Back to top

Analyst Blog

Brazilian steel producer, Gerdau S.A. (GGB - Analyst Report) reported disappointing financial results for the fourth quarter and year 2012, on February 21, 2013. The company’s net income at R$143 million (US$69.4 million) represented a 70% decline over the year-ago quarter.

For 2012, net income plummeted 29% to R$1,496 million (US$726.2 million).


Net revenue in the fourth quarter plummeted 1% year over year to R$8,988.0 million (US$4,363.1 million).

As for the net revenue, Brazilian business accounted for about 39.9% and registered a 1% growth over the year-ago quarter. North American revenue decreased 4% and contributed 30.1% to net revenue while Latin American revenue represented 13.6% of net revenue and spiked 14% over the year-ago period. Revenue from Specialty Steel declined 8% year over year and accounted for about 19.1% of net revenue.

Crude steel production was 4,186 million tons in the quarter, down 12% year over year due primarily to weak performances in all operating regions. Production in Brazil declined 9% while a respective 15% and 1% decline was noticed in North America and Latin America. Specialty Steel production was down 16%. Shipments were also down 8% year over year to 4,317 million tons, with dismal performance in all business operations.

For 2012, net revenue was R$37,982 million (US$19,477.9 million), up 7% year over year.


Gross margin in the quarter went down by 200 basis points to settle at 11.3% as the impact from a fall in revenue was neutralized by a 1.3% increase in cost of sales. Selling expenses, as a percentage of revenue, were at 1.7%, flat year over year while general and administrative expenses dipped 30 basis points year over year to 5.0%.

EBITDA at R$891.0 million (US$432.5 million) was down 13% year over year with a margin of 10% in the quarter. Operating margin was 4.7% versus 6.3% in the year-ago quarter.
Balance Sheet

Exiting the fourth quarter, Gerdau had cash and cash equivalents of approximately R$1,437.2 million (US$701.1 million) versus R$1,665.6 million (US$832.8 million) in the previous quarter. Long-term debt increased 1.3% to R$11,725.9 million (US$5,719.9 million).

Cash Flow

Net cash generated from operating activities in 2012 was R$4,344.0 million (US$2,119.0 million), up 154.0% year over year. Capital spending increased 59.4% to R$3,127.3 million (US$1,525.5 million).
Gerdau S.A., one of the foremost steel producers in Brazil, plans to spend roughly R$8.5 billion for the period from 2013 to 2017. The stock currently has a Zacks Rank #2 (Buy). Other stocks to look out for in the industry are Companhia Siderurgica Nacional (SID - Analyst Report), Commercial Metals Company (CMC - Snapshot Report) and Gibraltar Industries, Inc. (ROCK - Analyst Report), each with a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

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 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
PLANAR SYST… PLNR 4.33 +4.34%
ERBA DIAGNO… ERB 2.88 +3.22%
CENTURY ALU… CENX 22.22 +3.06%
GTT COMMUNI… GTT 12.00 +3.00%
ILLUMINA IN… ILMN 174.98 +2.63%