Gerdau unit Siderperú posted a second quarter profit as lower sales costs and financial expenses offset a decline in steel prices.

The firm posted a 5.9mn-sol (US$2.1mn) profit in the quarter compared with a 24.4mn-sol loss a year earlier, it said in a corporate filing. Sales dropped 8.1% to 381mn soles from 415mn soles in the same quarter of 2013.

The company, which replaced diesel with natural gas at its steel mill, cut sales costs by 10% to 341mn soles, it said. It also reduced its financial costs by 42% to 6mn soles from 11mn soles a year earlier and posted a 1mn-sol FX gain.

Siderperú is studying a US$480mn project to expand steel rolling capacity to 900,000t/y, including a US$253mn electric furnace. Gerdau's CEO Andre Gerdau said last year the company did not plan to reopen its 400,000t/y blast furnace, which has been closed since 2008, in a context of low steel prices and high costs of raw materials such as iron ore.

Brazil's Gerdau took over the former state steelworks in the Peruvian coastal city of Chimbote in 2006 after previous owner the Wiese Group were unable to meet investment commitments. Gerdau shut down the steel works' blast furnace a year after pledging to invest US$2.5bn in an expansion plan.

Siderperú, which can produce long and flat-steel products at its plant in Peru's Ancash region, has liquid steel capacity of 520,000t/y. It competes in Peru with Aceros Arequipa, which last month posted a 19.3mn-sol second quarter profit compared with a 47.4mn-sol loss a year earlier.