Transcript www.gerdau.com.br

Second Annual NYSE Small-Cap Conference
for Non-U.S. Companies
New York, May 6 - 7, 2004
Steel Sector
Gerdau S.A. Consolidated
Stock Market
World Production
Crude Steel
In million tons
2003
2002
Var. %
1
China
220.1
181.7
21.1%
2
Japan
110.5
107.7
2.6%
3
United States
91.4
92.2
-1.0%
produced
4
Russia
61.3
58.6
4.7%
247.7 million
5
Korea
46.3
45.4
2.0%
6
Germany
44.8
45.0
-0.4%
Brazil
7
Ukraine
36.7
34.1
7.8%
contributed
8
India
31.8
28.8
10.3%
9
Brazil
31.1
29.6
5.1%
10
Italy
26.7
26.0
3.0%
Other
244.4
236.7
3.3%
TOTAL
945.1
885.8
6.7%
In the 1Q 2004,
the world
tons of crude
steel.
with 3.2% of
this tonnage.
Sources: IISI and MEPS
03
Largest Producers
Crude Steel 2002
Company
Production
1
Arcelor
44.0
2
LNM Group
3
Nippon Steel
4
POSCO
5
Shanghai Baosteel(CHI) 19.1
6
Corus
7
Thyssen Krupp
8
NKK
(LUX)
(ENG)
(JAP)
34.8
29.8
28.1
(KOR)
16.8
(ENG)
(JAP)
In million tons
(GER)
16.4
15.2
Production
Company
9
Riva
15.0
(ITA)
10 US Steel
(USA)
11 Kawasaki
12 Nucor
(JAP)
(USA)
13 Sumitomo
14 Gerdau
15 SAIL
Source: IISI
(JAP)
(BRA)
(ENG)
14.4
13.7
12.4
11.8
11.5
11.4
04
Overview
Brazilian Steel Sector - 2003
CRUDE STEEL PRODUCERS IN BRAZIL
In thousand tons
Usiminas/Cosipa
8,624
8,449
Belgo/CST/Acesita (Arcelor)
Gerdau Açominas
6,976
CSN
5,318
Aços Villares
775
V&M do Brasil
551
Barra Mansa
421
MWL Brasil
LONG STEEL PRODUCERS IN BRAZIL
Gerdau Açominas – 49.6%
3,894 thousand tons
TOTAL 2003:
31,150 thousand tons
36
TOTAL 2003:
7,855 thousand tons
V&M do Brasil - 6%
466 thousand tons
Belgo (Arcelor) – 33.8%
2,654 thousand tons
Source: IBS
Aços Villares - 6%
456 thousand tons
Barra Mansa - 5%
385 thousand tons
05
Exports of Long Steel Products
Brazilian Steel Sector - 9M2003
In million tons
700
Monthly Average
517.2 thousand tons
Monthly Average
528.2 thousand tons
Monthly Average
461.5 thousand tons
Domestic Sales
Sep.2003/2001
- 11%
600
500
Exports
Sep.2003/2001
400
300
200
Monthly Average
84.4 thousand tons
Monthly Average
99.2 thousand tons
Monthly Average
156.3 thousand
tons
+85%
100
2001
Exports
Source: IBS
2002
Domestic Sales
2003
Exports of long steel products reached
2.2 million tons in 2003, an increase
of 78% YoY.
06
Competitiveness
