Gerdau SA Q4 FY2024 earnings call

• Ended 2024 with the lowest accident frequency rate in 124-year history, emphasizing commitment to health, safety, and well-being.
• Adjusted EBITDA was BRL10.8 billion in 2024 due to strategic cost reduction initiatives in Brazil.
• Brazilian market was impacted by high penetration rate of imported steel, even with the tariff-quota system implemented in mid-2024.
• Acquired two SHPs (Garganta da Jararaca and Paranatinga II) in Mato Grosso, aligning with competitiveness and decarbonization strategies.
• In 2024, achieved BRL1.5 billion in cost savings, invested BRL6.2 billion in CapEx (over half for strategic projects), and distributed almost BRL2.9 billion to shareholders via dividends and buybacks.
• From Q1 2025, transition to three reportable segments to enhance clarity in line with steel industry regionalization.

As of the first quarter of 2025, Gerdau will start reporting results using three reportable segments: Brazil, North America, and South America. This new format aligns with the steel industry's regionalization trend. However, detailed financial performance in absolute terms and revenue contribution % for each segment in the fourth quarter 2024 was not explicitly provided in the transcript.

• 2025 CapEx guidance: BRL6 billion, split equally between competitiveness and maintenance efforts.
• 2025 share buyback program to repurchase 65 million shares (approximately 3.2% of outstanding shares).
• Ouro Branco unit to add new hot coil rolled strip capacity in the first quarter of 2025.

• Brazilian market heavily impacted by high penetration of imported steel despite tariff-quota system.
• Uncertain macroeconomic conditions in Brazil, including rising inflation and high interest rates, potentially reducing local steel demand.
• Trade defense measures in North America with complexities and potential exceptions affecting operations and competitiveness.

Q: Marcio Farid asks about US operations (backlog recovery, trade measures) and Brazilian market (steel prices, demand).

A: Gustavo Werneck and Rafael Japur respond on North America backlog recovery post-trade measures, limited impact of Canada-US product transitions, and Brazilian market challenges with imported steel.

Q: Rafael Barcellos inquires about Brazilian market strategy (rebar capacity, consolidation) and US tariffs (Mexico plant investments, US growth segments).

A: Gustavo Werneck discusses Brazilian rebar competitiveness challenges and investment in flat steel, while Japur provides details on Mexico plant investment timelines and North America special steel growth potential.

Q: Daniel Sasson asks about CapEx guidance, energy investments, and hot coil project.

A: Rafael Japur explains 2025 CapEx curve, inclusion of energy investments in BRL6 billion, and hot coil project shipment projections.

Q: Leonardo Correa asks about Brazilian rebar prices and US spinoff plans.

A: Gustavo Werneck addresses Brazilian rebar price volatility and states no current plans for US spinoff.

Q: Ricardo Monegaglia asks about segment margins and strategic projects.

A: Rafael Japur talks about segment margins, special steel dynamics in North America, and strategic project ramp-up timelines.

Q: Yuri Pereira asks about Brazil costs and trade defenses.

A: Rafael Japur discusses Brazil cost pressures from exchange rates, and Gustavo Werneck advocates for stronger trade defense measures in Brazil.

Q: Eugenia Cavalheiro inquires about working capital expectations.

A: Rafael Japur discusses working capital dynamics based on North America and Brazil demand.