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2002 Latin America Equity Conference
Gerdau JP MORGAN 2002 Latin America Equity Conference November 4-5, 2002
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GERDAU S.A. - CONSOLIDATED Açominas Gerdau Ameristeel
Corporate Governance Capital Markets * All tonnage expressed in metric tons
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FINANCIAL STATEMENTS R$ million 03
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Net Revenue Ebitda Gross Margin Ebitda Margin 04 4Q01 1Q02 2Q02 3Q02
R$ million 297 412 439 682 R$ million 2,958 1,978 1,659 1,300 4Q01 1Q02 2Q02 3Q02 Gross Margin Ebitda Margin 42% 34% 34% 28% 13% 11% 4Q01 1Q02 2Q02 3Q02 4Q01 1Q02 2Q02 3Q02 Brazil North America South America 04
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INDEBTEDNESS R$ million HEDGE 05
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DEBT BREAKDOWN Short term Long term 06 R$ 4.0 BILLION R$ 3.1 BILLION
Companies abroad R$ 2,162 mm Other - R$ 34 mm BNDES – R$ 91 mm Bank loan – R$ 149 mm Import loan – R$ 281 mm Pre-export /ACC – R$ 411 mm Açominas (US$) R$ 842 mm R$ 4.0 BILLION Long term R$ 3.1 BILLION BNDES R$ 286 mm Eurobonds R$ 289 mm Açominas (R$) - R$ 223 mm Debentures R$ 534 mm Bank loan - R$ 186 mm Import loan - R$ 172 mm Açominas (R$) - R$ 156 mm Pre-export - R$ 114 mm Companies abroad R$ 1,093 mm Other - R$ 85 mm 06
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RATIOS * Last 12 months 07
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Rolled Products Output
Crude Steel Output 1,000 tons 4Q01 1Q02 2Q02 3Q02 1,430 542 77 1,496 662 69 1,181 687 72 1,614 646 74 2,049 2,227 1,940 2,334 Rolled Products Output 1,000 tons 4Q01 1Q02 2Q02 3Q02 832 526 84 798 612 71 877 633 81 961 621 1,442 1,481 1,591 1,666 South America North America Brazil 4Q01 1Q02 2Q02 3Q02 Sales 1,000 tons 1,352 521 90 1,412 625 87 1,212 695 75 1,581 647 84 1,963 2,124 1,982 2,312 South America North America Brazil 08
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Gerdau S.A. - Consolidated AÇOMINAS Gerdau Ameristeel
Corporate Governance Capital Markets 09
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Brazilian Central Bank Auction
EVOLUTION OF STAKE IN AÇOMINAS SEP.00 DEC.01 SEP.02 37% 54% 79% Stake before Brazilian Central Bank Auction Brazilian Central Bank Auction Natsteel buyout 17% ECONÔMICO US$ 180mm 25% NATSTEEL US$ 212mm 10
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FINANCIAL STATEMENTS R$ million 11
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OUTPUT & SHIPMENTS Output Shipments
Revamping of blast furnace of Açominas 1,000 tons 3Q2002 (1,000 tons) Crude steel Rolled products 2Q02 3Q02 1Q02 4Q01 Shipments 1,000 tons 2Q02 3Q02 1Q02 4Q01 331 184 515 102 156 258 462 159 621 397 120 517 Domestic market Exports 12
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Gerdau S.A. - Consolidated
Açominas GERDAU AMERISTEEL Corporate Governance Capital Markets
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CO-STEEL + GERDAU NORTH AMERICA = GERDAU AMERISTEEL
SYNERGIES CO-STEEL + GERDAU NORTH AMERICA = GERDAU AMERISTEEL Minority shareholders retain a 33% interest in Gerdau Ameristeel and Gerdau S.A. owns 67% of the new company. With 11 mill locations, Gerdau Ameristeel is geographically positioned to service long product costumers and is integrated with 29 downstream steel fabricating and specialty product business, increasing profit margins and reducing the volatility of earnings. Listed in the Toronto Stock Exchange under the ticker symbol GNA. Gerdau AmeriSteel is the 3rd largest steel producer and the 2nd largest long steel producer in North America. Estimate of US$ 23 million in near-term cost savings. The Board is comprised of a majority of outside, independent directors: 8 from Co-Steel, including 7 independent directors and 5 Gerdau directors. 14
