Gerdau's net revenue grows 7% in 2012

Press release

- Gerdau's net revenue reaches R$ 38 billion against R$ 35.4 billion in 2011
 
- Net revenue for the Brazilian market grew 12% and shipments by 5% in 2012
 
- Major investments in India in the special steel sector come into operation
 
- First shipments of iron ore begin to the international market
 
Gerdau closed the year 2012 with a consolidated net revenue of R$ 38 billion, which is a growth of 7% compared to last year. Nevertheless, the volume of shipments saw a 3% reduction  compared to the previous year, reaching 18.6 million metric tons due to the slowdown in China and other emerging countries, the European crisis, and uncertainty over the fiscal policy of the United States. Performance in the Brazilian domestic market (excluding the special steel segment) in 2012, despite a lower economic activity recorded in the country, was highlighted among the regions in which Gerdau operates with an expansion in its net revenue (+12%) and volume of shipments (+5%).
 
Gerdau's global steel production in the year was 18.9 million metric tons, 4% less compared to 2011. Considering the economic context of 2012, cash from operations (EBITDA) amounted to R$ 4.2 billion, which is a 10% reduction compared to the previous year. Consolidated net profit, in turn, was R$ 1.5 billion in 2012, 29% lower than in 2011.
 
In the fourth quarter, consolidated net revenue was R$ 9 billion, while shipments reached 4.3 million metric tons. Consolidated steel production on the other hand was 4.2 million metric tons. In the same period, the consolidated operating cash flow totaled R$ 891 million and net profit R$ 143 million.
 
"The performance recorded in the fourth quarter of 2012 does not represent Gerdau's performance trend  for 2013 as it was impacted by extraordinary operational and financial adjustments in North America and Latin America. Throughout 2012, beyond the effects of the global economic environment on the Company's performance, we saw an increase in costs of important raw materials, notably scrap and freight, which impacted the sector's profitability as a whole. In this context, we sought to enhance our operational efficiency in all regions where we operate, driven by the strategy of striving for higher levels of profitability and sustainable development. Among the main initiatives is to increase investments in the mining area, which should add more profit to our business and generate significant results with the export of this raw material to the international market. We are also going to expand the product mix in Brazil with the start of production of flat steel products in the first quarter of 2013. In addition, we are strengthening our geographic diversification in markets with significant growth potential, such as India, where we began with the production of special steels, a high value-added segment," said Gerdau's CEO, André B. Gerdau Johannpeter.
 
Throughout the year, the effects of the global economic scenario were felt at different levels, depending on the business segment and geographic region of the operations. The operation in Brazil (not including special steel mills), for example, reported 7.3 million metric tons sold in 2012 with 5.3 million metric tons going to the domestic market (+5%) and 2 million metric tons going to exports (-23%).
 
In our operation located in Canada and the United States (not including special steel mills), 6.5 million metric tons were sold in the year, which is a volume practically even compared to 2011. In other Latin American countries (excluding the operations in Brazil), sales increased 2% and reached 2.7 million metric tons. As for the special steel operation (includes special steel mills in Brazil, Spain, and the United States), it reached 2.7 million metric tons sold, a 10% reduction in 2012, primarily due to the Brazilian and European markets.
 
Gerdau invests R$ 3.1 billion in 2012
 
From January to December, Gerdau invested R$ 3.1 billion in plants and equipment (Capex) in its operations worldwide. One of its biggest investments was to start the production of flat steel in Brazil, and the rolling mill for hot rolled coils has already been in the testing phase since December 2012. This equipment, whose capacity is 800,00 metric tons per year, will start its operation in the first quarter of 2013.
 
In the area of mining, investments were continued in order to reach an annual installed capacity of 11.5 million tons in 2013. Moreover, Gerdau has already made the first shipments of iron ore to the international market, totaling 325,000 metric tons.
 
Gerdau has started the operation of a blast furnace in India, a large potential market, with an annual installed capacity of 350,000 metric tons, the power generation plant that will use blast furnace gas, sintering, the melt shop, and the new special steel rolling mill with an annual installed capacity of 300,000 metric tons. Two new inspection lines of bars will start operating in 2013. In 2014, the implementation of a coking plant is already in the plans with an annual capacity of 200,000 metric tons and integrated into it is a power generation plant.
 
The Company is being more selective in the assessment of its future investment projects considering the large volume of investments made in 2012, which had been previously scheduled, and the uncertainties about the global economic market. Therefore, for the period 2013-2017, R$ 8.5 billion are scheduled in investments in its industrial units, considering both the steel and mining activities.
 
Dividends to be paid on March 14
 
The publicly listed companies Metalúrgica Gerdau S.A. and Gerdau S.A. shall pay dividends on March 14 based on the results obtained in the fourth quarter. R$ 8 million will be paid to the shareholders of  Metalúrgica Gerdau S.A. (R$ 0.02 per share) and R$ 34 million to the holders of Gerdau S.A. shares (R$ 0.02 per share).
 
For the year, the remuneration for the shareholders of Metalúrgica Gerdau S.A. reached R$ 130 million (R$ 0.32 per share) and of Gerdau S.A. R$ 408 million (R$ 0.24 per share).
 
About Gerdau
Gerdau is the leader in the segment of long steel in the Americas and one of the main suppliers of special long steel in the world. With over 45,000 employees, it has industrial operations in 14 countries—in the Americas, Europe, and Asia—which together represent an installed capacity of over 25 million metric tons of steel per year. It is the largest recycler in Latin America and in the world, and transforms each year millions of tons of scrap steel, reinforcing its commitment to sustainable development in the regions where it operates. Gerdau is listed on the stock exchanges of São Paulo, New York, and Madrid and has over 140,000 shareholders.
 
 
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