Gerdau BOLSA DE MADRID LATIBEX Madrid Barcelona Espaa
Gerdau BOLSA DE MADRID LATIBEX Madrid, Barcelona España November 28 -29, 2002
STEEL SECTOR Gerdau S. A. - Consolidated Açominas Gerdau Ameristeel Corporate Governance Capital Markets
WORLD - CRUDE STEEL OUTPUT In million metric tons Source: IISI / LAFA / IBS 03
AMERICAS - CRUDE STEEL OUTPUT In million metric tons Source: IISI / LAFA / IBS 04
BRAZILIAN OUTPUT 1, 000 metric tons Source: IBS Growth due to: ü Conclusion on the refurbishment of the blast furnace at CSN. ü Increase in capacity of melt shop at Cosipa. 05
BRAZIL MARKET SHARE Long products Belgo - 36% GERDAU - 48% Others - 16% APPARENT CONSUMPTION x GDP 4, 2 5, 3 2, 5 -0, 1 3, 3 2, 7 -3, 5 3, 9 Elasticity (multiples) 13, 0 Apparent consumption GDP Elasticity -42, 3 Source: IBS / Conjuntura Econômica 06
Steel Sector GERDAU S. A. - CONSOLIDATED Açominas Gerdau Ameristeel Corporate Governance Capital Markets
HIGHLIGHTS ü 101 years of tradition focused on the production of steel in mini-mills and in the distribution of steel products. ü Installed capacity of 14 million metric tons of crude steel. ü 15 th largest world steel producer by the IISI ranking. ü Largest long steel producer of the Americas and the 2 nd largest in the North America. ü Distribution network with 70 sales points, 5 service centers for flat steel, 25 fabrication shops for civil construction and 17 downstream and specialty facilities. ü 10 steel plants in Brazil, 12 abroad, 1 strategic shareholding (Argentina) and 1 joint venture (USA) in flat steel. ü Gerdau S. A. is listed on the Brazilian Stock Exchanges and on the NYSE and Gerdau Ameristeel Corp. is listed on the Toronto Stock Exchange. 08
OUTPUT EVOLUTION CONSOLIDADED Usiba 1989 Hime 1985 Laisa Uruguay 1981 1980 Piratini 1992 Pains 1994 Barão de Cocais 1988 Cearense Guaíra 1982 1984 Courtice Canada 1989 1988 1, 000 metric tons 1980 Part. Açominas 1997 Ameri. Steel USA 1999 Sipsa Aza Chile 1992 Co-Steel 2002 Argentina 1997 MRM Canada 1995 Crude steel Rolled products Part. Sipar Argentina 1998 Açominas (control) 2002 1996 2000 2002 Variation Crude steel 1, 303 11, 500 +8. 8 x Rolled products 1, 182 8, 800 +7. 4 x 2002 includes full year Co-Steel 2002 annualized 09
CAPITAL STRUCTURE Met. Gerdau S. A. 51% Gerdau S. A. 96% 100% Seiva 79% Açominas Gerdau Internacional 100% Aza 100% Laisa 38% Sipar Gerdau Ameristeel Corp. 67% 100% Courtice 100% MRM Gallatin 50% 100% Ameri. Steel 10
INSTALLED CAPACITY 14, 2 million metric tons/year ABROAD MRM ü 7. 0 million metric tons of crude steel Lasco plant Courtice ü 6. 8 million metric tons of rolled products Raritan plant Sayreville plant Gallatin (1) Ameri. Steel Gerdau S. A. BRAZIL ü 7. 2 million metric tons of crude steel ü 4. 7 million metric tons of rolled products Açominas Aza Laisa Sipar (2) (1) (2) Flat steel mill, 50% owned JV Rolling mill, 38% owned JV 11
FINANCIAL STATEMENTS R$ million 12
GERDAU S. A. CONSOLIDATED Ebitda Net Revenue R$ million 2, 958 682 1, 978 1, 659 1, 300 4 Q 01 439 1 Q 02 297 1 Q 02 2 Q 02 1 Q 02 Brazil 4 Q 01 3 Q 02 Gross Margin 4 Q 01 412 3 Q 02 Ebitda Margin 2 Q 02 42% 34% 29% 13% 11% 3 Q 02 North America 4 Q 01 1 Q 02 2 Q 02 South America 3 Q 02 13
R$ million INDEBTEDNESS HEDGE 14
DEBT BREAKDOWN Short term R$ 4. 0 BILLION Other - R$ 34 mm BNDES – R$ 91 mm Bank loan (res. 2770) – R$ 149 mm Companies abroad R$ 2, 162 mm Import loan (Firce) – R$ 281 mm Pre-export /ACC – R$ 411 mm Açominas (US$) R$ 842 mm Long term R$ 3. 1 BILLION BNDES R$ 286 mm Açominas (R$) - R$ 223 mm Bank loan (res. 2770) - R$ 186 mm Eurobonds R$ 289 mm Debentures R$ 534 mm Import loan (Firce) - R$ 172 mm Açominas (US$) - R$ 156 mm Pre-export - R$ 114 mm Other - R$ 85 mm Companies abroad R$ 1, 093 mm 15
