* Net income at 160 mln reais beats estimates in poll
* Margin declines stem from climbing costs, expenses
SAO PAULO May 7 Brazil's Gerdau SA
slightly beat first-quarter net income
estimates on Tuesday as costs rose less than expected, signaling
that the largest steelmaker in the Americas is banking on
prudence to bolster profits.
The Porto Alegre, Brazil-based company posted net income of
160 million reais ($79.6 million) in the quarter, down 60
percent on an annual basis but up 12 percent from the prior
three months, according to a securities filing. The result beat
the average profit estimate of 151 million reais in a Thomson
Reuters poll with eight analysts.
Results disappointed as output fell on an annual basis
because of maintenance stoppages and operating earnings slumped.
Average prices rose in Brazil during the quarter even after
sales volumes faltered; a tough winter season hampered Gerdau's
underperforming North American unit for another quarter.
Steel mills in Brazil are facing their worst crisis in years
as their ability to stay competitive has been compromised by
rising labor and raw materials costs, two years of sub-par
economic growth and declining global prices that are making
imported steel more attractive in Brazil.
Revenue for Gerdau, also Brazil's biggest steel producer by
volume, came in at 9.17 billion reais, up 4.7 percent from the
fourth quarter of last year, the filing said. The number
compares with a estimate of 9.414 billion reais in the poll.
Costs rose 3.6 percent, less than the 5 percent expected in
the poll. Expenses rose 6 percent in the same period, the filing
Earnings before interest, tax, depreciation and
amortization, a gauge of operational profitability known as
EBITDA, came in at 805 million reais in the quarter, well below
the 886 million reais estimated by analysts in the poll.
Margins fell for the fifth straight quarter, with EBITDA
dropping to 9 percent of revenue from a 9.9 percent so-called
EBITDA margin in the fourth quarter of last year.
Management plans to discuss first-quarter earnings in a
conference call later on Tuesday.