What Happened
Gerdau (B3: GGBR4, NYSE: GGB) reported Q4 2025 adjusted net income of R$ 670 million ($130 million), a marginal 0.5% increase from R$ 666 million a year earlier. The result missed the LSEG consensus of R$ 813 million by a wide margin, reflecting seasonal weakness and import competition in Brazil that overwhelmed the company’s strong North American performance.
On an unadjusted basis, the steelmaker posted a net loss of R$ 1.29 billion ($250 million) — compared with a R$ 323 million profit in Q4 2024 — after booking approximately R$ 2 billion ($387 million) in non-cash asset impairments at Brazilian industrial plants. Management attributed the writedowns to deteriorating economic projections and underutilization at certain facilities.
Net revenue reached R$ 17.0 billion ($3.3 billion), up 0.9% year-over-year and slightly above the market consensus of R$ 16.6 billion. Steel shipments totaled 2.86 million tons in Q4, a 5.2% increase over the prior-year period, driven primarily by strong volumes in North America.
Key Drivers
North America — The Earnings Anchor
The North American operation delivered 72.8% of consolidated EBITDA in Q4 and 62% for the full year. Steel sales in the region jumped 14% year-over-year, supported by Section 232 tariffs that rebalanced import flows and strong demand from non-residential construction and renewable energy projects.
The order backlog extended to 85 days, well above the historical average of 70 days, signaling sustained demand momentum heading into 2026. Better pricing further bolstered margins in the segment.
Brazil — Deepening Headwinds
The Brazil segment EBITDA plunged 64.5% year-over-year to R$ 509 million ($98 million), with the EBITDA margin contracting sharply to 7.1%. Production fell 13.2% sequentially due to scheduled maintenance shutdowns, while sales dropped 7.5% quarter-over-quarter.
Imported steel penetration reached 21% in Q4, with total 2025 imports at a record 6.4 million tons — up 7.4% from 2024. Flat steel imports from China surged 29.6% during the year. Preliminary antidumping rulings on hot-rolled coil and wire rod from China, plus a 25% tariff on nine additional categories, offer potential relief, with final determinations expected in Q2 2026.
Asset Impairment
The ~R$ 2 billion ($387 million) non-cash impairment — primarily on fixed assets at Brazilian plants — was based on discounted cash-flow projections, utilization rates, and worsening economic scenarios. The charge effectively acknowledges that some domestic capacity may not recover to pre-cycle productivity levels, a structural signal alongside the cyclical import pressure.
Financial Detail
Profitability
Adjusted EBITDA came in at R$ 2.37 billion ($459 million), down 0.7% year-over-year and 13.3% sequentially. The adjusted EBITDA margin held at 14.0%, marginally below the 14.2% recorded in Q4 2024. For the full year, adjusted EBITDA totaled R$ 10.1 billion ($1.95 billion), a 7.1% decline, with the annual margin compressing to 14.4% from 16.2%.
Full-year adjusted net income fell 21.1% to R$ 3.38 billion ($654 million). Net revenue for 2025 reached R$ 69.9 billion ($13.5 billion), a 4.2% increase, while total steel shipments rose 5.9% to 11.63 million tons.
Cash Flow and Balance Sheet
Free cash flow surged to R$ 1.41 billion ($273 million) in Q4, a 3.3x increase from R$ 427 million in Q4 2024, driven by R$ 1.4 billion in working-capital release. For the full year, free cash flow was R$ 394 million ($76 million), reversing the negative R$ 2.49 billion recorded in 2024.
Net debt-to-adjusted-EBITDA ended Q4 at 0.76x, up from 0.48x a year earlier but remaining within the company’s internal policy. The increase partly reflected the early redemption of the 2030 bond — a US$ 510 million prepayment that reduced gross debt by 23.9% in the quarter. Net debt stood at R$ 7.8 billion ($1.5 billion), with an average maturity of 8.5 years and a fully available US$ 875 million revolving credit facility.
Capital Allocation
Capex totaled R$ 1.5 billion ($290 million) in Q4 and R$ 6.1 billion ($1.18 billion) for the full year. The 2026 capex plan calls for R$ 4.7 billion ($909 million), a 23% reduction, split 59% toward competitiveness projects and 41% toward maintenance.
Total shareholder returns for 2025 reached R$ 2.4 billion ($464 million) — comprising R$ 1.2 billion in dividends (R$ 0.62 per share) and approximately R$ 1.2 billion in share buybacks (64.5 million shares, 3.0% of the float). The Q4 dividend of R$ 0.10 per share (R$ 197.5 million / $38 million) is payable March 18, 2026. A new 18-month buyback program authorizing the repurchase of up to 56.4 million shares (~2.9% of outstanding) was approved alongside results.
