Gerdau S.A. (GGB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Gerdau's net income declined 1.9% year over year in second-quarter 2014, with earnings coming in at $0.10 per ADR. Revenues grew 5.7% due to healthy performance in North America, Special Steel and Iron Ore business operations. However, weak domestic demand for steel and lower exports affected the company's Brazilian operations while business in Latin America suffered from slower economic growth. Steel shipments were down 2.4% while production grew a meagre 0.5%. Gross margin was down 150 basis points. However, planned investments to improve manufacturing techniques, production capacities and raw material resources will help Gerdau to capitalize on the growing steel demand worldwide. Considering the above factors, we maintain a Neutral recommendation on the company.


Gerdau S.A. (GGB) is a leading steel producer in Brazil with operations spanning over South America, North America, Europe and Asia. The company is the second-largest long steel producer in the world and the largest in the Americas. Exiting 2013, the company had a total installed production capacity of over 25 million tons of steel per year, while crude steel (slabs, blooms and billets) production reached 18.0 million tons. Also, the company has ventured into flat steel production business, along with expanding its iron ore activities.

Gerdau produces steel, mostly through mini-mills and distributes steel products through its own network of 88 commercial branches in Brazil. The company operates 61 steel-producing units worldwide, including joint ventures and associated companies.

In the North American market, the company operates through its wholly owned subsidiary, Gerdau Ameristeel. Its North American facilities, 18 steel producing units, are based across both the U.S. and Canada. Additionally, Gerdau has four integrated mills in Brazil with plants located and sized to scale in order to meet the needs of local markets and access customers efficiently.

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

This article appears in: Investing , Stocks

Referenced Stocks: GGB

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