Gerdau (GGBR4) Q1 2025 earnings summary

Executive summary

• Net revenue for Q1 2025 reached R$17.4 billion, up 7% year-over-year, driven by higher North American shipments and favorable exchange rates, but net income attributable to shareholders dropped to R$749.5 million from R$2.04 billion in Q1 2024, reflecting margin compression and lower equity results from subsidiaries.

• Adjusted EBITDA was R$2.4 billion, stable sequentially but down 14.6% year-over-year, with resilient North American performance offsetting weaker Brazil and South America results.

• Steel shipments totaled 2.9 million tonnes, up 5.1% from Q4 2024 and 4.9% year-over-year, despite challenging macroeconomic conditions and steel oversupply.

• Accident frequency rate improved to 0.61, reaffirming commitment to safety and health.

• Strategic investments included hot-rolled coil expansion in Ouro Branco and IRMA certification for the Miguel Burnier mine, supporting long-term competitiveness and sustainability.

Financial highlights

• Adjusted EBITDA reached R$2.4 billion; net income was R$758 million (R$0.37/share), stable quarter-over-quarter but down year-over-year.

• CAPEX for the quarter totaled R$1.4 billion, with 70% allocated to Brazil and focused on strategic projects in flat steel and mining.

• Dividend of R$0.12/share (R$243.5 million) approved, with R$444.1 million in shares repurchased, representing 44% of the 2025 buyback program.

• Net debt/EBITDA ratio at 0.69x, within financial policy and below the 1.5x ceiling.

• Free cash flow for the quarter was R$1,252 million, with a closing cash position of R$6,870 million.

Outlook and guidance

• North America showed volume recovery and improved prices, with margins expected to improve in 2025 and a robust order backlog supported by tariffs and non-residential construction demand.

• Brazil faces continued pressure from imported steel, with cautious outlook for construction and automotive sectors due to high interest rates and price competition.

• CAPEX disbursements expected to decrease in coming years after current projects conclude; Mexico investment canceled.

• Management highlights ongoing market volatility and may revise projections if economic deterioration intensifies.