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2008 ANNUAL REPORT DYNAM IC108 YEARS ON THE MOVE
PROFILE
GERDAU
Gerdau is the leading producer
of long steel in the Americas and
one of the largest suppliers of
specialty long steel in the world.
It has operations in the Americas,
Europe, and Asia, which together
represent an installed capacity of over
20 million metric tons of steel per year.
It produces common long steel,
specialty steel, and flat steel for
the civil construction, industry
In 108 years of existence, Gerdau has learned to coexist with different cultures, languages, markets and realities. It has grown without losing sight of its principles and values. It has always managed to work in an agile, sustainable manner to attain its objectives, relying on the support of its thousands of employees throughout the world. The result of this dynamism is precisely what gives the Company its conviction to always overcome challenges.
ARGENTINAwww.sipargerdau.com
BRAZILwww.gerdau.com.br
CANADAwww.gerdauameristeel.com
CHILEwww.gerdauaza.cl
COLOMBIAwww.diaco.com.co
DOMINICAN REPUBLICwww.industriasnacionales.com
GUATEMALAwww.acerosdeguatemala.com
INDIAwww.kalyanigroup.com
MEXICOwww.sidertul.com.mx
PERUwww.sider.com.pe
SPAINwww.sidenor.com
UNITED STATESwww.gerdauameristeel.com
URUGUAYwww.gerdaulaisa.com.uy
VENEZUELAwww.sizuca.com.ve
www.gerdau.com
and farming sectors.
Its products are part of people’s
daily lives and are used in homes,
cars, freeways, bridges, agricultural
machinery, home appliances,
telephone towers and in the
energy industry, among others.
It is the largest recycler in Latin
America, and around the world, it
transforms around 16 million metric
tons of scrap into steel annually.
With over 140,000 shareholders,
Gerdau’s public companies are listed
on the stock exchanges of São
Paulo (Bovespa: GGBR4, GGBR3,
GOAU4, GOAU3, and AVIL3), New
York (Nyse: GNA, GGB), Toronto
(GNA.TO), Madrid (Latibex: XGGB),
and Lima (BVL: SIDERC1).
Cover photo
Low Income Mall in Brasília, opened
in April 2008. The project, by architect
Alencar Blanco Cinnanti and civil
engineer Dalmo Blanco Cinnanti, was
constructed using structural shapes
manufactured at Gerdau Açominas.
2008 ANNUAL REPORT DYNAM IC108 YEARS ON THE MOVE
PROFILE
GERDAU
Gerdau is the leading producer
of long steel in the Americas and
one of the largest suppliers of
specialty long steel in the world.
It has operations in the Americas,
Europe, and Asia, which together
represent an installed capacity of over
20 million metric tons of steel per year.
It produces common long steel,
specialty steel, and flat steel for
the civil construction, industry
In 108 years of existence, Gerdau has learned to coexist with different cultures, languages, markets and realities. It has grown without losing sight of its principles and values. It has always managed to work in an agile, sustainable manner to attain its objectives, relying on the support of its thousands of employees throughout the world. The result of this dynamism is precisely what gives the Company its conviction to always overcome challenges.
ARGENTINAwww.sipargerdau.com
BRAZILwww.gerdau.com.br
CANADAwww.gerdauameristeel.com
CHILEwww.gerdauaza.cl
COLOMBIAwww.diaco.com.co
DOMINICAN REPUBLICwww.industriasnacionales.com
GUATEMALAwww.acerosdeguatemala.com
INDIAwww.kalyanigroup.com
MEXICOwww.sidertul.com.mx
PERUwww.sider.com.pe
SPAINwww.sidenor.com
UNITED STATESwww.gerdauameristeel.com
URUGUAYwww.gerdaulaisa.com.uy
VENEZUELAwww.sizuca.com.ve
www.gerdau.com
and farming sectors.
Its products are part of people’s
daily lives and are used in homes,
cars, freeways, bridges, agricultural
machinery, home appliances,
telephone towers and in the
energy industry, among others.
It is the largest recycler in Latin
America, and around the world, it
transforms around 16 million metric
tons of scrap into steel annually.
With over 140,000 shareholders,
Gerdau’s public companies are listed
on the stock exchanges of São
Paulo (Bovespa: GGBR4, GGBR3,
GOAU4, GOAU3, and AVIL3), New
York (Nyse: GNA, GGB), Toronto
(GNA.TO), Madrid (Latibex: XGGB),
and Lima (BVL: SIDERC1).
Cover photo
Low Income Mall in Brasília, opened
in April 2008. The project, by architect
Alencar Blanco Cinnanti and civil
engineer Dalmo Blanco Cinnanti, was
constructed using structural shapes
manufactured at Gerdau Açominas.
GERDAU AROUND THE WORLD
MISSIONGerdau is an organization focused on the
steel business, seeking to satisfy customers’
needs and add value for shareholders,
committed to the fulfillment of people and to
the sustainable development of society.
VISIONTo be a global steel company and one
of the most profitable in the sector.
VALUESSATISFIED customers
TOTAL SAFETY in the workplace
Engaded and fulfilled PEOPLE
QUALITY in everything we do
RESPONSIBLE ENTREPRENEURSHIP
INTEGRITY
GROWTH and PROFITABILITY
GERDAU AROUND THE WORLD
MISSIONGerdau is an organization focused on the
steel business, seeking to satisfy customers’
needs and add value for shareholders,
committed to the fulfillment of people and to
the sustainable development of society.
VISIONTo be a global steel company and one
of the most profitable in the sector.
VALUESSATISFIED customers
TOTAL SAFETY in the workplace
Engaded and fulfilled PEOPLE
QUALITY in everything we do
RESPONSIBLE ENTREPRENEURSHIP
INTEGRITY
GROWTH and PROFITABILITY
KEY INDICATORS
Financial margins 2007 2008
Gross margin 24.4% 26.0%
Net margin 14.1% 11.8%
EBITDA margin 20.4% 23.9%
Output and sales 2007 2008
Steel production (thousand metric tons)
17,907 19,599
Rolled steel production (thousand metric tons)
15,160 16,440
Physical sales (thousand metric tons)
17,159 19,118
Capital markets 2007 2008
Metalúrgica Gerdau S.A.
Dividends (R$ per share) 2.10 1.60
Dividend yield (%)* 3.0 6.4
Return on equity (%) ** 26.4 19.9
Market capitalization (R$ million) 13,148 8,016
Gerdau S.A.
Dividends (R$ per share) 1.26 0.99
Dividend yield (%)* 2.4 5.2
Return on equity (%) ** 25.7 19.8
Market capitalization (R$ million) 32,497 20,061
*Ratio between the dividend paid per share and the share price on
the last day of the year.
**Ratio between net profit and consolidated shareholders’ equity.
Share appreciationlast five years
Investment in social responsibility(R$ million)
Financial performance(R$ million)
-50 0 50 100 150 200 250 300
Environmental management 2007 2008
Reuse of by-products (% of total generated) 79.4 78.2
Annual investments* (R$ million) 345.7 201.0
*In 2007, investments were made in environmental equipment
for the expansion of Gerdau Açominas.
Exchange rate* R$ US$2007 1.7713 1.00
2008 2.3370 1.00
*Quotations on December 31.
2 2008 GERDAU ANNUAL REPORT
Gerdau expands its production of •
coke (an important raw material
for steelmaking) for internal use,
with the acquisition of a 50.9%
interest in Cleary Holdings. The
company controls a metallurgical
coke production plant and of
coking coal reserves in Colombia.
In Mexico, the Company completes •
the acquisition of 49% of the capital
stock of Corsa Controladora, which
holds 100% of the capital stock of
Aceros Corsa and its distributors.
Gerdau begins producing steel •
in Central America by way of a
strategic alliance with Corporación
Centroamericana Del Acero,
taking over 30% of the capital
stock of the company, owner of
industrial facilities in Guatemala and
Honduras and of distribution centers
in El Salvador, Nicaragua and Belize,
besides sales offices in the region.
In the United States, acquisition •
has been finalized of Macsteel,
the second largest producer of
specialty long steel in the country.
The company operates three mills
and six downstream operations.
HIGHLIGHTS
Gerdau acquires 28.9% of the •
capital stock of Aços Villares
(state of São Paulo), thereby
gaining direct and indirect
control of 63.9% of the
company, which produces
specialty long steel in Brazil.
Gerdau acquires an additional •
20% interest in the capital stock
of Corporación Sidenor, the largest
manufacturer of specialty long steel
and large forged and cast steel
products in Spain. Consequently,
Gerdau comes to own, directly
and indirectly, 60% of Sidenor.
CONTENTS
BUSINESS
18
27
Business performance
Finance
30 Capital markets
03
04
06
14
15
Message from the Chairman of the Board
Message from the CEO
Corporate governance
Risk management
Strategy and competitive differences
46
48
52
60
Timeline
Glossary
Summarized financial statements
Corporate information
RELATIONSHIPS
Customers
Shareholders
Employees
Society
32
36
37
38
41 Suppliers
ENVIRONMENT
42 Environmental management
32008 GERDAU ANNUAL REPORT
shareholders. We will also continue
to contribute increasingly to the
growth of our customers’ businesses
and the sustained development
of the communities in which we
operate. We give special thanks
to our employees for their daily
dedication and performance.
Jorge Gerdau Johannpeter
Chairman of the Board of Directors
MESSAGE FROM THE CHAIRMAN OF THE BOARD
A CENTURY OF EXPERIENCE AND CONSOLIDATION OF A LONG-TERM STRATEGY
Our sound management structure and ability to quickly adapt our operations to market fluctuations have helped us to remain competitive throughout the year
After experiencing successive years
of record financial and operational
performance, we began to face a new
economic situation, as of the fourth
quarter of 2008, with a decrease
in the global demand for steel.
Despite the effects of the crisis on
our operations, we closed the year
with business sales, cash generation
and net profits superior to the 2007
levels. Our century-old experience
and ability for rapid adaptation to
market fluctuations has helped us
to maintain the competitiveness of
our operations in an environment
marked by uncertainties concerning
the future of the global economy.
In addition, in our favor is the
consolidation of a long-term strategy
– based on the pursuit of leadership
positions in the markets in which we
operate, geographic diversification,
and operation in distinct sectors
of the steel industry – and a solid
management structure, which has
permitted us to attain increasing
levels of productivity. We also have
the conviction that the demand
for steel will continue strong in
the coming years, especially in
emerging countries, since economic
development is built with steel,
which is used in infrastructure and
housing projects, and to produce
capital and consumer goods.
Without steel, there is no progress.
We also believe that, despite
imposing difficult measures regarding
cost management, the current crisis
will stimulate us to reach beyond
our limits. At this moment, our
goal is to maximize the efficiency
of and return on the investments
already made, as well as to obtain
an increasingly competitive cost
equation, whether by producing our
own raw materials and inputs, or
pursuing synergies between the
operations, among other initiatives.
As a closing note, we would like
to reaffirm Gerdau’s historical
commitment to the long-term
generation of value for our
4 2008 GERDAU ANNUAL REPORT
MESSAGE FROM THE CEO
EFFICIENCY AND FLEXIBILITY TO GENERATE RESULTS
Good performance in 2008 and confidence in the Organization’s ability to overcome challenges
Despite the effects of the global
economic crisis on our business, we
finished 2008 with good operational
and financial performance. Our sales
revenues reached R$ 46.7 billion,
a growth of 36.7% in comparison
to the previous year, and
the consolidated net profit
displayed a 14.9% increase,
reaching R$ 4.9 billion.
Throughout the first nine months,
we experienced a period of strong
growth in the global demand for
steel, yet as of October, besides the
typical year-end decrease in sales,
there was a significant drop in the
consumption of steel products.
Thanks to our solid management
system and to the flexibility of
the industrial process of most of
our steel plants, we have had the
conditions necessary to make
this adjustment to our production
volumes in a quick manner.
The effects of the crisis, however,
were felt at different levels,
depending upon the operating
segment and geographic region
of our operations. Consequently,
we had early maintenance works
and vacation shutdowns in some
countries. These measures also
aimed at reducing the need
for altering the plants’ head
count, which, unfortunately, was
necessary in some cases.
Throughout the year, we made
important investments in increasing
the competitiveness of our operations,
as well as in their expansion and
technological modernization. We
also made acquisitions in order
to occupy important positions in
the market. One of the highlights
is the acquisition of Macsteel,
North America’s second largest
producer of specialty long steel.
The acquisition of the Aços Villares
(Brazil) and Sidenor (Spain) also
stands out. Added to that is the
fact that an alliance was formed
with Corporación Centroamericana
del Acero, Central America’s main
steel producer, with headquarters in
Guatemala. In all, the investments
amounted to US$ 5.1 billion, with
US$ 1.4 billion in fixed assets and
US$ 3.7 billion in acquisitions.
People: teams trained
to face challenges
We have continually invested in
the training of our employees and
52008 GERDAU ANNUAL REPORT
2008-2010 period was updated
based on the foreign exchange
rate variation observed during
the business year. With this, the
total came to US$ 5 billion, with
US$ 1.4 billion already having been
invested in 2008. The remaining
US$ 3.6 billion will be invested
in the next five years, subject
to the development of future
economic conditions.
Acknowledgements
We are grateful for the confidence
of our customers, shareholders
and communities, as well as for
the effort and dedication of our
employees, and we are counting on
each one of you so that 2009 can
be a year of victories as important
as those we achieved in 2008.
André B. Gerdau Johannpeter
Chief Executive Officer
(CEO) of Gerdau
in the training of world leaders,
fundamental to an agile and efficient
response to adverse situations and
increasing global competitiveness.
In 2008, R$ 47.6 million were
allocated to training, 6.9% greater
than in the previous year.
We also gave the utmost attention
to job health and safety. During
the business year, we invested
R$ 56.6 million (an amount that
is 18.1% greater than our 2007
investment), in new accident-
prevention equipment and technology
and funding safety-awareness
campaigns and audits to discover
improvement opportunities, with the
support of specialized consultancy.
Commitment to the communities
and the environment
We have always sought to
contribute to the development
of the communities in which our
facilities are located. In this sense,
the volunteer work of our employees
stands out, with a workforce of
around 10,000 individuals throughout
the world. In the environmental area,
besides our constant investments in
industrial environmental-protection
technologies, our main initiative
was the creation of the Serra
de Ouro Branco Private Natural
Reserve in the state of Minas
Gerais, with 1,247 hectares, an
area where rare species of the local
flora and fauna are preserved.