RATIOS * Last 12 months 16
Crude Steel Output Rolled Products Output 1, 000 metric tons 2, 334 2, 227 2, 049 69 77 1, 957 3% 72 662 542 1, 496 1, 442 646 1, 198 1 Q 02 2 Q 02 81 71 526 612 832 798 633 1, 614 69% 4 Q 01 1, 687 1, 599 1, 481 84 28% 687 1, 430 74 3 Q 02 4 Q 01 1 Q 02 2 Q 02 5% 621 37% 982 58% 3 Q 02 South America North America Brazil 885 84 Sales 1, 000 metric tons 90 521 1, 352 4 Q 01 Brazil 2, 314 2, 121 1, 963 84 1, 983 86 76 647 625 695 1, 412 1 Q 02 4% 1, 212 2 Q 02 North America 28% 1, 581 68% 3 Q 02 South America 17
Steel Sector Gerdau S. A. - Consolidated AÇOMINAS Gerdau Ameristeel Corporate Governance Capital Markets
EVOLUTION OF STAKE IN AÇOMINAS SEPT. 00 37% Stake before auction by the Brazilian Central Bank DEC. 01 SEPT. 02 79% 54% Brazilian Central Bank Auction of 17% of former Banco Econômico Acquisition of Natsteel´s 25% in Açominas US$ 180 mm US$ 212 mm 19
FINANCIAL STATEMENTS R$ million * Source: Açominas´ Balance Sheet – sept/02 20
OUTPUT & SHIPMENTS Output Revamping of blast furnace of Açominas 1, 000 metric tons 3 Q 02 (1, 000 metric tons) Crude steel 651 Rolled products 4 Q 01 1 Q 02 2 Q 02 91 3 Q 02 Shipments 1, 000 metric tons 621 517 Domestic market 120 Exports 397 515 159 184 462 258 156 331 102 4 Q 01 1 Q 02 2 Q 02 3 Q 02 21
Steel Sector Gerdau S. A. - Consolidated Açominas GERDAU AMERISTEEL Corporate Governance Capital Markets
SYNERGIES CO-STEEL + GERDAU NORTH AMERICA = GERDAU AMERISTEEL ü Gerdau S. A. owns 67% of Gerdau Ameristeel and the minority shareholders the remaining 33% stake. ü With 11 mill locations (one Joint Venture – Gallatin), Gerdau Ameristeel is geographically positioned to service its costumers. ü Integrated with 29 downstream steel fabricating and specialty product businesses, aiming at better profit margins and less volatility of earnings. ü Listed in the Toronto Stock Exchange under the ticker symbol GNA. ü Gerdau Ameri. Steel is the 3 rd largest crude steel producer and the 2 nd largest long steel producer in North America. ü Estimates of US$ 23 million in short term cost savings. ü The Board is comprised of 13 members of which 7 are independent. 23
INSTALLED CAPACITY & OUTPUT 1, 000 metric tons CAPACITY UTILIZATION – 9 MONTHS 2002: 78% * Joint Venture 50% owned. 24
PRODUCT MIX - 2001 Gerdau North America Co-Steel Bars 21% Rebars 32% Rebars 18% Other 4% Flat Rolled 28% Wire Rod 2% Bars 34% Special Sections 8% Wire Rod 29% Fab Shops 24% Gerdau Ameristeel Special Sections 4% Rebars 25% Fab Shops 14% Bars 28% Flat Rolled 14% Wire Rod 15% 25
RESULTS – PRO FORMA * Debt includes convertible debentures 26
Steel Sector Gerdau S. A. - Consolidated Açominas Gerdau Ameristeel CORPORATE GOVERNANCE Capital Markets
CORPORATE GOVERNANCE Objectives ü Increase managerial capacity Meet demand resulting from increased competitiveness in the international market. ü Ensure the succession process to avoid the loss of accumulated knowledge. ü Increase transparency for shareholders and capital market. 28
CORPORATE STRUCTURE Board Strategy Committee Excellence Committee Executive Committee Processes Business Operations Clients 29
BOARD General Business Orientation Jorge Gerdau Johannpeter Chairman of the Board Germano Gerdau Johannpeter Vice President Klaus Gerdau Johannpeter Vice President Frederico Gerdau Johannpeter Vice President Carlos João Petry Vice President Affonso Celso Pastore Board Member André Lara Resende Board Member Oscar Bernardes Board Member Expedito Luz Secretary 30
