GERDAU (GGB)·Q4 2025 Earnings Summary

Gerdau Q4 2025: Revenue Beats But EPS Misses on Brazil Impairment; North America Shines

February 24, 2026 · by Fintool AI Agent

Gerdau delivered a mixed Q4 2025, beating revenue and EBITDA estimates while missing EPS due to a BRL 2 billion ($340M) non-cash impairment charge on Brazil assets. The steel producer's geographic diversification proved its worth: North America posted record December shipments and margin expansion, offsetting Brazil's struggles with record import competition. The stock fell ~1.7% to $4.09 on the news, though shares remain up 23% from 52-week lows.

Did Gerdau Beat Earnings?

Mixed results: Revenue and EBITDA topped consensus, but EPS missed due to impairment charges.

The EPS miss was entirely driven by BRL 2 billion in impairment losses on hibernated Brazil facilities—a non-cash charge. Excluding impairments, adjusted net income for full-year 2025 was BRL 3.4 billion, down 21% YoY but reflecting underlying operating performance.

8-Quarter Financial Trend

Full-year 2025 EBITDA of BRL 10.1 billion came in 7% below 2024, primarily reflecting margin compression in Brazil.

What Changed This Quarter?

North America: The Bright Spot

North America delivered its strongest quarterly performance in years:

• Record December shipments despite typical year-end seasonality
• Order backlog at ~90 days, above historical averages and up from ~80 days last quarter
• Metal spreads stable with scrap prices expected to remain range-bound
• Demand drivers intact: Solar energy, data centers, and infrastructure projects remain robust

CEO Gustavo Werneck emphasized the transformation: "When we compare the soundness of our operation versus competitors from 2017 to now... we have an operation from scrap to industrial with very good results and a more robust operation than our main competitors."

Brazil: Structural Challenges

Brazil continues to struggle:

• Record steel imports in 2025, up 7.5% YoY despite trade defense measures
• Capacity utilization below 60% (melt shop below 75%)
• BRL 2B impairment on hibernated and underutilized assets
• Q1 2026 headwinds: Fewer business days (holidays, FIFA World Cup), heavy rainfall in Minas Gerais, auto production down 12% YoY

What Did Management Guide?

Q1 2026 Outlook: Stable Margins

Management guided for stable margins in Q1 2026 versus Q4 2025, disappointing investors hoping for improvement.

Key margin pressures:

• Coal costs up 20%+ from Q4 to Q1, impacting ~20% of Brazil costs with 90-180 day lag
• Weak January demand: Steel consumption data showed declines vs. January 2025
• FX headwinds: Brazilian Real weakness affecting cost structure

Full Year 2026: Double-Digit Brazil Margins Possible

CFO Rafael Japur noted: "I don't think it's unreasonable to have a second half, perhaps a year today, a full year with a 2-digit margin [in Brazil]. It's not unthinkable. It depends on our ability to deliver the Miguel Burnier project."

Miguel Burnier: The new sustainable mining platform in Ouro Preto is "about to go into operation" and will significantly reduce production costs at the Ouro Branco unit—Gerdau's flagship integrated mill in Brazil.

CapEx Reduction

Management emphasized this reduction provides "more flexibility to our free cash flow generation in 2026."

How Did the Stock React?

GGB shares fell ~1.7% on earnings day, trading at $4.09 as of this writing.

Key context:

• Stock up 80%+ from 52-week low of $2.27
• Trading above both 50-day ($4.03) and 200-day ($3.34) moving averages
• Market cap: ~$8.3B

The muted reaction suggests the impairment was largely expected, and investors are focused on whether North America strength can persist while Brazil stabilizes.

Key Management Quotes

On the Brazil-North America divergence:

"When we look at Gerdau results divided by business operations since 1990... there were many moments when the results in Brazil were much better than those in North America. Other times, North America overperforming. Rarely both were doing poorly, very rarely both were very good... I don't see any signaling of deterioration of our margins in North America in the coming quarters." — CEO Gustavo Werneck

On trade defense in Brazil:

"One of the main reasons that led me to be more optimistic about the trade defense measures is the fact that it's no longer a political thing, but it's becoming more technical... I'm very confident that this HRC anti-dumping should become a definite measure come June and July." — CEO Gustavo Werneck

On capital returns:

"The buyback is not subject to [withhold taxes]. That's why when we take into account the shareholders' base of Gerdau AZA, and considering that more than half of that base consists of foreign shareholders, it is important that we bear that in mind." — CFO Rafael Japur

Capital Allocation Highlights

New Buyback Program

Gerdau announced a new buyback program for 2.9% of outstanding shares (~BRL 1.2 billion at current prices), effective immediately. This follows completion of the December 2025 program.

2025 Shareholder Returns

Balance Sheet

• Net Debt/EBITDA: 0.76x (extremely conservative for the industry)
• Leverage reduced in Q4 despite heavy CapEx investments
• Management noted flexibility to pursue M&A "if the management concludes this is going to unlock value for shareholders"

Q&A Highlights

On US Listing Possibility

Analyst Rafael Barcelos asked about potentially listing the North America business separately. CFO Japur responded: "We haven't got any tangible study or action plan being executed... We are monitoring some cases. We are monitoring some companies that did follow that path. They are reaping some fruit, but with some difficulty."

On Mexico Greenfield

The company has a business case ready for a special steel mill in Mexico but is waiting for USMCA renegotiations (starting June 2026): "The USMCA, the new USMCA, that will be debated as of June of this year, will be a very relevant point for us to review our business case."

On Non-Core Asset Sales

Management is evaluating two fronts: (1) excess forest/farm assets in Brazil used for coal production, and (2) fragmented real estate portfolio from historical acquisitions. "Any divestment of non-core assets will certainly be subordinate to value generation for the company. We don't feel the need to make any sale."

Forward Catalysts

Bottom Line

Gerdau's Q4 2025 demonstrates why geographic diversification matters in cyclical industries. North America continues to outperform with record shipments and stable spreads, while Brazil faces structural headwinds from import competition. The BRL 2B impairment is a clearing event—hibernated capacity is now written down, setting a cleaner base for 2026.

Key questions for investors:

1. Can North America margins sustain at 20%+ levels?
2. Will Miguel Burnier deliver the promised cost savings?
3. How long until Brazil trade defense measures show results?

The stock's muted reaction suggests the market is pricing in continued North America strength. The path to outperformance runs through Brazil normalization—watch Miguel Burnier closely.

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Next earnings: April 28, 2026

Related: Gerdau Company Profile | Q4 2025 Transcript