In This Article:
-
EBITDA: BRL2,624 million with a margin of 15.8%, down 1.6 percentage points from the first quarter.
-
One-off Costs: BRL131 million related to the hibernation of some industrial units in Brazil.
-
Adjusted EBITDA: BRL665 million, 12% higher than in Q1 2024, excluding one-off costs.
-
Cost Reduction Initiatives: Expected to lower costs by BRL1.5 billion annually by 2025.
-
Free Cash Flow: Positive BRL89 million in the second quarter.
-
Gross Debt: BRL12,500 million with a leverage level of 0.53 times.
-
Liquidity Position: BRL11,500 million, including cash and undrawn revolver line.
-
CapEx: BRL1,420 million in the second quarter, with 50% for growth and competitiveness projects.
-
Share Buyback Program: Up to 68 million preferred shares and 1.8 million common shares at Gerdau, and up to 33 million preferred shares at Metalurgica Gerdau.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Gerdau SA (NYSE:GGB) achieved a historically low accident frequency rate of 0.67, emphasizing its commitment to safety.
-
The company has been proactive in supporting the Rio Grande do Sul region, contributing over BRL26 million to recovery efforts after heavy rains.
-
Gerdau SA (NYSE:GGB) became the first steel company certified as a B Corporation in North America, highlighting its sustainability efforts.
-
The North America business division showed resilience, maintaining stable demand and a high backlog despite lower prices.
-
Gerdau SA (NYSE:GGB) is implementing cost reduction initiatives expected to lower its cost base by approximately BRL1.5 billion by 2025.
Negative Points
-
The Brazilian steel market is facing challenges due to a high inflow of imported steel, impacting local performance.
-
The South American market, particularly Argentina, is struggling with inflationary pressures and economic measures affecting steel demand.
-
Gerdau SA (NYSE:GGB) experienced BRL131 million in one-off costs related to the hibernation of some industrial units in Brazil.
-
EBITDA margin decreased by 1.6 percentage points from the first quarter, affected by lower sales prices in North America.
-
The company is facing uncertainties in the North American market due to upcoming presidential elections and economic dynamics.
Q & A Highlights
Q: Can you provide more details on the cost reduction initiatives in Brazil and the expected impact on EBITDA? A: (Rafael Japur, CFO) We have been implementing a series of cost optimization initiatives, aiming to reduce our cost base by approximately BRL1.5 billion by the start of 2025. In Brazil, we expect to save around BRL1 billion annually. The impact of these initiatives will be more visible in the second half of 2024, with a significant portion of the savings coming from increased operating leverage due to hibernations and efficiency improvements.