Brazilian Steel Sector
EBITDA MARGIN - 2002
In %
35%
40
35
30
25
20
15
10
5
Brazil Asia* Japan
* Does not include Japan
EU
North
Others
America (World)
 Despite increases in the prices of main inputs, Brazil has the highest
operating margin in the world.
 The mills operate with up-to-date technology due to a permanent
investment program.
Source: IBS
07
Investments
Brazilian Steel Sector
INVESTMENT SCHEDULE
2003
In US$ million
2004
2005
2006
2007
TOTAL
FLAT STEEL
613.4
694.0
854.4
351.5
117.9
2,631.2
LONG STEEL
290.3
276.2
281.2
185.9
180.1
1,213.7
72.8
58.5
50.4
38.1
32.3
252.1
976.5
1,028.8
1,186.0
575.4
330.4
4,097.0
SPECIALTY STEEL
TOTAL
INSTALLED CAPACITY X PRODUCTION X APPARENT CONSUMPTION
10
13
15
95
96
17
16
16
97
98
99
40
35
Installed Capacity
20
13
34
34
31
33
28
30
25
26
29
31
26
30
30
25
28
25
26
30
28
40
33
40
In million tons
27
50
18
19
18
19
00
01
02
03
21
22 23
24
Crude Steel Production
Apparent Consumption
0
1994
Source: IBS
04
05
06
2007
08
Steel Sector
Gerdau S.A. Consolidated
Stock Market
Main Products
BILLETS, BLOOMS
& SLABS
HEAVY
STRUCTURAL SHAPES
MERCHANT BARS
WIRE-ROD
REBARS
WIRES
FABRICATED STEEL
NAILS
10
Installed Capacity
In thousand tons
CRUDE
STEEL
SLABS,
BLOOMS
& BILLETS
COMMON
ROLLED
PRODUCTS
PRODUCTS
Billets, slabs, blooms, merchant bars,
Gerdau
Açominas
rebars, wire rod, drawn products,
7,575
2,610
4,640
welded wire meshes, structurals,
nails, downstream products, fab.
steel products and specialty steel.
South
America
510
-
634
Billets, merchant bars, rebars
and wire rod.
Billets, merchant bars, rebars, wire
North
America
rod, drawn products, welded
6,568
-
6,186
meshes, nails, downstream
products and fabricated steel
products.
TOTAL
14,653
2,610
11,460
11
Output Evolution
AVERAGE GROWTH RATE
1980 - 2003
Crude Steel 10.2% per year
Rolled Products 9.2% per year
Usiba
1989
Pains
1994
Barão de
Cocais
1988
Cearense
Guaíra
1982
Hime
1985
Laisa
Uruguay
1981
1980
Piratini
1992
1984
Courtice
Canada
1989
1988
Crude Steel
Aza
Chile
1992
Part.
Açominas
1997
AmeriSteel
USA
1999
Sipsa
Co-Steel
2002
12.3 million
Argentina
1997
MRM
Canada
1995
9.0 million
Part.
Sipar
Argentina
1998
Açominas
(control)
2002
1992
1996
2000
2003
Rolled Products

