Gerdau S.A. (GGB): Business Model Canvas [Dec-2025 Updated]

You're looking for a clear, data-driven view of Gerdau S.A.'s current operating model, and honestly, the late 2025 financials show a company leaning heavily on its North American strength to offset Brazilian market headwinds. This geographic diversification is definitely a core value proposition, especially when you see the North America Division ringing up R$9.2 billion in net sales in Q3 2025 compared to the Brazil Division's R$7.7 billion in the same period. So, while they manage raw material costs and push a R$6.0 billion CapEx plan for 2025, their key activities center on high-quality special steel and operational efficiency, which you can see reflected across all nine building blocks of their business model canvas right here.

Gerdau S.A. (GGB) - Canvas Business Model: Key Partnerships

You're looking at how Gerdau S.A. manages its external relationships to keep that massive steel operation running smoothly. It's all about securing inputs, driving innovation, and managing the balance sheet with the right financial players. Here's the breakdown of those critical alliances as of late 2025.

Research and Development Collaborations

Gerdau S.A. definitely partners with universities and research centers all over the globe to stay on top of emerging technologies. They focus R&D on unique chemistries for demanding applications, like clean steels for shafts, gears, and bearings. Their R&D teams work directly with the mills on process innovation, using tools like computer fluid modelling and automated scanning electronic microscopes. This commitment to new product development is key to their goal of being the supplier of choice in special steels for sectors like automotive and energy.

• R&D efforts cover liquid steel stage through final product evaluation.
• Focus on process innovation and improvement with mill teams.

Construction Materials Marketplace Joint Venture

Gerdau S.A. has a joint venture called Juntos Somos+. While the specific 2025 operational or financial metrics for this marketplace aren't public right now, its existence signals a partnership strategy focused on the construction channel, which is a core customer segment for Gerdau's long steel products.

Technology Partners for Digital Transformation

Digital efficiency is clearly a priority. Gerdau S.A. is deep into its digital transformation, using partners like SNP Group to roll out SAP Ariba across Argentina, Mexico, Peru, and Uruguay, with go-lives starting in early 2025. This involves deploying seven SAP Ariba modules to sharpen up their Spend area operations. Honestly, this builds on a long history; SAP has been the platform for Gerdau's 'Gerdau Template' to drive process standardization across its many locations for years. Also, Gerdau is using SAP technology integrated with AI to streamline candidate onboarding, which helps reduce manual tasks and paper use.

Suppliers for Raw Materials

For a mini-mill operator, suppliers are everything, especially for scrap and iron ore. Gerdau S.A. is Latin America's largest recycler of ferrous scrap, and over 70% of its steel comes from these recycled materials. On the mining side, they are aggressively expanding their captive supply. The Miguel Burnier mine investment is a big deal; they are boosting annual production from 1.2 million tons to a target of 5.5 million tons by the end of 2025. At the time of the Q2 2025 earnings call, that sustainable mining project was reported as 72% complete. This internal supply helps insulate them somewhat from market volatility, though their 2025 CAPEX was estimated at R$6.0 billion to support these growth and maintenance efforts.

Financial Institutions and Debt Management

Gerdau S.A. actively manages its capital structure through public debt markets. In June 2025, Gerdau Trade, a subsidiary, priced a new international bond offering totaling $650 million with a 5.750% coupon, maturing in 2035. This was a strategic move to bolster the financial structure. Just recently, in late 2025, the company executed a Make-Whole call to redeem its 2030 Bond, which had a principal amount of US$500 million and a 4.25% coupon, with a settlement date set for December 2, 2025. The company's leverage remains tight, reporting a Net Debt/EBITDA ratio of 0.85x at the end of Q2 2025, well within policy limits. Gross debt stood at approximately R$18 billion around that time.

Here's a quick look at the scale of their financial positioning and key procurement focus areas:

If onboarding takes 14+ days, churn risk rises, but the SAP/AI partnership is designed to prevent that defintely.

Finance: draft 13-week cash view by Friday.