Management Signals
The earnings release described “opposing dynamics” between markets — strong North American performance offset by pronounced Brazilian seasonality, maintenance shutdowns, and a competitive environment that compressed volumes and margins. The language signals continued reliance on U.S. operations as the primary earnings engine.
The R$ 2 billion impairment is perhaps the most telling signal: management is explicitly projecting economic deterioration more severe than prior scenarios contemplated, and is right-sizing its Brazilian asset base accordingly. This goes beyond cyclical caution into structural repositioning.
Meanwhile, the 182.3% payout ratio and immediate launch of a new buyback program underscore capital discipline. With the 2026 capex envelope shrinking 23%, Gerdau is clearly pivoting toward cash return over growth investment — particularly in Brazil, where the return on incremental capital appears challenged.
Watch Next
Antidumping final determinations on Chinese steel imports are expected in Q2 2026 and could materially reshape the competitive landscape for Brazilian producers. The preliminary rulings on hot-rolled coil and wire rod, along with the 25% tariff on nine additional categories, have not yet been sufficient to stem the import tide — definitive measures will be a key catalyst.
The Midlothian expansion in North America is 74% complete, and the Miguel Burnier mining platform stands at 91% completion with 5.5-million-ton annual capacity. The modernization of the Cearense plant (R$ 200 million investment) has been concluded. These projects should begin contributing to volume and efficiency in the second half of 2026.
BTG Pactual downgraded Gerdau to Neutral from Buy in January 2026, while UBS raised its price target to $4.60 in December 2025. TipRanks’ AI analyst rates GGB as Neutral, citing a solid balance sheet offset by weakening profitability and challenging cash generation. The stock recently traded near $3.07 on the NYSE.
Quarterly Snapshot Q4 2025 vs Q4 2024
| Metric | Q4 2025 | Q4 2024 | Y/Y |
| Net Revenue | R$ 17.0 bn ($3.3 bn) | R$ 16.8 bn | +0.9% |
| Adjusted EBITDA | R$ 2.37 bn ($459 mm) | R$ 2.39 bn | -0.7% |
| Adj. EBITDA Margin | 14.0% | 14.2% | -0.2 pp |
| Adj. Net Income | R$ 670 mm ($130 mm) | R$ 666 mm | +0.5% |
| Steel Shipments | 2.86 mt | 2.72 mt | +5.2% |
| Free Cash Flow | R$ 1.41 bn ($273 mm) | R$ 427 mm | +230% |
| Net Debt / EBITDA | 0.76x | 0.48x | +0.28x |
Full-Year Snapshot 2025 vs 2024
| Metric | 2025 | 2024 | Y/Y |
| Net Revenue | R$ 69.9 bn ($13.5 bn) | R$ 67.1 bn | +4.2% |
| Adjusted EBITDA | R$ 10.1 bn ($1.95 bn) | R$ 10.9 bn | -7.1% |
| Adj. EBITDA Margin | 14.4% | 16.2% | -1.8 pp |
| Adj. Net Income | R$ 3.38 bn ($654 mm) | R$ 4.29 bn | -21.1% |
| Steel Shipments | 11.63 mt | 10.98 mt | +5.9% |
| Dividends Per Share | R$ 0.62 | — | — |
| Capex | R$ 6.1 bn ($1.18 bn) | — | — |
Risks
North America concentration risk is Gerdau’s most immediate vulnerability. With 62-73% of EBITDA now generated stateside, any weakening in U.S. construction or a reassessment of Section 232 tariff policy — including potential USMCA exemptions for Canada and Mexico — could disproportionately impact earnings.
In Brazil, the 21% import penetration rate may continue eroding domestic margins even if antidumping measures are finalized. The Selic rate at 15% constrains construction and industrial activity, reducing end-market demand for long steel products. Additional impairments remain possible if utilization rates at Brazilian plants do not recover.
Currency volatility cuts both ways. The real’s recent appreciation to ~5.17/USD improves the dollar value of Brazilian cash flows but compresses the BRL-translated contribution from North American operations. A sustained stronger real could narrow consolidated margins even if underlying dollar profitability holds.
Sector Context
Gerdau’s Q4 results crystallize the two-speed reality facing Brazilian steelmakers. While Section 232 tariffs and infrastructure spending make North America a profit haven, Brazilian producers contend with record import volumes, elevated interest rates, and now explicit asset write-downs that acknowledge structural overcapacity. Gerdau’s peers Usiminas and CSN face similar pressures on the domestic front.
As Gerdau marks its 125th anniversary, the company’s geographic diversification is proving to be its most valuable strategic asset. The question for investors is whether the trade protection and construction momentum in North America can compensate long enough for Brazil’s structural challenges to ease — or whether the domestic impairments are the first sign of a more permanent rebalancing of the portfolio toward the Americas’ northern half.