Brazilian steel producer,
Gerdau S.A.
(
GGB
) reported its financial results for the second quarter of 2012 on
August 2, 2012. The company's net income increased 9% year over
year to R$549 million (US$280.1 million). The bottom-line results
were largely impacted by higher cost of sales that offset revenue
improvement reported in the quarter.
Revenue
Net revenue in the quarter jumped 10.7% year over year to
R$9,975 million (US$5,089.3 million).
As for the net revenue, Brazilian business accounted for about
37.3% and registered a 4% increase over the year-ago quarter. North
American revenue increased 18% and contributed 31.9% to net revenue
while Latin American revenue represented 12.8% of net revenue and
spiked 33% over the year-ago period. Revenue from Specialty Steel
grew 2% year over year and accounted for about 20.8% of net
revenue.
Crude steel production in the quarter declined 2% year over year
to 5,046 million tons, especially due to disruption in Brazilian
production with units being largely affected by heavy rainfall.
Shipments were also down 2% year over year to 4,778 million tons;
with business weal in all business operations. However, Latin
American business showed strength in the quarter.
Margins
Gross margin in the quarter went down by 130 basis points to
settle at 14.3%, as higher revenue growth was offset by a 12.4%
increase in cost of sales. Selling expenses, as a percentage of
revenue, were at 1.50%; down compared with 1.74% in the year-ago
quarter. General and administrative expenses dipped 9 basis points
year over year to 4.88%.
EBITDA at R$1,244 million (US$634.7 million) was down 5% year
over year with a margin of 12% in the quarter. Operating margin was
7.9% versus 9.7% in the year-ago quarter.
Balance Sheet
Exiting the second quarter, Gerdau had cash and cash equivalents
of approximately R$1,664.1 million (US$800.0 million), reflecting a
sequential increase of 22.5%. Long-term debt increased 3.9% to
R$11,296.6 million (US$5,431.1 million).
Cash Flow
Net cash flow from operating activities in the second quarter
2012 was R$1,046.5 million (US$533.9 million) as against cash
outflow of R$874.1 million (US$549.7 million) in the year-ago
quarter. Capital spending more than doubled in the quarter to reach
R$850.1 million (US$433.7 million).
Gerdau S.A., one of the foremost steel producers in Brazil,
plans to spend roughly R$10.3 billion for the period from 2012 to
2016. The company faces stiff competition from its peers like
Companhia Siderurgica Nacional
(
SID
),
Arcelor Mittal
(
MT
) and
Usinas Sider
(USNZY.PK).
GERDAU SA ADR (GGB): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
CIA SIDERUR-ADR (SID): Free Stock Analysis
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