Gerdau Group's sales revenue reaches R$ 7.5 billion with international acquisitions

Sales increased by 13.5% from January to March in comparison to the first three months in 2006 due to the acquisitions in the United States, Peru, and Spain

Gerdau Group´s internationalization contributed strongly to the good results in the quarter. From January to March, sales totaled R$ 7.5 billion, which is 13.5% higher than the R$ 6.6 billion recorded in the same period the previous year. This growth is mainly due to the integration of five new companies beginning in the second quarter of 2006: four in the United States (Callaway Building Products, Fargo Iron and Metal Company, Sheffield Steel, and a joint venture Pacific Coast Steel) and another one in Peru (Siderperu). Furthermore, Corporación Sidenor, the Spanish company in which the Gerdau Group holds a 40% stake, obtained a controlling interest in the GSB Acero steel mill. The numbers of the trimester reflect our strategy of growing with profitability and of positioning the Gerdau Group among one of the most profitable global steel companies. Our entrance into Mexican market at the end of March represented an important step toward the expansion of our operations in the Americas”, affirms the company's CEO André Gerdau Johannpeter. The percentage of the operations abroad on sales grew from 50.8% to 56.3%. In the United States and Canada, sales peaked at R$ 3.1 billion, an increase of 18.5%. The units in Argentina, Chile, Colombia, Peru, and Uruguay together totaled R$ 764 million in gross revenue, which represents a growth of 42.5% compared to the first quarter of 2006. In Spain, sales revenue grew 73%, reaching R$ 354 million in the quarter. In Brazil we made a R$ 3.3 billion in sales, which is practically flat in comparison to the first quarter the previous year. Gerdau Group's consolidated net profit totaled R$ 869.4 million. This is a 4.4% growth in relation to the period from January to March, 2006. The quarter EBITDA (gross profit minus selling, general and administrative expenses, plus depreciation and amortization) was R$ 1.4 billion, an increase of 17.4%. The total sales grew 11.1%, reaching 4.1 million metric tons of steel products. The consolidated production of steel (slabs, blooms, and billets) and rolled products (final products such as rebar and merchant bars) kept up with the sales increase and reached 4 million metric tons (+7.7%) and 3.4 million metric tons (+11.7%), respectively. In Brazil, the sales to the domestic market grew 1.5%, reaching 995,000 metric tons, which brought about a shift to exports that reached 596,000 metric tons. During the same period, all the country's mills produced 1.6% more, reaching 1.8 million metric tons of steel. The production of rolled products in Brazil was of 1.1 million metric tons and presented a positive variation of 0.2%. The units in Canada and the United States totaled 1.9 million metric tons sold, a volume 15.7% higher. Production in the region also grew, reaching 1.8 million metric tons of steel (+ 5.1%) and 1.8 million metric tons of rolled products (+ 11.2%). The sales of the companies in Argentina, Chile, Colombia, Peru, and Uruguay presented 36.8% expansion from January to March and reached 456,000 metric tons. Steel production evolved even more, 52.9%, and reached 371,000 metric tons, while that of rolled products reached 426,000 metric tons, presenting a growth of 47.3%. In Spain, 113,000 metric tons were sold, a volume 54.1% higher than the first quarter in 2006. Steel production reached 117,000 metric tons (+ 65.3%) and the production of rolled products totaled 111,000 metric tons (+ 60.6%).
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