Gerdau reports revenue boost

Brazil-based electric arc furnace (EAF) steelmaker Gerdau has reported a 35 percent hike in net sales in its 2018 third quarter, which ended Sept. 30, 2018.

The year-on-year quarterly sales increase “was driven by the better scenario in the Brazilian and international markets and by the effects from the exchange rate for translating revenue into Brazilian real,” according to the steelmaker.

In addition to the improvement in net sales, Gerdau says its “good performance reflects the management efforts made at all operations, which resulted, for example, in selling, general and administrative expenses (SG&A) reaching their lowest level ever, corresponding to 3.3 percent of net sales.”

Supported by management efforts, Gerdau’s consolidated adjusted operating cash generation (EBITDA) improved as well, to 2 billion Brazilian reals ($529.4 million) in the third quarter, growing 73 percent compared to the same period in 2017. That represents Gerdau’s best quarterly EBITDA of the last 10 years and the company’s third highest ever. Gerdau’s adjusted net profit was 1 billion reals ($264.7 million), more than six times higher than its third quarter of 2017 figure.

Year to date, Gerdau says its 2018 sales had increased by 30 percent versus the first nine months of 2017; EBITDA has risen by 67 percent, and consolidated adjusted net profit rose to 2.2 billion reals ($582.3 million) compared with 258 million reals ($68.3 million) in the comparable 2017 period.

“In the third quarter, the highlights were the better performances of the Brazil and North America operations, our key markets,” says Gerdau CEO Gustavo Wernec. “In addition, in November 2018 we finalized the sale of four rebar units in the United States announced earlier this year, which concludes our divestment cycle. Now, we will focus on our more profitable operations and on reducing our debt to a more comfortable level. I want to express my appreciation of our employees who, through their dedication, are directly responsible for our capacity to surmount challenges.”

In the third quarter, Gerdau says it made 43 of its capital investments in Brazil, 32 percent in North America and 5 percent in other Latin American nations.

Its divestment program included the sale of four rebar units, fabricated rebar units and distribution centers in the United States to Texas-based Commercial Metals Co. (CMC). The agreement included the mills in Jacksonville, Florida); Knoxville, Tennessee); Rancho Cucamonga, California; and Sayreville, New Jersey.