Gerdau Q4 results show drop-off in business

Brazilian recycled-content steel producer Gerdau S.A. has reported single-digit declines in net sales, shipments and earnings per share for the fourth quarter of 2024 compared with results from the prior quarter.

The company, which operates mills and metal recycling facilities in both South and North America, reports fourth quarter steel shipments of 2.7 million metric tons, a 3.9 percent decline compared with the previous quarter. The most recent shipments figure, however, represents a 2.6 percent increase compared with products shipped in the fourth quarter of 2023.

The company’s earnings per share figure of 15 Brazilian centavos (3 cents) in its most recently completed quarter represents a decline both from the previous quarter (down 77 percent from 64 centavos, or 11 cents) and one year ago (down 92 percent from 2 reals and 18 centavos, or 38 cents).

Comments from Gerdau’s management accompanying the earnings report say its lower earnings figure compared with the prior quarter mainly was impacted by lower prices in the North America Business Division and a volume decline due to the typical seasonality of the period.

The company's Brazil Business Division ended the fourth quarter of 2024 with the best performance for a last quarter since 2021.

Gerdau management says conditions in Brazil could improve further with assistance from that nation’s government. “Our domestic market volumes remain challenged by excessive inflow of imported steel in the country, which creates an environment of unfair competition for the local industry,” the company says.

In North America, Gerdau expresses concerns tied to seasonality and political uncertainties in the U.S.

"This scenario put further pressure on steel prices for the main product lines throughout the fourth quarter of 2024, impacting the business division’s profitability," the company says.

“Despite the ongoing cautious market scenario, our order backlog has recovered to the 60-day level across all product lines, driven notably by the nonresidential construction sector.”

In presentation slides released last week, Gerdau says tariff discussions in the U.S. could influence capacity utilization and spreads in the steel mill sector.

Regarding steel demand conditions in North America, Gerdau cites a positive outlook for nonresidential construction demand, infrastructure and government tax packages.

“In 2024, we continued to implement our strategy of sustainable growth while maintaining our financial strength,” says Gerdau Chief Financial Officer Rafael Japur about the company’s overall performance last year.