The gradual recovery of the worldwide demand for steel, especially in Brazil, increased Gerdau physical sales to 3.9 million tons in the third quarter, 14.7% greater volume than in the second semester of this year. In the comparison between the month of September 2009 and December 2008, the expansion of physical sales was even greater, reaching 46.3%. In order to satisfy the evolution of the demand, the company’s consolidated steel production was 4 million tons in the quarter, 29.8% greater than in the period of April through June of 2009.
Consequently, Gerdau gross sales increased 8%, totaling R$7.8 billion. In turn, net revenue went from R$6.4 billion in the second quarter, to R$6.8 billion in the third quarter.
*EBITDA (profit before interest, taxes, depreciation and amortizations and losses for fixed assets write-downs), as known as operational cash generation, was R$1.4 billion in the quarter, showing an increase of 131.1% compared with the previous quarter. EBITDA margin, one of the principal indicators for demonstrating the profitability of the company, considering its operational cash generation, also more than doubled, going from 9.3% in the second quarter to 20.2%.
From July to September, Gerdau’s consolidated net profit was R$655 million. Without considering non-recurring items in the amount of R$90 million, without income tax, the quarterly net profit would have been R$745 million. Year to date, the company had a positive result of R$361 million.
“Demand has grown gradually, but in a different way in each region where we operate. In the context of this improving scenario, with the efforts of our teams, we managed to reduce costs and working capital, besides reducing our debt, maintaining a high level of cash liquidity, which was R$5.4 billion in September. This shows that the company’s strategy of adaptation to the new world economic reality is well founded. We continue monitoring the behavior of the markets and we are prepared to meet the expansion of steel consumption”, affirms the President and CEO of Gerdau, André B. Gerdau Johannpeter.
From July through September, the cost of sales – which includes the production costs of the steel that was commercialized in the third quarter – was reduced by 5.3%, even with the increase of 14.7% in the sales volumes. Therefore, the efforts to reduce production costs carried out throughout the year reflected positively on the financial performance of the company. Sales, administrative and general costs showed a 13.8% reduction in the third quarter, dropping to R$520 million.
Besides that, working capital, represented by accounts receivable, plus stocks less suppliers, was R$7.1 billion in September of 2009, which represents a reduction of R$430 million compared with the month of June. In the third quarter, the net debt decreased 15.7% to R$10.7 billion and in the first nine months of 2009 the reduction was 39.9%.
In the quarter, all company operations showed growing physical sales. In Brazil (excluding specialty steel producing units), physical sales for the internal and external market reached 1.4 million tons, 20% more than in the second quarter. Of this total, 1 million tons were commercialized in the domestic market (+26.4%), especially due to the expansion of civil construction and industry. Shipments outside of the country were 428 thousand tons (+7%). In the period, the start up of blast furnace #1 at the Ouro Branco mill on 1 July contributed to meeting the higher demand for steel.
In Canada and in the United States (excluding specialty steel producing units) physical sales had a 13.8% increase and reached 1.4 million tons in the quarter due to stock reposition throughout the consumer chain and higher seasonal demand.In the other Latin American countries (excluding Brazil), sales showed an evolution of 5.9%, totaling 537 thousand tons, with highlights for Argentina, Chile, Uruguay and Mexico.In the Specialty Steels Business Operation (units in Brazil, United States and Spain), 475 thousand tons were commercialized, 13.1% higher volume than in the second semester, due to the gradual recovery of the Brazilian and North American markets.