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INSTALLED CAPACITY & OUTPUT
UTILIZATION – 9 MONTHS 2002: 77% * Jointventure 50% owned. 15
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Gerdau AmeriSteel PRODUCT MIX - 2001 Gerdau North America Co-Steel 16
Wire Rod 29% Flat Rolled 28% Bars 21% Rebars 18% Other 4% Wire Rod 2% Special Sections 8% Fab Shops 24% Rebars 32% Bars 34% Gerdau AmeriSteel Fab Shops 14% Flat Rolled Wire Rod 15% Special Sections 4% Bars 28% Rebars 25% 16
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RESULTS – PRO FORMA 17
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Gerdau S.A. - Consolidated
Açominas Gerdau Ameristeel CORPORATE GOVERNANCE Capital Markets
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CORPORATE STRUCTURE Objectives Increase managerial capacity
Meet demand resulting from increased competitiveness in the international market. Ensure the succession process to avoid the loss of accumulated knowledge. Increase transparency for shareholders and capital market. 19
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CORPORATE GOVERNANCE Board Estrategy Commitee Executive Commitee
Processes Board Executive Commitee Business Operations Clients Estrategy Commitee Excellence Commitee 20
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BOARD General Business Orientation Chairman of the Board
Jorge Gerdau Johannpeter Germano Gerdau Johannpeter Klaus Gerdau Johannpeter Frederico Gerdau Johannpeter Carlos Petry Affonso Celso Pastore Oscar Bernardes Expedito Luz André Lara Resende Chairman of the Board Vice President Board Member Secretary 21
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EXECUTIVE COMMITEE JORGE GERDAU JOHANNPETER – Strategic planning “Group & Operations” – Public & community relations FREDERICO GERDAU JOHANNPETER – Support and guidance to accounting & auditing – Holding – Legal – Gerdau Forestry. CARLOS JOÃO PETRY – Personnel – Logistics & Freight - Supplies ANDRÉ JOHANNPETER – North America – Global Information Systems CLÁUDIO JOHANNPETER – Long Steel Brazil – Specialty steels - Industrial OSVALDO SCHIRMER – Finance – Investor Relations – Argentina, Chile and Uruguay – Banco Gerdau PAULO VASCONCELLOS – Açominas – Marketing & Sales – Management of quality and technology – Metallic Input EXPEDITO LUZ – Secretary 22
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Gerdau S.A. - Consolidated
Açominas Gerdau Ameristeel Corporate Governance CAPITAL MARKETS
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COMPARATIVE DATA BRAZIL
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COMPARATIVE DATA NORTH AMERICA 25
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COMPARATIVE DATA OTHER 26
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DIVIDEND METALÚRGICA GERDAU S.A. GERDAU S.A. 2000 2001 1999 1998 190
1st half MET. GERDAU S.A. GERDAU S.A. Dividends R$ 36.0 million R$ 79.9 million Net income R$ million R$ million The payout in the 1st half is an advancement of the full year´s dividend. The 2nd half dividend completes the minimum dividend payout as stated in the by-laws of the Company. METALÚRGICA GERDAU S.A. GERDAU S.A. 2000 2001 1999 1998 190 353 393 464 59 98 125 164 2000 2001 1999 1998 122 207 218 253 123 57 54 34 Dividends Net income 27
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LIQUIDITY – GERDAU SHARES
Trading volume US$ million 2000 1999 2001 LTM 250 10 423 282 54 82 140 484 700 500 300 100 NYSE Bovespa 28
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