Gerdau Posts Solid Q4 Earnings - Analyst Blog


Shutterstock photo

Brazilian steel maker, Gerdau S.A. ( GGB ) reported impressive results for fourth-quarter 2013 on Feb 21. Net income in the quarter surged 244.1% year over year to R$491.6 million (US$216.6 million).

For 2013, Gerdau reported net income of R$1,693.7 million (US$787.8 million), up 13.2% year over year.


Gerdau generated net revenue of R$10,321.0 million (US$4,546.7 million), reflecting an increase of 14.8% year over year.

Gerdau's Brazilian business accounted for about 38.6% of net revenue in the quarter and registered an 11.1% year-over-year increase. Revenues generated in North America increased 14.5% and contributed 30.1% to net revenue, while Latin American revenues represented 14.2% of net revenue and increased 20.1% year over year. Revenues from Special Steel business operations increased 19.3% year over year and accounted for about 19.8% of net revenue.

Crude steel production increased 6.2% year over year to 4,446 million tons in the quarter. Production in Brazil fell 0.6%, while an increase of 8.7% was recorded in North America. Production in Latin America grew 4.4%, while Specialty Steel production in the quarter reflected an increase of 19.8%. Shipments grew 5.5% year over year to 4,555 million tons.

In 2013, net sales generated were R$39,863.0 million (US$18,540.9 million), up 5.0% compared with 2012.


Gerdau's gross margin in the quarter rose 180 basis points (bps) to 13.1% due to revenue increase, offset partially by a 12.6% increase in cost of sales. Selling expenses, as a percentage of revenues, were 1.6% versus 1.7% in the year-ago quarter. General and administrative expenses decreased 10 bps year over year to 4.9%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were R$1,370.0 million (US$603.5 million), up 53.8% year over year with a margin of 13.3% in the quarter. Operating margin was 7.8% versus 4.7% in the year-ago quarter.

Balance Sheet

Exiting fourth-quarter 2013, Gerdau's cash and cash equivalents were up 6.8% sequentially to R$2,099.2 million (US$893.3 million). Long-term debt was at R$14,481.5 million (US$6,162.3 million), up 6.3% from the preceding quarter.

Cash Flow

Gerdau generated approximately R$4,098.4 million (US$1,906.2 million) of net cash from operating activities in 2013, down 5.7% from 2012. Capital spent on additions of property, plant and equipment decreased 16.9% to R$2,598.3 million (US$1,208.5 million). Of the total capital spending, the company invested roughly 58.9% in its Brazilian operations, 20.2% in Special Steel, 14.2% in North American operations and 6.7% in Latin American operations.

Gerdau currently has a market capitalization of $10.9 billion and carries a Zacks Rank #4 (Sell). Some better-ranked companies in the industry include AK Steel Holding Corporation ( AKS ), United States Steel Corp. ( X ) and General Steel Holdings, Inc. ( GSI ), all of which hold a Zacks Rank #2 (Buy).

AK STEEL HLDG (AKS): Free Stock Analysis Report

GERDAU SA ADR (GGB): Free Stock Analysis Report

UTD STATES STL (X): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
More Headlines for: AKS , GGB , X , GSI

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by