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Tenth Annual
Latin America Conference
New York - March 2002
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
All data contained in this presentation pertains to Gerdau S.A. consolidated - 2001
Steel Sector
World
* Excess capacity
* Lower prices
* Economic slowdown
* Long products
* Consolidation
South America
* Crisis in Argentina
* Gerdau companies
Brazil
* Power rationing
* Strong demand
USA
* Anti-dumping process
* Section 201
* Economic recovery
03
Source: IISI
World output
As published byMetal Bulletin,Gerdau is the
24th largest
crude steelproducer in
the world
04
In million metric tons
1 China 141.4 126.3 11.9%
2 J apan 102.9 106.4 (3.4%)
3 USA 89.7 100.7 (10.9%)
4 Russia 57.5 57.6 (0.1%)
5 Germany 44.8 46.4 (3.4%)
6 Korea 43.9 43.1 1.7%
7 Ukraine 33.1 31.3 5.8%
8 India 27.3 26.9 1.4%
9 Brazil 26.7 27.9 (4.1% )
10 Italy 26.5 26.5 (0.3%)
Others 230.2 236.4 (2.6%)
TOTAL 823.9 829.6 (0.7%)
Country 2001 Variation2000
Source: IISI
In million metric tons
Apparent consumption in Latin America
South America 27 35 5.5
Asia 332 377 2.7
Middle East 16 18 2.5
Africa 16 17 1.9
Oceania 7 7 1.5
Europe 210 225 1.4
Nafta 144 151 0.9
TOTAL 752 830 2.1
Region 2000
Average annual growth %
2005Estimate
05A
Brazil
2.7
-5.1
-23.8
5.43.1
-0.2
2.4
-10%
-5%
0%
5%
10%
15%
20%
1994 1995 1996 1997 1998 1999 2000
-30
-25
-20
-15
-10
-5
0
5
10
Ela
stic
ity
(mu
ltip
les)
Apparent consumption - Brazil
GDP
Elasticity
Source: IISI/ IBS
APPARENT CONSUMPTIONBrazil x GDP
05B
MARKET SHARELong products
GERDAU48%
Belgo36%
Others 16%
Source: IBS/ Gerdau
Includes stake in Açominas since 1999
Crude steel
Long rolled
80 90 01
9% 12%17%
21%
32%
48%%
CST
GERDAU
Usiminas
CSN
Belgo
4,784
4,662
4,620
4,048
2,668
LARGEST CRUDE STEEL PRODUCERS
GERDAU’S PARTICIPATION IN THE NATIONAL PRODUCTION
06
Brazil
1,000 metric tons
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
Gerdau
08
* 100 years of tradition focused on the production of steel in mini-mills and in the distribution of steel products.
* Installed capacity of 11 million metric tons of crude steel (including 100% of Açominas and the Cartersville unit).
* 24th largest world steel producer and the best ranked Brazilian company.
* Largest Latin American long steel producer.
* Distribution network with 70 sales points, 3 service centers for flat steel and 27 fabrication shops for civil construction.
* 10 steel plants in Brazil (including Açominas), 10 abroad and 1 strategic shareholding.
Capital structure
Met. Gerdau S.A.
Gerdau S.A.
Seiva Gerdau International Açominas
AmeriSteel
Courtice
MRMSipsa
Laisa
Aza
Sipar
51%
56%100%96%
85%
100%
100%
38%
72%
100%
100%
09
Participation in total capital
Metalúrgica Gerdau S.A.
19%
26%
27%
27%
Controllers
Brazilian Institutional Investors
Public
Foreign Institutional Investors
Date: 12/31/2001 10
54%
14%16%
16%
Gerdau S.A.
Output evolutionAçominas
1997
Piratini1992
Usiba1989
Sipsa Argentina1997
AmeriSteelUSA1999
1,000 metric tons
1980 2001 Variation
Crude steel 1,303 7,242 +5.6 x
Rolled products 1,182 6,059 +5.0 x
11
Installed capacity
BRAZIL
* 7.2 million metric tons of crude steel
* 4.7 million ** metric tons of rolled products
11 MILLION METRIC TONS
ABROAD
* 3.8 million metric tons of crude steel
* 3.6 million metric tons of rolled products
** Includes the new Açominas’ rolling mill 12
Geographical distribution
Sipar
Aza
Sipsa
Laisa
AmeriSteel(with Cartersville)
Courtice
MRM
Gerdau S.A.
Açominas
Cearense
Açonorte
Usiba
Cosigua
Barão de Cocais
Açominas Guaíra
Piratini Riograndense
Divinópolis
GERDAU S.A.
AÇOMINAS
13
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
Recent facts
15
** In December 2001, through an auction organized by the
Brazilian Central Bank, Gerdau acquired an additional
17.67% of Açominas' total capital.
** Also in December 2001, Gerdau acquired the operating
assets of Birmingham Southeast, through AmeriSteel,
its subsidiary in the United States.