14th largest world steel producer according to the IISI.

Largest long steel producer in the Americas.
12
Geographical Distribution
NORTH AMERICA
 10 mills and 1 strategic
shareholding (Gallatin Steel)
 20 fabrication shops
 12 downstream operations
and special sections
Gerdau AmeriSteel Corp.
Gallatin Steel (1)
BRAZIL
 10 mills
 11 fabrication shops
Gerdau
Açominas S.A.
SOUTH AMERICA
 2 mills and 1
strategic
shareholding
(Sipar)
 3 fabrication
shops
AZA
 6 downstream
operations and special
sections
 68 sales points
(Comercial Gerdau).
 5 service centers for flat
steel (Comercial
Gerdau).
Laisa
Sipar (2)
(1) Flat steel mill, 50% stake JV
(2) Rolling mill, 38% stake JV
13
Competitive Edge

Focus on long steel products manufacturing and distribution

Market mill approach

Up-to-date technology

Competitive production costs

Diversified production processes

Multiple raw materials sourcing

Vertical and horizontal integration

Relevant market share in every country in which the Company
has operations

Financial soundness and access to international capital markets

Confirmed experience in turning around distressed operations
14
Results 1Q2004
1Q2004
4Q2003
1Q2003
GROSS SALES
Net Sales
4,973
4,173
4,169
3,516
3,925
3,327
Cost of Sales
(3,156)
(2,648)
(2,495)
Gross Profit
SG&A
1,017
(306)
869
(364)
832
(280)
(154)
(156)
(109)
16
(14)
(89)
593
350
353
(10)
(148)
6
(117)
(1)
(60)
(8)
(13)
(5)
Net Financial Expenses
Other Operating Revenues
Equity Pick Up
Operational Income
Non Operating Revenues/Expenses
Income Tax & Social Contribution
Statutory Participation
Net Income
Controlling Shareholders
Minority Shareholders
18
17
427
382
460
458
287
246
45
2
41
15
Results by Regions
1Q2004
BRAZIL
NORTH
AMERICA
SOUTH
AMERICA
TOTAL
1Q04
TOTAL
2003
In R$ million
Net Sales
Gross Profit
EBITDA
Net Income
1,988
759
620
324
2,028
195
204
62
157
63
59
41
4,173
1,017
883
427
13,367
3,290
2,683
1,255
In R$/Ton
Net Sales
Gross Profit
EBITDA
Net Income
1,221
466
381
199
1,460
140
147
45
1,300
522
489
339
1,330
324
281
136
2,029
499
407
191
In %
Gross Margin
EBITDA Margin
Net Margin
38%
31%
16%
10%
10%
3%
40%
38%
26%
24%
21%
10%
25%
20%
9%
16
Sales Track Record
In thousand tons
3,658 3,811
5,094
7,213
7,394
9,151
12,144
416
12,492 TOTAL TONS
436
5,140
5,180
North
America
3,211
3,476
Brazil
(exports)
3,874
3,376
3,400
2002
2003
1Q04
Annualized
352
351
376
2,264
2,294
285
240
499
208
260
505
208
2,711
2,837
1997
1998
1,052
1,068
3,152
3,546
3,656
2000
2001
1999
3,034
1,891
927
730
South
America
Brazil
(domestic sales)
17
Indebtedness
HEDGE
Total Debt
In R$ million
MAR. 04
DEZ. 03
100%
In US$ (Brazil)
44%
In R$ (Brazil)
14%
Companies Abroad
42%
GROSS DEBT
6,378
100%
6,263
100%
Short Term
2,230
35%
2,417
39%
187
3%
281
4%
1,540
24%
1,343
21%
Debt in US$ (Brazil)
2,783
504
8%
794
13%
Swap Operations
1,030
4,148
65%
3,845
61%
Cash & Equiv. In US$
714
11%
717
11%
Total Hedge
1,760
Foreign Currency
1,243
19%
1,031
16%
Coverage
0,63X
Companies Abroad
2,191
34%
2,097
33%
Cash & Equivalents
1,151
100%
1,017
100%
Local Currency
421
37%
430
42%
Companies Abroad
730
63%
587
58%
Local Currency
Foreign Currency
Companies Abroad
Long Term
Local Currency
NET DEBT
FX rate US$
5,228
R$ 2.9086
5,246
In R$ million
730
COST OF DEBT
In % p.a.
In R$ (Brazil)
14.0%
In US$ (Brazil) + FX
5.4%
In Us$ (Abroad)
6.3%
R$ 2.8892
19
Investments
2003
Gerdau Açominas
US$ 230 mm
NEW WIRE-ROD MILL
Installed capacity:
550 thousand tons/year
Total investment:
North America
US$ 59 mm
US$ 66 mm
South America
US$ 7 mm
TOTAL IN 2003: US$ 295 MM
FORECAST FOR 2004: US$ 350 MM
20
Operational Integration
 Combination of strengths of both companies: greater competitiveness
 Project developed in partnership between Gerdau and CEA (Employee Investment Club)
 Headquarters in Ouro Branco - MG
Gerdau S.A.
Aço Minas Gerais S.A.
Açominas
Gerdau Açominas S.A.
NEW CORPORATE GOVERNANCE
Met. Gerdau S.A.
Gerdau S.A.
Brazil
Gerdau
Açominas S.A.
North
America
Gerdau
Ameristeel
South
America
Gerdau AZA
Gerdau Laisa
Sipar
21
Outlook

Stronger demand in Brazil (domestic market);

Lower interest rates in Brazil expected for the end of the
year;

Economic stability in Brazil and uncertainty in the political
scenario;

International prices trend: stable to upwards;

North American operations pursuing better results;

US economy recovering;

