Gerdau Profit Misses Estimates as U.S. Sales Decline

Gerdau SA, Latin America’s largest steelmaker, said first-quarter profit declined 60 percent, missing analysts’ estimates, after sales fell at its North American unit.

Net income dropped to 148.2 million reais ($74 million) from 396.6 million reais a year earlier, the Porto Alegre, Brazil-based company said today in a statement. Gerdau was expected to post profit excluding one-time items of 154.1 million reais, the average of seven estimates compiled by Bloomberg. Its earnings missed estimates for a third consecutive quarter.

A more severe winter than usual pared sales in North America, which represents about 40 percent of revenue, Gerdau said. Net sales declined 0.4 percent to 9.17 billion reais, from 9.2 billion a year earlier, pushed down by a 13 percent decline in shipment volumes from Gerdau’s North American unit.

“We expect a more significant recovery of metal spreads in the U.S. in the second and third quarter,” Alan Glezer, an equity analyst at Banco Bradesco SA’s brokerage unit in Sao Paulo, said in a report on May 3. “In Brazil, we remain optimistic about demand as we approach a phase of intense infrastructure investments.”

Gerdau fell 3.6 percent to 14.90 reais at 10:31 a.m. in Sao Paulo, the most in three weeks. Before today, the stock lost 6 percent in 12 months, more than the 8.9 percent decline in Brazil’s benchmark Ibovespa index.

Price increases partly offset a 4 percent decline in total steel shipments, which fell to 4.56 million metric tons, Gerdau said.

(Gerdau is scheduled to hold a conference call with investors today at 1 p.m. New York time.)

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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