Brazil steelmaker Gerdau struggles to find workers in the U.S.

Reuters - finance.yahoo.com Posted 5 years ago

(Recasts throughout with details from meeting with analysts)

By Alberto Alerigi and Marcelo Rochabrun

SAO PAULO, Nov 22 (Reuters) - Brazilian steelmaker Gerdau SA , which has significant operations in the United States, expects its U.S. bottom line to continue benefiting from import tariffs on the metal and is looking to expand its output there, but is struggling to find workers to fill jobs.

"We struggle even to find drivers for our trucks," said Gustavo Werneck, Gerdau's chief executive officer, referring to its U.S. plants, in a meeting with analysts on Thursday.

U.S. President Donald Trump has imposed tariffs on imports of steel from China and other countries and implemented trade restrictions on Brazilian steel but Gerdau is able to bypass these limits because it operates plants directly in the United States.

In recent quarters, Gerdau has seen higher revenue from its U.S. plants than from its plants in Brazil, largely because Trump's tariffs limited the supply of steel within the United States, sending the price of the metal soaring as a result.

In its last quarter, Gerdau's U.S. operations accounted for 42 percent of the company's global revenue. Even as the company sold 6 percent less steel in the United States than in the same period in 2017, its revenues there increased by 44 percent to 5.7 billion reais ($1.5 billion).

Gerdau's shares have risen 25 percent so far this year.

Werneck said at the meeting that he expects Trump's protectionist policies to remain in place in 2019.

Werneck added that he expects spreads, the difference between the cost of buying raw materials and selling the steel, to remain high in 2019. Gerdau said its spread in the United States reached 40 percent in 2018.

"In North America, we had the best spread in years in 2018 and next year we expect the spread to remain high," Werneck said.

Gerdau will be distributing 30 percent of its profits in 2018 as dividends, but it might revise that figure for 2019, said Harley Scardoelli, Gerdau's chief financial officer. But he noted that whatever the revision, the amount distributed to shareholders would likely be higher than in 2018.


($1 = 3.8046 reais)

(Reporting by Alberto Alerigi Jr and Marcelo Rochabrun Editing by Frances Kerry)