Brazilian steelmaker Gerdau SA reported a 46.5% drop in second-quarter net profit to 372.8 million Brazilian reais from 698.3 million reais last year as sales volumes were impacted by asset disposals in 2018, according to an Aug. 7 release.
Gerdau sold steel assets in Texas, Chile and India in 2018 as part of a divestment program aimed at shifting focus to more profitable operations while reducing debt. As of June 30, net debt was down to 12.53 billion reais from 15.17 billion reais a year ago, with its net-debt-to EBITDA ratio falling to 1.9x from 2.7x over the period.
Adjusted EBITDA slumped 10.5% year on year to 1.57 billion reais while EBITDA margin increased to 15.5% from 14.6% a year ago, reflecting the company's new asset portfolio and a 17.9% decline in selling, general and administrative expenses.
The divestments, however, dragged down crude steel production in the June quarter by 14.1% year on year to 3.43 million tonnes. Shipments fell 22.5% to 2.97 Mt, with net sales falling 15.6% to 10.15 billion reais.
Given market conditions, Gerdau lowered its 2019 investment plan to 1.8 billion reais from 2.2 billion reais a year ago. Capital expenditure in the second quarter was 424 million reais.
As of Aug. 6, US$1 was equivalent to 3.98 Brazilian reais.