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In the second quarter of 2017, Gerdau posted net sales of R$9.2 billion, down 11 percent from the same period a year earlier. The result was mainly affected by the effects from exchange variation in the period on units located abroad and by the divestment of the special steel units in Spain.

However, compared to the first quarter of 2017, net sales advanced 8 percent, supported by higher shipments at most of the company’s business divisions.
Meanwhile, consolidated shipments fell by 13 percent compared to the second quarter last year, amounting to 3.7 million tons. Compared to the first quarter, shipments grew by 3 percent. Steel production, which amounted to 4.1 million tons, accompanied the behavior of shipments, decreasing 5 percent from the second quarter last year and increasing 2 percent form the first quarter this year.

Adjusted consolidated cash generation (EBITDA) amounted to R$1.1 billion in the second quarter, down 7 percent on the prior-year period, reflecting the lower gross profit, which was partially neutralized by the 27 percent reduction in selling, general and administrative expenses. Despite the lower EBITDA in the period, EBITDA margin expanded to 12.2 percent, from 11.7 percent in the second quarter of 2016. Compared to the first quarter of 2017, adjusted EBITDA advanced 31 percent, supported by improvements in all divisions.

In the second quarter, Gerdau also was able to reverse the adjusted net loss of R$34 million reported for the first quarter, with consolidated adjusted net income of R$147 million, supported by the higher EBITDA in the period. Net income in the quarter was adjusted by the deconsolidation of the operation in Colombia from the balance sheet, which has been treated as a jointly controlled entity since June, following the consummation of the sale of a 50 percent interest in Gerdau Diaco to Putney Capital Management.

The operations in Canada, U.S. and Mexico (excluding the special steel mills) shipped 1.6 million tons of steel goods in the second quarter of 2017, down 5 percent from the same period a year earlier and stable compared to the first quarter of 2017, due to strong pressure in the region from imported goods.

Published in the September 2017 Edition of American Recycler News