Back to top

Analyst Blog

Brazilian steel maker, Gerdau S.A. (GGB - Analyst Report) reported impressive results for fourth-quarter 2013 on Feb 21. Net income in the quarter surged 244.1% year over year to R$491.6 million (US$216.6 million).

For 2013, Gerdau reported net income of R$1,693.7 million (US$787.8 million), up 13.2% year over year.

Revenues

Gerdau generated net revenue of R$10,321.0 million (US$4,546.7 million), reflecting an increase of 14.8% year over year.

Gerdau’s Brazilian business accounted for about 38.6% of net revenue in the quarter and registered an 11.1% year-over-year increase. Revenues generated in North America increased 14.5% and contributed 30.1% to net revenue, while Latin American revenues represented 14.2% of net revenue and increased 20.1% year over year. Revenues from Special Steel business operations increased 19.3% year over year and accounted for about 19.8% of net revenue.

Crude steel production increased 6.2% year over year to 4,446 million tons in the quarter. Production in Brazil fell 0.6%, while an increase of 8.7% was recorded in North America. Production in Latin America grew 4.4%, while Specialty Steel production in the quarter reflected an increase of 19.8%. Shipments grew 5.5% year over year to 4,555 million tons.

In 2013, net sales generated were R$39,863.0 million (US$18,540.9 million), up 5.0% compared with 2012.

Margins

Gerdau’s gross margin in the quarter rose 180 basis points (bps) to 13.1% due to revenue increase, offset partially by a 12.6% increase in cost of sales. Selling expenses, as a percentage of revenues, were 1.6% versus 1.7% in the year-ago quarter. General and administrative expenses decreased 10 bps year over year to 4.9%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were R$1,370.0 million (US$603.5 million), up 53.8% year over year with a margin of 13.3% in the quarter. Operating margin was 7.8% versus 4.7% in the year-ago quarter.

Balance Sheet

Exiting fourth-quarter 2013, Gerdau’s cash and cash equivalents were up 6.8% sequentially to R$2,099.2 million (US$893.3 million). Long-term debt was at R$14,481.5 million (US$6,162.3 million), up 6.3% from the preceding quarter.

Cash Flow

Gerdau generated approximately R$4,098.4 million (US$1,906.2 million) of net cash from operating activities in 2013, down 5.7% from 2012. Capital spent on additions of property, plant and equipment decreased 16.9% to R$2,598.3 million (US$1,208.5 million). Of the total capital spending, the company invested roughly 58.9% in its Brazilian operations, 20.2% in Special Steel, 14.2% in North American operations and 6.7% in Latin American operations.

Gerdau currently has a market capitalization of $10.9 billion and carries a Zacks Rank #4 (Sell). Some better-ranked companies in the industry include AK Steel Holding Corporation (AKS - Analyst Report), United States Steel Corp. (X - Analyst Report) and General Steel Holdings, Inc. , all of which hold a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 26.58 +8.53%
CENTURY ALU… CENX 27.09 +8.45%
BANCO DO BR… BDORY 16.68 +7.41%
CANADIAN SO… CSIQ 37.94 +7.05%
WILLDAN GRO… WLDN 11.37 +5.77%