New York, September 3-5, 2003 DEUTSCH BANK Second Annual Global Emerging Markets One-on-One Conference.

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Presentation transcript:

New York, September 3-5, 2003 DEUTSCH BANK Second Annual Global Emerging Markets One-on-One Conference

STEEL SECTOR GERDAU S.A. CONSOLIDATED Highlights Consolidated Figures Capital Markets

WORLD PRODUCTION Crude Steel Source: IISI 3 In 1,000 tons

LARGEST PRODUCERS Crude Steel 2002 Source: IISI In million tons 4 Company Production Company Production

INTERNATIONAL PRICES & COST OF MAIN INPUTS Average world steel transaction price Source: MEPS/ USGS / EIA Jan. 02Jul. 02Jul. 03Jan $/t – Hot Rolled Coil 322 $/t - Merchant Bar 307 $/t - Wire Rod 311 $/t - Rebar US$/ton 5 Retail Sales of Electricity Industrial Sector Composite Prices for Steel Scrap

CRUDE STEEL OUTPUT 6M2003 Source: IBS In 1,000 tons Usiminas/Cosipa Gerdau/Açominas Belgo/CST/Acesita (Arcelor) CSN Aços Villares V&M do Brasil Barra Mansa 4, , , , Brazilian Crude Steel Producers 6 Brazilian Long Steel Producers Gerdau 48% Belgo (Arcelor) 35% Aços Villares 6% Barra Mansa 5% V&M do Brasil 6%

STEEL SECTOR GERDAU S.A. CONSOLIDATED Highlights Consolidated Figures Capital Markets

102 years of tradition focused on the production of steel in mini-mills and in the distribution of steel products. Installed capacity of 14 million metric tons of crude steel. 14 th largest world steel producer according to IISI. Largest long steel producer in the Americas. Metalúrgica Gerdau S.A. is listed on the São Paulo Stock Exchange, Gerdau S.A. is listed on the São Paulo Stock Exchange, on the NYSE and on the Latibex (Madrid Stock Exchange). Gerdau Ameristeel Corp. is listed on the Toronto Stock Exchange. 10 units in Brazil, 12 abroad and 2 strategic shareholdings (Sipar and Gallatin Steel). 68 sales points in Brazil (Comercial Gerdau). 17 downstream operations and special sections (5 in Brazil e 12 in North America). 26 fabrication shops (9 in Brazil, 03 in South America and 14 in North America). 4 service centers for flat steel in Brazil (Comercial Gerdau). HIGHLIGHTS 8

Barão de Cocais BRAZIL 7.4 MILLION TONS OF CRUDE STEEL PER YEAR 4.8 MILLION TONS OF ROLLED PRODUCTS PER YEAR ABROAD 7.0 MILLION TONS OF CRUDE STEEL PER YEAR 6.8 MILLION TONS OF ROLLED PRODUCTS PER YEAR SIPAR LAISA GERDAU AMERISTEEL GERDAU S.A. AÇOMINAS AZA GEOGRAPHICAL DISTRIBUTION Gerdau S.A. Açominas Cearense Açonorte Usiba Cosigua Açominas Guaíra Piratini Riograndense Divinópolis 9

Billets, rebars, merchant bars, profiles, wire rod, drawn products, nails, specialty steel. Billets, slabs, blooms, rebars, merchant bars, profiles and structurals. Rebars, merchant bars, profiles and wire rod Products Rebars, merchant bars, profiles, wire rod, downstream products, special sections and flat products. Crude Steel Rolled Products CAPACITY & PRODUCTS In 1,000 tons

OUTPUT EVOLUTION Growth Average Rate CRUDE STEEL 10.4% year ROLLED PRODUCTS 9.6% year Aza Chile 1992 Part. Sipar Argentina 1998 MRM Canada 1995 Part. Açominas 1997 AmeriSteel USA 1999 Crude Steel Rolled Products Cearense Guaíra 1982 Laisa Uruguay 1981 Hime 1985 Barão de Cocais 1988 Courtice Canada 1989 Usiba 1989 Piratini 1992 Pains 1994 Sipsa Argentina * Açominas (control) 2002 Co-Steel * 100% of Co-Steel 11

STEEL SECTOR GERDAU S.A. CONSOLIDATED Highlights Consolidated Figures Capital Markets

HIGHLIGHTS 6M2003 Net Income of R$ 262 million in 2Q03 and R$ 549 million in 1H03. Net Sales of R$ 3.0 billion in 2Q03 and of R$ 6.4 billion in 1H03. Crude steel Output in March reached 1 million metric tons, a historical high. Dividends now paid quarterly. Stock Bonus of 100% for Metalúrgica Gerdau S.A. shareholders and 30% to Gerdau S.A. shareholders. Reverse split of 1,000:1 and shares quoted as single units. Stock option plan for management and employees. Metalúrgica Gerdau S.A. listed as Level 1 in Bovespa’s Corporate Governance Index. 13

