Gerdau reports stable first quarter sales

Brazil-based Gerdau has reported net sales of 10.4 billion reals ($3.37 billion) for the first three months of 2015, a level the company calls “stable” compared with the same period last year. The company says its performance was affected primarily by weak steel demand in its operating regions, global overcapacity and currency gains between the Brazilian real and the U.S. dollar.

Gerdau’s steel shipments in the period came to 4.1 million metric tons, down 6 percent compared with the first quarter of 2014, while steel production reached 4.3 million metric tons, down 5 percent.

The company says its consolidated net income for the first quarter of 2015 declined almost 40 percent to 267 million reals ($86.5 million).

“Gerdau’s strategy of diversification across geographic regions and management’s efforts at all operations enabled it to mitigate the impacts on our performance of this challenging moment for the global steel industry,” says Gerdau CEO André B. Gerdau Johannpeter. “In addition to our ongoing efforts to adjust production to demand, we reduced our general and administrative expenses at the global level."

He adds, "We will remain cautious over the coming months, carefully monitoring market developments in a scenario of global overcapacity and economic uncertainties in Brazil.”

The company, which bills itself as Latin America’s largest recycler, says all of its markets posted lower shipments. In Brazil, domestic shipments (excluding special steel production units) fell to 1.3 million metric tons, a 13 percent decline relative to the same period in 2014, while exports nearly doubled to 305,000 metric tons.

The United States and Canada (excluding special steel production units) shipped 1.4 million metric tons, down 4 percent from the first quarter of 2014, which was affected by the higher supply of imported products in the region, according to Gerdau.

Meanwhile, units in other Latin American countries (excluding Brazil) shipped 634,000 metric tons, 7 percent less than in the first quarter of 2014.

Shipments by the Special Steel Business Operation (including mills in Brazil, the United States, India and Spain) fell by 8 percent to 696,000 metric tons compared with the first quarter of 2014.

From January to March, iron ore shipments came to 1.5 million metric tons compared with 2 million metric tons in the same period the prior year. Of this total, 1.2 million metric tons were shipped to Gerdau mills.

The company also reports investments of 612 million reals ($198 million) during the first quarter of 2015, including the construction of a new heavy plate rolling mill in Minas Gerais, Brazil, with annual production capacity of 1.1 million metric tons. Gerdau says it expects to commission to plant in late 2016. The company says it plans to invest a total of 2 billion reals ($648 million) during 2015.