Nov. 5 (Bloomberg) -- Gerdau SA, Latin America’s largest steelmaker, posted third-quarter profit that beat analyst estimates and said it plans to invest 9.5 billion reais ($5.5 billion) in the next five years as global demand rebounds.

Net income fell 43 percent from a year earlier to 553 million reais, or 39 centavos a share, Porto Alegre, Brazil- based Gerdau said today in a statement. Profit excluding some items was forecast to be 34.9 cents a share, the average estimate of seven analysts in a Bloomberg survey.

Gerdau Chief Executive Officer Andre Gerdau Johannpeter is stepping up spending amid forecasts that a demand rebound, which started earlier this year, will continue into the fourth quarter and 2010. Gerdau will resume investments in a 1.5 million-ton-a- year iron-ore mine in Brazil that was delayed because of the global economic slowdown, he said today on a conference call.

“Brazil steel demand will stay heated in 2010,” Gerdau Johannpeter said. The U.S. market is showing “a slow and gradual recovery.”

About 80 percent of the new five-year investment plan, which replaces a previous 6.3 billion-real program, will be spent in Brazil, he said.

Gerdau rose 2.2 percent to 28.10 reais at 1:52 p.m. in Sao Paulo trading. The shares have risen 87 percent this year, more than the 72 percent gain for Brazil’s benchmark Bovespa index.

The steelmaker didn’t break-out year-earlier figures in its statement today. Profit was 967.1 million reais, or 67 centavos, in the third quarter of 2008, according to Bloomberg data.

Sales Drop

Sales fell 45 percent from a year earlier to 6.81 billion reais in the third quarter after Gerdau slashed output amid a global economic crisis and prices fell in international markets, including North America, which accounts for about 40 percent of its revenue.

The company said it took a charge of 143 million reais in the quarter because of permanently idled North American assets, boosting total write-downs this year to 1.2 billion reais.

“Gerdau suffered greatly in the crisis,” said Pedro Galdi, a Sao Paulo-based analyst with SLW Corretora. “But the result shows a recovery from the second quarter.”

Gerdau restarted a 3 million-ton-a-year blast furnace at its Acominas unit in Brazil in July, after a six-month halt, because of rising steel demand from builders and carmakers. The company said in August it wouldn’t shut a smaller furnace as planned for maintenance amid a rebound in Brazil and abroad.

Crude-steel output rose 30 percent from the second quarter, Gerdau said.

‘Trend Toward Recovery’

Brazilian steelmakers boosted sales in September by 11 percent from August, “reflecting a trend toward recovery,” the nation’s steel institute, known as Aco Brasil, said last month.

Gerdau said Oct. 20 that it will resume a 1.75 billion-real steel mill project that had been delayed because of the global financial crisis.

Gerdau will benefit from the 2014 World Cup and the 2016 Olympic Games in Brazil, which will require “grandiose investments in infrastructure,” said Rodrigo Ferraz, a Rio de Janeiro-based analyst with Brascan Corretora, who rates the stock “underperform” and doesn’t own any.

The company’s results are based on international financial reporting standards.

To contact the reporter on this story: Diana Kinch in Rio de Janeiro at dkinch1@bloomberg.net

Last Updated: November 5, 2009 10:53 EST