Gerdau S.A. (GGB) - Canvas Business Model: Key Activities

You're looking at the core engine of Gerdau S.A., the activities that actually make the steel and drive the business forward as of late 2025. It's all about turning raw material into product and then optimizing every step in between.

Production and commercialization of long, flat, and special steel

Gerdau S.A. is Brazil's largest steel producer, and its activity centers on moving steel volumes across its geographically diversified footprint. The North American segment has been the clear driver, reaching its highest-ever contribution to consolidated EBITDA at 65% in the third quarter of 2025. In Q3 2025, total steel shipments reached 3.1 million tonnes. The company produces special and long steel products in North America.

Here's a quick look at the shipment volumes reported through the first three quarters of 2025:

The Brazilian market, however, continues to see pressure, with the import penetration rate averaging 25% in the first nine months of the year. Still, Gerdau completed the expansion of its hot-rolled coil capacity at the Ouro Branco unit in March 2025, adding 250,000 tonnes per year of flat steel capacity.

Operational efficiency and cost reduction initiatives

Keeping costs tight is a constant activity, especially when facing market distortions like high imports in Brazil. Gerdau achieved R$1.5 billion in cost savings during 2024, meeting its guidance. Management confirmed they started 2025 at a new level of operating efficiency. A key measure of this efficiency is cash conversion; in the third quarter of 2025, the company generated R$1.0 billion in free cash flow, which represents a 37% EBITDA conversion rate. The company also works to improve its environmental footprint, achieving an average GHG emission of 0.85 tons of CO2 per ton of steel, less than half the global average.

Managing the R$6.0 billion CapEx plan for 2025, focused on asset competitiveness

You need to manage the money allocated for keeping the assets sharp. Gerdau S.A. confirmed its investment plan for 2025 at R$6.0 billion. This plan is divided into two fronts: maintenance and competitiveness. For the third quarter of 2025 alone, Gerdau invested R$1.7 billion. The focus on asset competitiveness is clear, as 59% of the 3Q25 CapEx went to expansion projects and technological upgrades, while 41% went to maintenance. To be fair, management noted that the 2025 CapEx was equally divided between maintenance and competitiveness. This spending includes investments in new capacity, like the R$400 million allocated to renewable energy projects, including the acquisition of two SHPs in Mato Grosso. The 2026 CapEx plan is set to be R$4.7 billion, a 22% reduction from the 2025 forecast.

R&D for high-value applications (e.g., clean steels for gears)

Gerdau S.A. is focused on being the supplier of choice for special steels in demanding sectors. Research and development teams specialize in unique chemistries for the toughest customized applications.

• Developing clean steels for gears, bearings, and shafts.
• Producing Performa™ steels with special chemical controls for improved fatigue resistance.
• 100% of the Special Steel Segment's shipments are make to order.
• Advancing process innovation using computer fluid modelling and ultrasonic testing.

Developing new businesses via Gerdau Next (logistics, energy)

Gerdau Next is the vehicle for developing new business fronts, often tied to sustainability and vertical integration. A major ongoing activity is the sustainable mining platform at the Miguel Burnier mine in Minas Gerais, with a total CAPEX of R$3.6 billion. This project was 72% complete as of Q2 2025, with a scheduled start-up in 4Q25 and ramp-up in 1H26. This mine is expected to generate a potential annual EBITDA gain of up to R$1.1 billion by 2027+. Also, the company is actively pursuing energy independence, having announced the acquisition of two SHPs in Mato Grosso to increase renewable energy production.

Gerdau S.A. (GGB) - Canvas Business Model: Key Resources

You're looking at the core assets Gerdau S.A. (GGB) relies on to run its business as of late 2025. These aren't just things on a balance sheet; they are the engines for their operations across the Americas.

The company's physical footprint is a major asset, featuring geographically diversified manufacturing assets across the Americas. This diversification proved effective, with North American operations reaching a record contribution of 65% of consolidated EBITDA in the third quarter of 2025.

