Metalurgica Gerdau (GOAU4) Q2 2024 earnings summary

Executive summary

• Net sales reached R$16.6 billion in 2Q24, up 2.5% from 1Q24 but down 9.0% year-over-year, reflecting lower shipment volumes and prices.

• Adjusted EBITDA was R$2.6 billion, down 6.7% from 1Q24 and 30.3% from 2Q23, with a margin of 15.8%.

• Adjusted net income totaled R$949 million, a decrease of 24.0% from 1Q24 and 55.5% from 2Q23.

• Steel shipments were 2.7 million tonnes, stable sequentially but down 7.5% year-over-year.

• R$1.4 billion in CAPEX was invested, with 71% allocated to Brazil.

Financial highlights

• Gross profit was R$2.2 billion, down 9.6% from 1Q24 and 33.3% from 2Q23; gross margin fell to 13.2%.

• Free cash flow was positive at R$87 million, a R$718 million improvement over 1Q24.

• Net debt/Adjusted EBITDA ratio increased to 0.50x, with gross debt at R$12.6 billion and cash at R$6.9 billion.

• SG&A expenses were R$534 million, up 5.9% sequentially but down 5.7% year-over-year.

Outlook and guidance

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

• Initiatives to adjust production capacity, including plant hibernations, are expected to impact future results.