Outlook
In 2009, Gerdau will keep itself busy
with the pursuit of higher levels
of productivity and cost reduction.
We also will direct our efforts toward
the integration of the recently
acquired companies, in the areas in
which additional synergies can be
achieved. Based on our experience
in operating in moments of crisis, we
will continue monitoring the behavior
of the various markets, adjusting our
operations to the current economic
scenario. Our century-old experience
and flexibility in rapidly adapting
to market fluctuations make us
confident of the Organization’s ability
to overcome the difficulties imposed
by the global economic crisis.
Concerning the investments to be
made in the following years, we
reiterate that all projects already
announced will be maintained, with
a schedule adjusted to the new
reality of the steel market. In addition,
the amount of US$ 6.4 billion in
investments in fixed assets for the
6 2008 GERDAU ANNUAL REPORT
CORPORATE GOVERNANCE
Transparency and adherence to the best market practices mark Gerdau’s corporate governance
Gerdau’s corporate governance
aims to guarantee security and
transparency for its investors.
The Company constantly pursues
the improvement of its practices,
upholding the highest international
standards and its own century-
old management experience.
In addition to its solid governance
structure, Gerdau has a disclosure
policy that values transparency and
respect to the rules of confidentiality.
Since 2007, Gerdau has operated in
compliance with the Sarbanes-Oxley
(SOX) Act, which defines the rules
to be followed by companies with
stocks traded on the North American
market. The same is true for Gerdau
Ameristeel, the company responsible
for our steel-manufacturing
operations in the U.S. and Canada.
As part of its strategy as a global
steel manufacturer, as of 2007
Gerdau began to report its results
according to the international
accounting norms defined by the
International Financial Reporting
Standards (IFRS), thus adapting
itself to the global best practices.
Governance structure
Comprised of nine members, the
Board of Directors of Gerdau S.A.
monitors the implementation of
established policies, the definition
of long-term strategies, the choice
of the Executive Officers and the
naming of Executive Committee
members, as well as making
decisions within the scope of
transactions and operations.
In 2008, André B. Gerdau
Johannpeter and Claudio Gerdau
Johannpeter – Gerdau’s CEO
and COO, respectively – became
members of the Board, which is
assisted by the following support
committees: the Corporate
Governance Committee, the Strategy
Committee, and the Compensation
and Succession Committee.
At Metalúrgica Gerdau S.A., the
Board of Directors consists of
10 members, of which nine are the
same individuals that make up the
Board of Gerdau S.A. The Board
of Directors of Villares S.A. consists
of five members; and that of Gerdau
Ameristeel consists of eleven
members. A majority of the members
of all of the boards is elected by
the controlling shareholders.
Board of Directors members are
elected annually at the Shareholders
General Meeting, which is also
responsible for appointing the
members of the Board of Auditors,
deliberating over the accounts
presented by the administrators,
and analyzing, discussing and voting
over financial statements, allocation
of the net profit for the fiscal year
and the dividend distribution policy,
among other responsibilities.
Metalúrgica Gerdau S.A., Gerdau
S.A. and Aços Villares S.A., which
are publicly-listed companies in
Brazil, have boards of auditors that
are responsible for monitoring and
auditing the administrators’ acts,
issuing opinions concerning the
Management Report and proposals
by members of the Board, besides
analyzing the financial statements,
among other assignments.
At Gerdau Ameristeel, the job of
auditing and monitoring the actions
of management is carried out by an
Audit Committee, in compliance with
72008 GERDAU ANNUAL REPORT
Read more about Gerdau’s governance structure at
www.gerdau.com/grupo-gerdau/governanca-corporativa.aspx
Shareholders Meeting
Board of Directors
Board of Auditors
Corporate Governance Committee, Strategy
Committee and Compensation and
Succession Committee
Gerdau Officers and Executive Committee
Functional Processes
Latin America IndiaNorth America AçominasSpecialty SteelLong Steel Brazil
Excellence Committees and
Support Committees
BUSINESS OPERATIONS MANAGEMENT
Business Operations
8 2008 GERDAU ANNUAL REPORT
the Sarbanes-Oxley (SOX) Act.
The determinations of the Sarbanes-
Oxley act are also followed by
the Board of Auditors of Gerdau
S.A., whose stocks are traded on
the New York Stock Exchange.
Gerdau’s corporate management
is the responsibility of the Board
of Directors, whose Executive
Committee (GEC) coordinates and
supervises the Business Operations
and the Functional Processes.
The GEC consists of one CEO,
one COO and seven vice presidents.
The GEC receives assistance from
support committees, which are
created according to specialization
criteria. There also are excellence
committees, which have the
responsibility of identifying the
best management practices
and stimulating the exchange of
knowledge among the plants.
Independent audit
Aiming at complying with CVM
Instruction no. 381/2003, Gerdau
S.A. has a company that renders
external auditing services.
The Company’s policy for the
contracting of eventual services
not related to external auditing by the
independent auditor is based on the
principles that preserve the auditor’s
independence: the auditor must not
audit his/her own work, must not
perform the management work of
his/her client and must not promote
the interests of his/her client.
Code of ethics
The Gerdau Ethical Guidelines define
the Company’s relationships with its
employees, customers, shareholders,
suppliers, communities, competitors
and environment. They are public
records that can be found on the
Gerdau website (www.gerdau.com.
br/port/respsocial/diretrizes.asp).
The Organization provides open
channels that encourage the free
expression of opinions, attitudes
and preoccupations. On the
website, for example, there is the
Talk to Gerdau section; and on the
Intranet, the Ethics Channel – a
direct communication line with the
employees –, which guarantees
anonymity and confidentiality in the
handling of the information received.
92008 GERDAU ANNUAL REPORT
CORPORATE GOVERNANCE STRUCTURE
Read more about Gerdau’s corporate structure at
www.gerdau.com/investidores/acoes-estrutura-societaria.aspx
45.7%
60,0%
66,4%Gerdau
Aços EspeciaisS.A.
GerdauAços Longos
S.A.
GerdauAçominas
S.A.
GerdauAmérica LatinaParticipações
S.A.
Corporación Sidenor, S.A.
Aços Villares S.A.
SJK Steel Plant Limited
Macsteel
GerdauLaisaS.A.
SiparAceros
S.A.
Corsa Controladora S.A. de CV
Gerdau AZAS.A.
SiderúrgicaTultitlán,
S.A. de CV
Corporación Centroamericana
del Acero, S.A.
SiderúrgicaZuliana, C. A.
Diaco S.A.
EmpresaSiderúrgica
del Perú S.A.A.
IndústriasNacionales
C. por A.
GerdauComercial de
Aços S.A.
Metalúrgica Gerdau S.A.
Gerdau S.A.
GerdauAmeristeel
Corp.
Gallatin
93.3%89.4% 93.3%
60.0%
58.4%
28.9%
45.2%70.0%30.0%
93.3%66.4%
50.0%
49.0% 92.8%
83.3% 100.0%
98.7% 100.0%
100.0% 100.0%
49.0% 30.0%
93.3%
10 2008 GERDAU ANNUAL REPORT
GERDAU S.A. BOARD OF DIRECTORS - 2008
Jorge Gerdau Johannpeter
Chairman
Germano H. Gerdau Johannpeter
Vice chairman
Affonso Celso Pastore
Board member since 2002
Claudio Gerdau Johannpeter
Board member since 2008
André Pinheiro de Lara Resende
Board member since 2002
Oscar de Paula Bernardes Neto
Board member since 2002
Klaus Gerdau Johannpeter
Vice chairman
Frederico C. Gerdau Johannpeter
Vice chairman
André B. Gerdau Johannpeter
Board member since 2008
In 2008, André B. Gerdau Johannpeter, CEO, and Claudio Gerdau Johannpeter, COO, became members of the Board of Directors, advancing with the Gerdau corporate governance process.
112008 GERDAU ANNUAL REPORT
GERDAU EXECUTIVE COMMITTEE (GEC)
1. André B. Gerdau Johannpeter
Chief executive officer (CEO)
2. Claudio Gerdau Johannpeter
Chief operating officer (COO)
3. Alfredo Huallem
Executive vice president of the Long
Steel Brazil Business Operation
4. Expedito Luz*
Executive vice president of
Legal Affairs and Compliance
5. Manoel Vitor
de Mendonça Filho
Executive vice president of the
Açominas Business Operation
6. Márcio Pinto Ramos
Executive vice president of the
Latin America Business Operation
7. Mario Longhi Filho
Executive vice president of the
North America Business Operation
and CEO of Gerdau Ameristeel
8. Osvaldo Burgos Schirmer
Executive vice president of
Finance and Investor Relations
9. Paulo Fernando
Bins de Vasconcellos
Executive vice president of the
Specialty Steel Business Operation
*Member of the GEC since January 2009.
2 1895 3 6 4 7
BUSINESS OPERATIONS MANAGEMENT*
12 2008 GERDAU ANNUAL REPORT
André Araujo HofmeisterDirector, Planning and Business Development
André Pires de Oliveira DiasDirector, Investments
Antonio José Bacelar TeixeiraDirector, Logistics
Antônio Marques de Almeida Director, Gerdau Shared Services
Cláudio Mattos Zambrano Director, Industry and Management Systems
Enio Viterbo JuniorDirector, Occupational Health and Safety
CORPORATE MANAGEMENT*
Érico Teodoro Sommer Director, Energy, Environment and Engineering
Expedito LuzExecutive vice president, Legal Affairs and Compliance
Francisco Deppermann Fortes Director, Human Resources and Organizational Development
Geraldo ToffanelloDirector, Accounting
Harley Lorentz ScardoelliDirector, Finance
Joaquim de Souza GomesDirector, Metallics
José Paulo Soares Martins Executive Director, Gerdau Institute
Mario Sant’Anna JuniorExecutive Director, Gerdau Florestal
Osvaldo Burgos SchirmerExecutive vice president of Finance and Investor Relations
Paulo Perlott RamosDirector, Marketing and Sales
Renato Gasparetto Jr.Director, Corporate Communications and Public Affairs
Tadeu PetterleDirector, Procurement
LONG STEEL BRAZILAlfredo Huallem Executive vice president
Carlos Hamilton de O. PimentaExecutive director, Gerdau Nordeste
Fernando José Dutra ParreiraExecutive director, Gerdau Sul
Fladimir Batista Lopes GautoExecutive director, Procurement and Logistics
Heitor L. Beninca BergaminiDirector, Metallics Procurement
José Falcão FilhoDirector, Direct Sales
José Walnei G. de AlmeidaDirector, Industrial Marketing
Julio Carlos Lhamby PratoExecutive director, Industrial Plants
Luciana DomagalaDirector, Human Resources
Nestor MundstockExecutive director, Gerdau Cosigua
Paulo Ricardo TomazelliDirector, Sales and Distribution
Renato Silva BernardesDirector, Civil Construction Marketing
Ricardo Giuzeppe MascheroniCommercial director
132008 GERDAU ANNUAL REPORT
LATIN AMERICAMárcio Pinto Ramos Executive vice president
André Felipe Gueiros ReinauxDirector, Mexico Project
Dirceu Tarcisio TogniIndustrial director, Latin America
Eduardo Ermida Moretti Executive director, Diaco (Colombia)
Hermann Von Mühlenbrock Sotto General manager, Gerdau AZA (Chile)
João Carlos Salin Gonçalves Director, Raw Materials
José Padilla BelloExecutive director, Sizuca (Venezuela)
José Pedro Sintas Executive director, Gerdau Laisa (Uruguay)
Luís Daniel Pécora Nova Executive director, Sipar Gerdau (Argentina)
Luiz Augusto Polacchini Executive director, Siderperú (Peru)
Samuel Nanes Venguer Diretor-executivo da Sidertul (México)
NORTH AMERICAMario Longhi Filho Director, President andChief Executive Officer
Terry A. SutterVice president and Chief Operating Officer
Barbara R. Smith Vice president Finance, Chief Financial Officer and Assistant Secretary
Carl CzarnikVice president Human Resouces
Chia Yuan WangVice president Management Systems
Diane E. DrumVice president andChief Information Officer
Guilherme C. G. JohannpeterVice president SBQ/Wire Rod Operations
James R. KerkvlietVice president Sales and Marketing
J. Neal McCullohs Vice president Commercial and Downstream Operations
Matthew C. Yeatman Vice president Scrap Procurement and Operations
Michael P. MuellerVice president Safety, Environmental, Technology and Asset Reliability
Robert E. LewisVice president General Counsel and Corporate Secretary
Terry K. DanahyVice president Chief Human Resources Officer
INDIAAndre Beaudry Executive vice president
*Updated in May 2009.
SPECIALTY STEELPaulo Fernando Bins de VasconcellosExecutive vice president
Hermenio Pinto GonçalvesIndustrial director, Specialty Steel Brazil
Joaquim Guilherme BauerExecutive director, Specialty Steel Brazil
José Jainaga GomezGeneral manager, Sidenor (Spain)
José Joaquín Salazar Paternain Director, Factories (Spain)
Marcos Eduardo Faraco Wahrhaftig Director, Marketing
Rodrigo Belloc Soares Director, Technology
Murilo Antunes de O. FilhoExecutive director, Pindamonhangaba (Brazil)
AÇOMINASManoel Vitor de Mendonça Filho Executive vice president
Carmine Sarao Neto Director, Human Resources
Daniel Antonio M. de Mesquita Director, Industrial
José Carlos de Matos Silva Executive director, International Trade
Marcus Rocha Duarte Director, Mining and By-products
14 2008 GERDAU ANNUAL REPORT
RISK MANAGEMENT
Gerdau adopts meticulous risk control standards for all variables having an impact on business
Gerdau constantly reviews and
reevaluates the vulnerabilities of
the steelmaking activity in the world,
which results in the continuous
upgrading of the mechanisms the
Company adopts to protect itself
and minimize the various risks.
Market risks
Gerdau constantly gauges market
risks, especially the economic/
financial conditions of the regions
in which the Company operates and
their impact on the real consumption
and potential of steel products.
