Gerdau’s Continental Divide: North American Strength Offsets Brazilian Headwinds

Gerdau's latest quarterly performance reveals a tale of two continents, with the steel producer's operations in North America and Brazil moving in starkly different directions. The company's Q3 2025 results highlight this geographical split, presenting investors with both robust growth stories and significant challenges.

The steel manufacturer's quarterly figures present contrasting signals across key metrics:
* Adjusted EBITDA reached 2.7 billion Brazilian reals, marking a 7% increase from the previous quarter
* Net income settled at 1.1 billion reals
* Total revenue amounted to 18.0 billion reals

Despite these generally positive figures, earnings per share of $0.101 fell short of analyst projections of $0.116. The company also announced plans to reduce capital expenditures by 22% to 4.7 billion reals in 2026, signaling a shift toward more conservative investment strategies.

North American Operations Drive Record Results

Gerdau's North American division has emerged as the undeniable powerhouse within the corporation. The region contributed a remarkable 65% to the company's adjusted EBITDA during the third quarter, establishing a new record. Revenue from North American operations climbed 11%, fueled by sustained demand strength and reduced import competition resulting from steel tariffs.

Order backlogs tell a compelling story, standing at approximately 70 days—17% above the historical average of 60 days. Market experts anticipate this robust demand from infrastructure projects and renewable energy initiatives will persist through early 2026.

Should investors sell immediately? Or is it worth buying Gerdau?

Brazilian Operations Face Import Pressure

The company's home market presents a considerably bleaker picture. Imported steel captured 29% of the Brazilian market in the third quarter, maintaining an average market share of 25% throughout the first nine months of the year. This influx of foreign steel has created substantial margin pressure for domestic producers like Gerdau.

Capital Management and Shareholder Returns

Gerdau is pursuing aggressive debt reduction strategies, including the early repayment of a $500 million bond carrying a 4.25% interest rate and maturing in 2030. This move is expected to lower gross debt to approximately 14 billion reals by year-end.

The company's shareholder return initiatives remain active, with 88% of the 2025 share repurchase program already completed. Gerdau has bought back 56.8 million shares for 902 million reals and will distribute a dividend of 0.28 reals per share in December.

Despite the challenging conditions in South America, Gerdau's shares have shown resilience, advancing 4.8% over two weeks to close at $3.49. This performance suggests cautious investor optimism about the company's ability to navigate its continental divide.