By Brazil Stock Guide – Gerdau (GGBR4; GGBR3; GGB) started 2026 with adjusted net income of R$1.0 billion in the first quarter, up 51% from the previous quarter and 34% from the same period last year. The result shows a company increasingly supported by the strength of its North American business as Brazil remains pressured by imports, weak pricing and uneven industrial demand.
Net revenue reached R$16.7 billion, down 1.5% from the fourth quarter and 3.8% year on year. The more important figure came from profitability. Adjusted Ebitda rose to R$3.0 billion, up 25% sequentially and 23% from a year earlier. The adjusted Ebitda margin expanded to 17.7%, almost four percentage points higher than in the first quarter of 2025.
North America leads
North America was the clear driver of the quarter. The region delivered R$2.25 billion in adjusted Ebitda, up 88% from the first quarter of 2025, with a 24.1% margin. It accounted for roughly 75% of Gerdau’s consolidated adjusted Ebitda. Performance was supported by higher volumes, inventory rebuilding, better prices and resilient demand from non-residential construction, renewable energy and distribution channels.
The contrast with Brazil was sharp. Gerdau’s Brazilian operation posted R$578 million in adjusted Ebitda, up 13% from the fourth quarter but down 47% year on year. The margin stood at 9.2%, compared with 14.6% a year earlier. The company pointed to a difficult mix of stronger seasonality, pressured prices, excess supply and record imports, especially in flat steel.
Trade defense yet to bite
Brazil remains the weak spot. Any benefit from recent or expected trade-defense measures has not yet shown up meaningfully in Gerdau’s numbers. The company said import penetration in flat steel reached 34% in February, the highest level in the historical series, and averaged 28.5% in the quarter. Total steel imports into Brazil reached 1.7 million tons, up 32% from the fourth quarter, keeping domestic prices under pressure and limiting the recovery in volumes.
Gerdau’s total sales in Brazil fell 9.5% from the previous quarter and 7.5% year on year. The decline was steeper in flat steel, the segment most exposed to imported competition. In special steel, the company also reported a weaker environment, affected by a drop in heavy vehicle production.
Even so, Gerdau managed to improve its Brazilian result sequentially through cost control, lower impact from maintenance stoppages and operating efficiency gains. Its Ouro Branco unit, whose hot-rolled coil capacity was expanded in 2025, reached record production in March — a positive signal if domestic demand for flat steel recovers and trade-defense measures begin to reduce import pressure.
Mixed South America
In South America, the picture was uneven. Adjusted Ebitda totaled R$186 million, up 7% from the fourth quarter and slightly down 1.5% year on year. Peru helped through stronger volumes and a better construction-related sales mix, while Argentina and Uruguay remained under pressure from imports and weaker demand.
The regional split reinforces the logic of Gerdau’s portfolio. North America is providing price, volume and margin support. Brazil is still waiting for a cleaner competitive environment. South America remains a smaller, more mixed contributor.
Cash tight, balance sheet strong
Free cash flow was positive by only R$16 million, sharply below the R$1.4 billion reported in the fourth quarter. The difference was mainly explained by the use of roughly R$1.0 billion in working capital, typical of a quarter of operational recovery. Compared with the first quarter of 2025, however, the improvement was meaningful: free cash flow had been negative by R$1.25 billion a year earlier.
Leverage remains low. Net debt ended March at R$8.2 billion, with net debt to adjusted Ebitda at 0.74 times, a comfortable level for a cyclical company. Gerdau also closed the quarter with R$5.6 billion in cash and a fully available global revolving credit facility of US$875 million.
Shareholder returns
Gerdau approved R$354.1 million in dividends, equivalent to R$0.18 per share, to be paid on June 9. The company also moved ahead with its 2026 share buyback program, with about 21% of the plan already executed by April, representing total investment of roughly R$211 million.
Capital expenditure totaled R$1.1 billion in the quarter, down 27% from the fourth quarter and equal to 23% of the company’s R$4.7 billion guidance for 2026. Most of the spending went to Brazil, including projects in sustainable mining, scrap processing and industrial efficiency. Gerdau also inaugurated the Barro Alto Solar Complex in Goiás, with capacity to supply 13% of the company’s electricity consumption in Brazil.
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