In 2008, Gerdau displayed swiftness
and flexibility when faced with the
world economic crisis adapting its
production volumes and stressing
efficient cost management.
Financial risks
In order to protect itself from
financial risks, Gerdau has a
conservative financial management
policy, based on established
indebtedness limits, maintaining
the appropriate leverage ratio.
Investment risks
Investment-risk decisions are
evaluated periodically according to
the guidelines defined by corporate
governance. The decisions adhere
to a long-term corporate vision and
aim at ensuring the competitiveness
of operations in various market
situations. Concerning acquisitions,
Gerdau prefers profitable assets that
are in line with its operating strategy
for each location and market.
Legal risks
In order to minimize legal risks,
the Company constantly keeps
itself up-to-date on legislation and
fulfills its legal obligations in all
countries in which it operates.
Supply risks of raw
materials and inputs
Gerdau establishes long-term
relations and business alliances
with its suppliers that ensure the
creation of joint commitments.
Besides guaranteeing its supply
of raw materials and input, this
stance contributed to the Company
– faced with price and demand
fluctuations in 2008 – quickly
being able to adapt a significant
portion of its supply contracts to
the new world economic reality.
Environmental risks
The Company has a well-structured
Environmental Management
System, which involves a series
of environmental protection and
preservation practices that satisfy
ISO 14001 requirements.
Risks of accidents to people,
equipment, and plants
To Gerdau, safety in the work
environment is a top priority.
Aiming at minimizing accident risks,
Gerdau bases its initiatives on
the Total Safety System, which is
founded on audits, training programs,
safety-awareness campaigns
and investments in technological
upgrading and safety equipment.
Compliance
As of January 2009, Gerdau
established a vice presidency
of Compliance, which serves to
aid the governance bodies in
the observance of ethical and
legal and contractual rules and
in risk-mitigation evaluations and
procedures, among others.
152008 GERDAU ANNUAL REPORT
STRATEGY AND COMPETITIVE DIFFERENTIALS
Continued integration in acquired companies and capture of synergies are priorities at Gerdau
Gerdau Strategic Aspirations
In 2008, Gerdau dedicated itself
to the continuity of the process of
integrating the companies acquired
in the last years, at the same time
seeking to value successful local
practices and reach increasing
performance levels. This is
because Gerdau believes that, in
order to construct an integrated
organization, one must know how
to perceive and understand each
region and culture’s differences
and take advantage of them.
Between 2006 and 2008,
32 companies were absorbed by
Gerdau in the Americas, Europe
and Asia. Standing out in this
new group of companies are
the North American companies
Chaparral Steel (manufactures
structural shapes) and Macsteel
(produces specialty steel), which
manufacture products of a greater
added value and have expanded
Gerdau’s geographic scope.
During the following business years,
Gerdau will continue pursuing new
synergies, increasingly expanding
the exchange of experience
between operations in order to attain
exceptional profit levels in relation
to the steel market by way of cost
reductions and increased productivity,
which are fundamental factors in
times of global economic uncertainty.
The Company also will continue
to pursue leading positions in
the markets in which it operates,
operations in important segments
of the market (especially long
steel and specialty long steel)
and geographic diversification.
Gerdau seeks to satisfy the needs of
its various stakeholders (community,
employees, shareholders, customers
and suppliers), an effort reflected by
the Company’s reputation. According
to the most important international
center of studies and research on
reputation, the Reputation Institute,
headquartered in New York, in 2008
Gerdau achieved second place
among Brazilian companies and the
24th place globally. The Company
climbed 22 positions in relation to the
2007 world ranking and 46 positions
since the study began in 2006.
Incentive of the best practices
Ever since the beginning of its
implementation in 2002, the Gerdau
Business System (GBS) has been
establishing itself as one of Gerdau’s
main competitive advantages.
The GBS, jointly defined with the
Business Operations, consolidates
and transfers the best practices
by way of standardized processes.
Besides promoting the progress of
all operations, Gerdau’s management
system enhances global results,
facilitates integration and accelerates
the adherence of new companies to
Gerdau’s management practices.
Because it is an open system
undergoing constant improvement,
the GBS identifies, assesses and
incorporates new practices that
have produced significant results
in the Business Operations. This
system includes policies, guidelines,
best practices, and global indicators
that allow Gerdau to achieve its
Vision and Strategic Aspirations.
Market leadership
Geographic diversification
Being a player in all segments
GROWTH and PROFITABILITY
Being an integrated organization
16 2008 GERDAU ANNUAL REPORT
Gerdau Business System (GBS) organizational structure
Virtual communities,
real experiences
The Practice Communities were
created in 2008 for employees
to share knowledge, solutions,
practices, suggestions, and ideas.
Through them, it is possible to
request support anywhere in order
to discover the solution to a problem
faced by an employee assigned to
any Business Operation or country
in which Gerdau operates. Thus,
problems can be solved more
quickly at a much lower cost.
The Practice Communities are
open to the participation of any
employee having the interest and
need to exchange knowledge about
a specific process. They function in
a virtual environment, known as the
Knowledge Management Portal.
Executive Committee
Board of Directors
Operational Macroprocesses
Support Macroprocesses
Indi
a
Spe
cial
ty S
teel
Aço
min
as
Nor
th A
mer
ica
Latin
Am
eric
a
Long
Ste
el B
razi
lLeaders of Operations
Process Leaders
Process Owners
Sales & Operational Planning
Procurement
Raw Material
Logistics
Industrial Processes
Marketing and Sales
Occupational Health and Safety
Legal Affairs
Finance and Investor Relations
Energy
Auditing
Accounting
Information Technology
Social Responsibility
Corporate Communications and Public Affairs
Management Systems
Planning and Business Development
Human Resources and Organizational Development
Each business macroprocess — for example, Marketing and Sales, Industrial Processes, Management Systems — is coordinated by a Process
Owner who works together with the Process Leaders for the Business Operations in the various countries where Gerdau operates.
172008 GERDAU ANNUAL REPORT
Gerdau produces its own raw materials and inputs
Throughout 2008, Gerdau made
important moves to guarantee
the supply, at competitive prices,
of raw materials and inputs that
are strategic to its operations. It
acquired a 50.9% stock interest
in the Colombia-based firm Cleary
Holdings – a controlling company
of metallurgical coke production
plants and owner of coking coal
reserves – for US$ 73 million.
Produced from mineral coal, coke is
one of the raw materials used in the
steelmaking process of integrated
mills that operate with blast furnaces.
Continuity was also given to the
production of Gerdau’s own iron ore
in Minas Gerais, whose reserves total
1.8 billion metric tons, according to
prospecting studies. This activity
is aimed at serving our integrated
steelmaking plants in Brazil.
Additionally, the Company has
continued investing in power
generation based on renewable
sources. Currently, Gerdau possesses
51.8% of the Dona Francisca
Energética power company in the
state of Rio Grande do Sul, which has
a 125-megawatt capacity. Its main
investment underway focuses on the
construction of two hydroelectric
plants in the state of Goiás, which
together will be responsible for the
generation of 155 megawatts of
installed power starting in 2010. In
the state of Paraná, a concession
was obtained in 2008 for the
generation of power. This enterprise
will have an installed capacity of 105
megawatts. Furthermore, Gerdau
Açominas has a capacity to generate
around 70% of its total power needs.
Iron ore processing plant in Miguel Burnier (state of Minas Gerais, Brazil)
18 2008 GERDAU ANNUAL REPORT
BUSINESS
Flexibility and swiftness for adapting Operations to the current reality of global demand
OPERATION PERFORMANCE
Throughout 2008, our financial
performance reflected the market
fluctuations – heavy demand during
the first nine months and reduced
consumption as of October.
Due to the reduced demand for steel,
as of November the Company took
steps to adjust its production volumes
to the new market reality, such as
having scheduled downtimes ahead
of time, and vacation shutdowns,
as well as postponing previously
announced investments. In addition,
various union negotiations were
conducted to adjust the size of the
workforce to the demand according
to the local market situations.
In 2008, the consolidated
sales volume was 19.1 million
metric tons (+ 11.4%), and the
consolidated production volume
reached 19.6 million metric tons
of steel (+ 9.4%), especially due
to sales growth from January to
September, increased productivity,
increased installed capacity and the
consolidation of new companies.
In Brazil, physical sales to the
domestic market exhibited a growth
of 22.1% in 2008, reaching
Gerdau products used in the construction of the Eldorado Business Tower, one of the most modern office buildings in Brazil (state of São Paulo)
192008 GERDAU ANNUAL REPORT
“Efficient resource management, rapid adaptation of production to the lower demand, and improved industrial plant productivity permitted Gerdau to face market fluctuations in the last quarter of 2008. Our performance in this fiscal year was marked by the integration of the recently acquired companies and by the capture of synergies among the various Business Operations.”
Claudio Gerdau Johannpeter
Gerdau Chief Operating Officer
4.8 million metric tons, mainly due to
the demands of civil construction and
industry. This led to the redirection
of part of the exports out of Brazil,
resulting in an 11.1% reduction in
the volumes shipped, which totaled
1.7 million metric tons. The revenues
from exports came to US$ 2.2 billion
during the fiscal year, including
shipments to subsidiaries and
associated companies. Industrial plant
production in Brazil accompanied
the demand, increasing 8.4%, to
7.5 million metric tons of steel.
In the United States and Canada
(excluding Macsteel), physical sales
reached 7.6 million metric tons in
2008, a 10.1% increase compared
to the previous year’s sales. This
increase was mainly due to the
consolidation of Chaparral Steel,
which occurred as of the third quarter
of 2007. Throughout the year, steel
production in the region grew to
7.6 million metric tons, a volume that
is 11.1% higher than that of 2007.
In Latin America (excluding Brazil),
physical sales remained practically
constant in relation to the previous
year, totaling 2.2 million metric tons.
However, reflecting the adaptation
of the industrial pace to the lower
demand during the last quarter of
2008, steel production displayed a
decrease, especially in Peru, Chile
and Colombia. Thus, steel production
for 2008 was 1.7 million metric tons,
which represents a 10.2% decline.
Since 2007, the Company also
operates in Asia, with a 45.2% share
of the Kalyani-Gerdau joint venture.
Kalyani-Gerdau is located in Tadipatri
in the state of Andhra Pradesh, India.
From January to December,
consolidated investments totaled
US$ 5.1 billion, of which
US$ 3.7 billion were allocated
to the payment of acquisitions
and US$ 1.4 billion went to the
expansion and technological
upgrading of the industrial plants.
Of the total of US$ 3.7 billion
allocated to acquisitions,
US$ 2.9 billion were invested in
expanding the Operation in the area
of specialty long steel – the purchase
of Macsteel (USA) and of stock
interests in Aços Villares (Brazil)
and Sidenor (Spain) –, US$ 477
million in the expansion of activities
in Latin America (except Brazil),
US$ 304 million in Canada
and the United States and
US$ 47 million in Brazil.
In 2008, US$ 1.4 billion in
investments in fixed assets
was distributed as follows:
US$ 798 million to the plants
in Brazil; US$ 168 million to
20 2008 GERDAU ANNUAL REPORT
Canada and the United States;
US$ 200 million to Latin America
(except Brazil); and US$ 233 million
to the division of specialty long steel
(Brazil, Spain and the United States).
Outlook
In 2009, Gerdau will keep
itself busy with the pursuit of
greater profitability, focusing on
results and cost reductions.
The Company will continue
seeking new synergies among
Operations, which contribute
to increasing productivity, and
investing in the development of
new products, in order to satisfy
market demands and offer its
customers competitive solutions.
Our US$ 6.4 billion investment
plan for 2008–2010 was adjusted
according to the year’s foreign
Sales per business sector(19.1 million metric tons)
Investments (US$ million) 2007 2008
Brazil 992 845
Fixed assets 992 798
Acquisitions - 47
North America 4,473 472
Fixed assets 190 168
Acquisitions 4,283 304
Latin America 631 677
Fixed assets 165 200
Acquisitions 466 477
Specialty Steel 219 3,117
Fixed assets 194 233
Acquisitions 25 2,884
Consolidated total 6,315 5,111
Fixed assets 1,541 1,399
Acquisitions 4,774 3,712
Note: acquisitions include transactions concluded during the year and the debts of the companies acquired
exchange rate variation. With this,
the total came to US$ 5 billion,
without project cancellations, yet
with revisions to their operating
schedules, which are subject to
future development in economic
conditions. Of the US$ 5 billion
total, US$ 1.4 billion was already
invested in 2008. The remaining
US$ 3.6 billion will be invested during
the next five years, with the possibility
of reductions, considering that the
cost of industrial equipment could
drop in comparison to 2008. These
amounts do not include acquisitions.
BRAZIL
Gerdau reports the performance of
the Long Steel Brazil and Açominas
Business Operations under “Brazil.”
Information relating to Specialty Steel
is reported separately. Long-steel
operations in Brazil concentrate
mainly on serving the domestic
market and involve
10 steel mills, 26 fabricated
reinforcing steel facilities
and various scrap collection
and processing facilities.
Among the markets served,
the supply of long steel for civil
construction stood out, followed by
the markets of farm machinery and
equipment, highway and railway
implements, and power transmission
towers. In 2008, the Long Steel Brazil
Business Operation aimed its efforts
at expanding and structuring the
supply of products having a higher
added value, mainly targeted at the
civil construction. This move was
mainly due to the growing demand
for ready-made products, especially
during the first nine months of 2008.
These extended products – ready-
Brazil: includes the Long Steel and Açominas Operations.
North America: includes all Operations in North America, except for the
plants in Mexico and specialty steel plants in the United States (Macsteel).
Latin America: includes all Operations in Latin America, except Brazil.
Specialty Steel: includes all Specialty Steel Operations in Brazil,
Spain and the United States.
The above information does not include data of companies with
shared control and joint ventures.
212008 GERDAU ANNUAL REPORT
for-use – have earned increasingly
more space in the marketplace
because they permit cost reductions
and offer higher productivity levels.
Domestic market supply was
guaranteed by a well-structured
commercial strategy of product
distribution through Comercial
Gerdau, which has roughly
70 distribution centers and
4 flat steel service centers,
covering Brazil’s main
steel-consuming regions.
