Credit rating agency Standard and Poor’s (S&P) has upgraded the ratings outlook of integrated steelmaker Gerdau SA and its North American business, Gerdau Ameristeel Corp, from stable to positive, the agency said. Additionally, S&P reaffirmed the company’s global scale ratings at BBB-, as well as its local ratings at brAAA.
“The positive outlook indicates we could increase Gerdau’s ratings at a global scale if the company keeps up margins above 14 percent along the cycle, while demonstrating its commitment of keeping a leverage (the ratio of the company's loan capital to the value of its common stock) below 2 times and funds from operations (FFO) over debt above 45 percent,” the agency said.
S&P noted Gerdau managed to quickly reduce leverage levels, despite a still strong domestic recession. It attributed the company’s improved financial metrics to the sale of non-core assets, increased margins, higher added-value products, improved cost management as well as a more efficient management of its working capital.