EXECUTIVE COMMITTEE JORGE GERDAU JOHANNPETER – global orientation of Strategic Planning – Corporate and Operations, Organizational Development, Corporate Communications and Community Relations Processes. FREDERICO GERDAU JOHANNPETER – business operation and global orientation of the following processes: Legal, Accounting, Audit and Holdings in addition to the Gerdau Forestry business. CARLOS JOÃO PETRY – guidance and support to the other members of the Corporate Executive Committee with their Business and Processes and global orientation of the following processes: Human Resources, Procurement and Logistics & Transportation. ANDRÉ JOHANNPETER – business operations in North America and global orientation of the Information Technology Process. CLÁUDIO JOHANNPETER – Long common and specialty Steel Operations in Brazil and global orientation of the Industrial Process (Production, Engineering, Health & Safety and Environment). OSVALDO SCHIRMER – operations in South America, global orientation of the Finance-related and Investors Relations Processes and Banco Gerdau. PAULO B. VASCONCELLOS – operations of Açominas and global orientation of the following processes: Marketing & Sales, Scrap Purchase and Quality Management Systems. EXPEDITO LUZ – Secretary of the Corporate Executive Committee and legal support to this Committee. 31
Steel Sector Gerdau S. A. - Consolidated Açominas Gerdau Ameristeel Corporate Governance CAPITAL MARKETS
PARTICIPATION IN TOTAL CAPITAL Gerdau S. A. 13% 18% Metalúrgica Gerdau S. A. 15% 19% 54% 29% 25% 27% Controllers Brazilian Institutional Investors Foreign Institutional Investors Public Date: 10/30/2001 33
DIVIDENDS Distribution of dividends based on net income adjusted twice a year. 1 ST HALF 2002 MET. GERDAU S. A. Dividends R$ 36. 0 million GERDAU S. A. R$ 79. 9 million R$ million METALÚRGICA GERDAU S. A. 234 163 106 34 54 33% 382 174 57 123 53% 306 181 59 33% 32% 1998 461 98 32% 125 164 36% 33% 1999 2000 2001 Dividends 1998 1999 2000 Adjusted Net Income 2001 34
LIQUIDITY – GERDAU S. A. * Trading volume US$ million +52% Nyse 700 +440% Nyse -33 Bovespa +70% Bovespa 54 500 300 140 250 1999 2000 NYSE * Preferred shares and ADRs +71% Nyse 282 +72% Bovespa 423 10 100 82 2001 484 LTM Bovespa 35
RETURN TO SHAREHOLDERS BOVESPA R$ 198. 1 R$ 173. 0 100 R$ 66. 2 (9, 860 points) 2000 Gerdau S. A. GGBR 4 Source: Economática 2001 2002 Metalúrgica Gerdau S. A. GOAU 4 Ibovespa Reference: 05/17/2002 a 11/13/2002 36
RETURN TO SHAREHOLDERS NYSE 100 US$ 86. 5 US$ 77. 9 (8, 399 points) 2000 2001 Gerdau S. A GGB Source: Economática 2002 Dow Jones Reference: 05/17/2002 a 11/13/2002 37
10 -YEAR TRACK RECORD Metalúrgica Gerdau S. A. Source: Economática Gerdau S. A. Ibovespa Dow Jones Reference: 11/13/2002 38
INVESTOR RELATIONS AND CAPITAL MARKET New Corporate Governance Practices: ü Tag Along 100% to all shareholders ü New Corporate Governance structure ü Board External Members ü Fiscal Committee ü Disclosure Policy and compliance with Instruction CVM 358 ü Inclusion in Bovespa’s Corporate Governance Index Level I 39
INVESTOR RELATIONS AND CAPITAL MARKET New features: ü Shareholders Service section on the web site ü Quarterly Releases published in the web site ü Electronic mailing list service ü Toll Free Service for shareholders (Brazil only) ü Satisfaction research based on market analysts opinion ü Quarterly releases in quarter-over-quarter format ü Specific investor relations section on the web site ü Visits and presentations (non-deal road shows) to investors ü Interactive charts and key ratios on the web site (under construction) 40
INVESTOR RELATIONS SITE On our site you will find: Schedule of events, complete texts on results and complementary data, transcription and audio of conference calls, Q & A sessions in addition to information and documentation for shareholders. 41
www. gerdau. com. br inform@gerdau. com. br
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