Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Uruguay scenario remains positive, reflecting good levels of steel consumption, particularly in the agribusiness sector and public and private investment |
| But a moment like this, where we have a relatively solid demand, Brazil is growing the demand for steel, but met have some seasonalities in some more difficult years |
| We have been paying over time in recent years, a payout significantly higher than 30%, and we understand that there is room to continue to remunerate our shareholders above 30% in the coming quarters |
| Can we approve investment decisions or long-term investments? Well, for that, we built over the years a solid and healthy balance sheet so that we could have resilience to go through not so positive moments in the market |
| I would even say that if we had to think about without the effects of Colombia, Dominican Republic and Argentina, well, this quarter there was an improvement because of the operations in Uruguay, Argentina and Peru vis-à-vis the third quarter |
| But we have everything it takes for us to have a very good performance in North America this year |
| We are delivering sound results, our balance sheet, our P&L is very sound |
| Finally, I would like to point out that we have a solid and robust balance sheet with low leverage, built up over the last few years through strict discipline in capital allocation |
| I would also like to point out that we continue to invest in improving the operating efficiency of our North American BD units, with an emphasis on the plants in Midlothian in Texas and Jackson in Tennessee, ensuring that we offer a portfolio of steel products and services to our customers in the region and continuously generate value for our stakeholders |
| In the United States, deal was good and has everything to be good again in terms of manufacturing and sale of vehicles |
| So we have everything to have a very positive year in the United States, in North America for Special Steels |
| And we have a very sound backlog with the growth of all of these incentive programs that I mentioned that has been very good for us |
| So among our BDs, I think Special Steels has everything to serve smoothly, perhaps with an upside compared to last year in terms of better financial results over the year |
| Of this total, R$1.6 billion were earmarked for improving our environmental practices and improving the safety of our people and our operations in 2024 |
| And we also see a recovery in the demand for steel for heavy vehicles |
| GDP growing by 3.3% in the fourth quarter of 2023 when compared to the previous quarter, above previously published expectations |
| Not only we're able to serve our customers better, but in the future at Ouro Branco we could also have some flat down streams or maybe cold and cold or galvanized |
| We had a return of well over 100% in the period reaffirming our commitment to consistently creating value for our shareholders |
| You mentioned civil construction, and there's a solid demand coming from civil construction |
| I will end by reinforcing that I personally and other Gerdau leaders have been saying for many years that we believe in open and free trade, that even in the face of difficulties of doing business in the country, due to the high Brazil cost, we have been able to compete on an equal shooting with any steel producer in the world |
| We started the year on a very good stand |
| An A- grade for the first time in the climate change module of the 2023 cycle of CDP, an organization that is a global benchmark for evaluating sustainable actions, with this evolution, we have achieved leadership status in the subject, surpassing the global average and that of the metals and metallurgy sector, reinforcing our commitment to transparency and to reducing greenhouse gas emissions |
| Mexico has been shown and will continue to be a great platform of steel service for North America |
| We adapted our operations to this more restricted market situation, and we also see recovery in the market of light vehicles, and especially of heavy duty vehicles |
| In Midlothian, the solar plant which we inaugurated in mid 2023 is operating at full capacity, bringing benefits to the operation as planned |
| Renata Oliva Battiferro Very well |
| Even despite all of the difficulties involving Brazil costs and other things that get in the way of our competitiveness, throughout the years, we've been able to search for other alternatives and to compete on equal footing with any other producer in the world |
| Now moving to the next slide at the start of the first quarter of 2024 in the North America market has been marked by healthy levels of demand, with our backlog stable at a high level of 60 days |
| Last year, steel imports increased by 50% compared to 2022, totaling 5 million tonnes, reaching a record volume in the annual historical series, according to the Brazil Steel Institute |
| But certainly we do have the means to improve our margins, not only in terms of the fourth quarter, because we have to take into account maintenance shutdown, seasonality |
| Statement |
|---|
| It's difficult for us, given demand and the sale of light vehicles, but primarily due to significant reduction in sales of heavy vehicles – heavy duty vehicles |
| The steel sector in Brazil employs 3 million people, including direct, indirect and induced jobs, and a significant portion of these jobs remain at imminent risk in the face of this challenging short-term scenario |
| If prolonged for several more months, this situation will also contribute to the acceleration of the country's deindustrialization process, which is already underway and poses a threat to the investments planned for the steel industry for the coming years |
| And this was more than half of the drop in revenue we had in the previous quarter, which was a drop of 7 percentage points |
| Now going to the next slide, I will now talk about the long and flat steel scenario in Brazil, whose performance in the fourth quarter and for the whole of 2023 reflects a slowdown in our steel shipments on the domestic market, mainly due to the excessive entry of imports into the country as a result of predatory trade practices as I mentioned earlier |
| These two factors, very strong consumers of steel have lost relevance as levers of the Chinese economy, causing a deep and structural imbalance between steel supply and demand in the Chinese domestic market |
| We did go through cycles over time, demand dropping, other difficulties |
| In Brazil we went through a difficult year for this segment |
| In turn, the outlook for the special steel market in Brazil continues to be influenced by the uncertainties linked to access to credit lines and the acceleration in the reduction of interest rates, which continue to be high, contributing to a restriction in the demand for vehicles as well by the scenario of excessive entry of imported vehicles |
| We are in a complicated scenario with worse results |
| And within North America as well, we saw the scrap prices going up, the price spread I think it was a bit more difficult |
| We didn't make all of the decisions we can make in Brazil to adapt our production capacity to a reality that in our point of view, will continue for a while and this postponement of the federal government to take measures |
| Of course, the strike of the four big ones in September did impact volume, but things are coming back on track |
| At a time when Gerdau is celebrating 123 years of history, maintaining annual investments in the order of R$6 billion, we once again appeal to the Brazilian federal government to quickly analyze this issue, thus preventing an industrial sector as relevant and strategic for the country as the steel sector is from being harshly penalized to the point of losing its future competitiveness |
| Even though we try to reduce our costs, it's impossible to compete like this |
| But once you have Chinese steel landing in Brazil and in other countries that are still open to receiving things at lower costs, even lower than production costs, it's impossible to compete |
| I know that they will come up with the damage that the Chinese companies are causing to us |
| And this is terrible for us and for the market and also the LCMs that issue |
| Inflation could go up and things that are difficult to understand in Brazil |
| On the contrary, shipments will be reduced very much related to some of our affiliate companies or someone off things that we could do in the international market with adequate profitability |
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