Gerdau's Q2 2025 Earnings Call: Unpacking Contradictions in CapEx Strategies and Market Dynamics

Capital expenditure strategy and allocation, U.S. import share and demand impact, shareholder returns and financial management, rebar market share and strategic positioning, and capital expenditure allocation and strategic priorities are the key contradictions discussed in Gerdau's latest 2025Q2 earnings call.



Financial Performance and North American Operations:
- Gerdau's adjusted EBITDA for Q2 2025 was BRL 2.6 billion, showing a 6.6% increase from Q1 2025, with North America contributing 61% of consolidated EBITDA.
- The strong performance in North America was attributed to high demand and favorable market conditions, including steel import tariffs.

Impact of Imports on Brazilian Market:
- Imports reached 23.4% of the Brazilian domestic market in the first half of 2025, indicating an excessive level of foreign steel in the market.
- The high import penetration rate negatively impacts domestic steel industries and jobs, leading Gerdau to reassess its investment plans in Brazil.

Capital Expenditure and Strategic Investment:
- Gerdau invested BRL 1.6 billion in Q2, with a significant portion allocated to the Miguel Burnier mining project, which aims to enhance iron ore supply for domestic operations.
- The long-term strategy is to improve competitive positioning and cost reduction through increased domestic self-sufficiency.

Shareholder Returns and Debt Management:
- The company approved a dividend distribution of BRL 0.12 per share, totaling BRL 239 million, and completed 68% of a BRL 700 million share buyback program.
- Gerdau maintained a strong financial position, with leverage at 0.85x, indicating the company's ability to continue investing despite adverse market conditions.