Gerdau Açominas, Gerdau’s largest
steel plant in Brazil, exhibited good
performance in 2008, despite the
drop in demand during the fourth
quarter. Nevertheless, in order to
adapt its production to the new
market reality, Gerdau Açominas
performed the maintenance of its
blast furnace 1 prematurely, as
of December 2008, temporarily
halting its activities.
During the year, around 60% of
its production was directed toward
the international market, with
the increase in shipments to the
Middle East standing out. Added
to this are the positive results of
the structural shapes sector, which
presented a sales growth of 31%.
Presently, the mill serves the civil
construction and the automotive,
railway, machinery and implements
industries with its diverse product
mix – slabs, blooms, billets, wire rod
and structural shapes. In 2009, the
plant will finish the installation of new
machinery for the continuous slab
casting, which is expected to begin
operating during the first semester.
In order to guarantee its supply of raw
materials, Gerdau Açominas has iron-
ore reserves in Minas Gerais, near
the mill. According to prospecting
studies, the reserves total 1.8 billion
metric tons of ore. Furthermore,
the plant is self-sufficient in the
production of coke, another important
input item in its production process.
During 2008, a new coke plant began
operating, with a production capacity
of 630,000 metric tons per year.
Outlook
The Long Steel Brazil Business
Operation will continue emphasizing
the efficient management of the
equation between costs and sales
price, besides adapting itself
to the new growth rate of the
Brazilian economy. The goals set
for 2009 include the following:
Cost improvements.•
Pursuit of synergy gains •
between the Operations.
Expansion of the information •
management process and
the sharing of experience
among the plants.
The flexibility of its product mix and
the geographic diversification of its
sales will be important competitive
advantages for Gerdau Açominas
to conquer new markets, even in
the face of the uncertain global
economic situation. Some of the
activities anticipated are as follows:
Focus on increasing sales •
to the markets of the Middle
East, Africa, and Europe.
Expand operations in the sector of •
high-quality structural shapes and
wire rod on the international market.
Take advantage of the flexibility of •
Gerdau Açominas’ equipment to
adapt its production to the demand.
Grow in the power and •
forging-plant sectors.
Begin sales of high-quality slabs •
to the automotive, naval, and civil
construction sectors, among others.
Structural shapes produced at Gerdau Açominas (state of Minas Gerais, Brazil). These shapes have various applications, especially in metal construction jobs, and provide speed and economy on the construction site
22 2008 GERDAU ANNUAL REPORT
LATIN AMERICA(Argentina, Chile, Colombia, Dominican Republic, Guatemala, Mexico, Peru, Uruguay and Venezuela)
In 2008, Gerdau established itself
as one of the main steelmaking
companies in Central America by
way of its strategic alliance with
Corporación Centroamericana del
Acero, the largest steel producer
of the region, with one steel mill
(Guatemala), four rolling mill
plants (Guatemala and Honduras),
sales offices (Guatemala,
Honduras and El Salvador) and
distribution centers (Guatemala,
Belize, El Salvador, Honduras
and Nicaragua). In addition, this
company holds a minority interest
in Intrefica (Honduras), which
conducts wiredrawing activities.
With the establishment of
the alliance, Gerdau acquired a
30% stock interest in the company.
In Colombia, a market in which it
holds a leadership position among
steelmaking companies, Gerdau
increased its share of interest in
Diaco, coming to hold 98.7% of the
company’s capital stock. In Mexico,
Gerdau concluded its acquisition of
49% of the capital stock of Corsa
Controladora, the holding company
of Aceros Corsa and its distributors.
In Chile, Gerdau expanded the
geographic span of its distribution
network, with the purchase of
Distribuidora y Comercializadora
de Aceros Regionales (Barracas
Janssen), and invested in the area
of wire and nails, with the acquisition
of Trefilados Bonati. Added to this
is the purchase of Caños Córdoba
(Argentina), which is involved in
the distribution of steel products.
Gerdau also expanded its efforts to
guarantee the supply, at competitive
prices, of one of the main raw
materials of the steelmaking process:
coke. This occurred by way of the
acquisition of 50.9% of the Cleary
Holdings Corp., the controlling
company of a metallurgical coke
production plant and of coking
coal reserves in Colombia.
As of October, the markets in which
Gerdau operates in Latin America
were affected, to distinct degrees,
by the world economic crisis. The
plants in Peru, Chile and Colombia
were affected the most, partially
because they concentrated a
significant part of Gerdau’s sales and
production volume on this region.
The markets of Argentina, Mexico
and Uruguay were also affected.
This led Gerdau to revise its schedule
of previously announced investments,
in the face of the new reality of
demand, especially the expansion
of Siderperú and the construction
of new plants in Argentina and
Mexico. Despite these adjustments
to the investment plan, the installation
of a new electric furnace at Siderperú
(Peru) and a steel plant in Tocancipá
(Colombia) was maintained for 2009.
In order to adapt the Operation to
adverse conditions, adjustments
to the production volumes were
also necessary, so as to regularize
the inventory levels. In addition,
scheduled downtimes and employee
vacations were anticipated.
Outlook
In order to maintain its growth rate
in Latin America, Gerdau will seek
productivity increases and cost
reductions. Among its main efforts
for 2009, the following stand out:
Improve the safety system •
of the industrial plants in
Latin America, especially the
recently acquired plants.
Cusezar Tower, a modern commercial building in northern Bogotá, Colombia, constructed with Gerdau products
232008 GERDAU ANNUAL REPORT
Adapt its production to the •
demand of each country.
Equate costs and inventory levels.•
Seek increased productivity, •
especially in recently acquired
companies, and adaptation
of the processes to the
best global practices.
NORTH AMERICA(Canada and the United States)
Gerdau Ameristeel took steps to
adapt itself to the new reality of
the North American market, which
strongly affected its performance
in the fourth quarter. This impact,
however, was attenuated by the
Company’s ability to prepare itself
for fluctuations in the economy.
The Company, which displayed record
performance during the first nine
months of the year, implemented
additional measures of cost control
and process improvement, as well
as quickly making adjustments
to its production volumes.
To this can be added the successful
integration of the new companies
acquired in 2007, mainly the
Chaparral steel company, which
generated twice the synergies
expected at the time of its acquisition
and expanded the Company’s
operations in the area of structural
steel (see “Integration of new
companies increases competitiveness
in the United States”). Furthermore,
Gerdau Ameristeel strengthened
its relationships with its customers,
improving the handling of the
specific needs of each.
Despite its solid balance sheet
and capital structure, Gerdau
Ameristeel recorded negative
financial performance for the
period – according to the
US GAAP accounting standard –
mainly because of the anticipated
recovery of investment premiums,
conducted due to the new economic
reality (more details in “Finance”).
During the fiscal year, moves to
consolidate Gerdau Ameristeel
focused mainly on steel-processing
companies and suppliers of scrap,
its main raw material. The Company
acquired Metro Recycling in
Canada and Sand Springs Metal
Processors in the United States, two
companies that operate in the area
of recycling and scrap processing.
Additionally, the stock interest in
Pacific Coast Steel was increased to
84%, which acquired Century Steel
during the year. Hearon Steel was
also acquired. The three companies
are engaged in fabricated reinforcing
steel activities, although Pacific Coast
Steel and Century Steel also perform
the assembly of their respective
structures in construction sites.
Outlook
Gerdau Ameristeel relies on high-
quality management, processes and
services as competitive advantages
for dealing with the uncertainties of
the current world economic situation.
For 2009, its plans include:
Invest in the competitiveness •
of the operation with the
adjustment of costs.
Adjust production volumes •
according to the steel
market’s demand.
Reinforce the Operation’s strong •
points through the sharing of
experience among the industrial
plants and adherence to the
best international practices.
Gerdau Ameristeel mill in Cambridge, Canada
24 2008 GERDAU ANNUAL REPORT
Besides expanding Gerdau
Ameristeel’s geographic reach and
its line of value-added products, the
consolidation of Chaparral Steel,
as of the third quarter of 2007,
produced important synergies
between the two companies. The
job of integrating Chaparral, the
second largest producer of structural
shapes in North America, made it
possible to achieve more efficient
operations and significant gains
in productivity, which resulted in a
savings of over US$ 100 million.
Integration of new companies increases competitiveness in the United States
These synergies represented
twice that expected by Gerdau
Ameristeel at the time of the
acquisition of Chaparral. This
successful integration job was
made possible through the sharing
of administrative and management
resources in the most diverse areas.
A similar process occurred with
Gerdau’s assimilation of steel
company Macsteel, the second
largest manufacturer of specialty long
steel in North America. Over 12 task
forces, involving 60 professionals
in Brazil and the United States,
conducted the work of identifying
and gauging the possibilities of
integration between the two plants.
In all, 55 priority projects were
defined and US$ 90 million worth of
synergies between the Operations
were identified. The objective of
the projects developed was to
promote the transfer of management
knowledge, the unification of
power contracts and of purchase
agreements for raw materials and
inputs, and the specialization process
of the industrial plants, allowing
them to focus their production
on specific market niches and
promote productivity gains.
Manufacture of structural shapes at Gerdau Ameristeel Petersburg, Virginia (USA)
252008 GERDAU ANNUAL REPORT
SPECIALTY STEEL(Brazil, Spain, United States)
The year 2008 heralded Gerdau’s
establishment as one of the largest
specialty long steel suppliers in
the world. In the United States,
we concluded the acquisition
of Macsteel, the second largest
manufacturer of specialty long
steel in North America, with plants
in Jackson (Michigan), Monroe
(Michigan) and Fort Smith (Arkansas),
accomplishing an important
step in the process of Gerdau’s
internationalization (see “Integration
of new companies increases
competitiveness in the United States”).
In Spain, Gerdau purchased an
additional 20% interest in Sidenor,
the largest manufacturer of specialty
long steel and large forged and cast
products in the country and one of
the main ones in Europe. With this,
Gerdau increased its holdings in the
company to 60%. True to our strategy
of expanding our line of products
and services offered in the region,
we acquired the companies Vicente
Gabilondo e Hijos and Rectificadora
Del Vallés, leaders in the production
and commercialization of cold-
finished products in the country.
In Brazil, Gerdau acquired an
additional 28.9% interest in Aços
Villares, thus intensifying the capture
of synergies and the integration of
its production plants of specialty
long steel in this country.
With plants in Brazil, Spain and
the United States, Gerdau’s strong
international presence made it
possible for Gerdau to establish
closer relations with its main
customers and form global supply
agreements of steel products.
These agreements were responsible
for a significant part of its sales
throughout the business year.
Nonetheless, as of the fourth quarter
of 2008, the change in global steel-
consumption levels led Gerdau to
adjust its production levels in the
countries in which it operates, mainly
by way of conducting scheduled
downtimes ahead of time and
granting early employee vacations.
Despite the heavy drop in demand
of the automotive industry observed
during the fourth quarter of 2008,
Gerdau maintained its position
as a world leader in the supply
of specialty long steel to this
industry. Additionally, it continued
supplying its products to the naval,
oil, machinery and equipment,
wind-power and construction
equipment sectors, among others.
To increase the competitiveness
of its enterprises, Gerdau currently
possesses three modern integrated
centers for product research and
development, in the United States,
Brazil and Spain. Over 100 engineers
work toward the improvement of
products and processes – developed
together with its customers –,
seeking high-quality, innovative
solutions that are more economical.
26 2008 ANNUAL REPORT
Outlook
The improvement of operating
efficiency, the continued achievement
of synergies between the industrial
plants and the optimization of the
production capacity provide Gerdau
with the elements necessary
to minimize the effects of the
world crisis on its production
INTERNATIONAL PRESENCE OF THE SPECIALTY STEEL OPERATION
plants of specialty long steel.
In order to do so, the Company
will seek the following in 2009:
Adapt production and inventory •
levels to the market demand
and increase the productivity
of the industrial plants.
Increase the supply of •
specialty steel by way of
international agreements.
Continue the market diversification •
of specialty steel Operations,
developing products for
new applications and for
the automotive industry.
272008 ANNUAL REPORT
Source of revenues(R$ 46.7 billion)
Growth of steel demand and consolidation of new companies guarantee positive performance
FINANCE
Gross revenues
Despite the severe global economic
crisis and the drop in sales observed
during the fourth quarter of 2008,
Gerdau closed the year with record
financial performance due to the
increased demand for steel during
the first nine months of the year and
the consolidation of new companies,
mainly in the United States. The
gross revenues for the business
year reached R$ 46.7 billion, a
36.7% increase in comparison to
the same period in 2007, according
to the International Financial
Reporting Standards (IFRS).
Net sales revenues and EBITDA
Net sales revenues reached
R$ 41.9 billion in 2008, 36.9%
higher than in the previous year.
The generation of operating cash,
represented by the EBITDA
(earnings before interest, taxes,
depreciation and amortization),
EBITDA(R$ 10.0 billion)
EBITDA breakdown (R$ million)
2007 2008 Variation 2008/2007
Net profit 4,303 4,945 14.9%
Income tax provision and social contrib. 952 948 -0.4%
Net financial income (332) 2,235 -
Depreciation and amortizations 1,317 1,896 44.0%
EBITDA 6,240 10,024 60.6%
Brazil: includes the Long Steel and Açominas operations.
North America: includes all operations in North America, except for the
plants in Mexico and specialty steel plants in the United States (Macsteel).
Latin America: includes all operations in Latin America, except Brazil.
Specialty Steel: includes all Specialty Steel operations in Brazil,
Spain and the United States.
Brazil: includes the Long Steel and Açominas Operations.
North America: includes all Operations in North America, except for the
plants in Mexico and specialty steel plants in the United States (Macsteel).
Latin America: includes all Operations in Latin America, except Brazil.
Specialty Steel: includes all Specialty Steel Operations in Brazil,
Spain and the United States.
The above information does not include data of companies with
shared control and joint ventures.
28 2008 GERDAU ANNUAL REPORT
Net profit(R$ million)
2007 2008 Variation 2007/2008
Brazil1 1,814 3,499 92.9%
North America 985 1,057 7.3%
Latin America 345 454 31.6%
Specialty Steel 682 618 -9.4%
Subtotal 3,826 5,628 47.1%
Foreign currency conversion2 477 (683) -
Total 4,303 4,945 14.9%
1 - Excludes the effect of the conversion of balances in foreign currency.
