Gerdau reports lower Q1 earnings amid high raw material costs

Friday, 04 May 2012 01:58:56 (GMT+2)

Late Wednesday, Brazil-based Gerdau SA reported its financial results for Q1 2012. Profits of R397 million (US$206.77 million) were 3 percent less than the same period a year ago, as a result of the "deindustrialization" in Brazil. Additionally, significant raw material increases--iron ore, mineral coal and scrap--negatively impacted earnings and continue to pressure margins. While tonnage sales were little changed at 4.7 million metric tons, production increased 4 percent from a year earlier to 4.9 million mt.

"Gerdau's performance in the first quarter shows that demand continued heated in some markets, but that profitability levels fell at our operations mainly due to growing production costs and the deindustrialization process in Latin America's steel production chain," Gerdau's Chief Executive Officer Andre Gerdau Johannpeter said in a statement. "In Brazil, the impact of this deindustrialization has been strongly felt in the domestic market."