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Gerdau sales grow 18% and reach R$ 35.7 billion
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- Consolidated physical sales reach 17.4 million metric tons in the year, which is an increase of 24% over 2009.
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- Consolidated steel production grows 32% compared to the previous year, reaching 17.9 million metric tons.
- Investment plan for 2011-2015 reaches R$ 10.8 billion after the company finished the year 2010 with an outlay of R$ 1.3 billion in property, plant and equipment.
- Iron ore deposits in Minas Gerais reach 2.9 billion metric tons and the Company will monetize part of this volume.
Gerdau closed the year 2010 with R$ 35.7 billion in consolidated gross revenues, an increase of 18% over 2009, driven by increased worldwide demand for steel. This good performance was fueled by the expansion of 24% in physical sales compared with the previous year, reaching 17.4 million metric tons, especially the increased demand for common long steel in the Brazilian domestic market and expanding sales of specialty steel in Brazil and the United States. Furthermore, consolidated steel production grew 32% over the previous year, reaching 17.9 million metric tons.
EBITDA, also known as generation of cash from operations, presented a 36% growth, reaching R$ 5.2 billion in 2010. Net income rose from R$ 1 billion in 2009 to R$ 2.5 billion in the year under review.
In the fourth quarter, consolidated gross revenues reached R$ 8.7 billion and physical sales reached 4.5 million metric tons. EBITDA was R$ 815 million and net income reached R$ 420 million.
"The year 2010 was very positive for Gerdau with growth in production, sales, EBITDA, and net income. Moreover, market signals in the 1st quarter of 2011 are positive with recovery of margins exceeding our initial expectations. Additionally, we will continue the ongoing management effort to increase productivity in order to improve our operating margins. To meet growing demand in Brazil and abroad, we will continue to invest in expanding the supply of common long, special, and flat steel products in addition to increasing our own production of iron ore in Minas Gerais," says Gerdau's CEO, André B. Johannpeter.
All operations once again presented growth in sales volume during the year. Operations in Brazil (except for specialty steel mills) sold 6.6 million metric tons (+28%) in 2010. Of this total, 4.7 million metric tons were sold in the domestic market where Gerdau reported a 29% increase in sales volumes compared to last year, primarily due to growth of the industrial and civil construction sectors. The Company's exports from Brazil reached 1.9 million metric tons, surpassing by 26% the shipments going abroad in 2009.
Accumulated in the year, the operation in Canada and the United States, except special steel mills, showed a 16% increase in the company's physical sales and reached 5.7 million metric tons, boosted by the industrial sector. The units in the other Latin American countries (except Brazil) totaled 2.2 million metric tons sold, an increase of 10% over the previous year, whose highlights were the markets of Argentina and Mexico.
The Specialty Steel Operation, which includes units in Brazil, United States, and Spain, totaled 2.8 million metric tons sold, a 48% growth over 2009 due to growth in the automotive industry in Brazil and the United States.
Investments reach R$ 1.3 billion in 2010
Accumulated for 2010, investments in property, plant and equipment totaled R$ 1.3 billion, of which 72% was allocated to the units in Brazil and 28% for plants located in other countries.
For the period from 2011 to 2015, Gerdau will invest R$ 10.8 billion in its operations. Of the total investment, around 75% will go to Brazil and 25% for operations in other countries.
Thus, Gerdau will be fully capable to meet the future needs of steel in Brazil and maintain its levels of export.
Yesterday, March 2, Gerdau announced new investments to expand production of steel and rolled products at its Cosigua plant located in the Industrial District of Santa Cruz (RJ). The capacity of steel production at the plant will grow 50% in 2012, reaching 1.8 million metric tons per year. In addition, a wire rod and rebar rolling mill will be installed with an annual production capacity of 1.1 million metric tons to be implemented in two phases, the first phase with 600,000 metric tons per year. This new equipment will be operational in 2013. The investments, which comply with the most stringent environmental protection standards, also involve the deployment of the entire infrastructure needed for the expansion of the industrial unit.
In addition, the investment plan includes the continuation of the project to expand production of iron ore in Minas Gerais. The initiative involves a second processing plant at Miguel Burnier with a capacity to produce 5.6 million metric tons per year and a logistical structure to deliver the material to the Ouro Branco mill, meeting 75% of the plant's need in 2011 and 100% in 2012 with production of approximately 7 million metric tons of ore.
Regarding its performance in mining, Gerdau announces that its mineral deposits measured, indicated, and inferred total currently 2.9 billion metric tons of iron ore compared with 1.8 billion metric tons previously disclosed. This increase is due to new assessments recently made of volumes and iron content of the mineral deposits and the additional acquisition of land areas. The deposits are located in Miguel Burnier, Várzea do Lopes, Gongo Soco, and Don Bosco in the State of Minas Gerais and far exceed the needs of Gerdau's own supply in Brazil, even considering plans for future expansion.
In light of the comfortable situation in the supply of its current and future needs, the Company decided to analyze the commercial exploration of part of these resources of iron ore.
Therefore, detailed studies will be made to explore alternatives to monetize these assets in an efficient manner and address all the needs of a project of this scale in relation to mining, processing, transportation logistics, storage, and sales.
Also in Minas Gerais, the Ouro Branco mill is planned to start operations to expand the rolling mill's operations of structural shapes in 2011, whose installed capacity will reach 700,000 metric tons a year.
Also well underway is the installation of two flat rolled steel facilities in the same plant, one directed toward the production of thick plates and another for hot rolled coils. The deployment of the two rolling mills is on schedule and the rolling mill for coils will start up production in 2012. Together, the equipment totals 1.9 million metric tons of installed capacity.
As previously announced, a new specialty steel rolling mill will also be installed at a venue to be announced soon that will have a production capacity of 500,000 metric tons annually in order to meet the growing demands in the automotive and industrial segments. The beginning of its operations is scheduled for 2012.
Also part of the investment plan is to modernize the steel mill plant located in Peru, as well as improve the port logistics structure and environmental protection technologies at this unit by 2013. In Colombia, the modernization of the dust collection/removal system in Tuta will be completed by late 2011 and the activities of the port facility for shipping coal and coke will commence in 2012.
As for India, a number of investments will also startup their operations in 2012 as already announced in its joint venture: rolling mill for special steels and rebars, sintering and coking processes, and power generation projects.
In relation to the United States, there will be the installation of a new continuous casting machine with increased capacity of the melt shop unit in Monroe (Michigan) - Specialty Steel Operation, which will start its activities in 2012, and the deployment of a reheating furnace at its plant in Calvert City (Kentucky) - North America Operation, which will begin production the same year. Also under study is the installation of a dust collection/removal system in order to enhance the protection of the air in Tamco, a recently acquired company located in California.
Dividends to be paid on March 24
The publicly traded company Gerdau S.A. and Metalúrgica Gerdau S.A. will pay dividends referring to the fourth quarter of 2010 on March 24. Gerdau S.A. shareholders will receive R$ 90 million (R$ 0.06 per share) and accumulated in the year the payout will reach R$ 630 million (R$ 0.44 per share).
Metalúrgica Gerdau S.A. shareholders will receive R$ 37 million (R$ 0.09 per share) referring to the fourth quarter. Thus, payments made to shareholders in the year will be R$ 264 million (R$ 0.65 per share).
Gerdau is the leading producer of long steel in the Americas and one of the largest suppliers of specialty long steel in the world. It has over 40,000 employees and an industrial presence in 14 countries with operations 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 around the world it transforms millions of metric tons of scrap into steel every year. Gerdau is listed on the stock exchanges of São Paulo, New York, and Madrid and has around 140,000 shareholders.
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