2 - Effect of the conversion of balances in foreign currency held by the companies in Brazil on debts and accounts receivable from exports, after income tax.
totaled R$ 10.0 billion, a
60.6% increase in relation to
the previous year. The EBITDA
growth occurred due to the good
operating performance and the
reduced growth of the operating
costs in relation to the net sales
revenues. Consequently, the EBITDA
margin for the period reached
23.9%, against 20.4% in 2007.
Net Profit
In 2008, the consolidated net profit
reached R$ 4.9 billion, a growth
of 14.9% in comparison to 2007.
The North American operations
presented a net profit of
R$ 1.1 billion, 7.3% greater
than that of 2007, according
to the International Financial
Reporting Standards (IFRS),
a methodology applied to Gerdau’s
consolidated balance sheet.
Nevertheless, according to the
United States Generally Accepted
Accounting Principles (US GAAP),
which are used by Gerdau Ameristeel
in its balance sheet, there was
a revaluation of the investment
premium rebound, which
resulted in an accounting loss of
US$ 1.2 billion. As a consequence,
Gerdau Ameristeel recorded a loss
of US$ 542 million for the year.
This loss does not represent
present or future cash disbursements
by the Company, and the loss
recorded in North America did
not affect the consolidated
balance sheet of Gerdau S.A.
Operational expenses
The cost of sales in 2008 was
R$ 31 billion, 34.1% above the
amount recorded in 2007. Costs
were affected by the consolidated
acquisitions during the year, the
greater sales volume and the
higher input prices for the period.
In 2008, sales costs, added
to general and administrative
expenditures, presented an
18.8% increase in relation
to 2007. During the fiscal
year, they represented 7.1% of
the net sales revenues, against
8.2% in 2007, reflecting the greater
dilution of fixed costs due to the
2008 sales volume growth.
Financial income and expense
During the business year, due to
the devaluation of the Brazilian real
in relation to the American dollar,
a negative financial result of
R$ 2.2 billion occurred (financial
income less financial expenses).
Included in this amount is the loss
292008 GERDAU ANNUAL REPORT
Indebtedness (R$ million) 2008 2007
Short-term
Domestic currency (Brazil) 892 1,163
Foreign currency (Brazil) 1,103 521
Foreign companies 1,938 855
Total 3,933 2,539
Long-term
Domestic currency (Brazil) 2,625 2,555
Foreign currency (Brazil) 6,886 4,342
Foreign companies 9,790 6,467
Total 19,301 13,364
Gross debt 23,234 15,903
Cash on hand and financial investments 5,491 5,139
Net debt 17,743 10,764
Value added breakdown(R$ 16.0 billion)
due to the exchange rate variation
of R$ 1 billion. In 2007, the net
financial income was positive,
amounting to R$ 332 million,
accounting for R$ 723.3 million
in foreign exchange gains.
Financial liabilities
Gerdau does not perform leveraged
operations with any type of
derivative. The practice of derivatives
is limited to the management of
the foreign exchange exposure
associated with the operations’ cash
flows and interest rate swaps.
On December 31, 2008, the net
debt (loans and financing, plus
debentures, less available funds
and bonds and securities) totaled
R$ 17.7 billion, compared to the
R$ 10.8 billion recorded at the
end of the previous year. This debt
increase is due to the effect of
the exchange rate variation on the
debts incurred in foreign currency
in Brazil and to the acquisitions
conducted during the period.
Nonetheless, the ratio between
the net debt and the generation
of cash was 1:1.8, below the 1:2.5
ratio limit established according to
Gerdau’s policy of indebtedness.
The gross debt (loans and financing,
plus debentures) at the end of the
business year was R$23.2 billion,
with 83.1% in long-term debts
(R$ 19.3 billion) and 16.9% in
short-term debts (R$ 3.9 billion).
The average debt-payment term
was seven years and six months.
Of the total gross debt as
of December 31, 2008,
15.1% was in Brazilian reais;
34.4% in foreign currency,
incurred by the companies
in Brazil; and 50.5% in
various currencies, incurred
by the subsidiaries in the
remaining countries.
Gerdau closed the year with available
cash and financial investments of
R$5.5 billion, 48.3% (R$ 2.7 billion)
of which was indexed to foreign
currencies, mainly the US dollar.
Value added breakdown
The consolidated value added of
the Gerdau companies in 2008
reached R$ 16.0 billion, a
52.8% increase in relation to 2007.
The value added breakdown derives
from revenues from goods and
services after discounts, totaling
R$ 46.2 billion, less R$ 30.2 billion in
costs. Making up these costs are the
amounts relative to raw materials and
consumer goods, third-party services,
depreciation and amortizations, equity
adjustments and financial income.
30 2008 GERDAU ANNUAL REPORT
CAPITAL MARKETS
With over 60 years in the capital
markets, Gerdau’s operations
have always been guided by a
conservative financial management
and a solid capital structure,
factors that have contributed to the
historical generation of profits for
its over 140,000 shareholders.
Gerdau has five publicly-listed
companies – Metalúrgica Gerdau
S.A., Gerdau S.A., Aços Villares
S.A., Empresa Siderúrgica del
Perú S.A.A. (Siderperú) and Gerdau
Ameristeel Corp. –, whose 2008
performance was influenced by
the global economic crisis.
During the period, however,
the shares of Gerdau companies
underwent significant trading, totaling
US$ 55.4 billion in 2008 on the
stock exchanges of São Paulo,
New York, Toronto, Madrid and Lima.
For the third consecutive year,
Metalúrgica Gerdau S.A. and Gerdau
S.A. kept themselves listed on the
Business Sustainability Index (ISE)
of the São Paulo Stock Exchange
(Bovespa), which is reserved
for a select group of companies
committed to sustainability and social
responsibility. Additionally, Gerdau
S.A. has been listed under Bovespa’s
Level 1 Corporate Governance
since 2001. Metalúrgica Gerdau
S.A. was also listed in 2003.
The Gerdau companies are
listed on the Index of Stocks with
Distinguished Corporate Governance
(IGC), the Index of Stocks with
Distinguished Tag Along (ITAG),
the Bovespa Index (Ibovespa), Index
Brazil 50 (IBrX50), the Industrial
Sector Index (INDX) and the Toronto
Stock Exchange – Standard & Poor’s
(S&P/TSX Composite Index).
A solid capital structure and conservative financial management mark Gerdau’s activity in the capital markets
Appreciation of shares over the last five years
-50 0 50 100 150 200 250 300
312008 GERDAU ANNUAL REPORT
Public offer of shares
and dividends
In 2008, initial public offers of
common and preferred shares
issued by Metalúrgica Gerdau
S.A. and Gerdau S.A. were made.
Entirely successful, these operations
generated R$ 2.9 billion in new
funds, allocated to reestablish the
liquidity of the Gerdau companies
due to the various acquisitions
undertaken during the last two years.
Subsequently, Metalúrgica Gerdau
S.A. and Gerdau S.A. paid dividends
of 100% to their shareholders,
through the capitalization of reserves,
which resulted in the issuance of
new shares. In that Operation, the
shareholders received one new share
for each share held. With this, the
total reserves capitalized amounted
to R$ 1.7 billion for Metalúrgica
Gerdau S.A. and R$ 3.5 billion
for Gerdau S.A., thus raising the
amount of the companies’ capital
stock to R$ 6.9 billion and
R$ 14.2 billion, respectively.
This initiative made greater
liquidity possible, thus facilitating
small investors’ access to
securities on the bond market.
Compensation to shareholders
Metalúrgica Gerdau S.A. and Gerdau
S.A. adhere to the traditional policy
of paying quarterly dividends and/
or interest on shareholders’ equity,
equivalent to at least 30% of the
adjusted net income for the business
year, assessed according to Brazilian
accounting practices. This percentage
is greater than the minimum
established under prevailing Brazilian
legislation, which stipulates 25%.
The dividends and interest on
shareholders’ equity distributed
to Metalúrgica Gerdau S.A.
shareholders totaled R$ 520.2 million
in 2008, while the compensation
paid to holders of Gerdau S.A.
shares was R$ 1.1 billion.
Gerdau Ameristeel Corp. customarily
distributes dividends every quarter
and, for the fourth consecutive
year, it paid special supplementary
dividends during the first quarter,
due to the superb results achieved
and the good market prospects at
the time. In 2008, special dividends
were US$ 0.25 per share, totaling
US$ 108.2 million, and quarterly
shares were US$ 0.02 per share,
adding up to US$ 34.4 million. In all,
US$ 142.6 million were distributed.
Aços Villares S.A. distributed
quarterly dividends and/or interest
on shareholders’ equity, at the rate
of 30% of the adjusted net income.
In 2008, Aços Villares S.A.
distributed R$ 116.8 million
in dividends and interest on
shareholders’ equity.
Empresa Siderúrgica del Perú
S.A.A. “follows a dividend policy of
distributing up to 33% of the net
profit. In 2008, by way of a decision
by the Board of Directors, the net
income, after statutory allowances,
was reinvested in the Company.
2008 Ownership
Region Metalúrgica Gerdau S.A. Gerdau S.A. Gerdau Ameristeel
Brazil 83.1% 76.5% 66.4%
North America 10.5% 19.4% 33.6%
Europe 4.5% 2.7% -
Other 1.9% 1.4% -
Total 100% 100% 100%
32 2008 GERDAU ANNUAL REPORT
RELATIONSHIPS
EMPLOYEES
The Organization invests in the education of professionals to face global challenges
In all countries, Gerdau employees
share the same conviction: century-
old values guide the Company’s
decisions and growth. These
same values are the basis of
Gerdau’s relationship with its over
40,000 employees, characterized
by integrity, respect, the pursuit
of mutual gains and coherence
between words and actions.
In order to face market challenges,
Gerdau has traditionally invested in
the training of its employees and
the preparation of global leaders,
which is fundamental to an agile and
efficient response to the external
scenario of global competitiveness.
All of this work is carried out based
on standardized human resource
practices in line with the Gerdau
culture, which aims at disseminating
the best management examples in
the area, in all Operations, based on
internal and market benchmarks.
Health and safety
Gerdau believes that no emergency,
production situation or desired
result can justify the lack of safety
of its employees and service
Engineers’ Intensive Training Program prepares professionals to work in Gerdau’s various Operations around the world
332008 GERDAU ANNUAL REPORT
providers. Therefore, people’s
safety in the work environment
is a top priority in all Operations,
and its objective is to reduce the
number of accidents to zero.
All of its plants adhere to the Total
Safety System, a rigorous set
of safety practices. Additionally,
constant investments in new accident
prevention equipment and technology
are made. In 2008, R$ 56.6 million
were invested in the area of safety,
18.1% more than in the previous year.
In order to improve safety
management in the work
environment, a project was
implemented in 2008 to chart, in
detail, the activities with the highest
probability of causing accidents
and to establish strict control
parameters, aiming at remedying the
critical factors that were identified.
Additionally, Practice Communities
– an internal social network relating
to health and safety – were created
to encourage the exchange of
information and experiences among
employees from different countries.
During the year, the rate of lost-time
accidents per million man-hours
worked (an international indicator
that gauges the occurrence of
workplace accidents) was 3.2, below
the world steelmaking average,
yet higher than the 2007 figure
because the indicator included nine
new companies located in Brazil,
Colombia, Dominican Republic,
Mexico, Peru, Spain, and Venezuela.
Internal climate
Gerdau’s excellent relationship with
its employees was reflected by the
increase in the favorability index
of the 2008 Opinion Poll – which
concerns all positive responses
given by employees –, which
rose from 71%, in 2007, to 72%,
mainly due to the upsurge of the
indicator in the United States and
Canada. Also observed was a rise
in the general satisfaction index,
which went from 78% in 2007 to
81% in 2008. During the same
period, employee participation in
the Opinion Poll reached 93%.
Moreover, Gerdau was recognized
as one of the Best Companies to
Work for in Brazil and Chile. In Brazil,
the survey was conducted by the
magazine Guia Você S/A Exame,
in association with the Institute
of Administration Foundation
(FIA) of the University of São
Paulo; in Chile, by the consulting
firm Great Place to Work.
Workforce indicators* 2007 2008
Schooling of employees
% who completed elementary school 19.5 18.0
% who completed high school 58.7 57.3
% who completed college education 21.8 24.7
Number of women working at Gerdau 3,192 3,936
% of leadership positions occupied by women 12.6 12.9
Average age of employees 38 37.6
% of employees over 45 years old 30.9 28.0
% employed for 20 or more years 21.0 18.4
Average time working for the Company 10 years 10 years
Turnover rate (%) 8.2 9.1
*Data relating to associated companies with shared control and joint ventures were not included.
34 2008 GERDAU ANNUAL REPORT
Training
In 2008, R$ 47.6 million were
invested in the training of people,
an amount 6.9% greater than that
of 2007. In all, 3 million hours were
devoted to training, which amounts
to an average of 67.4 hours
of instruction per employee.
One of the year’s highlights was
the conclusion of the first edition
of the Gerdau Business Program, a
two-year MBA program customized
according to the Company’s
needs. The executives – who were
prepared to meet global challenges
– participated in various modules
in internationally recognized
institutions in France, the United
States, China and Brazil. The
second edition of the program is
underway, involving 34 executives.
Investments in health and safety in the workplace(R$ million)
The Engineers’ Intensive
Training Program, which prepares
professionals to work at any Gerdau
plant in the world, graduated its
first class in 2008. As of 2009, the
68 engineers trained via this initiative
will work in various countries,
focusing on the improvement
of the industrial process.
Trainees
One of the main initiatives to
instruct and attract talents is the
trainees program. In 2008, over
20,000 candidates participated in the
selection process. In all, 390 trainees
began to work for the Company in five
countries – Argentina, Brazil, Canada,
Colombia, and the United States.
For two years, the trainees participate
in a structured preparatory program,
including various types of instruction,
on-the-job training, and specific
projects. Based on systematic
supervision, this program aims at
preparing trainees to work in the
day-to-day routine of our Operations
and add value to our business.
The program has been restructured
and, in 2009, trainee education
will be intensified in the areas of
technical knowledge, management
and safety in the workplace.
Successors
Gerdau is continuously preparing
new executives to hold significant
positions in the Organization,
maintaining the Organization’s
values and management practices.