Vertical integration is secured through ownership of iron ore mines in Minas Gerais, Brazil. The Miguel Burnier mine expansion is a key focus, with the project reaching 72% physical completion as of the second quarter of 2025. This project, set to start operating by the end of 2025, is expected to increase annual production capacity to 5.5 million metric tons of iron ore. The certified reserves at this facility stand at 476 million metric tons of proven and probable iron ore. The CEO anticipates a surplus production of 2 million tons of iron ore available for sale starting in 2026.

Gerdau S.A. maintains a strong liquidity position, which is crucial for navigating market volatility. The Current Ratio, a measure of short-term obligations coverage, stood at a robust 2.89 for the three months ending June 30, 2025.

The firm is actively building out its digital capabilities through technology ventures. This includes G2Base, the construtech arm under Gerdau Next, which industrializes the steel foundation chain. G2Base aims to increase productivity by up to 40% by centralizing the process from raw material to execution. The company also utilizes G2L, which is integral to logistics, such as the iron ore pipeline and rail terminal associated with the Miguel Burnier mine expansion.

Underpinning the high-value product lines is specialized technical expertise in special steel metallurgy. Gerdau S.A. is recognized as a leading producer of these specialized steel products.

Here's a quick look at some of the latest operational and financial figures supporting these key resources:

The strategic deployment of capital into these assets is clear:

• Investments (CAPEX) in 3Q25 totaled R$1.7 billion.
• 60% of the 3Q25 CAPEX was allocated to enhancing asset competitiveness.
• The company is executing a Share Buyback Program, having repurchased around 56.8 million shares for an investment of R$902 million so far in 2025.
• Gerdau S.A. announced a Make-Whole call for its 2030 Bond, amounting to US$500 million.

These tangible and intangible assets form the bedrock of Gerdau S.A.'s competitive stance.

Gerdau S.A. (GGB) - Canvas Business Model: Value Propositions

Geographical diversification, insulating against single-market risks.

Gerdau S.A.'s operational footprint across multiple countries provides a buffer against localized economic downturns. For instance, in the third quarter of 2025, the North America Division generated $\mathbf{R\$9.2}$ billion in net sales, while the Brazil Division generated $\mathbf{R\$7.7}$ billion in net sales. This diversification was advantageous in Q2 2025, where North America contributed $\mathbf{61\%}$ of the consolidated Adjusted EBITDA, offsetting pressure in the Brazilian market from record steel imports. The Q3 2025 sales breakdown shows North America accounting for $\mathbf{40.9\%}$ of group sales, compared to $\mathbf{50\%}$ from Brazil, and $\mathbf{9.1\%}$ from South America (excluding Brazil). Still, the Brazilian market faced a $\mathbf{26\%}$ import penetration rate in Q2 2025.

High-quality special steel for safety-critical automotive and energy sectors.

Gerdau S.A. is recognized globally as a leading supplier of special steel grades. The North American operations, which include facilities in Canada, Mexico, and the US, specifically produce specialty steel and long products. Demand in the US market for these products is expected to be supported by data center construction and renewable energy investments through the fourth quarter of 2025 and into 2026. Downstream product sales, which reflect specialized applications, rose by $\mathbf{47\%}$ year-on-year to a record $\mathbf{76,000}$ tonnes in the third quarter of 2025.

Commitment to sustainability, achieving the lowest historical greenhouse gas emissions.

The production matrix of Gerdau S.A. is inherently low-carbon, relying primarily on recycling scrap and charcoal. The company transforms $\mathbf{11}$ million tonnes of scrap every year. As of the latest reported figures, Gerdau's greenhouse gas emissions intensity is $\mathbf{0.89}$ t $\text{CO}_2\text{e}$ per tonne of steel produced, which is about half the global industry average of $\mathbf{1.91}$ t $\text{CO}_2\text{e}$ per tonne of steel (worldsteel). The company has set an intensity target to reduce this to $\mathbf{0.83}$ t $\text{CO}_2\text{e}$ by 2031, from a 2020 baseline of $\mathbf{0.93}$ t $\text{CO}_2\text{e}$. Furthermore, Gerdau S.A. has an ambition to make its operations carbon neutral by 2050. In recognition, its CDP classification for Climate Change was $\mathbf{A-}$ in 2020, better than the sector average.

