August 5, 2010 / 5:02 PM / 8 years ago

UPDATE 2-Brazil Gerdau Q2 net tops forecasts on sales jump

* Revenue jumps 30 pct, led by demand in Brazil

* EBITDA soars to 1.72 bln reais (Adds investment plan, Gerdau comments, share performance)

By Alberto Alerigi Jr. and Elzio Barreto

SAO PAULO, Aug 5 (Reuters) - Gerdau, Brazil’s largest maker of steel for the construction industry, posted better-than-expected second-quarter earnings on Thursday as a real estate and public works boom in the country stoked demand for steel and other materials.

The company, based in the city of Porto Alegre, also said it would increase its 2010-2014 spending plan by 16 percent to 11 billion reais ($6.26 billion), adding 3.46 million metric tons of new steel output capacity in a bet that demand will continue strong for years to come.

“Recently in Brazil there have appeared some signs of a decline in activity, maybe because of the World Cup, but we already see a rebound,” Gerdau Chief Executive Officer Andre Gerdau Johannpeter told reporters on a conference call. “The country should have a very good year.”

“In the United States we have two areas that are recovering, the auto industry and those in the energy sector, with a better rebound in steel consumption,” he added.

Net income totaled 856 million reais ($487.5 million), reversing losses of 329 million reais a year earlier, Gerdau said in a securities filing.

The company was expected to post a profit of 690 million reais for the quarter, according to the average estimate of six analysts in a Reuters poll.

Gerdau shares were down 0.4 percent at 26.74 reais, compared with a 0.03 percent gain in the benchmark Bovespa index .BVSP. The stock is down 7.9 percent so far in 2010, compared with a 0.4 percent drop in the Bovespa.

As part of the four-year investment plan Gerdau plans to boost mining output and build new rolling laminators in Brazil and India, as well as develop a shipping facility in Colombia.

Gerdau (GGBR4.SA) (GGB.N) increased raw steel output by 52 percent, while laminated steel production jumped 40 percent year on year, to meet a surge in demand as economies in Brazil, North America and Latin America recovered from a slump last year. Revenue jumped 30 percent to 8.3 billion reais.

Most of the increase in output and sales took place in Brazil, where combined production of raw and laminated steel rose 42 percent and sales to the domestic market soared 52 percent.

The company’s North American unit, Gerdau AmeriSteel GNA.TO, also reported earnings on Thursday, posting a $45.8 million profit that reversed losses of $51.6 million a year earlier. [ID:nN05250486]

Gerdau in June offered about $1.6 billion to buy out the shares in the AmeriSteel unit and delist the company.

Earnings before interest, taxes, depreciation and amortization, a measure of operational profitability and cash generation known as EBITDA, soared to 1.72 billion reais from 595 million reais a year earlier. ($1=1.756 reais) (Editing by Gerald E. McCormick, Dave Zimmerman and Matthew Lewis)

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