Throughout the year, the 58 People
Development Committees in the
Accident frequency rate*
*Rate of lost-time accidents per million man-hours worked.
352008 GERDAU ANNUAL REPORT
Business Operations evaluated
942 executive positions. Discussions
concerning careers and succession
at Gerdau are held at the meetings of
the People Development Committees,
ensuring a broad debate on the
development of people and teams.
Technical career
The education of technicians with
great mastery of all of Gerdau’s
processes is fundamental for the
Company to establish itself as a global
player exhibiting performance that
is a benchmark to other companies.
This being the case, in 2008
Gerdau expanded the possibilities
of professional development
and growth with the Technical
Career Project, which was initially
implemented in Brazil. The project will
be expanded to the other countries.
Its objectives are to attract,
retain, develop and value qualified
professionals displaying outstanding
performance in the technical area,
thus increasing the number of
employees possessing full knowledge
of the Company’s specific processes.
Labor union agreements
Gerdau maintains a union relations
policy that is based on respect
for free expression and for open,
clear discussion, always seeking
a path of common interest that
generates mutual benefits.
In 2008, the Company signed
28 collective bargaining agreements
with union entities in Brazil, Chile,
Spain, the United States, Mexico,
Uruguay, Peru and Venezuela.
Compensation and benefits
Gerdau’s compensation policy is
structured into two parts: employees
receive a fixed salary that is in
line with the best practices of the
market; and variable compensation
that is based on individual, team,
plant, and Business Operation
performance and goal achievement.
The Company offers its employees
and their families a benefit plan
that involves educational and
residential loans, private pension
plans, life insurance, and medical
and dental care. The benefits
vary according to the needs in the
various regions of the world.
*Amount distributed by the Company to employees in variable compensation.
Profit sharing*
Benefits (R$ million) 2007 2008
Meals 55.7 62.0
Transport 50.9 59.3
Health 175.6 230.7
Private pensions 96.3 94.4
Training and development 2007 2008
Investment (R$ million) 44.6 47.6
Training hours (million) 1.8 3.0
Training hours per employee 49.0 67.4
36 2008 GERDAU ANNUAL REPORT
CUSTOMERS
Gerdau’s quality products and innovative solutions are a differential in servicing its customers
Alert to the needs and rapid
changes of the market, Gerdau
seeks to identify trends and prepare
itself for future demands, so as
to offer its customers intelligent
and innovative solutions.
This is the case of the Zbar, a
rebar that was launched mainly on
the North American market, with
innovative and exclusive Gerdau
technology. It stands out for being
rust-resistant via dual coatings,
offering much greater durability than
conventional coatings. The product
was developed for application
in structures and floors located
in regions with adverse weather
conditions, such as humidity and
exposure to salt, which can provoke
a high degree of corrosion. In
2008, the Zbar received the ASTM
A1055 certification of the Standard
Specification for Zinc and Epoxy Dual
Coated Steel Reinforcing Bars, a
certification that is widely recognized
in the United States, conferring
credibility to the product’s quality.
The improvement of Gerdau’s
services and products was also
recognized in Canada. During the
fiscal year, the Manitoba plant was
chosen by Caterpillar to receive
the MQ 11005 certification, an
accomplishment that only one steel
company among its 9,000 suppliers
worldwide had previously achieved.
In the long steel sector, Gerdau
intensified the transfer of technology
among its plants in Brazil, in Spain,
and in the United States, improving
the quality of its product line and
increasing the efficiency of its
processes. Moreover, the Company
has continued to develop new steel
for applications in the power, oil,
machinery, and naval sectors.
In the long steel sector in Brazil,
numerous actions were developed
aiming at addressing and overcoming
the expectations of customers.
Among the actions developed, forging
a closer relationship with clients can
be highlighted by means of direct
contacts with over 18,000 end-users
and the intensification of the work
of the sales and technical
team, with training of more than
23,000 professionals on product
application methodology for Gerdau
products and on new technological
trends in the Construction, industrial
and agricultural sectors.
Additionally, there was also the
launching of new products, such
as wire mesh for concrete walls
and bent mesh for precast shapes
that provide cost reduction and
greater productivity to worksites.
Gerdau also offers technical
alternatives for projects of 1,200
customers by creating appropriate
and cost effective solutions to the
specific needs of each of them.
Customer satisfaction is a priority
within the Organization. Therefore,
Gerdau constantly monitors its
strong points and its opportunities
for improvement by way of opinion
polls conducted by an independent
firm. In 2008, over 27,000 customers
were surveyed throughout the
world. The results of the study
demonstrated a high degree of
satisfaction of the customers, who
positively assessed the following
items: product quality, logistics,
technical support and sales service.
372008 GERDAU ANNUAL REPORT
Transparency and straightforward policies are the basis of Gerdau’s relationship with its over 140,000 shareholders
SHAREHOLDERS
Gerdau’s publicly-listed companies
are managed via a solid corporate
governance structure that adheres
to the best global models. Its
performance is based on the
transparency, clarity and swiftness of
its communication with shareholders.
The stockholder compensation
policies of the public companies –
Metalúrgica Gerdau S.A., Gerdau
S.A., Aços Villares S.A., Empresa
Siderúrgica del Perú S.A.A.
(Siderperú) and Gerdau Ameristeel
Corp. – are clear and are in line with
the parameters of the market. At
Metalúrgica Gerdau S.A., Gerdau S.A.
and Aços Villares S.A., dividends and/
or interest on shareholders’ equity are
distributed quarterly at the rate of at
least 30% of the adjusted net profit.
Gerdau Ameristeel Corp.’s practices
are in line with the highest North
American standards, which require
the payment of quarterly dividends
and, eventually, the distribution of
complementary annual dividends,
depending on the profits obtained
for the period and on the business
prospects. The dividend policy
of Siderúrgica del Perú S.A.A.
requires the distribution of up
to 33% of the net profit.
Furthermore, the minority
shareholders of Metalúrgica Gerdau
S.A. and Gerdau S.A. have tag along
rights; this permits the holders of
common and preferred shares to
receive 100% of the amount paid to
controllers upon the eventual sale
of the control of the companies.
A permanent, accessible
communication system, comprised
of various channels, always keeps
shareholders and investors up-to-
date on the most recent information
about Gerdau. In addition to the
Company website (www.gerdau.
com/investidores), visits are
made, conferences are held and
presentations are given in various
markets around the world.
Investors will find up-to-date information about the Company’s business on the website www.gerdau.com/investidores
38 2008 GERDAU ANNUAL REPORT
Gerdau’s social investments are channelled to the areas of education and emergency assistance
SOCIETY
Gerdau believes that the continuous
development of communities is made
possible by entrepreneurial actions.
Therefore, in the social programs
in which it participates, it seeks to
involve companies, the government
and civil organizations, so as to
increase investment potential, offer
sustainability to long-term initiatives
and encourage volunteer work,
promoting solidarity and the transfer
of knowledge among people.
Guided by the Gerdau Institute, the
Company’s activities focus on the
following areas: formal education;
education for quality, productivity
and competitiveness; environmental
education; education through
culture and sports; and emergency
assistance. In 2008, R$ 103.3 million
were invested in social programs, a
45.6% increase in relation to 2007.
During the 2008 fiscal year, the
Gerdau Institute also began the
internationalization of its social
management practices, seeking
synergies in the performance of
Operations in various countries.
Throughout 2009, this initiative will
focus on the plants in Argentina,
Canada, Chile, Colombia, the
United States, Peru, and Uruguay.
Formal education
In 2008, Gerdau invested
R$ 20.7 million to improve the
quality of formal education by
way of programs to improve the
administration of public institutions
and the training of preschool and
grade school teachers. One of the
highlights is the work developed by
the Gerdau Institute in its support
of the All for Education Movement.
The movement established five
goals for improving the quality of
Brazil’s elementary school education
system by 2022. In 2008, besides
monitoring the main indicators of
Brazilian elementary education,
the movement conducted a large
campaign, during city elections,
to make citizens aware of the
importance of choosing government
leaders that are committed to
quality formal education.
Education for quality, productivity,
and competitiveness
In order to encourage the
entrepreneurial spirit, develop
talents capable of producing wealth
for communities, and improve
management methods in public and
private organizations, Gerdau invested
R$ 23.9 million in projects in this area
in 2008. One example is the work
Public school students participated in the conscientious consumption workshops conducted during the Gerdau Volunteer Olympics, which joined together over 6,000 volunteers throughout Brazil in 2008
392008 GERDAU ANNUAL REPORT
developed jointly with the Competitive
Brazil Movement to improve public
administration. In Brazil, between
2004 and 2008, the governments
and associates of ten Brazilian
states and of the cities of São Paulo
and Porto Alegre invested
R$ 44 million in the improvement
of public administration
practices, generating savings of
R$ 8.8 billion, 163.0% higher
than the goal established in the
projects, which translated into the
improvement of services rendered
to the taxpayers and to society.
Among the projects endorsed by
Gerdau aimed at developing the
entrepreneurial spirit of low-income
youths is the Technical School,
which is located in Peru. The school
has already trained over 400 young
people between 16 and 21 years
of age since its founding in 1998.
Education through culture and sports
Committed to promoting education
and social inclusion through culture
and sports, Gerdau invested
R$ 37.9 million in this area in 2008.
Part of the funds came from tax
incentives. A highlight in 2008 was
the aid given to the construction
of the new headquarters of the
Iberê Camargo Foundation in Porto
Alegre, Rio Grande do Sul, Brazil
(see “New headquarters for the
Iberê Camargo Foundation”).
Environmental education
Gerdau develops initiatives for
expanding society’s environmental
awareness. In 2008, it invested
R$ 2.5 million in recycling programs
and in projects aimed at promoting
the conscientious consumption of
natural resources. Conscientious
consumption was the theme of the
Gerdau Volunteer Olympics, which
mobilized 6,750 employees in Brazil,
offering tips and performing tasks
concerning water, energy and waste,
thus contributing to the environment.
Emergency Assistance
Gerdau also takes care of the
emergency needs of communities,
mobilizing resources, employees,
Investment (R$ million) Number of volunteers
and members of society, and
supports social organizations that
are recognized for their exemplary
performance concerning social
responsibility. In 2008, investments
in this area totaled R$ 18.3 million.
Standing out among the emergency
assistance initiatives is the Gerdau
Professionals Pro-Childhood Fund,
through which the Company and
its employees in Brazil raise and
distribute tax waiver funds to social
institutions that care for children
and teenagers in situations of social
risk. In 2008, the Fund raised a
sum of R$ 6 million, which was
distributed to 151 social institutions.
Another highlight is the Gerdau
Volunteer Program, which obtained
the adherence of 9,200 employees
in 2008, 45.8% more than in 2007.
Volunteer work is very popular in
Brazil and the United States; in the
latter, around 40% of our employees
participate in volunteer initiatives.
40 2008 GERDAU ANNUAL REPORT
New headquarters for the Iberê Camargo Foundation
In May 2008, a new landmark in
world architecture was inaugurated:
the Iberê Camargo Foundation
building, located in Porto Alegre
(state of Rio Grande do Sul, Brazil).
Investments in the project totaled
R$ 40 million, with a significant
part of this amount (around 60%)
coming from tax incentives for
culture. Gerdau was one of the
main financial supporters of the
initiative. Along his life as an
artist, Iberê Camargo became one
of the most influential Brazilian
painters of the twentieth century.
The new building was conceived
by Portuguese architect
Álvaro Siza Vieira, one of the five
most important contemporary
architects in the world, winner of
the Hyatt Foundation’s Pritzker
Award (Chicago, USA), which is
considered the Nobel Prize of the
arts. In Brazil, Siza was awarded the
Medal of Honor for Cultural Merit in
2007, and was the recipient of the
Riba Gold Medal, one of the most
prestigious awards in architecture.
The Iberê Camargo Foundation
project received the Gold Lion at
the Venice Architecture Biennial in
2002 and special merit at the
Milan Design Triennial. The building
houses a collection of over
4,000 works by Iberê Camargo.
In seven months of activities in 2008,
over 90,000 people foundation.
A highlight was the Educational
Program, which trained 600 teachers
and assisted over 23,000 students.
Iberê Camargo Foundation headquarters in Porto Alegre (state of Rio Grande do Sul, Brazil) – an architectural classic showcasing contemporary art
412008 GERDAU ANNUAL REPORT
Wide chain of suppliers and long-term alliances give Gerdau the flexibility needed for rapid adaptation to market movements
SUPPLIERS
For decades, Gerdau has developed
a wide chain of suppliers, which has
been essential for increasing its
levels of competitiveness and quickly
adapting itself to the developments
of the steel markets. This has also
been possible due to its ability to
establish long-term alliances, which
are based on direct relationships
and the pursuit of mutual gains.
Gerdau also prefers contracting
suppliers that share its policy
of respect to people and the
environment, for it understands
that the sustainability of its
business also goes through the
production chain into which it is
inserted. Besides requiring rigorous
compliance with the prevailing
legislation of each country, Gerdau
conducts periodic audits, aiming
at ensuring the observance of
its standards of excellence.
To encourage the development of
its suppliers in Brazil, the Company,
in association with the Brazilian
Micro and Small Business Support
Service (Sebrae), conducts the
Supplier Development Program.
Created in 2006, this initiative
promotes the improvement of
management skills, focusing on
job safety, service quality and cost
reduction, among other things.
Because it uses steel scrap as one
of its main raw materials, Gerdau is
dedicated to the improvement and
training of its scrap supply chain
in various countries. In Chile, it has
worked for two years to transform
direct suppliers of scrap into formal
businesses, also promoting the
learning of modern management
practices. To do this, training is
conducted in different areas –
such as management, tax and
fiscal aspects of the business,
and precautions concerning the
natural environment –, so that the
businesses of these small suppliers
achieve sustainability. In all,
150 people have already been
trained in this program. In Brazil,
Gerdau supports the formation of
scrap recycling cooperatives, which
has resulted in social inclusion
and income generation for needy
families. By 2008, 13 cooperatives
had been created in various Brazilian
states, involving 580 cooperating
participants. This initiative was
expanded to Colombia in 2008, with
the goal of forming 15 cooperatives
in the country by the end of 2009.