South American operations in very good shape and
improving.
22
Steel Sector
Gerdau S.A. Consolidated
Stock Market
Shareholders Structure
Metalúrgica Gerdau S.A.
Other
Shareholders
36%
Foreign Inst.
Investors
15%
Other Gerdau
Companies
25%
Brazilian
Inst.
Investors
24%
Gerdau S.A.
Other
Shareholders
16%
Foreign Inst.
Investors
22%
Met. Gerdau
and other
Gerdau
companies
52%
Brazilian
Inst.
Investors
10%
Gerdau Açominas S.A.
Gerdau
Group
92%
CEA Clube / Fund. Aços 4%
Other Shareholders 4%
24
Dividend Policy

Payout of 30% of the Adjusted Net Income.

Dividend payments are being made on a quarterly basis since March 2003.
METALÚRGICA GERDAU S.A.
GERDAU S.A.
546
In R$ million
1.080
351
763
In R$ million
172
234
123
163
54
1999
33.0%
6.0%
265
413
141
462
306
174
98
57
2000
2001*
2002
2003
32.6% 52.5% 34.2% 31.5%
7.9%
17.0% 12.4 % 6.2 %
1999
PAY OUT
YIELD
Adjusted Net Income
32.2%
3.6%
381
165
125
2000
2001
32.8% 35.7%
6.1%
6.8%
2002
2003
34.7% 32.5%
7.1 %
3.9%
Dividends paid
* Met. Gerdau paid a higher amount due
to a one-time supplementary dividend payment in 2001.
25
Stock Price Performance
USA (New York Stock Exchange)
400
400
350
350
300
300
250
250
Base 100
Base 100
Brazil (São Paulo Stock Exchange)
200
150
200
150
100
100
50
50
-
Jan-03
Jun-03
GGBR4
Nov-03
GOAU4
2003 > GGBR4: + 152%
2004 > GGBR4: + 10%
Jan-03
Apr-04
Jun-03
IBOVESPA
GGB
GOAU4 : + 161%
GOAU4 : + 25%
Nov-03
Apr-04
DOW JONES
2003 > GGB: + 195%
2004 > GGB: + 12%
Canada (Toronto Stock Exchange)
250
Base 100
200
150
100
50
Jan-03
Period: 01.01.2003 to 04.19.2004
Source: Economática/Bloomberg
Jun-03
GNA
Nov-03
S&P TSX Index
Apr-04
2003 > GNA: +103%
2004 > GNA: + 9%
26
Appreciation Chart
In US$
BRAZIL (Bovespa)
GOAU
+720%
GOAU4
GGBR4 +199%
+180%
IBOV
+82%
GGBR4
+319%
1 year
GOAU4
+458%
IBOV
13%
3 years
GGBR4
+468%
IBOV
+11%
5 years
USA (NYSE)
Metalúrgica Gerdau S.A.
Gerdau S.A.
Ibovespa
Gerdau - ADR
Dow Jones
GGB
+246%
GGB
+171%
DOW
+25%
1 year
Source: Economática
Base: 04.19.2004
Dividend-adjusted
DOW
-2.4%
3 years
GGB
+304%
DOW
0%
5 years
27
Comparative Chart
TICKER SYMBOL
GERDAU
BELGO
CSN
USIMINAS
NUCOR
STEEL
DYNAMICS
GGBR
BELG
CSN
USIM
NUE
STLD
Market Capitalization
04.19.2004 (US$ mm)
3,367
1,834
4,267
2,581
5,088
1,307
Enterprise Value - EV
(US$ mm)
5,183
1,971
5,966
4,920
5,642
1,849
EBITDA annualized
(US$ mm)
929
402
1,039
1,063
469
113
EV/EBITDA annual.
(X)
5.6
4.9
5.7
4.6
12.0
16.4
22.68
261.16
59.45
11.99
65.09
27.49
434
271
357
452
63
47
P/E - Price/Earnings
per share (X)
7.7
6.8
11.9
6.0
81.0
27.8
Market Cap/EBITDA annual.
(X)
3.6
4.6
4.1
2.4
10.8
11.6
Price
04.19.2004 (US$)
Net Income
(US$ mm)
Source: Economática and company websites
28
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