Gerdau steel shipments drop on divestments

Brazil-based steelmaker Gerdau's steel production and shipments fell in the fourth quarter of 2018 as a result of recent divestments in India and the US.

Gerdau sold its Indian operations at the end of October, while four US rebar mills were sold to Commercial Metals Company (CMC) in November.

Steel production fell across all of Gerdau's segments in the fourth quarter from the same time in 2017, dropping by 18pc to 3.2mn t. Steel shipments fell by 16pc year over year to 3.2mn t. Sales increased by 11pc to R$10.9bn ($2.9bn) on higher prices, especially for its North American business unit.

Crude steel production for the fourth quarter in the Brazil business unit fell by 5.6pc to 1.5mn t, while steel shipments fell by 10.3pc to 1.3mn t. Gerdau said shipments fell because of lower export profitability. Sales increased by 14pc to R$3.9bn.

The North American business unit saw crude steel production fall by 28pc year over year to 1.2mn t because of the sale of the rebar business to CMC. Steel shipments fell by 24pc to 1.2mn t, while sales increased by 11pc to R$4.3bn.

Crude steel production in the South American division, which includes Argentina, Peru, Uruguay and Venezuela, and joint operations in the Dominican Republic and Colombia - fell by 55pc to 144,000t, while steel shipments fell by 32pc to 262,000t, mainly because of the sale of its Chile operations in July 2018. Sales for the division decreased by 27pc to R$819mn.

The special steel division, which has operations in Brazil and the US, saw crude steel production fall by 14pc to 444,000t, while shipments fell by 4.8pc to 474,000t. Net sales rose by 24pc to R$2bn.

For full-year 2018, Gerdau's crude steel production fell by 4.8pc to 15.3mn t, while shipments fell by 2.5pc to 14.5mn t. Net sales rose by 25pc to $12.4bn.

Fourth quarter profit increased to R$389mn ($103mn), up from a loss of R$1.4bn in the same period of 2017.

Gerdau said it expects to spend R$7.1bn in capital expenditures in the next three years on maintenance and work on its Ouro Branco mill in Brazil. The company plans to conduct a 60-day stoppage in 2019 on its blast furnace 1 at Ouro Branco.