Besides contributing to the
improvement of its chain of suppliers,
Gerdau seeks greater agility in its
daily purchasing procedures, cost
reduction and better conditions
for choosing the best service
suppliers. To achieve these goals, the
Company implemented the Gerdau
Global Procurement program in
2008, a system that standardizes
and aligns the Organization’s
purchasing procedures. The system’s
implementation began with the plants
in Brazil, the United States and
Canada; it should be expanded to
all Operations in the coming years.
42 2008 GERDAU ANNUAL REPORT
ENVIRONMENT
Eco-efficiency practices and the constant upgrading of environmental protection technology characterize Gerdau’s performance
ENVIRONMENTAL MANAGEMENT
Gerdau constantly invests in the
improvement of its eco-efficiency
practices and in technologies for the
protection of the air, water and soil. In
2008, R$ 201.0 million were invested.
By way of a well-structured
Environmental Management System, the
environmental aspects of its production
chain are supervised, from the purchase
of raw materials to the final product
and the destination of by-products.
The number of ISO 14001 certified
Gerdau plants has increased
significantly. Seven plants obtained
certification in 2008, raising the
number of certified industrial plants
to 40, which represents a growth of
21.0% during 2008 alone. Current
plans are to certify all plants by 2011.
Scrap
During the year, Gerdau,
Latin America’s largest recycler,
transformed approximately
16 million metric tons of scrap into
steel, 25.0% more than in 2007.
The production of steel from scrap is a
fully sustainable process, insomuch as
it helps reduce the amount of materials
discarded in landfills or inappropriate
places, power and water consumption
and the generation of waste.
The Planting Future Project carried out at Gerdau Cosigua (state of Rio de Janeiro, Brazil) has already produced over 5 thousand seedlings for reforesting in the state with the support of the community and volunteers
432008 GERDAU ANNUAL REPORT
Environmental investments(R$ 201 million)
Energy
Gerdau’s investments are based on
power generated through the use of
renewable resources and alternative
energy sources. An example is the
construction of two hydroelectric
plants in Goiás (Brazil), which together
should generate 155 megawatts.
Standing out in the area of energy
efficiency is the utilization of the
residual gases produced in Gerdau
Açominas’ blast furnaces, steel
plant and coke plant, a resource that
enables the plant itself to generate
around 70% of its power needs. In
2008, of the total volume of gases
produced, 97.6% were reused for
power generation or for reheating.
The Company seeks to optimize energy
use by way of periodically upgrading
its industrial equipment and processes,
which contributes to eliminating waste
and reducing the corresponding
environmental consequences.
Air
Gerdau has modern dust removal
systems to control the atmospheric
emissions of its steel mills. These dust
removal systems aim at treating the
gases produced by the steelmaking
process, transforming the retained
materials into by-products, which
are recycled by other segments
of the industry. In our recently
acquired companies, protection of
the atmosphere is one of our main
investment priorities when opportunities
for improvement are detected.
The increase in the energy efficiency of
Gerdau’s plants contributed to reducing
carbon dioxide emissions in the
atmosphere. In 2008, its CO2 emission
index was 557 kg per ton of steel
produced, consistently below the world
steel industry of 1,900 kg, according
to World Steel Association data.
Water
Gerdau’s water-recycling levels are
a benchmark for the steel industry.
In 2008, our recirculation index
reached 97.5%. In other words,
only 2.5% of our water resources
were obtained externally, which was
mainly due to evaporation losses.
This recycling ratio is equivalent
reusing to 2,883 cubic meters.
In 2008, twelve of the Company’s
industrial plants achieved high
recirculation levels, reaching the zero-
industrial-effluent mark in its technology.
Reuse of by-products
Brazil: includes the Long Steel and Açominas Operations.
North America: includes all Operations in North America, except for the
plants in Mexico and specialty steel plants in the United States (Macsteel).
Latin America: includes all Operations in Latin America, except Brazil.
Specialty Steel: includes all Specialty Steel Operations in Brazil,
Spain, and the United States.
44 2008 GERDAU ANNUAL REPORT
By-products
Secondary products in Gerdau’s
steelmaking process, the by-products
are usually reused by the steel
company itself and by other segments
of the industry. In 2008, the index of
by-product reuse was 78.2% of the
total generated, which represented
R$ 68.4 million in earnings in Brazil.
The entire process of transport,
storage and sales of by-products
complies with the requirements
of the Gerdau Environmental
Management System.
Biodiversity
The expansion and maintenance of
green belts with native species and
the maintenance of statutory reserves
and of permanent preservation
areas around our industrial
plants contribute to the conservation
of biodiversity. Of the entire
18,900 hectares of land owned
by the Company, 2,400 hectares
are areas of statutory reserves
or permanent preservation;
and 8,700 hectares, are native
forests (see “Private reserve
preserves fauna and flora”).
The Company invests in various
programs dedicated to planting
trees. In 2008, over 230,000
seedlings of different species were
planted around Gerdau’s industrial
plants in the various countries
in which Gerdau operates.
Environmental education
Mobilizing employees, their families
and neighboring communities by
way of awareness-raising campaigns,
lectures and training is also part of
Gerdau’s environmental management
program. 2008 boasted
46,700 participants and
93,000 hours of training aimed
at encouraging a pro-active
environmental attitude among
employees, numbers much
higher than those of 2007,
with 19,300 participants and
50,400 hours of training.
452008 GERDAU ANNUAL REPORT
Our main initiative to preserve
fauna and flora was the creation
of a private natural reserve in
the mountains of Serra de Ouro
Branco in the state of Minas Gerais,
Brazil. With 1,247 hectares, the
reserve is the home of threatened
species of wild animals, such
as the maned wolf (Chrysocyon
brachyurus) and the Brazilian
porcupine (Coendou prehensilis).
In the region, there also are
important species of Brazilian flora,
among them the Vriesea minarum,
a bromeliad that is on the country’s
Private reserve preserves fauna and flora
list of threatened species, and the
Aspilia caudata, a rare type of daisy.
Perpetual and irrevocable, the
reserve resulted from the alliance
between Gerdau and the Minas
Gerais State Institute of Forests
- State Forest System (Sisema).
Private natural reserve in Serra de Ouro Branco (state of Minas Gerais, Brazil)
46 2008 GERDAU ANNUAL REPORT
TIMELINE
In 1869, João Gerdau arrives from Germany in the Santo Ângelo colony, Brazil, current city of Agudo (state of Rio Grande do Sul)
Pontas de Paris nail factory (Rio Grande do Sul, Brazil)
Construction of Gerdau Cosigua (state of Rio de Janeiro, Brazil)
1901João Gerdau and his son Hugo launch
the basis of Gerdau with the Pontas
de Paris Nail Factory in Porto Alegre
(state of Rio Grande do Sul), Brazil.
1907The businesses of João Gerdau are
divided into two independent branches:
Hugo manages the nail factory and his
brother Walter is responsible for the
Gerdau Furniture Factory, both in Porto
Alegre, state of Rio Grande do Sul, Brazil.
Later, in 1930, the two will take part
in the creation of the State Center
for the Manufacturing Industry, future
Federation of Industries of the State.
1914Hugo Gerdau becomes one of the charter
founders of Cia. Geral de Indústrias
(state of Rio Grande do Sul, Brazil), that
then gave rise to Fogões Geral. Later,
he assumes control of the company
and in 1947, leaves the business.
1933The Nail Factory expands its production
level with the construction of a new plant
in Passo Fundo (state of Rio Grande
do Sul, Brazil), in business until 1964.
1946Curt Johannpeter, son-in-law of Hugo,
assumes management of the company
and oversees a decisive phase in
the expansion of the business.
1947The Nail Factory — now Metalúrgica
Gerdau S.A. — begins trading on the
stock exchange of Porto Alegre and starts
paying dividends to its shareholders.
1948Gerdau enters the steel industry, with
the Riograndense — known as Usina
Farrapos (UFA) — in Porto Alegre (state
of Rio Grande do Sul, Brazil), anticipating
the concept of a mini-mill, a model based
on the use of scrap and on regional
marketing that makes it possible to have
more competitive operating costs.
1957The second plant of the Riograndense
goes into operation, also known as
Plant II, in Sapucaia do Sul (state
of Rio Grande do Sul, Brazil).
1963The creation of the Gerdau Foundation,
with programs in the areas of health,
education, housing and social assistance,
reinforces the culture of social
responsibility of the Organization.
1967The São Judas Tadeu Wire factory,
in Sao Paulo (state of São Paulo),
marks the expansion into the
southeast region of Brazil.
1969Gerdau arrives in the northeast of
Brazil with Siderúrgica Açonorte
(state of Pernambuco).
1971Start of the construction of Gerdau
Cosigua, in Rio de Janeiro (Brazil), and
entry into the sector of steel distribution,
with the first Comercial Gerdau, in São
Paulo (Brazil). Gerdau assumes control
of Siderúrgica Guaíra, pioneer in the
production of steel in the state of Paraná
(Brazil). In 1982 its second plant goes
into operation in the state, in Araucária.
1980Beginning of internationalization, with
the steel mill of Laisa, in Uruguay.
1982Start of the operation of
Siderúrgica Cearense, in Maracanaú
(state of Ceará, Brazil).
1989Entry into North America with Courtice
Steel, now Gerdau Ameristeel Cambridge,
in the province of Ontario (Canada). The
presence in the country is reinforced
in 1995, year when Gerdau took over
MRM, in Manitoba. The Organization
also arrives in Bahia, Brazil, by
means of the purchase of Usiba.
472008 GERDAU ANNUAL REPORT
Gerdau Laisa (Uruguay) marks the start of Gerdau’s globalization program
Debut of Gerdau S.A. on the New York Stock Exchange (Nyse)
Iron ore processing plant in Miguel Burnier (state of Minas Gerais, Brazil)
1992Acquisition of the AZA steel mill, in
Chile, and Aços Finos Piratini (state
of Rio Grande do Sul, Brazil). The
GG 50 rebar is launched, one of the
main products of Gerdau in Brazil.
1998Gerdau buys part of the capital stock of
the Sipar steel rolling mill, in Argentina,
and in 2005, takes a controlling stake.
1999Entry into the United States with the
acquisition of control of Ameristeel.
Gerdau S.A., a publicly traded
company in Brazil, is listed on the
New York Stock Exchange (Nyse).
2001The Organization celebrates 100 years
of business with installed capacity of
8.4 million metric tons of steel per year.
It assumes control of Açominas (state of
Minas Gerais, Brazil), its largest plant, of
which it was a shareholder since 1997.
2002Gerdau and Co-Steel merge their
steel operations in North America,
creating Gerdau Ameristeel, which
at the time had 11 steel plants and
29 downstream operations.
2004Expansion of Gerdau in the Americas. In
Colombia, an agreement is announced
for acquisition of the control of Diaco
and Sidelpa. In North America, assets
of North Star Steel are purchased, and
Gerdau Ameristeel is listed on the Nyse.
2005Gerdau expands its presence on
the global market by announcing at
the end of the year, the acquisition
of 40.0% from the Spanish Sidenor,
in a transaction concluded in 2006.
The Gerdau Institute is created to
coordinate the policies and guidelines
of social responsibility of Gerdau.
2006Gerdau acquires Siderperú, in Peru, and
in the United States, Sheffield Steel and
Callaway Building Products, in addition
to signing the Pacific Coast Steel joint
venture. In Spain, Sidenor assumes control
of the Spanish steel mill GSB Acero. In
Brazil, the Gerdau São Paulo plant (state
of São Paulo) goes into operation.
2007André Gerdau Johannpeter assumes
the position of CEO and Claudio Gerdau
Johannpeter becomes chief operating
officer (COO). Gerdau enters Mexico
(Siderúrgica Tultitlán), the Dominican
Republic (Industrias Nacionales — Inca),
and Venezuela (Siderúrgica Zuliana). The
acquisition of Chaparral Steel (USA) for
US$ 4.2 billion and of an interest stake in
Aceros Corsa (Mexico) also takes place.
An agreement is signed for the purchase
of Macsteel (USA), and the Kalyani
Gerdau joint venture is started in India. In
Brazil, Gerdau Açominas (MG) increases
its production capacity by 50.0%.
2008Gerdau enters Central America, acquiring
30.0% of Corporación Centroamericana
del Acero, which is headquartered in
Guatemala. A 50.9% stock interest is
acquired in Cleary Holdings, producer of
metallurgical coke and the owner of coking
coal reserves in Colombia. Prospecting
studies reveal the existence of 1.8 billion
metric tons of iron ore reserves belonging
to Gerdau in the state of Minas Gerais,
Brazil. Additional stock holdings in Aços
Villares (state of São Paulo, Brazil) and
Sidenor (Spain) are also acquired.
48 2008 GERDAU ANNUAL REPORT
AAdjusted net income
Net profit after deduction of 5.0%
of the net profit to a legal reserve,
until this reserve is equivalent to
20.0% of the paid-in capital. It is
the basis for calculating dividends.
ADRs
Acronym for American Depositary
Receipts. Security that represents
shares of non-US companies
issued and traded on the capital
market of the United States.
BBillet
Steel product with a square or
rectangular cross-section produced
by the continuous casting process
or by means of rolling of larger
cross-sections. It is the raw material
for the rolling of long products.
Blast furnace
Large furnace, clad with refractory
tiles, used in integrated mills to
make pig iron from iron ore.
Bovespa Level 1
Corporate Governance
Set of conduct standards for
companies, directors and controlling
entities considered important for
good appreciation of the shares
and other assets issued by the
company. Level 1 companies
commit themselves mainly to
improvements in the provision
of information to the market and
to a broad ownership base.
By-product
Secondary product of an
industrial process, which may
or may not be desirable.
CCash generation
See definition of EBITDA.
Cogeneration
Transformation of one form of
energy into another or others that
are fit for human consumption.
Coke
Basic raw material for the
production of steel. Coke is
produced from charcoal.
Coke plant
Area of the mill where
coke is produced.
Common share
Security that represents the
smallest part in which the capital
stock of a corporation is divided,
giving its holder the right to vote
at shareholders’ meetings.
Compliance
Observance of laws and adherence to
norms that regulate a specific sector.
Continuous casting
Process that continually produces
billets or slabs from liquid
steel poured into a mold.
