Metalurgica Gerdau (GOAU4) Q2 2025 earnings summary

Executive summary

• Achieved record-low workplace accident rates and published the 2024 sustainability report, with GHG emissions of 0.85 tons CO2/ton steel, less than half the global average.

• North American operations delivered the highest-ever share of consolidated EBITDA at 61.4%, driven by strong demand and favorable market conditions, offsetting weaker results in Brazil and South America.

• Net sales totaled R$17.5 billion, a 0.9% increase over 1Q25 and 5.5% higher year-over-year, driven by higher volumes in North America.

• Brazilian market faced challenges from excessive steel imports, leading to reduced investments and production adjustments.

• Dividend distribution of R$239.5 million (R$0.12/share) approved, with 68% of the 2025 share buyback program completed.

Financial highlights

• Adjusted EBITDA reached R$2.6 billion, up 6.6% sequentially, with North America as the main contributor.

• Net income was R$864 million (R$0.43/share), a 14% increase from Q1 2025.

• Issued US$650 million in bonds (2035 maturity) and R$1.4 billion in 7-year debentures to strengthen cash flow and extend debt maturity.

• Free cash flow was negative R$773 million, an improvement over 1Q25 but R$862 million lower than 2Q24 due to higher CAPEX and interest payments.

• Leverage ratio (net debt/EBITDA) at 0.85x, well below policy limits.

Outlook and guidance

• North America expected to maintain strong demand, especially in non-residential construction, with high order backlogs.

• Brazil's steel market remains under pressure from imports; future investments in Brazil to be reduced, with more details at Investor Day.

• CapEx to decrease after 2026, prioritizing North America for future investments.

• Strategic focus remains on geographic diversification, operational efficiency, and sustainable growth.

• Anticipates positive free cash flow and reduced leverage in the second half of the year.