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UBS WARBURG
Brazil 2001 CEOs Roundtable Conference
FEBRUARY 05-07, 2001 RIO DE JANEIRO - BRAZIL
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(No Transcript)
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Steel Industry Brazil
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source IBS
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Gerdau is the largest long steel producer in
Brazil. Output was 3.3 million metric tons in
2000, a 46 market share for long steel.
Source IBS
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Does not included stake in Açominas
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Apparent Consumption
Source IBS
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Source IBS
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Source IBS
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GERDAU Results Business Capital Markets
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Results
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Net Revenue

• Revenues generated abroad present gains
  when converted to Reais due to currency
  devaluation.
• (6 for 4th quarter only)

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Gross Profit

• Export prices in Açominas suffered some
  reduction vis-à-vis production cost.
• Gross margin changed to 24.6 in 4th quarter
  from 25.6 in the 3th quarter.

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Net Financial Expenses

• Impact of the exchange rate on the debt in
  U.S Dollars.

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Equity Pick-up

• Impact of the exchange rate on the net
  worth of the subsidiaries abroad.

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Other Oper. Revenues

• Negative goodwill amortization of investment
  in Açominas.

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Non-operating Expenses/Revenues

• Tax recovery in Açominas and SIPSA
  (REFIS IVA).

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Income Tax Social Contribution

• Reversion of provision for Income Tax due to
  increase in financial expenses and
  payment of interest over capital
  stock.

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Net Income

• Increase in financial expenses and lower
  margins reduced net income.
• Net margin in 4th quarter was 6.3.

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w.a. cost 12.6 p.a.
Cash position Dec 00 US 360 MM, 58 in U.S.
dollars
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Debt Breakdown
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Ratios
EBITDA and financial expenses of last 12 months.
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GERDAU Results Business Capital Markets
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The Company

• 100 years of tradition focused in the
  production of steel in mini-mills and in the
  distribution of steel products.
• Installed capacity of 8 million metric tons of
  crude steel.
• 25th largest world steel producer and best
  ranked Brazilian Company.
• Largest Latin American long steel producer.
• Distribution network with 63 sales points, 3
  service centers for flat steel and 24 fab
  shops for civil construction.

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The Focus
Focus on long rolled steel and stake in flat and
semi-finished products (slabs and billets)
through Comercial Gerdau and Açominas.
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21 Plants

• 10 in Brazil
• 9 abroad
• 2 shareholdings

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Goals

• BRAZIL
• Maintain its leadership in
• the long steel market.
• Increase supply by offering new products
  and services.

• ABROAD
• Consolidate recent acquisitions and enhance
  synergies.

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Management

• Strive for excellence through variable
  compensation programs.

• Stimulate empowerment and value
  pro-active attitude of associates.

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How to Add Value
Enhance the Armafer (cut bend) network in
Brazil and of Fabrication Shops abroad.

• Advantages
• Enhance quality
• Increase productivity
• Reduce waste
• Reduce working capital

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Sales

• Distribution through the industrial units and
  Comercial Gerdau branches.
• Sales team acting as consultants and presenting
  technological innovations to clients and
  posting orders through the web.

• BUSINESS-TO-BUSINESS
• Proprietary sales site as an additional tool to
  service clients.

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Depreciation figures based at the exchange rate
on December 2000
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Environment

• In the last decade Gerdau invested US 150
  million to ensure its ecoefficiency.
• Investments in dust collection systems were well
  over US 45 million and an additional US 11
  million are scheduled for investments through
  2003.

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GERDAU Results Business Capital Markets
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Gerdau Experience

• In 1947 Gerdau lists for the first time at the
  Stock Exchange in Porto Alegre, in 1966 at the
  Bovespa and in 1999 at the NYSE.
• Gerdau S.A. is part of the Bovespa Index.
• Since 1977 Gerdau guarantees the payment of
  a minimum 30 dividends over adjusted net
  income (since 1997 33 for preferred shares)
• Has had an Investor Relations Dept. for more
  than 30 years.

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Gerdau Experience

• Gerdau promoted the restructuring of its
  subsidiaries in 1995.
• In 1996, Gerdau began disclosing voluntarily its
  cash flow.
• Endeavors to become a benchmark in early
  disclosure .
• Bilingual conference calls on the web.

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(No Transcript)
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Gerdau S.A.
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Açominas - 37
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Includes Stake of 38 in Sipar.
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North America
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www.gerdau.com.br inform_at_gerdau.com.br