Gerdau (GGBR4) Q4 2025 earnings summary

Executive summary

• North America delivered strong results in 2025, with EBITDA up 18.5% year-over-year, driven by resilient demand in key sectors and record shipments, while Brazil faced profitability challenges due to a surge in steel imports despite new trade defense measures.

• Steel shipments reached 11.6 Mt in 2025, a 5.9% increase year-over-year, with positive performance across all regions.

• The Miguel Burnier mining project achieved 91% physical progress and is set to reduce production costs at the Ouro Branco unit.

• Net income was R$3.4 billion, down 21% from 2024, reflecting operational and financial dynamics and impairment losses in Brazil.

Financial highlights

• 2025 EBITDA reached R$10.1 billion, down 7% year-over-year, with improved North American results offsetting weaker performance in Brazil and South America.

• Adjusted net income for 2025 was R$3.4 billion, a 21% decrease from the previous year, excluding R$2.0 billion in non-cash impairment losses in Brazil.

• CAPEX in 2025 totaled R$6.1 billion; 2026 guidance is R$4.7 billion, reflecting a focus on free cash flow and a 24% reduction.

• Free cash flow for 2025 turned positive at R$394 million, with R$1.411 billion in Q4 2025.

• R$2.4 billion was returned to shareholders via dividends and buybacks in 2025.

Outlook and guidance

• Moderate demand growth is expected in Brazil for 2026, with optimism around recent trade defense measures and a focus on infrastructure and civil construction.

• North America is projected to maintain high steel consumption and margin growth in 2026, supported by strong order backlogs and demand in solar, data centers, and infrastructure.

• CAPEX for 2026 is guided at R$4.7 billion, prioritizing competitiveness, maintenance, and cost reduction.

• Brazil margins are expected to remain stable in H1 2026, with potential for double-digit EBITDA margins in H2 if market conditions and cost improvements materialize.

• The startup of the Miguel Burnier mining project and Midlothian expansion are expected to lower costs and enhance capacity.