Bloomberg News

Gerdau Profit Beats Estimates as Sales Rise in Brazil, U.S.

February 17, 2012

(Updates with closing share price in sixth paragraph.)

Feb. 16 (Bloomberg) -- Gerdau SA, Latin America’s largest steelmaker, reported fourth-quarter profit that beat analysts’ estimates on rising demand in Brazil and North America.

Net income rose to 438.8 million reais ($252.7 million) from 369 million reais in the year-earlier period, the Porto Alegre, Brazil-based company said today in a statement. Gerdau was expected to post a 352.4 million-real profit excluding items, the average of seven estimates compiled by Bloomberg.

Demand for steel used in construction increased in Brazil as banks boosted lending for homes, while manufacturers and energy companies drove up sales in North America, Gerdau said.

Net sales jumped 16 percent to 9.1 billion reais in the quarter. Sales at Gerdau’s North American unit, which accounts for about a third of revenue, increased 10 percent in volume, while domestic sales jumped 15 percent.

Crude-steel output climbed 8 percent to 4.73 million metric tons in the quarter, while production of rolled steel increased 9 percent to 3.98 million tons.

Gerdau rose 0.8 percent to 17.34 reais in Sao Paulo. Before today it gained 19 percent, more than the 15 percent increase in Brazil’s benchmark Bovespa index.

The company reported a financial loss of 82 million reais, less than the 184 million reais it had a year ago, as it used part of proceeds from its 5.5 billion-real share sale in April to pay some debt in advance, it said.

Iron-Ore assets

Gerdau Chief Executive Officer Andre Gerdau Johannpeter is still considering options to monetize the company’s mining assets, which hold about 2.9 billion tons of iron-ore reserves.

The company hired Goldman Sachs Group Inc. as an adviser to see alternatives for the company’s mining assets, Gerdau told reporters on a conference call today.

Gerdau plans to invest 10.3 billion reais between 2012 and 2016, including the expansion of its iron-ore output and a port in Colombia.

The steelmaker reported earnings today before market opened, after “instability” in the computer system of Brazil’s securities regulator, known as CVM, prevented it from reporting yesterday as initially planned, according to the company’s press office.

--With assistance from Juan Pablo Spinetto in Rio de Janeiro. Editors: Dale Crofts, Robin Saponar

To contact the reporter on this story: Lucia Kassai in Sao Paulo at

To contact the editor responsible for this story: Dale Crofts at

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