Gerdau revenue up for the second quarter

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Steelmaker Gerdau of Brazil ended the second quarter of 2015 with net sales of $10.8 billion Brazilian real (US$3 billion), up 3 percent from the same period last year, primarily reflecting the effects from currency variations generated by overseas operations and exports, the company reports.

The increase was despite the fact that shipments in the quarter declined 6 percent from the second quarter of 2014 to 4.3 million metric tons. Gerdau also reports that in the same period consolidated steel production fell 5 percent to 4.4 million metric tons.

The company says it is restructuring its business operations to capture greater strategic and operational synergies in its South and North America. As a result, Gerdau says, the units in Mexico and the joint ventures in the Dominican Republic, Guatemala and Mexico will become part of the North America Business Operation, which comprises its long steel operations in Canada and the United States.

Other financial results included stable operating cash generation of R$1.2 billion (US$340 million) in the quarter compared with the same quarter of 2014. Consolidated net income was R$265 million (US$75.3 million), down 33 percent from the second quarter of 2014, explained by the lower operating income and higher financial expenses in the period, the steelmaker says. 

“In the second quarter, Gerdau’s strategy of diversifying geographically enabled the stronger results in North America to partially offset the weaker performance in Brazil,” says Gerdau CEO André B. Gerdau Johannpeter. “We continue to work on various fronts to prepare Gerdau for both current and future challenges and to improve its competitiveness in the current scenario of oversupply in the global steel industry and weak demand in Brazil.”

Gerdau Johannpeter also says the company is working to implement the Gerdau 2022 project, a global initiative to simplify internal operations and structures and reassess the profitability of assets in accordance with a long-term strategic vision.

Over the course of the quarter, the markets served by Gerdau presented distinct performances. The shipments to Brazil’s domestic market (excluding the mills producing special steels) of 1.1 million metric tons were 20 percent lower year over year, reflecting the contraction in the construction industry and weaker industrial production. However, exports from Brazil advanced 121 percent to 477,000 metric tons.

In the other Latin American countries (excluding the operations in Brazil), shipments came to 634,000 metric tons, in line with second quarter of 2014. Meanwhile, the operations in Canada and the United States (excluding the mills producing special steels) shipped 1.5 million metric tons, down 6 percent from the second quarter of 2014.

The special steel operations (including the mills in Brazil, U.S., Spain and India) shipped 700,000 metric tons, down 7 percent from the second quarter of 2014.

Iron ore shipments amounted to 2 million metric tons, increasing 13 percent from the second quarter of 2014. Of this amount, 1.4 million metric tons were shipped to Gerdau mills and 571,000 metric tons were sold in the market.