Gerdau (GGBR4.SA): North America CEO Meeting Feedback: High Margins For Longer

Research evidence excerpt

Gerdau (GGBR4.SA): North America CEO Meeting Feedback: High Margins For Longer

Goldman Sachs Gerdau (GGBR4.SA)

Demand Drivers: Data Centers and Renewables Leading Growth. AI-driven capital

investment in the US has been the single most important demand growth driver for

Gerdau’s North America business (operating rates >90%), with management expressing

confidence that data center demand should continue as a meaningful tailwind going

forward — though the longer-term trajectory will ultimately depend on energy

availability for the projects and returns on the AI capex deployed. Data center and

renewable growth pockets were nonexistent a couple of years ago and today each

represents 6-8% of sales with attractive margins. Non-residential construction is

improving only gradually, but outside of high-growth pockets, manufacturing remains

soft. Backlog levels for beams and structural products are at historical highs (90 days at

the end of 1Q26 vs 70 avg in prior quarters), and distributor restocking activity is

supportive of firm pricing.

USMCA and Trade Policy: Managing Uncertainty. Trade policy remains a source of

considerable uncertainty, though management’s base case is one of a continuation of

some trade protectionism rather than a full USMCA breakdown. A complete withdrawal

from the agreement remains a tail risk but is not the base scenario. Gerdau has

proactively leveraged its network flexibility to mitigate exposure, re-balancing

production flows across North America. A resolution favorable to Canada would be

positive, as it would allow Gerdau’s free movement of merchant product into the US

market. A deal with Mexico, however, would be more challenging — particularly for

structural products where Gerdau faces greater competitive exposure.