Sales of Gerdau Group grow 9.4% in quarter

Sales volume, pushed by accelerated growth of the civil construction sector in Brazil, reaches 3.7 million metric tons

The 13.2% increase in sales of the Gerdau Group in Brazil, pushed by the recovery of the civil construction sector, was the main highlight of the company’s performance in the first quarter of 2006. In the internal market, 980 thousand metric tons of steel products were sold, against 866 thousand in the same period in 2005. Gerdau Group increased its production of rolled products in 13.3% in Brazil, totaling 1.1 million metric tons. “Since February, Gerdau Group has made a commitment to lowering the prices of its civil construction products that received benefits from the reduction of the excise tax (IPI) in Brazil. The sector responded well and sales increased”, says Frederico Gerdau Johannpeter, the company’s Senior Vice President. Part of exports were redirected to respond to the increased demand in the internal market – 627 thousand metric tons were exported, 13.1% less than in the same period in 2005. The economic growth of Argentina, Chile, Uruguay and Colombia, where the Gerdau Group has operations, also had positive repercussions on quarter sales. A total of 335 thousand metric tons were sold, an increase of 116.7% over the first quarter of 2005. This performance also reflects the consolidation of the units in Colombia (Diaco) and in Argentina (Sipar Gerdau), which was conducted in the end of last year. As a result, the production of rolled steel grew 127.6%, and reached 287 thousand metric tons, while steel production increased 110.2% up to 242 thousand metric tons. In North America, sales increased 2.4%, totaling 1.7 million metric tons, in response to the demands of the accelerated activities in the regional market. Steel production increased from 1.6 million to 1.7 million metric tons, a positive variation of 4.1%. In the same period, the production of rolled products grew 1.0%, and maintained the 1.6 million metric ton threshold. In the first quarter of 2006, Gerdau Group also consolidated 40% of the operations of the Spanish steel mill Corporación Sidenor. Santander holds other 40%, and the rest of the company is controlled by Spanish executives from Sidenor. The company contributed to the performance of Gerdau Group with the production of 71 thousand metric tons of steel and 69 thousand metric tons of rolled products. Gerdau Group total sales volume increased 9.4%, totaling 3.7 million metric tons. The production of rolled products increased 14.1% and reached 3.0 million metric tons, while the production of steel increased 5.8% and totaled 3.7 million metric tons. Global sales revenue reached US$ 3.0 billion, a 17.2% increase. Exchange rate variation affected the results of Group Gerdau due to the conversion of sales revenues obtained from exports and operations outside Brazil, which account for 59.7% of sales revenues. Sales revenues in the Brazilian market accounted for 40.3% (US$ 1.2 billion) of total sales revenues, and exports from Brazil represented 8.9% (US$ 271 million). In the same period, operations in the other South American countries represented 8.1% (US$ 246.8 million), while the units in North American contributed with 39.6% of sales revenues (US$ 1.2 billion). Sidenor’s participation was 3.1% of the total (US$ 94.3 million). Consolidated net profit in the first quarter was US$ 383.2 million, a 26.1% increase over the same period in 2005.
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