November 9, 2016 / 8:57 PM / 2 years ago

UPDATE 1-Brazil's Gerdau says Trump infrastructure plan may boost steel

(Adds details, background)

SAO PAULO, Nov 9 (Reuters) - Brazilian steelmaker Gerdau SA said on Wednesday that promised infrastructure spending by U.S. President-elect Donald Trump’s government could support the steel sector, as it posted results showing a return to profit in the third quarter.

Gerdau reported a net profit of 95 million reais ($29.9 million), compared to a net loss of 1.96 billion reais in the third quarter last year.

It was the company’s third consecutive quarterly profit.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) slipped to 1.20 billion reais from 1.29 billion reais, according to a securities filing.

EBITDA from North American operations, which account for around one-third of the total, fell by 47 percent due to political uncertainty, lower industrial activity and competition from imports, the company said.

“There is a need for major infrastructure investment and that was in President Trump’s program ... We hope he will make those investments and it will affect the steel sector,” Executive Chairman Andre Gerdau Johannpeter said.

He played down the prospect of protectionist measures to protect the U.S. steel industry under a Trump government.

“The United States is a country with strong institutions and questions related to imports, like steel rods, will be technically studied by official bodies,” the executive said.

He added that he did not expect possible changes to the North American Free Trade Agreement (NAFTA) to harm Gerdau’s Mexican operations. Trump has said that NAFTA is killing U.S. jobs and has said he will renegotiate the deal or tear it up.

Gerdau said it expected “some recovery” in the Brazilian car market next year, which could help the specialized steel division of the company.

Overall, the company estimated it would invest 1.5 billion reais this year, 35 percent below 2015 capital expenditures.

Shares in Gerdau closed up 6.5 percent at 12.06 reais, the biggest gainer on the Bovespa stock index.

$1 = 3.1807 Brazilian reais Reporting by Bruno Federowski and Alberto Alerigi; Editing by Daniel Flynn and Tom Brown

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