Metalurgica Gerdau (GOAU4) Q2 2024 earnings summary

Executive summary

• Q2 2024 marked by resilient North American performance, ongoing cost optimization in Brazil, and one-off costs from hibernation of industrial units.

• Net sales reached R$16.6 billion, up 2.5% from Q1 but down 9% year-over-year, reflecting lower shipment volumes and prices.

• Gerdau reported a historically low accident frequency rate of 0.67 and contributed over BRL26 million to Rio Grande do Sul flood recovery.

• Achieved B Corporation certification for North American operations, highlighting sustainability progress.

• Adjusted net income totaled R$949 million, down 24% from Q1 and 55.5% from Q2 2023.

Financial highlights

• Q2 2024 EBITDA reached BRL2.624 billion with a margin of 15.8%, down 1.6 p.p. from Q1, mainly due to lower North American sales prices and non-recurring hibernation costs in Brazil.

• Excluding BRL131 million in one-off hibernation costs, adjusted EBITDA would have been BRL665 million, 12% higher than Q1.

• Gross profit was R$2.2 billion, down 9.6% from Q1 and 33.3% from Q2 2023; gross margin fell to 13.2%.

• Free cash flow was positive at BRL89 million in Q2, despite significant CapEx and tax outflows.

• Gross debt at BRL12.5–12.6 billion; leverage at 0.50–0.53x.

Outlook and guidance

• Expect improved results in H2 2024, driven by cost reductions, operational leverage, and gradual impact of Brazilian trade remedies.

• Management expects structural adjustments and cost optimization to support value creation in coming quarters.

• North American market remains resilient, with stable demand and backlog, supported by government infrastructure programs.

• Anticipate further cost savings in H2, with full annualization of initiatives by 2025.

• CapEx disbursements expected to accelerate in H2 due to maintenance seasonality and project ramp-ups.