20-F: Gerdau S.A. Announces Fiscal Year 2024 Results

Gerdau S.A. reports its financial results for the fiscal year ended December 31, 2024, highlighting key financial metrics and strategic initiatives.

Summary

• Gerdau S.A. reported net sales of R$ 67.0 billion for 2024, a 2.7% decrease compared to 2023.
• The company's crude steel production reached 11.7 million tonnes in 2024, a 1.3% increase from the previous year.
• Net income for 2024 was R$ 4.6 billion, a 39.0% decrease compared to 2023.
• The Brazil Business Segment's net sales decreased by 3.2% to R$ 26.0 billion, while the North America Business Segment's net sales decreased by 3.7% to R$ 25.9 billion.
• The South America Business Segment's net sales increased by 12.5% to R$ 5.8 billion, and the Special Steel Segment's net sales decreased by 3.5% to R$ 11.0 billion.
• The company's investment plan for 2024 totaled R$ 6.0 billion, focused on maintenance and competitiveness projects.
• Gerdau is committed to reducing GHG emissions and aims to be carbon neutral by 2050.

Sentiment

Score: 6

Explanation: The document presents a mixed outlook. While there are positives such as increased production and a commitment to sustainability, the decrease in net sales and income, along with external risks, temper the overall sentiment.

Positives

• Crude steel production increased by 1.3% in 2024.
• The company is committed to sustainable development and reducing GHG emissions.
• The South America Business Segment experienced a 12.5% increase in net sales.
• The company has a strong focus on cost reduction and efficiency improvements.

Negatives

• Net sales decreased by 2.7% in 2024.
• Net income decreased by 39.0% in 2024.
• The Brazil and North America Business Segments experienced decreases in net sales.
• The company faces challenges from steel imports, particularly from China.

Risks

• The steel industry is cyclical and subject to fluctuations in demand and prices.
• The company faces significant competition from domestic and foreign producers.
• Increases in raw material and energy prices could adversely affect operations.
• The company is subject to environmental regulations and climate change-related risks.
• Political and economic instability in Brazil could negatively impact the company.

Future Outlook

Gerdau expects positive demand in the U.S. due to government policies and reshoring, while monitoring the impact of new trade measures. The company also anticipates resilient demand in Brazil's construction and automotive sectors, but remains cautious about potential impacts from higher interest rates.

Industry Context

The global steel industry faces challenges from overcapacity, particularly in China, and trade disputes. Gerdau is adapting by focusing on cost reduction, efficiency improvements, and sustainable practices.

Comparison to Industry Standards

• Gerdau is the largest Brazilian producer of steel and a leading producer of long steel in the Americas.
• The company is one of the world's leading suppliers of special steel.
• Gerdau is the largest recycling company in Latin America, using scrap as a key input.
• The company was classified by World Steel Association as the world's 33rd largest steel producer based on its consolidated crude steel production in 2023.

Legal Proceedings

• The Company and its subsidiary Gerdau Aos Longos S.A. entered into a Settlement Agreement with the Administrative Council for Economic Defense (CADE), subject to judicial approval, relating to the Administrative Proceeding.

Related Party Transactions

• The Company maintains loans with some of its subsidiaries and other affiliates through loan contracts.
• Commercial operations between Gerdau and its subsidiaries or related parties consist of transactions involving the purchase and sale of inputs and products.
• The Company holds marketable securities in investment funds managed by a bank.
• The Company and its subsidiaries carried out transactions with controlling shareholders referring to the sale of property.

Stakeholder Impact

• Shareholders may be concerned about the decrease in net income and the potential impact on dividends.
• Employees may be affected by potential restructuring and workforce recalibration.
• Customers may experience changes in pricing and availability of steel products.
• Suppliers may be affected by changes in demand and pricing of raw materials.
• Creditors may be concerned about the company's ability to service its debt.

Next Steps

• The company will continue to monitor the impact of new trade measures on the global and regional market.
• Gerdau will continue to invest in modernization and technology updates at its units.
• The company will continue to streamline its production processes and invest in new energy matrices and open innovation.

Key Dates