Gerdau%20Group

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Gerdau Group
SMITH BARNEYs 13th Annual Latin America
Conference
New York, March 15-16, 2005
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Steel Sector Gerdau S.A. Consolidated Consolida
ted Figures Capital Markets
All data presented in R and in metric tons,
except when indicated
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World Output Crude Steel
In million tons
The world production of crude steel surpassed
the 1 billion ton mark in 2004, an increase of
8.9 over the previous year. The growth average
has been 4.6 year over year if China were not
included.
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Source IISI
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World Top Producers Crude Steel
In million tons
Mittal Steel (Ispat, LNM and ISG) will be the
biggest world steel company with 60 million tons
of installed capacity.
After the investment program in Brazil is
completed in 2007, Gerdau will have an installed
capacity of 21 million tons of crude steel per
year.
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Source Metal Bulletin
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Steel Sector Gerdau S.A. Consolidated Consolida
ted Figures Capital Markets
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Units Distribution

• NORTH AMERICA
• 14 mills and 1 strategic shareholding (Gallatin
  Steel)
• 29 fabrication shops
• 13 downstream operations and special sections

• BRAZIL
• 10 mills
• 11 fabrication shops
• 8 downstream operations and special sections
• 75 sales points (Comercial Gerdau) and flat steel
  service centers

• SOUTH AMERICA
• 2 mills and 1 strategic shareholding (Sipar)
• 4 fabrication shops
• 4 sales points

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Installed Capacity December 2004
In thousand tons
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Output Evolution

• Utilization rate
• Abroad 83.9
• Brazil 96.2

• Utilization rate
• Abroad 83.7
• Brazil 91.7

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Shipments
In thousand tons
In R/ ton
74 increase in sales in the last 5 years
12,560
12,144
1,560
9,151
1,101
7,213
7,394
1,001
796
720
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Exports
2003
2004
EXPORTS 2004

• Shipments from Brazil reached 2.7 million tons
  in 2004
• Revenues generated by exports reached US 1.1
  billion in 2004
• Average price 57.9 greater than in 2003 (in US)

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Financials
In R million
2003
2004
MAIN VARIATIONS (YoY)

• NET SALES REVENUE 46.6
• Better prices in the international market
• Recovery of the domestic demand
• Consolidation of the units acquired in 2004.

• NET FINANCIAL EXPENSES -72.8
• Increase in financial investments of the cash
• generated in the period

OTHER OPERATING INCOME 1,153.3 - Favorable
outcome of a legal suite due to the
improper collection of PIS.

• EQUITY PICK UP 14.7
• FX variation over investments abroad
• Fiscal incentives reserves
• Goodwill amortization.

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Results by Region 2004
NORTH
AMERICA
SOUTH
AMERICA
In R million
Gross Revenue 12,914 9,453 1,040 23,407 15,783 48
Net Revenue 9,976 8,857 764 19,597 13,367 47
Gross Profit 4,307 1,662 276 6,245 3,290 90
EBITDA 3,705 1,597 251 5,553 2,683 107
Net Income 2,165 896 174 3,235 1,255 158
In R/Ton
Gross Revenue 1,948 1,747 1,996 1,864 1,300 43
Net Revenue 1,505 1,637 1,466 1,560 1,101 42
Gross Profit 650 307 530 497 271 83
EBITDA 559 295 482 442 221 100
Net Income 327 166 334 258 103 150
In
Gross Margin 43 19 36 32 25
EBITDA Margin 37 18 33 28 20
Net Margin 22 10 23 17 9
Var.
BRAZIL
2004
2003
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Evolution of Results
NET REVENUE
EBITDA
GROSS MARGIN
EBITDA MARGIN
42.0
43.6
36.2
35.8
34.1
30.3
25.3
32.1
14.9
13.5
2.9
3.6
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Indebtedness
COST OF DEBT (per annum) Brazil - Domestic
currency 15.2 Brazil Foreign currency
FX4.4 Companies abroad
7.2
2004
2003
In R million
HEDGE In R million Foreign currency debt
2,358 Swap operations
225 Exports 2,904 Cash in US 1,393 TOTAL
HEDGE 4,522
COVERAGE RATIO 1.9x
DEBT AVERAGE LIFE 4.1 years
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Capital Expenditures
CAPEX 2005 - 2007 US 3.2 billion
In US million
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Main Investments
TOTAL INVESTMENT US 3.2 BILLION
Brazil Expansion US 1,620 mm Update US 750
mm
Abroad Update US 800 mm
INSTALLED CAPACITY
CRUDE STEEL Brazil Current 7,580 k tons New 11,720 k tons Abroad Current 8,800 k tons New 9,230 k tons Consolidated Current 16,380 k tons New 20,950 k tons
ROLLED PRODUCTS Brazil Current 4,730 k tons New 6,610 k tons Abroad Current 8,240 k tons New 8,880 k tons Consolidated Current 12,970 k tons New 15,490 k tons
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Outlook

• In general terms, the expectation is that 2005
  will be similar to 2004 both in
• Brazil and abroad.
• Increase in cost of coking coal and iron ore
  brings repercussions to the steel
• products international prices.
• In the short term there is a decline in scrap
  and pig iron prices.
• In Brazil the trend is to see margins in the
  1Q05 at the same levels as those of
• the 4Q04.
• In the 1Q05, volumes in Brazil seasonally low,
  compensated by exports.
• In Brazil GDP should grow around 4 leading to
  an increase in the demand
• for steel products.
• Investments in infrastructure in Brazil are
  expected to grow sharply in 2005.

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Steel Sector Gerdau S.A. Consolidated Consolida
ted Figures Capital Markets
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Stock Performance
GGBR4 GERDAU S.A.
GOAU4 METALÚRGICA GERDAU S.A.
77
116
Ibovespa
Ibovespa
28
28
Market Cap US 5.6 bi
Market Cap US 2.0 bi
GGB GERDAU S.A. ADRs
GNA GERDAU AMERISTEEL CORP.
86
84
ADRs - Gerdau S.A.
Dow Jones
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4
Market Cap US 4.5 bi
Market Cap US 2.6 bi
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Source Economática/Bloomberg - Period
01.01.2004 to 03.03.2005 (Base 100).
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Stock LiquidityBovespa
METALÚRGICA GERDAU (GOAU4)
GERDAU (GGBR4)
In US million (Volume)
In number of trades
GGBR4 1,420 Trades US 21.1mm
1,500
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30 Stock bonus 70 Split (GOAU)100 Stock
bonus (GGBR)
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1,200
15
900
12
GGBR4 492 Trades US 5.4mm
9
600
GOAU4 384 trades US 5.7mm
6
300
GOAU4 109 trades US 1.6mm
3
Dec 03
Jan 04
Feb 04
Mar 04
Apr 04
May 04
Jun 04
Jul 04
Aug 04
Sep 04
Oct 04
Nov 04
Dec 04
Jan 05
Feb 05
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Source Economática
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Stock LiquidityGNA
LIQUIDITY OF SHARES Monthly daily average
9M04 GNA.TO Trades 217 thousand
shares/day GNA.TO Volume US 871
thousand/day Monthly daily average since
10.18.2004 GNA.TO NY 1,057 mil
thousand/day GNA.TO NY Volume US 5.9
million/day SHARE APPRECIATION FROM
10.18.2004 TO 03.03.2005
SHARES TRADED 387 FINANCIAL VOLUME 577
GNA 48
GNA.TO 47
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Source Bloomberg Base 100
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