Gerdau rebound sends positive signals

Gerdau rebound sends positive signals
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Steelmaker Gerdau S.A., which is based in Brazil with operations in several North and South American nations, has reported increased profits in the fourth quarter of 2020 compared with both the previous quarter and the fourth quarter of 2019.

The São Paulo-based firm says increased steel output in late 2020 was “supported by the continued recovery in demand in the various countries where the company operates.”

Gerdau says its steel shipments in the fourth quarter of 2020 in relation to the same quarter in 2019 increased, “led by shipments to the domestic market of the Brazil business division and to the North America business division. Compared to the third quarter of 2020, the stability in shipments in a seasonally weaker quarter is explained by the better performance of the Special Steel division and the North America division.”

In North America, Gerdau operates seven scrap-fed electric arc furnace (EAF) carbon steel mills in the United States and three in Canada under the Gerdau Longsteel brand. The company also operates three mills in its Special Steel division in the U.S., according to the 2021 Recycling Today list of steel mills in North America.

In addition to increased shipments, the company says its gross profits and margins expanded in the fourth quarter of 2020, “reflecting the 10 percent increase in sales [revenue] per metric ton sold and [just] a 3 percent increase in cost per metric ton sold” compared with the previous quarter.

Compared with the fourth quarter of 2019, increased margins can be explained “by the strong domestic market in the Brazil business division,” Gerdau says.

The steelmaker says its earnings before interest, taxes, depreciation and amortization (EBITDA) rose from 2.1 billion Brazilian reals ($388 million) in the third quarter of 2020 to 3.1 billion reals ($573 million) in the fourth quarter.

In remarks accompanying a presentation to stock analysts, Gerdau Chief Financial Officer Harley Scardoelli comments, “This best EBITDA fourth quarter in Gerdau’s history was the fruit of a quarter with strong performance in practically all our operations, with a highlight in Brazil and South America.”

Scardoelli says in the fourth quarter of 2020, the company’s consolidated EBITDA margin reached 22.4 percent, with a “highlight” being the 30.9 percent margin in Brazil. “In Brazil, EBITDA reached approximately 1.8 billion reals ($333 million) due to rising demand in the domestic market for civil construction and industry,” he remarks.

Gerdau, Scardoelli adds, pursued “the maximum of opportunities to keep the Brazilian market supplied” with steel.

In its quarterly result statement, Gerdau also portrayed demand for steel in the construction sector in Peru and Argentina as “robust,” saying EBITDA in its South American region (which includes those two nations, plus Uruguay and Venezuela) was the highest in any quarter since 2008.

Similarly, in its North American market (which includes the U.S., Canada and Mexico), Gerdau said its fourth-quarter 2020 EBITDA was the highest in any quarter since 2007. The company credited “the 31 percent appreciation in the average U.S. dollar rate against the Brazilian real in the period” for some of the profits.

In terms of capital expenditures, Gerdau says many current projects focus on environmental compliance and benefits. The capex spending includes “improvements and technological updating that enables higher energy efficiency gains and lower greenhouse gas emissions, driven by reducing losses in continuous casting, electric arc furnace, spheroidization furnace and logistics processes.”

In North America, the company’s EAF mills are fed in part by its own scrap processing and trading network, which includes the operation of three auto shredding plants in the United States and ownership of a fourth, according to the most recent Recycling Today list of auto shredders. 

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Source: Recycling Today
Gerdau rebound sends positive signals
<![CDATA[Steelmaker Gerdau S.A., which is based in Brazil with operations in several North and South American nations, has reported increased profits in the fourth quarter of 2020 compared with both the previous quarter and the fourth quarter of 2019.The São Paulo-based firm says increased steel output in late 2020 was “supported by the continued recovery in demand in the various countries where the company operates.”Gerdau says its steel shipments in the fourth quarter of 2020 in relation to the same quarter in 2019 increased, “led by shipments to the domestic market of the Brazil business division and to the North America business division. Compared to the third quarter of 2020, the stability in shipments in a seasonally weaker quarter is explained by the better performance of the Special Steel division and the North America division.”In North America, Gerdau operates seven scrap-fed electric arc furnace (EAF) carbon steel mills in the United States and three in Canada under the Gerdau Longsteel brand. The company also operates three mills in its Special Steel division in the U.S., according to the 2021 Recycling Today list of steel mills in North America.In addition to increased shipments, the company says its gross profits and margins…