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Gerdau’s production, shipments fall in 2012

Keywords: Tags  Gerdau, Brazil operations, Latin America operations, North America operations, steel, steel production, steel sales, steel shipments Juan Weik

SÃO PAULO — Gerdau SA’s crude steel output and steel sales fell slightly last year due to a slowdown in emerging economies, the eurozone crisis and U.S. fiscal uncertainties.

Crude steel output fell 3.6 percent year on year in 2012 to 18.9 million tonnes, while shipments slipped just shy of 3 percent to 18.6 million tonnes vs. 2011, the Porto Alegre, Brazil-based company said Feb. 21 with the release of its earnings results.

Full-year production and shipments fell in three of the company’s main divisions—Brazil, North America and special steel—with only the Latin America business logging an increase.

The Brazilian operation’s shipments fell 4.6 percent for the year ended Dec. 31, 2012, to 7.3 million tonnes, excluding special steel. Domestic Brazilian sales rose 4.7 percent to 5.3 million tonnes while exports slid 22.9 percent to 1.98 million tonnes.

Sales to the domestic Brazilian market increased 5 percent to 5.3 million tonnes, and shipments to other Latin American countries rose 2 percent to 2.7 million tonnes. Shipments to North America fell slightly to 6.5 million tonnes.

The special steel business—comprising operations in Brazil, Spain, the United States and India—saw the largest decrease in shipments, which fell 10.4 percent to 2.7 million tonnes on the back of poorer results in the Brazilian and European economies.

Net income for the year slipped to nearly 1.5 billion reais ($759.9 million), down 28.7 percent from almost 2.1 billion reais in 2011, on revenue that jumped 7.3 percent to 37.98 billion reais ($19.24 billion) from 35.41 billion reais in 2011. Net sales per tonne shipped increased in all business operations, offset by higher raw materials costs, the steelmaker said.

Earnings before interest, taxes, depreciation and amortization (Ebitda) fell 10.2 percent year on year to almost 4.18 billion reais ($2.12 billion) in 2012 from 4.65 billion reais a year earlier.

"Throughout 2012, besides the reflections of the global economic environment on the performance of the company, we experienced an increase in costs of important raw materials, notably scrap and freight, which (affected) the profitability of the sector as a whole," chief executive officer André Gerdau Johannpeter said.

A version of this article was first published in AMM sister publication Steel First.

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