Gerdau S.A. (NYSE:GGB) Q2 2023 Earnings Conference Call August 9, 2023 11:00 AM ET

Company Participants

Gustavo Werneck – Chief Executive Officer

Rafael Japur – Chief Financial Officer

Renata Oliva Battiferro – Investor Relations General Manager

Conference Call Participants

Caio Greiner – BTG Pactual

Daniel Sasson – Itaú BBA

Rafael Barcellos – Santander

Thiago Lofiego – Bradesco BBI

Vanessa Quiroga – Credit Suisse

Rodolfo Angele – JP Morgan

Gustavo Werneck

Good morning, all of you. Hello, everyone. I hope you're all well, and thank you for the opportunity to join us today during this video conference to announce Gerdau's Results for the Second Quarter of 2023. Next to me is our CFO, Rafael Japur. And for both of us, it's always a pleasure to talk to you about our performance and also clarify issues that may arise during our presentation.

I would like to start by talking about the macro business environment, the general results. And right afterwards, I will detail – give you more details about our business operations. Right after that, Japur will talk about our financial performance. And at the end, I will give you some more details about our ESG agenda. And at the end, we will both be available to talk to you about any points that you want to elaborate further.

I would like to start the second slide, talking about the macro environment in which Gerdau operates. Throughout the second quarter of 2023 and amid a very challenging scenario, we continue to deliver very consistent results based on a model of geographic diversification of assets in the Americas and our flexible production routes. Two factors [Audio Gap] China remains having very high steel production, very close to historic levels.

While at the same time, measures of stimulus to boost steel consumption, particularly coming from the construction sector are not yet reflecting in the dynamics of the market. In view of the scenario of excess steel production in China, China's steel exports totaled about approximately 90 tonnes a year, even with the backdrop of import restricted markets such as the United States and Europe, which has impacted the markets where we operate, in particular, Brazil.

In this next slide – even before we start talking about Gerdau's financial results in the second quarter, I would like to say that we came to the end of the first half of the year with an accident frequency rate of 0.66. And this is below the 0.76 rate recorded in consolidated 2022, which represented the lowest rate ever recorded in our historic series. This performance reinforces our [Audio Gap] Therefore, as part of our digital transformation journey. We have invested in several artificial intelligence in industry 4.0 initiatives in our operations to improve our monitoring of critical tasks and prevent accidents and enforce the safety and active care among our employees and partners.