Brazilian steel producer,
) reported disappointing financial results for the fourth quarter
and year 2012, on February 21, 2013. The company's net income at
R$143 million (US$69.4 million) represented a 70% decline over
the year-ago quarter.
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For 2012, net income plummeted 29% to R$1,496 million (US$726.2
Net revenue in the fourth quarter plummeted 1% year over year to
R$8,988.0 million (US$4,363.1 million).
As for the net revenue, Brazilian business accounted for about
39.9% and registered a 1% growth over the year-ago quarter. North
American revenue decreased 4% and contributed 30.1% to net
revenue while Latin American revenue represented 13.6% of net
revenue and spiked 14% over the year-ago period. Revenue from
Specialty Steel declined 8% year over year and accounted for
about 19.1% of net revenue.
Crude steel production was 4,186 million tons in the quarter,
down 12% year over year due primarily to weak performances in all
operating regions. Production in Brazil declined 9% while a
respective 15% and 1% decline was noticed in North America and
Latin America. Specialty Steel production was down 16%. Shipments
were also down 8% year over year to 4,317 million tons, with
dismal performance in all business operations.
For 2012, net revenue was R$37,982 million (US$19,477.9 million),
up 7% year over year.
Gross margin in the quarter went down by 200 basis points to
settle at 11.3% as the impact from a fall in revenue was
neutralized by a 1.3% increase in cost of sales. Selling
expenses, as a percentage of revenue, were at 1.7%, flat year
over year while general and administrative expenses dipped 30
basis points year over year to 5.0%.
EBITDA at R$891.0 million (US$432.5 million) was down 13% year
over year with a margin of 10% in the quarter. Operating margin
was 4.7% versus 6.3% in the year-ago quarter.
Exiting the fourth quarter, Gerdau had cash and cash equivalents
of approximately R$1,437.2 million (US$701.1 million) versus
R$1,665.6 million (US$832.8 million) in the previous quarter.
Long-term debt increased 1.3% to R$11,725.9 million (US$5,719.9
Net cash generated from operating activities in 2012 was
R$4,344.0 million (US$2,119.0 million), up 154.0% year over year.
Capital spending increased 59.4% to R$3,127.3 million (US$1,525.5
Gerdau S.A., one of the foremost steel producers in Brazil, plans
to spend roughly R$8.5 billion for the period from 2013 to 2017.
The stock currently has a Zacks Rank #2 (Buy). Other stocks to
look out for in the industry are
Companhia Siderurgica Nacional
Commercial Metals Company
Gibraltar Industries, Inc.
), each with a Zacks Rank #2 (Buy).