SÃO PAULO — Gerdau S.A. preference shares (GGBR4) jumped more than 4% Thursday to close at 21.33 Brazilian reais as investors applauded the Brazilian steelmaker's resilient North American performance and ongoing capital return initiatives, even as domestic market challenges from steel imports persist.

Gerdau Preference
Gerdau Preference

The B3-listed shares rose as high as 21.49 reais on solid volume, extending recent gains amid a broader risk-on mood following a U.S.-Israel-Iran ceasefire that eased some commodity market tensions. GGBR4 has climbed roughly 47% over the past 12 months and about 5% year-to-date in 2026, reflecting confidence in Gerdau's diversified footprint despite headwinds in its home market.

Gerdau, Latin America's largest steel producer and a major recycler of scrap metal, benefits from a balanced portfolio spanning Brazil, North America and other international operations. North America has emerged as the clear growth engine, contributing 62% of the company's consolidated adjusted EBITDA in 2025 thanks to steady demand, cost discipline and higher margins in its recycled-content electric arc furnace operations.

The company's fourth-quarter 2025 results, released in late February, highlighted this divergence. Consolidated adjusted EBITDA reached 2.37 billion reais, roughly in line with analyst expectations but down slightly from the prior quarter due to seasonal factors. Adjusted net profit edged up 0.5% year-over-year to 670 million reais, while revenue grew modestly to 16.97 billion reais.

North American operations delivered robust gross profit of 1.56 billion reais, up 172% year-over-year, driven by favorable market conditions and efficient cost management. In contrast, the Brazil segment faced significant pressure, with gross profit plunging 87% to just 161 million reais amid seasonality, maintenance shutdowns and intense competition from imported steel — primarily from China — which captured about 21% of the domestic market in late 2025.

For the full year 2025, Gerdau posted adjusted EBITDA of 10.1 billion reais on net revenue of 69.9 billion reais and steel shipments of 11.6 million tonnes. The company recorded a net loss in the fourth quarter due to non-cash impairment charges of about 2 billion reais related to Brazilian assets, but adjusted figures underscored underlying operational resilience.

Gerdau has responded aggressively to shareholder value creation. In February, the board approved a new share buyback program authorizing the repurchase of up to 55 million preferred shares (roughly 4.4% of outstanding GGBR4) and a smaller number of common shares over 18 months. The company also canceled millions of shares earlier in the year without reducing capital stock. In 2025, Gerdau returned approximately 2.4 billion reais to shareholders through dividends and buybacks, achieving a shareholder return rate exceeding 182%.

A dividend of 0.10 reais per share was declared for 2025, paid in March. For 2026, the company approved a capital expenditure plan of 4.7 billion reais focused on efficiency, capacity optimization and sustainability initiatives, including potential iron ore mine expansions.

Analysts have grown more constructive. UBS raised its price target on the NYSE-listed ADR (GGB) to $4.60 from $4.40 while maintaining a Buy rating in early April. Itaú BBA upgraded the stock to Outperform, and other firms cite Gerdau's North American exposure as a key differentiator among global steelmakers. Consensus views lean positive, with some projecting moderate recovery in Brazilian demand supported by automotive and construction sectors.

CEO Gustavo Werneck has warned repeatedly about risks from surging steel imports, which could exceed 6 million tonnes annually and undermine local industry competitiveness. Gerdau advocates for stronger trade defense measures, including anti-dumping investigations expected to conclude by late 2026. Werneck expressed optimism that government awareness is rising and that targeted protections could gradually reduce import penetration from current highs toward a more sustainable 10% level.

Despite Brazilian challenges, Gerdau sees a constructive 2026 outlook. Management anticipates slight growth in long steel shipments domestically after seasonal weakness, supported by infrastructure projects and industrial recovery. North America is expected to remain a stable contributor amid resilient U.S. manufacturing and construction activity.

The company has restarted idled capacity, including a steel billet plant in Ceará with 160,000 tonnes annual potential, to better serve northern and northeastern Brazilian markets where high freight costs make imports more competitive. Gerdau also continues investing in sustainability, leveraging its leadership in recycled steel production to appeal to environmentally conscious customers and potentially benefit from future carbon-related regulations.

Gerdau's preference shares (GGBR4) offer distinct appeal to income-focused investors in Brazil, often trading with a dividend yield premium compared with common shares. The stock's recent momentum reflects improving sentiment around capital returns and the defensive qualities of its international diversification.

Thursday's gains came as oil prices eased on the ceasefire news, potentially lowering input costs for energy-intensive steelmaking, while global steel sentiment benefited from reduced geopolitical uncertainty. Volume on B3 was healthy, signaling renewed retail and institutional interest.

Still, risks remain. Steel prices are cyclical and sensitive to Chinese export policies, global demand fluctuations and raw material costs such as iron ore and scrap. Brazilian currency volatility, interest rates and economic growth also influence results. Analysts project first-quarter 2026 earnings around April 27, with consensus EPS estimates near 0.37-0.45 reais.

Gerdau operates dozens of mills across the Americas, emphasizing mini-mill technology that relies heavily on scrap recycling — a model that delivers both cost advantages and lower carbon emissions compared with traditional blast furnaces. The company has committed to further decarbonization efforts, aligning with global trends toward green steel.

For Brazilian investors, GGBR4 represents exposure to a blue-chip industrial name with a long history of navigating commodity cycles. Founded in 1901 in Rio Grande do Sul, Gerdau has grown into a global player while maintaining strong family and institutional roots.

As Thursday trading closed, shares settled at 21.33 reais, up 0.89 reais or 4.35%. After-hours activity showed minor softening, but the day's performance underscored resilience amid mixed fundamentals.

Looking ahead, key catalysts include progress on trade measures, first-quarter results and any updates on the buyback program's execution. Analysts will scrutinize volume trends in Brazil, margin recovery potential and North American contribution sustainability.

Gerdau's story highlights the complexities of operating in a globalized steel industry. While domestic pressures from imports test Brazilian operations, the company's strategic focus on high-recycle North American assets and disciplined capital allocation have helped sustain investor confidence.

Whether the current rally broadens depends on execution in a challenging environment and tangible improvements in the Brazilian competitive landscape. For now, the preference shares' dividend appeal and buyback support provide a floor, while North American strength offers upside leverage.

Gerdau S.A. employs tens of thousands and ranks among the world's most efficient steel producers in its core segments. Its preference shares remain a staple in many Brazilian portfolios seeking industrial exposure with income characteristics.