Gerdau closed 2017 with consolidated net sales of R$ 37 billion, down 2 percent compared to the prior year, which was influenced by the 4 percent reduction in consolidated net shipments.
In 2017, consolidated shipments amounted to 14.9 million tons. Steel production, however, advanced 3 percent to 16.1 million tons in the same period.
In 2017, Gerdau’s results were adversely affected by non-recurring non-cash items of R$ 861 million. These items refer to the reversal of the provision for contingencies due to the exclusion of ICMS from the PIS and COFINs tax calculation base and to accounting write-offs (fixed assets and goodwill) net of taxes. Due to these non-recurring items, Gerdau is reporting adjusted net income and adjusted cash generation (EBITDA) to better demonstrate its performance and management efforts during the year. Adjusted EBITDA, which excludes non-recurring items, came to R$ 4.3 billion in 2017, 7 percent higher than in the same period last year. Meanwhile, Gerdau’s adjusted net income posted significant growth, from R$ 91 million in 2016 to R$ 522 million in 2017.
According to Gerdau chief executive officer Gustavo Werneck, “We closed 2017 with improvement in our results. We reduced selling, general and administrative expenses by nearly R$ 600 million in 2017 and net debt by around 10 percent, which improved our leverage indicators. Our divestment plan has grown to reach R$ 6.3 billion in economic value over the last four years, which allows the Company to focus on its more profitable assets in the steel industry while continuing its transformation journey. We also generated R$ 1.5 billion in free cash flow in the year, in line with capital discipline strategy implemented by the Company. In 2018, we will work intently to improve the profitability of our operations, to maximize free cash generation and to continue deleveraging.” In January, Gustavo Werneck accumulated temporarily responsibility for the North America long steel operation, until the announcement of a new leader, which is expected in next few months.
In the fourth quarter, consolidated net sales amounted to R$ 9.8 billion, increasing 14 percent from the same period of 2016. Consolidated shipments came to 3.8 million tons, practically in line with the fourth quarter of 2016, while consolidated steel production grew 19 percent to 3.9 million tons. From October to December, adjusted cash generation (EBITDA) advanced 65 percent, to R$ 1.2 billion. Adjusted net income for the fourth quarter improved to R$ 262 million, compared to the net loss of R$ 203 million in the same period last year.
Published in the June 2018 Edition
