São Paulo – Gerdau, a Brazilian multinational company in the steel sector, believes that the measures adopted by governments to minimize the impacts of the global crisis on their economies should also help boost steel sales. In a press conference yesterday (19), the CEO at the company, André Gerdau Johannpeter, and the finance, control and international relations executive vice president, Osvaldo Schirmer, said they expect reactions, due to government actions, in sales to the United States and Brazil.
In Brazil, according to Johannpeter, the works of the Growth Acceleration Program (PAC) should have an impact, as should measures for stimulation of civil construction and reduction of the Industrialised Product Tax (IPI) levied on vehicles. "Some signs of improvement have already been identified on the domestic market," said Johannpeter. In the United States, the investment announced by the government in the infrastructure sector should also increase the demand for steel, according to Schirmer. In the United States, the main sector for Gerdau products is infrastructure.
The global crisis strongly affected the performance of the ironworks sector in the last quarter of last year, when compared to the same period in 2008. There was a 24.4% reduction in sales of steel, which reached 3.5 million tonnes. The company posted 16% growth in gross revenues, which reached 10.5 billion, due to the trade variation, conversion of foreign revenues and consolidation of new companies, but reduction of 67.1% in net profit, to 311 million Brazilian reals (US$ 134 million). The Ebitda dropped 9.6% to 1,500 million reals (US$ 645 million).
The high demand on the steel market up to September last year, however, made the company’s performance in the year positive. Gross revenues grew 36.7% in 2008 and reached 46.7 billion reals (US$ 20 billion). Consolidated net profit reached 4.9 billion reals (US$ 2.1 billion), with growth of 14.9% over the previous year, and the Ebitda was 10 billion reals, against 6.2 billion in 2007. The sales volume grew 11.4%, to 19.1 million tonnes.
Gerdau steel sales in Brazil last year grew even further, 22.1% and reached 4.8 million tonnes. The strong domestic demand caused a reduction in exports, which dropped 11.1% to 1.7 million tonnes. The last quarter of the year, however, was not good in the domestic market. According to Johannpeter, the company strategy, due to the crisis, has been to adjust the level of production of stocks and demand. "We are prepared to face the crisis," said the CEO.
The company is negotiating the temporary suspension of work contracts with labour unions and should rethink its investment programme. Johannpeter guarantees that investment should not be cancelled, that US$ 3.6 billion should be invested in five years, but that execution of projects should depend on the reaction of each market. Works that were already at over 20% developed have not been cancelled, according to him.
Gerdau has operations in the Americas, Europe and Asia with an installed capacity of 26 million tonnes of steel. The company is a leader in the long steel market in the Americas and a world leader in special steel for the vehicle industry. The company is listed on the São Paulo Stock Exchange (Bovespa), and in the New York, Toronto and Madrid Stock Exchanges.
*Translated by Mark Ament
