Gerdau(US:GGB)2023-08-07 16:00Financial Performance - Net sales for Q2 2023 were R$18,265,370, a decrease of 20% compared to R$22,968,442 in Q2 2022[4] - Gross profit for the six-month period ended June 30, 2023, was R$6,907,016, down 38% from R$11,084,933 in the same period of 2022[4] - Net income for Q2 2023 was R$2,142,723, a decline of 50% from R$4,298,499 in Q2 2022[5] - Net income for the six-month period ended June 30, 2023, was R$5,358,122, a decrease of 26% compared to R$7,238,884 for the same period in 2022[7] - Total comprehensive income for the period recognized was R$4,039,680, compared to R$6,419,476 in the previous year[6] - The company reported a basic earnings per share of R$1.22 for Q2 2023, down from R$2.39 in Q2 2022[4] - The diluted EPS for the six-month period ended June 30, 2023, was R$3.04, down from R$4.00 in the previous year[164] - For the three-month period ended June 30, 2023, the allocated net income available to common and preferred shareholders was R$2,135,909, a decrease from R$4,282,123 in the same period of 2022[160] Assets and Liabilities - Total assets as of June 30, 2023, were R$73,795,457, slightly down from R$73,798,652 at the end of 2022[3] - Current liabilities decreased to R$10,310,529 from R$13,462,581 at the end of 2022, a reduction of approximately 23.9%[3] - Total loans and financing decreased to R$9,879,470 as of June 30, 2023, from R$11,179,617 as of December 31, 2022, a decline of 11.6%[50] - Total financial liabilities reached R$18,664,200, with R$18,655,528 at amortized cost and R$8,672 at fair value through profit or loss[78] - The balance of leasing payable increased to R$1,210,878 as of June 30, 2023, from R$963,793 at the end of 2022, reflecting a rise of 25.69%[93] Cash Flow and Investments - Cash provided by operating activities for the six-month period ended June 30, 2023, was R$5,180,523, down from R$6,177,675 in the same period of 2022[7] - The company experienced a net cash used in investing activities of R$2,285,504 for the six-month period ended June 30, 2023, compared to R$1,591,000 in 2022[7] - The company’s investments in associates and joint ventures increased to R$4,721,456 from R$3,896,518, a growth of 21.2%[2] - Acquisitions of property, plant, and equipment for the six-month period ended June 30, 2023, amounted to R$2,183,061, an increase of 40.6% compared to R$1,551,839 in the same period of 2022[41] Market and Economic Conditions - The Company will continue to monitor the steel market throughout 2023 to identify any significant changes in demand or economic conditions that may impact projections[183] - The company does not expect material impacts on its Financial Statements from the new IFRS standards effective in 2024[14] Provisions and Contingencies - The total balance of provisions as of June 30, 2023, was R$2,134,724, up 5.36% from R$2,026,003 at the end of 2022[99] - The company has contingent liabilities related to tax matters totaling R$9,021,297, primarily concerning goodwill amortization disputes[106] - The company believes that provisions for judicial and administrative proceedings are sufficient to cover probable losses, indicating a stable outlook on financial position and liquidity[94] Shareholder Information - The Company approved a capital increase of R$966,162 through the issuance of 83,669,860 new shares, increasing total capital to R$20,215,343[152] - The Company acquired 44,564,000 preferred shares under its share buyback program, totaling R$1,073,124 as of June 30, 2023[150] - The Company credited interest on equity to shareholders amounting to R$892,056 for the first quarter of 2023[158] Legal Matters - The company is awaiting the outcome of ongoing investigations by Brazilian authorities regarding tax appeals and political contributions, with no ongoing criminal investigations against its executives[108][109] - Gerdau S.A. has a lawsuit pending for the recognition of R$683 million in credits related to undue payments, which is still awaiting a final decision[121]