• Production matrix based on $\mathbf{71\%}$ scrap usage (2024 data).
• North America operations exclusively use scrap-based electric arc furnace technology.
• Gerdau is the first steel producer included in the Carbon Efficient Index (ICO2).

Customized steel solutions for complex industrial applications.

Gerdau S.A. supplies a portfolio including long steel, flat steel, and special steel grades for various industrial needs. The company also produces flat steel and iron ore for its own consumption within Brazil. Strategic investments support this, such as the expansion at the Miguel Burnier mine, which is projected to generate a potential annual EBITDA gain of $\mathbf{R\$ 1.1}$ billion upon completion.

Reliable supply chain supported by internal iron ore production.

Internal raw material sourcing enhances supply reliability. Gerdau S.A. is bringing its new sustainable mining platform online at the Miguel Burnier mine, expected to start operations in late 2025. This project involves an investment of $\mathbf{R\$ 3.2}$ billion ($\mathbf{\$667}$ million). The mine is certified to hold $\mathbf{476}$ million metric tons of proven and probable iron ore reserves. The expected annual production capacity from this mine is $\mathbf{5.5}$ million tonnes, which will supply Gerdau's four steel units in Minas Gerais state.

The 2025 investment plan for the Company is estimated at $\mathbf{R\$ 6.0}$ billion overall.

Gerdau S.A. (GGB) - Canvas Business Model: Customer Relationships

You're looking at how Gerdau S.A. manages its connections with the various groups it sells to and partners with, right up to the shareholders. It's a mix of direct sales, digital platforms, and financial communication.

Dedicated B2B sales teams for large industrial and construction clients are clearly active, given the performance of key segments. For instance, the North America division reached a record share of consolidated EBITDA in the third quarter of 2025, accounting for 65% of the total. The company reported net sales of R$17.98 billion in the third quarter of 2025. The overall Gross Profit Margin for the trailing twelve months ending late 2025 stood at 11.68%.

Collaborative R&D with customers for unique chemistry applications is evidenced by product development success. Gerdau S.A. was recognized with the Prêmio AutoData 2025 in the technology innovation category for the Gerdau Tech Ecomachining project, a special steel line developed with non-toxic alloys for high-precision machining parts in the automotive and agricultural sectors.

Digital self-service and logistics management via G2L and Vector IND provides operational support. G2L, the digital logistics operator, serves more than 80 clients across various sectors, including construction and retail. This network reaches more than 4,000 Brazilian cities. Vector is identified as Gerdau's Logtech.

The platform-based relationship through the Juntos Somos+ marketplace is a significant digital touchpoint. This marketplace is a joint venture involving Gerdau S.A., Votorantim Cimentos, and Tigre.

• The sortiment on the online store grew 60% in the 12 months leading up to June 2025.
• The platform currently offers over 30 thousand items to retailers across Brazil.

Here's a look at the scale of the platform based on recent figures:

Investor relations focused on capital allocation and shareholder returns is a highly quantified relationship. For the third quarter of 2025 results, the company approved a dividend distribution of R$0.28 per share, equivalent to R$555.2 million. Furthermore, the company reached approximately 88% completion of its 2025 Share Buyback Program, having invested R$902 million in repurchases so far. This resulted in a payout of 75% of net income in Q3, which is more than double what is set in the by-laws. The 2025 investment plan (CAPEX) was estimated at R$ 6.0 billion.

You can see the capital return focus clearly in the numbers:

The CAPEX guidance for 2026 is set to be 22% lower than the forecast for 2025. Finance: draft the Q4 2025 shareholder return projection by next Wednesday.

Gerdau S.A. (GGB) - Canvas Business Model: Channels

Gerdau S.A. employs a multi-faceted approach to channel distribution, balancing direct engagement with large clients and leveraging a broad logistics and digital ecosystem.

