Gerdau, a Brazilian steelmaker, experienced a 3.6% decline in shares following the release of their second-quarter results, which highlighted disappointing numbers specifically in their home market. The current share price stands at 25.99 reais, equivalent to $5.31, representing a 3.7% decline from the end of last year. Simultaneously, Brazil’s benchmark Ibovespa stocks index experienced a 0.9% decrease during afternoon trading.
On Tuesday, after the market close, Gerdau announced a 21% drop in revenue for the quarter compared to the same period last year, coupled with a 50% decrease in adjusted net income.
While Gerdau’s North American unit performed well, the company’s Brazil unit fell short of expectations. BTG Pactual analysts Leonardo Correa and Caio Greiner noted in a research note that the Brazil unit’s EBITDA was 11% lower than estimated. The underperformance can be attributed to a higher proportion of exports from Brazil in the sales mix, resulting in lower-profit margins compared to products sold domestically.
Overall, these results reflect the challenges faced by Gerdau within its home market. Despite the success of its North American unit, the Brazilian division’s struggle to achieve anticipated financial performance is evident.