OREANDA-NEWS. Gerdau closed the second quarter of 2013 with consolidated net revenues of BRL 10 billion, 7.8 percent higher than in the first three months of this year, mainly due to an improved market in Brazil in the segments of long and special steel as well as in some Latin American countries. Physical sales overall, in turn, reached 4.6 million metric tons, an increase of 1.7 percent compared to the first quarter of 2013, and the consolidated steel production, which also reached 4.6 million metric tons, was 5.4 percent higher. Earnings before interest, taxes, depreciation and amortization - EBITDA - reached BRL 1.2 billion, representing a 48.6 percent increase, while net income was BRL 401 million, an increase of 150.6 percent compared to the period from January to March.

“The improved performance in the second quarter reflects the gradual recovery of the markets at different levels and the effort made in managing our operations, which resulted in the reduction of working capital by BRL 1.1 billion, expanding the company’s cash. Furthermore, physical sales in the Brazilian market had its best performance since 2008 and, in relation to North America, another significant market for Gerdau, expectations are growing for the next two years. We are convinced that Gerdau has the experience and management skills to come out even stronger from this current phase in the world’s steel cycle , which is marked at the moment by a significant excess of installed capacity, and hence lower profitability,” affirms the CEO, Andre B. Gerdau Johannpeter.

Compared with the second quarter of 2012, net revenue remained in line while overall physical sales showed a 3 percent decrease. Consolidated steel production was also lower by 7.9 percent. -EBITDA was 3.9percent lower compared to the second quarter of 2012, while net income saw a 27 percent reduction.

Throughout the second quarter, sales performance showed different behaviors in the regions where Gerdau operates. In the Brazilian market (except the segment of special steels), 1.5 million metric tons was sold between finished and semi-finished products, 6.2 percent higher compared to the same period last year, while exports declined by 47.4 percent to 262,000 metric tons. In Canada and the United States (except special steel mills), sales decrease by 3 percent to 1.5 million metric tons, reflecting higher imports of steel in the region and the deployment of management software in Gerdau’s operation.

In Latin America (except Brazil), the sales volume evolved 6 percent versus the second quarter of 2012, reaching 726,000 metric tons, the highlights being an increased demand in some countries. As for the Special Steel Operation, which includes special steel mills in Brazil, United States, Spain, and India), 766,000 metric tons were sold against 731,000 metric tons in the same period last year, due to increased vehicle production in Brazil, especially of trucks.

Gerdau’s investments reach BRL 635 million in the quarter

Gerdau’s investments in the second quarter reached BRL 635 million, and for the year-to-date BRL 1.2 billion, the highlights being the starting up of production of flat steel in Brazil and the increase of its own production capacity of iron ore.

The production of hot-rolled coils at the Ouro Branco (MG) plant will start this month of August, and the project to increase the iron ore production capacity is still in progress as planned. Also in its final stages of installation is a new bar rolling mill with an installed capacity of 500,000 metric tons of special steel per year at the Pindamonhangaba (SP) plant, and the start-up of operations is scheduled for the end of this year. Also, in Mexico, the main equipment for the installation of new mill for producing structural shapes has already been purchased and construction is fully underway.

As previously announced, BRL 8.5 billion in investments in the Company’s industrial plants has been scheduled for the period of 2013-2017 considering the steel and mining activities. It is also important to remember that, considering the large volume of investments made in 2012 and the uncertainty about the global economic market, Gerdau continues to be more selective in evaluating its future investment projects.

Dividends to be paid on August 21

The publicly traded companies in Brazil - Gerdau S.A. and Metalurgica Gerdau S.A - shall pay quarterly dividends on August 21, 2013. BRL 119 million will be paid to the shareholders of Gerdau S.A. (BRL 0.07 per share) and BRL 44.7 million to the holders of Metalurgica Gerdau S.A. shares (BRL 0.11 per share). Accumulated in the year, the remuneration for the shareholders of Gerdau S.A. totaled BRL 153 million (BRL 0.09 per share) and Metalurgica Gerdau S.A. was BRL 52.7 million (BRL 0.13 per share).