Gerdau posts sequential decrease in net sales

Brazil-based steelmaker Gerdau S.A., with scrap-fed electric arc furnace (EAF) steel mills in several nations in the Americas, has announced its first-quarter 2022 financial results, which show that it produced 3.4 million metric tons of crude steel, 4 percent more than in the last quarter of 2021 and 8 percent more than in Q1 of 2021. However, the company shipped 3 million metric tons in the first quarter of this year, which is 3 percent less than it shipped in Q4 of 2021 and 1 percent less than in Q1 of 2021.

Gerdau’s net sales for the quarter totaled R$20,330 million, or $ 3,988 million, which was 6 percent less than in Q4 2021 and 24 percent more than Q1 2021. Its gross profit of R$5,181 million, or $1,016 million, was 36 percent more than the R$3,797 million, or $744.9 million, it realized in Q1 2020. Adjusted earnings before interest, taxation, depreciation and amortization were R$5,827 million, or $1,143 million, in Q1 2022 compared with R$4,317 million, or $846.9 million, in Q1 2021.

Gerdau’s production capacity utilization rate of 75 percent in the quarter reflects the seasonally weaker period, especially in the domestic market of Brazil, the company says. The volume sold in Gerdau’s main business operations had a slight decrease compared with the final quarter of 2021 and was in line with the first quarter of 2021.

The net sales decrease in Q1 2022 compared with the sequential quarter reflects the reduction in the volume sold, the lower prices in Brazil and the local currency appreciation, which reduced sales in foreign currency translated into Brazilian real, the company says. In relation to Q1 of 2021, net sales posted robust growth because of better pricing, Gerdau says.

Cost of goods sold decreased in Q1 2022 compared with the sequential quarter, reflecting lower shipments, despite the 57 percent increase in coal costs, 150 percent increase in metallurgical coal, 19 percent increase in iron ore and 12 percent increase in scrap.

Gerdau’s Gross profit for the quarter was in line with its sequential results and increased year over year. Gross margin improved compared with the sequential quarter and year over year, driven primarily by the performance of the construction industry in North America and the results of the company's Special Steel business division. Year over year, gross profit registered robust growth, the company says, driven mainly by the North America business division, reflecting the better metals spread in the United States.

The company’s adjusted EBITDA and adjusted EBITDA margin for the quarter set all-time highs for a first quarter, with this performance reflecting the current scenario for demand and prices in the steel industry, especially in North America, combined with the teams’ capacity to seize opportunities in the market, according to Gerdau.