Metalurgica Gerdau (GOAU4) Q1 2025 earnings summary

Executive summary

• Net sales reached R$17.4 billion in Q1 2025, up 3.3% from Q4 2024 and 7.2% year-over-year, driven by higher North American shipments and favorable exchange rates.

• Adjusted EBITDA was R$2.4 billion, stable sequentially but down 14.7% year-over-year, with North America offsetting weaker Brazil and South America.

• Adjusted net income rose 13.4% sequentially to R$756 million, but fell 39.4% year-over-year; EPS was R$0.26, up R$0.15 from Q4 2024.

• Free cash flow was negative R$1.3 billion, mainly due to high CAPEX and working capital consumption from shipment growth.

• Maintained strong safety performance with an accident frequency rate of 0.61 and received IRMA certification for responsible mining at Miguel Burnier.

Financial highlights

• Steel shipments totaled 2.9 million tonnes, up 5.1% from Q4 2024 and 4.9% year-over-year, led by North America.

• Gross profit was R$1.95 billion, down 3.6% sequentially and 19.6% year-over-year; gross margin fell to 11.2%.

• Net debt/Adjusted EBITDA increased to 0.69x from 0.47x in Q4 2024, reflecting higher net debt and stable EBITDA.

• CAPEX reached R$1.4 billion in Q1, focused on strategic projects in flat steel and mining.

• 1Q25 payout (dividends + buyback) reached 74% of net income, over double the policy minimum.

Outlook and guidance

• Full-year 2025 CAPEX guidance maintained at R$6.0 billion, with major projects including Ouro Branco hot-rolled coil mill expansion and the Itabiritos iron ore project.

• CapEx expected to decrease in coming years as major projects conclude; cautious on Brazil due to high imports and lack of trade defense.

• Management expects incremental annual EBITDA of nearly R$400 million from the Ouro Branco expansion once fully ramped.

• North America outlook positive, especially in nonresidential construction, with robust order backlog and benefits from US tariffs.

• Working capital expected to normalize through the year, with some cash consumption from higher prices in North America.