- Adjusted operating cash generation (EBITDA) remained stable in 2014, despite the challenging scenario in the world steel industry Gerdau ended 2014 with consolidated net sales of R$42.5 billion, up 6.7% from the previous year. Net sales growth was driven mainly by stronger revenue in the U.S. market and the positive effect of currency exchange into Brazilian real. Meanwhile, shipments amounted to 17.9 million tonnes, down 3.5% from 2013, reflecting the weaker steel demand in Brazil and other Latin American countries. During this period, steel production was flat at 18 million tonnes. Operating cash generation (EBITDA) was R$5.1 billion in 2014, increasing 7.1% from the previous year. This performance was positively influenced by the proceeds from the divestment of the interest in U.S. steelmaker Gallatin Steel for R$637 million and adversely affected by losses from asset impairments in Latin America in the amount of R$339 million. Excluding these transactions, adjusted EBITDA was R$4.8 billion, or 0.9% higher than in 2013. Meanwhile, net income decreased 12.2% to R$1.5 billion in 2014. Regarding Gerdau's fourth quarter performance, net sales were R$10.8 billion, up 5.1% from the same period in 2013, reflecting the lower shipments and production volume in the period. Shipments decreased 3.4% to 4.4 million tonnes, while steel production decreased 2.8% to 4.3 million tonnes. In the period from September to December, operating cash generation (EBITDA) amounted to R$1.5 billion. Adjusted EBITDA (excluding the divestment of the interest in Gallatin Steel and the losses from assets impairments in Latin America) came to R$1.2 billion, decreasing 9.6% compared to 4Q13. Net income in the quarter was R$393 million, down 20.1% from the previous year. "The year 2014 was a challenging period for Gerdau and the industry, especially given the global steel production overcapacity and the weaker demand in key markets, particularly Brazil and other Latin American countries. On the other hand, we were able to minimize the effects of this scenario on Gerdau's operating performance. We optimized the performance of our operations in light of this difficult scenario, divested non-strategic assets, such as the interest held in Gallatin Steel, and remained highly selective in our investments in fixed assets. Despite the lower net income in 2014, the efforts made by our management are demonstrated by the stability in our Adjusted EBITDA in relation to the previous year," said Gerdau CEO André B. Gerdau Johannpeter. Over the course of 2014, the repercussions of the global economic scenario were felt at varying levels, depending on the business segment and the geographic region of the operation. The operation in Brazil (excluding special steel mills) posted a 5.8% reduction in shipments to the domestic market to 5.5 million tonnes, reflecting the country's recession. Meanwhile, shipments to export markets declined 25.4% to 1 million tonnes, which is explained by the lower international prices and oversupply in the global steel industry. In the other Latin American countries (excluding the operations in Brazil), higher steel imports in the region and weaker economic growth led to a 6.6% decrease in shipments, which amounted to 2.6 million tonnes. The operations in Canada and the United States (excluding special steel mills) shipped 6.2 million tonnes, in line with the previous year, reflecting the stable demand from the non-residential construction and manufacturing industries. On the other hand, the U.S. market continued to be impacted by the higher supply of imports in the region. In the special steel operations (including the mills in Brazil, United States, Spain and India), shipments came to 2.9 million tonnes, up 1.3% from 2013, benefitting from the Spanish and North American markets and from the higher contribution to shipments by the operation in India. Lastly, the iron ore operation focused on production for internal consumption, which has strengthened the competitiveness of the Ouro Branco mill in Minas Gerais. Investments of R$2.3 billion in 2014 In 2014, Gerdau invested R$2.3 billion in fixed assets (CAPEX), most of which was allocated to ongoing projects. This amount was 21% lower than the initial forecast for 2014, reflecting the Company's announcement during the year to be highly selective in its CAPEX investments. In Brazil, the main investment was in the construction of a heavy plates rolling mill at the Ouro Branco unit in Minas Gerais that is expected to start operations in 2016. In the special steel operation, the new special steel rolling mill and reheat furnace were successfully commissioned at the Monroe mill in Michigan, USA. The Company also completed construction of a new continuous casting mill at the St. Paul unit in Minnesota, USA. At the joint venture Gerdau Corsa located in Mexico, a mill to produce structural profiles is currently under construction. The melt shop is already operational and rolling operations should begin by mid-year. For 2015, Gerdau plans to invest R$1.9 billion in fixed assets (CAPEX), reflecting the world steel market scenario, which is currently marked by overcapacity. Furthermore, the Company will continue to evaluate the economic scenario and the impacts on its operating performance so that, if needed, it can adjust its investments to market developments. Dividends to be paid on March 26th On March 26, the corporations Gerdau S.A. and Metalúrgica Gerdau S.A. will pay dividends for the fourth quarter of 2014. A total of R$119.3 million will be paid to the shareholders of Gerdau S.A. (R$0.07 per share) and R$28.4 million to the shareholders of Metalúrgica Gerdau S.A. (R$0.07 per share). For the whole of the fiscal year, payments to shareholders of Gerdau S.A. will amount to R$426.1 million (R$0.25 per share) while the shareholders of Metalúrgica Gerdau will receive R$117.8 million (R$0.29 per share).
X About Gerdau Gerdau is the leading manufacturer of long steel in the Americas and a major global supplier of special steel. In Brazil, also produces flat steel and iron ore, activities that are expanding its product mix and the competitiveness of its operations. Gerdau has industrial operations in 14 countries – the Americas, Europe and Asia – with a combined installed capacity of more than 25 million tonnes of steel a year. It is also Latin America’s biggest recycler and, worldwide, transforms millions of tonnes of scrap metal into steel every year, reinforcing its commitment to sustainable development in the regions where it operates. With more than 120.000 shareholders, Gerdau's shares are listed on the New York, São Paulo and Madrid stock exchanges.