3 415 M
Net income 2018 1 711 M
Debt 2018 9 200 M
Yield 2018 1,94%
P/E ratio 2018 16,35
P/E ratio 2019 11,64
EV / Sales 2018 0,85x
EV / Sales 2019 0,79x
Capitalization 25 622 M
Duration : Period :
Gerdau Technical Analysis Chart | GGBR4 | BRGGBRACNPR8 | 4-Traders
Technical analysis trends GERDAU
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 17,5  BRL
Spread / Average Target 10%
EPS Revisions
Gustavo Werneck da Cunha Chief Executive Officer & Director
Claudio Gerdau Johannpeter Chairman
Harley Lorentz Scardoelli CFO, Director-IR & Legal, Vice President
André Bier Gerdau Johannpeter Director
Affonso Celso Pastore Independent Director
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