The company utilizes a direct sales force to service key accounts, complemented by sales through independent distributors and direct shipments from its steel mills, particularly for flat steel products which undergo additional processing at service centers.

The global network of steel mills and distribution centers is geographically diversified, supporting regional sales contributions as of the third quarter of 2025 (3Q25):

North American operations, which include facilities in Canada, Mexico, and the US, saw shipments rise 10.4% YoY in 3Q25, supported by a healthy order backlog of about 70 days.

G2L, Gerdau's digital logistics operator, is key for delivery across Brazil, offering road and multimodal transport, yard management, and distribution center operations. Its scale includes:

• 25 branches strategically distributed across Brazil.
• Serving more than 4,000 Brazilian cities.
• Annual revenue north of R$ 1 billion.
• Proprietary application GMOV with more than 50,000 registered truck drivers.
• Portfolio serving over 80 clients across sectors like construction, chemicals, and retail.

For construction materials distribution, Gerdau participates in the Juntos Somos+ digital marketplace. This platform, a joint venture with Votorantim Cimentos and Tigre Group, reported a total annual gross turnover of goods reaching R$ 9 billion in a prior reporting period.

Export channels are significant, especially for the Brazil segment, where export shipments specifically grew by 70.5% Quarter-over-Quarter in 3Q25, helping offset lower domestic prices. Gerdau also executed a Make-Whole call for its US$500 million 2030 Bond, with settlement scheduled for December 2, 2025, impacting international financial channels.

The company's overall sales volume performance in 3Q25 saw consolidated steel shipments rise 9.3% QoQ to 3,087 kt.

Gerdau S.A. (GGB) - Canvas Business Model: Customer Segments

You're looking at where Gerdau S.A. actually books its sales as of late 2025, and the story is clearly about North America driving the profitability. The geographic split shows a clear dependence on the US and Canada for the bulk of the operating income.

The North America Division is the engine right now, having recorded its highest quarterly adjusted EBITDA in the last two years during Q3 2025. This segment accounted for 65% of the consolidated adjusted EBITDA of R$2.7 billion in the third quarter of 2025. This strength is tied directly to specific project demand.

Non-residential construction projects in North America are a key driver here. Demand for steel in projects like solar energy installations and data centers remained high through Q2 2025. The order backlog in this region was reported as being above historical levels, at over 70 days in Q1 2025.

Meanwhile, the Brazil Division faces a tougher competitive landscape. The Brazilian market continued to be affected by the high penetration of imported steel, which averaged 25% in the first nine months of 2025. Still, Gerdau S.A. maintains a strong position in the Brazilian rebar market.

Here's how the net sales broke down geographically for the third quarter of 2025, out of total net sales of R$18.0 billion:

Automotive and heavy vehicle manufacturers are served through Gerdau's focus on specialized products. The company continues to hold a strong competitive position, particularly in specialty steel products. This capability directly addresses the needs of manufacturers requiring specific material properties.

For civil construction and infrastructure developers in Brazil and South America, demand is present but subject to macroeconomic volatility. In Q1 2025, the civil construction market in Brazil was noted for having resilient demand, though with attention paid to the eventual impacts of high interest rates.

Industrial manufacturers and agricultural equipment producers form another core group, often purchasing through direct sales or service centers. The overall business serves the construction, industrial, and agricultural sectors globally. Gerdau is prepared to operate effectively across various macroeconomic scenarios, thanks to its business model based on geographic diversification and production flexibility.

Steel distributors and service centers are a critical channel for market penetration. While specific revenue percentages for this channel aren't broken out separately from the geographic segments, they are the mechanism through which much of the steel for smaller industrial and construction users is moved. The company's strategy involves maintaining a level playing field in the domestic market to ensure sustainability for these partners.

Finance: draft 13-week cash view by Friday.

Gerdau S.A. (GGB) - Canvas Business Model: Cost Structure

You're looking at the core expenses that keep Gerdau S.A. running across the Americas and beyond. The cost structure is heavily weighted toward capital deployment and raw material procurement, which is typical for a major steel producer.