RESULTS 6M

Gross MarginEbitda Margin Brazil North America South America COMPARISON OF RESULTS 15 Ebitda 2Q021Q03 2Q R$ million Net Sales 2Q021Q032Q03 1,769 1, R$ million 1,717 1, , ,978 3,327 3,030 2Q 6% 31% 1Q022Q3Q4Q1Q032Q1Q022Q3Q4Q1Q03 7% 38% 32%

Slight increase in volumes. Higher international prices and stronger exports could counterbalance the lower domestic market demand. SHIPMENTS Brazil – Domestic Market Brazil – Exports North America South America 793 1, , Q021Q032Q03 2,976 2,889 1, In 1,000 tons Exports increased +183% 2Q02/2Q03 798

2nd QUARTER 2003 SALES BY SEGMENT 41% Civil Construction, 58% Industry and 2% Agriculture (Gerdau S.A. non consolidated) SALES BY PRODUCT LINE Domestic Market 14% Exports 86% Semi-finished products Domestic Market 54% Exports 46% Common long steel products Abroad 39% Common long steel products Brazil 22% Semi-finished 22% Specialty steel 3% Drawn products 5% Flat steel 9% 17

OUTPUT CRUDE STEEL OUTPUTROLLED PRODUCTS OUTPUT , , ,599 2,135 2,239 1,679 2Q021Q032Q03 1, ,688 1, , ,957 2,968 3,085 South America North America Brazil 18 In 1,000 tons 2Q021Q032Q03

INDEBTEDNESS June 2003 In R$ million 19 * US$ debt contracted in Brazil

DEBT BREAKDOWN June 2003 LONG TERM – R$ 3.6 billion Companies abroad 1,647.8 million Açominas (US$) million Debentures (R$) million Debentures (US$) – million BNDES – million Other – million Açominas (R$) – million ACC/Pre-export – million Working Capital – million SHORT TERM – R$ 3.2 billion BNDES – million Other – million Açominas (R$) – 74.1 million ACC/Pre-export – million Eurobond – million Import loans – million Working Capital million Companies abroad million Açominas (US$) – million Debentures (R$) – 11.8 million Import loans – 14.2 million 20

FINANCIAL RATIOS * EBITDA of last 12 months. 21

INVESTMENTS 2 nd QUARTER 2003 US$ 72 MM Açominas US$ 34 mm Gerdau US$ 23 mm South America US$ 4 mm North America US$ 11 mm Stronger investments in 2003 due to the new wire rod rolling mill facility. HIGHLIGHTS Conclusion of the new wire rod rolling mill in Açominas in December Increase of electric furnace at Piratini for a 15% increase in melt shop capacity. Installation of a new continuous caster at the Usiba mill (conclusion in 2004). Improvement and technological update of units in North America. São Paulo Greenfield project will be re-visited in the 2 nd half of FORECAST US$ 230 MM 22

STEEL SECTOR GERDAU S.A. CONSOLIDATED Highlights Consolidated Figures Capital Markets

Other investors 16% Foreign Inst. Investors 20% Brazilian Inst. Investors 12% Gerdau Companies 52% SHAREHOLDERS STRUCTURE June 2003 Other investors 35% Foreign Inst. Investors 18% Brazilian Inst. Investors 22% Gerdau Controlling Group 25% METALÚRGICA GERDAU S.A. GERDAU S.A. 24

DIVIDEND POLICY Adjusted Net IncomeDividend paid Distributes at least 30% of the Adjusted Net Income. As of March 2003, dividend payments are being made on a quarterly basis R$ million METALÚRGICA GERDAU S.A * Pay out 32.8%32.0%32.8%35.6%34.9%32.0%33.1%32.6%52.5%33.9% 25 Yield 11.7 %3.6 %6.1 %6.8 %7.1%16.4 %6.0 %7.9 %17.0 %12.4 % GERDAU S.A R$ million * Higher amount due to a supplementary dividend payment.

APPRECIATION CHART Date: 08/19/2003 Source: Economatica GGBR4 +79% Ibov +56% GGBR4 +56% GGBR4 +257% Dow +9% Ibov -35% Dow +5% Dow -15% Ibov -50% GOAU4 +112% GOAU4 +80% GOAU4 +244% 1 year 3 years 5 years Met. Gerdau – GOAU4 Gerdau - GGBR4 Ibovespa Dow Jones PROFITABILITY IN US$ 26

Metalúrgica Gerdau S.A Gerdau S.AIbovespa Period: From 02/21/2001 to 08/19/2003 Source: Economatica PRICE EVOLUTION 27