Earnings

Gerdau Has No Plan For A U.S. Spin-Off Or Big North American Deal, CFO Says

CFO Rafael Japur also called a U.S.-Mexico trade agreement a net negative for the steelmaker's margins, while a Canada-U.S. deal would help.

Gerdau has no plan for a spin-off or a large acquisition in North America to meaningfully raise its exposure there, CFO Rafael Japur told analysts on the steelmaker's third-quarter earnings call on Tuesday. North America supplied 76% of consolidated EBITDA in the quarter, up from 75% in the prior one, Japur said.

No spin-off, no big deal

An analyst from BTG Pactual asked whether Gerdau might revisit a spin-off or another strategic move in the United States, given how far the region has pulled ahead of Brazil. Japur said the North American weight is not new and that the company has no plan for either at this time.

CEO Gustavo Werneck gave the same answer to a Bank of America analyst who asked about acquisitions versus organic growth. Gerdau will keep adding capacity organically, Werneck said, and will not announce any major acquisition or greenfield plant. Greenfield means a plant built from scratch.

Werneck said the North America EBITDA margin hit 27.7% in the quarter, the highest in four years.

Which trade deals help, which hurt

Asked by a Goldman Sachs analyst about the risk of a trade deal and the new D'Acero plant in Mexico, Japur said a trilateral agreement among the U.S., Canada and Mexico looks unlikely. He expects separate bilateral talks instead.

A Canada-U.S. agreement would be a net positive, he said, because Gerdau's specialized Canadian plants lose sales volume to tariffs today. A U.S.-Mexico agreement would be a net negative, with the potential to make margins a little worse.

Japur said D'Acero will mainly serve the Mexican market, though some volume could eventually reach North America. Werneck later said he expects the plant's impact to be marginal and sees supply and demand as balanced.

Demand overlap and the Midlothian expansion

Werneck said demand from data centers, transmission towers, shipbuilding and nuclear projects overlaps, which gives him confidence it will stay solid. He said the second phase of the Midlothian expansion, in Texas, runs until January. Japur said the expanded capacity will show up mostly through 2027, absent setbacks in the ramp-up.

In Brazil, Werneck said a plan to improve competitiveness is still being finished, with more detail due at Investor Day.

Japur said Gerdau would like to be less dependent on North America, and that the focus is making the Brazilian operation more profitable and competitive.