Metalurgica Gerdau (GOAU4) Q2 2025 earnings summary

Executive summary

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

• North American operations delivered a record 61.4% share of consolidated EBITDA, driven by strong demand, favorable market conditions, and reinforced tariffs.

• Net sales totaled R$17.5 billion, a 0.9% increase year-over-year, with North America offsetting declines in Brazil and South America.

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

• Free cash flow was negative R$773 million, mainly due to higher CAPEX and interest payments.

Financial highlights

• Adjusted EBITDA reached R$2.6 billion, up 6.6% year-over-year, 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.

• Leverage ratio (net debt/EBITDA) at 0.85x, up from 0.69x last year.

• Adjusted EBITDA margin improved to 14.6% from 13.8% year-over-year.

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.

• Management remains focused on geographic diversification, operational efficiency, and sustainable growth amid challenging global steel market conditions.

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