Capital-intensive operations demand significant, ongoing investment. Gerdau S.A. has a substantial investment plan for 2025, estimated at $\text{R}\$ \mathbf{6.0} \text{ billion}$ in Capital Expenditure (CapEx). This level of spending reflects the need to maintain and modernize a vast, multi-continental asset base.

The High cost of goods sold (COGS) is a major factor, reflected in a reported Trailing Twelve Months (TTM) Gross Margin of $\mathbf{11.68}\%$ as of late 2025. This margin level shows the pressure from input costs relative to realized selling prices, particularly in certain markets.

Raw material costs are central to the expense profile. Gerdau S.A. is recognized as the largest recycler in Latin America, with nearly $\mathbf{70}\%$ of its steel production derived from scrap metal, transforming over $\mathbf{10} \text{ million tonnes}$ of scrap annually. The company also relies on iron ore, with its mining platform expected to contribute a potential annual EBITDA gain of $\text{R}\$ \mathbf{1.1} \text{ billion}$ once fully operational. Management has noted expectations for steady scrap costs, which helps manage the overall input cost volatility.

The company's cost base includes significant logistics and distribution expenses, necessary to move raw materials to its mills and finished products across its operations in multiple continents, including North America, South America, and Europe.

Fixed costs related to personnel and asset upkeep are also substantial. Gerdau S.A. supports a global workforce of over $\mathbf{30,000}$ direct and indirect employees. Furthermore, a significant portion of the 2025 CapEx is dedicated to keeping the machinery running.

Here's a quick look at how the $\text{R}\$ \mathbf{6.0} \text{ billion}$ 2025 CapEx was planned to be allocated:

The breakdown of maintenance spending within a specific quarter, like $\text{R}\$ 1.7 \text{ billion}$ in 3Q25, shows $\mathbf{41}\%$ allocated to maintenance projects, which is a recurring operational cost component.

Key elements driving the overall cost structure include:

• Scrap metal usage: Nearly $\mathbf{70}\%$ of steel production input.
• Energy costs: Managed partly through investments in renewable energy projects, including $\text{R}\$ \mathbf{400} \text{ million}$ for such projects within the 2025 CapEx.
• Labor costs: Associated with over $\mathbf{30,000}$ employees globally.
• Fixed asset depreciation: Driven by the $\text{R}\$ \mathbf{6.0} \text{ billion}$ capital base investment planned for 2025.

Gerdau S.A. (GGB) - Canvas Business Model: Revenue Streams

When we look at how Gerdau S.A. brings in money, it really comes down to its geographic split and the types of steel it sells. You see a clear picture of where the revenue is landing, especially when you check the third quarter of 2025 results.

Overall, Gerdau S.A. posted total net sales of approximately R$17.98 billion in the third quarter of 2025. This revenue base is supported by strong operational performance in key regions, even as the company manages market pressures elsewhere.

Here's the quick math on the divisional breakdown for those net sales:

The North America Division was the standout performer, generating R$9.2 billion in net sales from shipping 1.29 million tonnes. That region's EBITDA margin was quite strong at 19.8% for the period. The Brazil Division followed, bringing in R$7.7 billion on 1.58 million tonnes shipped, though its EBITDA margin was tighter at 9.9%.

The core of the revenue generation, naturally, comes from the physical product itself. Gerdau S.A. earns its revenue through the:

• Sale of long steel products.
• Sale of flat steel products.
• Sale of special steel products.

Also, don't forget the newer areas of business that Gerdau is building out. These ventures, operating under the Gerdau Next umbrella, represent a push into adjacent markets, which diversifies the revenue base beyond just primary steel production. These include potential revenue from:

• Energy-related ventures.
• Logistics services.

Finally, a direct return to shareholders is a key financial event tied to earnings. Based on the Q3 2025 results, Gerdau S.A. approved a dividend distribution totaling R$555.2 million, payable in December 2025. That translated to R$0.28 per share for Gerdau S.A. shareholders.