** In February 2002, Gerdau signed contracts to acquire
24.8% of Natsteel's stake in Açominas’ total capital. This
agreement must be implemented by September 9th , 2002.
Açominas
Source: Açominas
PRODUCTS:
Billets Blooms Slabs
Rebars Merchants Structurals
Shapes and Profiles
INSTALLED CAPACITY (metric tons):
Crude Steel 3.0 million
Rolled Products 740 thousand
YEAR 2001:
NET SALES: R$ 1,025 million
EBITDA: R$ 265 million
NET INCOME: R$ 93 million
16
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
Output
1,000 metric tons
3,661 5,066 7,058 7,242
2,974
555
132
3,875
1,005
186
4,450
2,348
260
4,662
2,295
285
CRUDE STEEL
98 99 00 01
3,398 4,272 5,901 6,059
2,753
485
160
3,111
918
243
3,390
2,195
316
3,528
2,193
338
ROLLED PRODUCTS
1,000 metric tons
98 99 00 01
18
Brazil
South America
North America
Sales
3,811 5,094 7,213 7,394
3,046
260
3, 882
927
285
4,598
2,264
351
4,724
2,294
376
505
IN METRIC TONS
98 99 00 01
2,060
NET SALES
271
2,178 2,353 3,149 3,557
741
1,800216
247
5,8885,1963,3102,178In R$ million
98 99 00 01 19
Brazil
South America
North America
Industry 51%
Civil construction 46%
Agriculture 3%
SALES BY MARKET SEGMENTSGerdau S.A. non-consolidated
SalesSALES BY PRODUCT LINEIn metric tons
Common long rolled 67%
Specialty 4%
Drawn 10%
Flat 6%
Semi-finished 13%
20
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
Brazil North America
South America
Total
Gross Margin
37.1% 12.6% 27.1% 28.1%
Net Margin
14.4% 1.5% 1.1% 9.3%
EBI TDA Margin 28.2% 12.1% 21.6% 22.3%
Highlights 2001
Brazil North America
South America
Total
Net Sales (R$ million) 3,557.5 2,059.7 271.2 5,888.4
Net I ncome (R$ million) 512.0 31.2 3.1 546.3
EBITDA (R$ million) 1,002.1 249.3 58.6 1,310.0
22
Ebitda & Net incomeR$ million
29.7% 32.6%
25.8%
28.1%
20.4%
25.2%
20.4%22.3%
8.8% 9.3%7.7%
10.6%
1998 1999 2000 2001
Gross Margin
EBITDA Margin
Net Margin
Brazil North Am. South Am.
445 640 755 1,002
291255
24931
50
1,3101,060961
445
59
98 99 00 01
EBITDA
191 291 374 512
5322
31
8
2
546398
352
191
3
Brazil North Am. South Am.
98 99 00 01
NET INCOME
23
Investments
304Average
1991 - 2001
96
US$million
83171
390
703
260217
600
200
97 98 99 00 01 02 03
24
2002 investments include the payments of:
Açominas’ auction (17.7%) US$ 180
Natsteel’s stake in Açominas (24.8%) US$ 210
Indebtedness
LONG TERMR$ 2.1 Bi
BNDESR$316M
Companiesabroad
R$602M
Pre Export R$104M
FIRCER$142M
Açominas (US$) R$227M
Açominas (R$) R$148M
OthersR$ 15M
Eurobonds R$287M
DebenturesR$ 219 M
25
BNDESR$102M
ACC / Pre Export R$ 71M
FIRCER$159M
Brazilian Central Bank R$333M
Açominas (US$) R$391M
Açominas (R$) R$46M
Others R$ 12M
SHORT TERMR$ 2.1 Bi
Companiesabroad
R$993M
Year
R$ million
US$ million
2002 2,107 908
2003 578 249
2004 639 276
2005 379 163
2006 145 62
2007 40 17
After 2007 279 121 TOTAL 4,167 1,796
Amortization
26
Ratios
-
1998 1999 2000 2001
36.74% 57.53% 56.55% 51.55%
25.93% 50.87% 50.35% 44.61%
2.4X 3.5X 3.0X 3.2X
1.4X 2.7X 2.3X 2.4X
Total debt/ Total capitalization
Net debt/Total Capitalization
Total debt/ EBITDA
Net debt/ EBITDA
EBITDA/ Net financial expenses (minus monetary & exchange rate var.)
- 3.9X 5.7X
27
2000 2001
Cash at the beginning of the period 695 704
Net operational cash 772 1,251
Proceeds from fixed assets financing 666 910
Amortization (financing) (546) (749)
Interest paid for financing (169) (208)
Funds used for investments (484) (792)
Other investments (116) (35)
Dividend/ interest & statutory participation payment
(114) (138)
Cash at the end of the period 704 1,013
R$ million
Cash flow
28
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
Growth strategy
* Mini-mills
* Acquisitions
* Internationalization
* Standing out between peers
* Barriers to entry
* Market Segments (Civil Construction, Industrial and Agriculture)
30
