August 8, 2018 / 2:59 PM / 2 months ago

Brazil's Gerdau, CSN shares jump after trade war propels beat

SAO PAULO, Aug 8 (Reuters) - Gerdau and Companhia Siderurgica Nacional shares rose to multimonth highs on Wednesday after the Brazilian steelmakers’ quarterly earnings beat forecasts thanks to a jump in metal prices linked to U.S. tariffs.

Gerdau’s net income increased more than ninefold to 698 million reais ($185.51 million), while CSN swung to a 1.1 billion net profit from a year-ago 660 million real net loss.

Both were bolstered by one-time gains from asset sales, 594 million reias in Gerdau’s case from the sale of a Chilean unit and 2.7 billion reais in CSN’s from an offloaded U.S. subsidiary.

Due to higher global prices, steel revenue, which accounts for most of CSN’s overall revenue, increased 34 percent compared to last year, with revenues for the metal in the foreign market increasing 28 percent. Still, CSN’s largest market remains Brazil.

Gerdau, which has a substantial U.S. operation, also said its revenues were bolstered by higher steel prices.

Expectations around U.S. President Donald Trump’s plan to impose 25 percent tariffs on steel imports from the EU, Canada and Mexico have sent prices for the metal skyrocketing this year.

Gerdau stock was up close to 5 percent, hitting its highest level since late May, while CSN’s was up 3 percent, a five-month high.

The profits would have been even stronger were it not for the impact of a trucker’s strike in Brazil that paralyzed the transportation of goods in May. Both produced less steel this quarter compared to a year ago, with Gerdau attributing the decrease to the strike and to the planned maintenance of a furnace.

CSN went from producing 1.07 million tons of steel last year to 996,000, while Gerdau went from 1.5 million tons to 1,381 million tons. CSN did not elaborate on why its production declined.

In the case of Gerdau, exports from its Brazilian operations decreased, which the company attributed to the trucker’s strike. Gerdau’s earnings before interest, taxes, depreciation and amortization (EBITDA) rose 57 percent to 743 million. ($1 = 3.7625 reais) (Reporting by Marcelo Rochabrun Editing by Frances Kerry)

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