Gerdau SA, Latin America’s largest steelmaker, said second-quarter profit declined 27 percent, beating analysts’ estimates, after boosting shipments in Brazil.
Net income dropped to 390.4 million reais ($171.5 million) from 535.8 million reais a year earlier, the Porto Alegre, Brazil-based company said today in a statement. Gerdau was expected to post profit of 244 million reais excluding some items, according to the average of seven analyst estimates compiled by Bloomberg.
Brazil’s steelmakers are raising prices and cutting costs to strengthen profit margins amid a weaker local currency that reduces imports’ competition. Usinas Siderurgicas de Minas Gerais SA, the second-largest Brazilian steelmaker by output, last week posted its best adjusted profit in two years.
Gerdau’s net sales slid 0.9 percent in the quarter from the same period last year to 9.88 billion reais while the cost of goods were little changed in the period, the company said. Sales within Brazil, its biggest unit, rose 7.9 percent and revenue from the country’s exports slumped 39 percent as Gerdau focuses on the most profitable domestic market.
In Brazil, “the net sales growth is explained by the higher shipments to the domestic market,” Gerdau said in the filing, which was released before the opening of regular market trading. “Selling costs were stable despite the reduction in shipments, which was fully offset by the effect of exchange variation.”
Crude-steel output declined 7.9 percent to 4.65 million metric tons in the quarter, while total shipments dropped 3 percent, the company said.
Gerdau advanced 2 percent to 14.88 reais at 10:46 a.m. in Sao Paulo today.
(Gerdau scheduled a conference call with investors today at 1 p.m. New York time.)
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