Financial results were affected by excess imports in the Brazilian market and a challenging global macroeconomic scenario
– Adjusted net income totaled R$1.6 billion in the third quarter of 2023.
– Brazil’s steel imports increased 57.9% between January and September compared to the same period last year, totaling 3.7 million tons. In September, penetration of imports in the domestic market reached a record 23%, according to Instituto Aço Brasil.
– Newave Energia, a company in which Gerdau holds 33.33% interest though its new business division Gerdau Next, acquired the Arinos Solar Complex in Minas Gerais advancing the Company’s expansion in generating clean and renewable energy in its operations and underscoring its goal of becoming more competitive.
São Paulo, November 6, 2023 – Gerdau, Brazil’s largest steel producer, ended the third quarter of 2023 (3Q23) with adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of R$ 3.3 billion and adjusted EBITDA margin of 19.6%.
Adjusted net income came to R$1.6 billion between July and September this year, during which Gerdau registered net sales of R$17.1 billion, with steel shipments reaching 2.8 million tonnes.
“Gerdau posted adjusted EBITDA of R$3.3 billion between July and September 2023, delivering solid financial results in one more quarter despite a challenging global scenario marked by a decline in demand for steel. The Brazilian market was especially affected during the period due to a significant increase in imports of steel goods, which reinforces the need to apply temporary tariffs to ensure that Brazilian steel remains competitive in the short term. We remain prepared to meet the current and future needs of our clients through a portfolio of innovative and digital steel products, solutions and services based on our operations in Brazil”, said Gustavo Werneck, CEO of Gerdau.
“This quarter, we released working capital of R$500 million, which compensated for a more challenging adjusted EBITDA during the period, resulting in free cash flow of R$2.2 billion. Gerdau continues to have a solid balance sheet as it prepares for a new cycle of sustainable growth and sharing of value with its stakeholders”, said Rafael Japur, CFO of Gerdau.
Capex reaches R$1.5 billion in the 3rd quarter of 2023
During the third quarter of 2023, Gerdau invested R$1.5 billion, of which R$723 million went allocated to maintenance and R$762 million to expansion and technological upgrade projects. The Capex plan for 2023 is estimated at R$5 billion, which encompasses investment projects in maintenance, expansion and technological modernization of its operations.
Newave Energia, in which Gerdau holds 33.33% interest though its new business division Gerdau Next, acquired the Arinos Solar Complex in the state of Minas Gerais, from the Voltalia group. This transaction is another important step in its strategy of expanding clean and renewable energy generation in pursuit of greater competitiveness and sustainability of its operations.
The future project, which should be concluded by the end of 2024, will receive total investments of about R$1.4 billion for its construction. The new solar energy cluster will have installed generation capacity of approximately 420MWp and will include an energy substation. The plant’s installed photovoltaic capacity is equivalent to 7% of Gerdau’s annual energy consumption in Brazil based on its production in 2022, which should be reduced by up to 22,000 tCO2 a year.
When the unit is fully operational, 30% of the renewable energy generated by the Arinos Solar Complex will be routed to the production of Gerdau steel in Brazil, in the form of self-production. This volume of energy corresponds to approximately 34 MWa, equivalent to the consumption by a steel production unit with annual capacity of around 400,000 tonnes.
Gerdau S.A. and Metalúrgica Gerdau S.A. will pay dividends on December 13 and 14, respectively. Gerdau S.A. will pay R$822.2 million (equivalent to R$0.47 per share) and Metalúrgica Gerdau S.A. will pay R$960.4 million (equivalent to R$0.93 per share), in both cases to shareholders of record on November 17, 2023.
With a history spanning 122 years, Gerdau is Brazil’s largest steel producer and one of the leading producers of long steel in the Americas and special steel in the world. In Brazil, Gerdau also produces flat steel and iron ore for its own use. It also has a new business division, Gerdau Next, which fosters entrepreneurship in segments adjacent to the steel industry. Guided by its purpose of empowering people who build the future, the company operates in nine countries and has over 36,000 direct employees. Gerdau is the largest recycling company in Latin America and uses scrap as an important input: 71% of its steel is produced from scrap. Every year, Gerdau transforms 11 million tonnes of scrap into a variety of steel products. The Company is also the world’s largest charcoal producer, with over 250,000 hectares of planted forests in the state of Minas Gerais. As a result of its sustainable production matrix, Gerdau currently has one of industry’s lowest average greenhouse gas emissions (CO₂e) of 0.86 t/CO₂e per tonne of steel, which is about half the global industry average of 1.91 t/CO₂e per tonne of steel (worldsteel). Gerdau’s target is to reduce its carbon emissions to 0.83 t/CO₂e per tonne of steel by 2031. Gerdau’s shares are listed on the São Paulo (B3), New York (NYSE) and Madrid (Latibex) stock exchanges.
São Paulo, November 6, 2023