Corporate governance
System whereby companies are
managed and monitored, involves
relations between shareholders,
Board of Directors, Executive Board,
independent auditor and Board
of Auditors. The purpose of good
corporate governance practices is to
increase the value of the company,
facilitate its access to capital and
contribute to its sustainability
(definition of the Brazilian Institute
of Corporate Governance).
GLOSSARY
492008 GERDAU ANNUAL REPORT
DDebenture
Security issued by a corporation
to obtain resources, for use
in investments or financing
of working capital.
Dividend
Amount distributed to shareholders
in cash, based on the number of
shares owned. It comes from profits
obtained by a company in the current
fiscal year or in past fiscal years.
Drawn bars
Steel products with dimensionally
precise finish specifications, which
are produced by way of a cold
forming process and are employed
in the manufacture of parts for
the automotive and agricultural
machinery industries, among others.
EEBITDA
Earnings before interest, taxes,
depreciation and amortization. Also
known as generation of operating
cash. It is gross profit minus sales,
general and administrative expenses,
plus depreciation and amortization.
EBITDA margin
Equal to EBITDA divided by net
revenue, expressed in percentage.
The percentage represents the
amount of each monetary unit of net
revenue that resulted in EBITDA.
Eco-efficiency
Capacity to produce more and
better products while consuming
less non-renewable resources
and producing fewer residues.
Electric arc furnace
Equipment for the production of
steel in which the metallic charge
(scrap + solid pig iron) is melted
using energy resulting from an
electrode-generated electric arc.
FFlat steel
Classification of steel products
that includes sheets and
strips. Flat steel is used in
outside parts of automobiles,
household appliances, etc.
Forging plant
Location at which metal-forging
processes are performed,
i.e., the processes of heating
and shaping the metal.
GGalvanization
Coating steel with a thin layer of zinc
with the purpose of increasing its
resistance to surface corrosion and
improving the product’s appearance.
Gross debt — Bank loans plus
debentures issued by the company.
Gross sales revenue
See definition of Revenue.
HHedge
Used as an instrument of protection
against the risk of price variations
in the various markets of real
or financial assets. Hedge may
be defined as an instrument of
strategy or protection to minimize
the level of risk of a certain
position in investment assets.
IInterest on shareholders’ equity
Amount distributed to shareholders,
in cash, based on the number of
shares owned. It is a substitute
for the payment of dividends.
Investment grade
Risk rating from specialized
agencies, granted to companies
or countries evaluated as capable
of honoring their commitments.
Iron ore
Raw material for the production
of pig iron and sponge iron. It is
the form iron is found in nature.
ISO 14001
Standard developed by the
International Organization for
Standardization (ISO) that specifies
the requirements related to an
environmental management
system of an organization.
JJoint venture
The joint investment of two
companies in a third company.
LLadle
Equipment in which liquid steel is
stored for adjustment of chemical
composition (addition of alloys to
correct manganese, silicon, and
carbon levels), temperature and
composition homogenization, and
to improve the cleanliness of steel.
Ladle furnace
Furnace that receives liquid steel
from the electric arc furnace for
the making of chemical refining.
50 2008 GERDAU ANNUAL REPORT
Leverage
Mechanism employed to obtain funds
for investments and for conducting
operations, using third-party capital.
Liquidity
Greater or lesser ease in trading
a security, converting it to cash.
Long specialty steel
Its production process assures
specific physical and metallurgical
characteristics adequate for the
requirements of special applications,
such as the automotive, oil, tool, and
machinery and equipment industries.
Long steel
Classification of steel products in
which one of the dimensions (length)
predominates over the others. It
includes bars, shapes, wire rod, rebar,
structural shapes and wire. This is
the main line of Gerdau products.
Lost-time accident
An accident that prevents the
employee from returning to work,
to his normal duties, on the day
immediately following the accident,
in the normal working hours, or
that results in a loss of life, partial
permanent disability, total permanent
disability or total temporary disability.
MMBA
Master of Business Administration.
Graduate course geared to
education of executives.
Melt shop
Area of a steelmaking plant
where steel is produced.
Mini-mill
Plant built to meet the demand of
a certain region, with the use of
local raw materials and resources.
Minority shareholder
Holder of a number of shares
insufficient to exercise shareholder
control of a company.
NNet debt
Gross debt minus cash on hand
and financial investments.
Net margin
Equal to net profit divided by
net revenue. It is expressed as
a percentage. The percentage
represents the amount of each
monetary unit of net revenue
that resulted in net profit.
Net profit
Final result achieved in a certain
period, after the recording of
all income and expenses.
Net sales revenue
Gross sales minus taxes on
sales, freight and discounts.
OOn-the-job training
Preparatory instruction
conducted in the workplace.
PPreferred share
Security that represents the smallest
part into which the capital stock
of a corporation is divided, giving
its holder priority in the receipt of
dividends and/or, in the case of
dissolution of the company, in the
return of the capital. In general,
it does not give the right to vote
at shareholders’ meetings.
RRebar
Long ribbed steel bar, used
as structural reinforcement
in civil construction, roads,
bridges, buildings, etc.
Revenue
The financial result from a company’s
sales of goods or services.
Rolling
Cold or hot mechanical shaping
process to make changes in the
shape and dimensions of the cross-
section of the initial material that
usually comes from the melt shop.
SSarbanes-Oxley
Law approved by the US Congress
to protect investors against
the possibility of accounting
fraud at corporations. The rules
and applications amend and
supplement the laws in effect
for public companies that trade
shares on US stock exchanges.
512008 GERDAU ANNUAL REPORT
Sintering
Process that consists of
agglomerating iron ore in a mix
with approximately 5.0% of a finely
divided carbon. This mix is heated,
which causes the alloying of ore
particles and results in a uniform
and porous product, called sinter.
Slab
Steel product of the flat steel
sector. It is the basis for the
production of sheets and strips.
Steel
Iron and carbon alloy (up to
1.5%) that also can contain other
chemical elements aimed at the
improvement of its properties.
Structural shapes — Group of
steel products that includes
I and H shapes, wide flange
beams and sheet piling. They
are used in the construction of
buildings, industrial centers, and
reinforcement of bridges, etc.
TTag along
Right that guarantees minority
shareholders the same
conditions offered to controlling
shareholders in case of sale of
the control of the company.
Trainee
Recent graduate from college
who is consistently and quickly
prepared to assume future
positions in the company.
Truss
Triangular frame produced with
grooved CA-60 steel, used in
prefabricated slabs of buildings,
bridges and viaducts, and in
spacer for slabs and floors,
among other applications.
WWire drawing
The wire drawing process by which
metal bars are converted into wire.
Wire drawing machine
Equipment that performs
the cold forming process,
transforming wire rod into wire.
Wire rod
Product of steel with a circular
cross-section obtained in the
rolling process. Wire rod is normally
drawn and used in the production
of wire, screws and nails.
YYield
Indicator that measures the annual
financial return of a share in the
form of dividends or interest on
shareholders’ equity. It is the ratio
of dividends and/or interest on
shareholders’ equity per share
to the price of the stock at the
end of a specific period.
52 2008 GERDAU ANNUAL REPORT
SUMMARIZED FINANCIAL STATEMENTS* GERDAU S.A. AND METALÚRGICA GERDAU S.A.ON DECEMBER 31, 2008 AND 2007
*Complete financial statements are available on the Gerdau website www.gerdau.com
Note 2008 2007(a)
CURRENT ASSETS
Cash and cash equivalents 4 2,026,609 2.026.096
Short-term investments
Held for Trading 5 2,759,486 2.836.903
Available for sale 5 627,151 276.374
Trade accounts receivable 6 3,683,933 3.172.316
Inventories 7 10,398,263 6.056.661
Tax credits 8 857,923 598.317
Prepaid expenses 89,262 108.690
Unrealized gains on derivatives 16 10,035 14
Other current assets 322,878 237.602
20,775,540 15.312.973
NON CURRENT ASSETS
Long-term investments 5 77,563 -
Tax credits 8 521,441 501,595
Deferred income taxes 9 1,766,355 1,014,129
Unrealized gains on derivatives 16 68,145 1,553
Prepaid expenses 129,368 110,207
Judicial deposits 18 258,620 223,735
Other non-current assets 323,415 290,783
Prepaid pension cost 20 271,447 507,017
Equity Investments 11 1,775,073 628,242
Other investments 11 21,768 18,623
Goodwill 12 11,294,102 6,043,396
Intangible assets 13 1,712,930 1,073,715
Property, plant and equipment, net 10 20,054,747 15,827,944
38,274,974 26,240,939
TOTAL ASSETS 59,050,514 41,553,912
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
GERDAU S.A. and subsidiaries CONSOLIDATED BALANCE SHEET(In thousands of Brazilian reais [R$])
532008 GERDAU ANNUAL REPORT
GERDAU S.A. and subsidiaries CONSOLIDATED BALANCE SHEET(In thousands of Brazilian reais [R$])
Note 2008 2007(a)
CURRENT LIABILITIES
Trade accounts payable 2,855,419 2,586,634
Short-term debt 14 3,788,085 2,500,985
Debentures 15 145,034 38,125
Taxes payable 17 517,272 462,311
Payroll and related liabilities 551,941 518,098
Dividends payable 7,820 392
Unrealized losses on derivatives 16 69,435 1,964
Other current liabilities 540,431 478,639
8,475,437 6,587,148
NON CURRENT LIABILITIES
Long-term debt 14 18,595,002 12,461,128
Debentures 15 705,715 903,151
Deferred income taxes 9 3,060,268 2,346,140
Unrealized losses on derivatives 16 314,267 16,106
Provision for contingencies 18 467,076 489,103
Employees benefits 20 1,275,985 758,899
Put options on minority interest 16-f 698,321 889,440
Other non-current liabilities 414,865 379,589
25,531,499 18,243,556
SHAREHOLDERS’ EQUITY 22
Capital 14,184,805 7,810,453
Treasury stocks (122,820) (106,667)
Legal reserve 144,062 278,713
Other reserves (1,028,355) 90,326
Retained earnings 5,110,818 5,756,529
Cumulative translation adjustment 1,877,992 (1,049,333)
PARENT COMPANY’S INTEREST 20,166,502 12,780,021
MINORITY INTEREST 4,877,076 3,943,187
SHAREHOLDERS’ EQUITY 25,043,578 16,723,208
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY 59,050,514 41,553,912
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
54 2008 GERDAU ANNUAL REPORT
Note 2008 2007(a)
NET SALES 24 41,907,845 30,613,528
Cost of sales 28 (31,018,946) (23,133,902)
GROSS PROFIT 10,888,899 7,479,626
Selling expenses 28 (688,640) (618,938)
General and administrative expenses 28 (2,284,857) (1,884,405)
Other operating income 205,676 110,721
Other operating expenses (116,064) (282,679)
INCOME FROM OPERATIONS 8,005,014 4,804,325
Equity in earnings of unconsolidated companies 122,808 118,399
INCOME BEFORE FINANCIAL INCOME (EXPENSES) AND TAXES 8,127,822 4,922,724
Finacial revenues 29 484,046 810,137
Financial expenses 29 (1,620,782) (1,202,027)
Exchange variations, net 29 (1,035,576) 723,289
Gain and losses on derivatives, net 29 (62,396) 1,170
INCOME BEFORE TAXES 5,893,114 5,255,293
Provision for income and social contribution taxes
Current 9 (1,423,660) (872,315)
Deferred 9 475,444 (80,012)
(948,216) (952,327)
NET INCOME 4,944,898 4,302,966
ATTRIBUTED TO:
Parent company's interest 3,940,505 3,549,881
Minority interests 1,004,393 753,085
4,944,898 4,302,966
Basic earnings per share - preferred and common 23 2.83 2.68
Diluted earnings per share - preferred and common 23 2.83 2.66
GERDAU S.A. and subsidiaries CONSOLIDATED STATEMENT OF INCOME(In thousands of Brazilian reais [R$])
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
552008 GERDAU ANNUAL REPORT
GERDAU S.A. and subsidiaries CONSOLIDATED STATEMENT OF CASH FLOW(In thousands of Brazilian reais [R$])
Note 2008 2007(a)
Cash flows from operating activities
Net income 4,944,898 4,302,966
Adjustments to reconcile net income to the cash flow provided by operating activities:
Depreciation and amortization 1,896,076 1,317,156
Equity in earnings of unconsolidated companies (122,808) (118,399)
Exchange variation 1,035,576 (723,289)
Loss (Gains) on derivatives, net 62,396 (1,170)
Post-employment benefits 130,976 (145,929)
Stock based remuneration 7,545 5,707
Income tax 948,216 952,327
Loss on disposal of property, plant and equipment and investments 72,782 87,069
Provision for losses on avaible-for-sale securities 140,166 15,727
Allowance for doubtful accounts 25,613 15,116
Reserve for contingencies (13,120) 178,381
Distributions from joint ventures 68,095 109,959
Interest income (244,501) (662,944)
Interest expense 1,151,253 750,033
Provision for obsolescense and net realisable value adjustment 256,457 (584)
10,359,620 6,082,126
Changes in assets and liabilities:
Reduction (Increase) in trade accounts receivable 1,065,076 (482,616)
Increase in inventories (2,489,882) (777,140)
Decrease (Increase) in trade accounts payable (2,215,810) 455,987
Increase in other receivables (427,162) (456,834)
Increase in other payables 197,636 278,541
Investments in Trading securities and available for sale securities (7,224,221) (4,191,788)
Redemption of trading securities and available for sale securities 7,178,198 6,864,285
Cash provided by operating activities 6,443,455 7,772,561
Interest paid on loans and financing (970,986) (711,518)
Income and social contribution taxes paid (1,895,419) (696,728)
Net cash provided by operating activities 3,577,050 6,364,315
Cash flows from investing activities
Additions to property, plant and equipment and intangibles (2,741,048) (2,757,093)
Payments for business acquisitions 3.6 (4,076,171) (8,525,731)
Interest received on cash investments 314,868 191,561
Net cash used in investing activities (6,502,351) (11,091,263)
Cash flows from financing activities
Capital increase/Treasury stock 2,834,799 907,324
Dividends and interest on capital paid (1,649,936) (1,199,424)
Borrowings 5,117,617 11,693,389
Repayment of loans and financing (4,967,812) (5,622,460)
Intercompany loans, net 1,265,290 291,440
Net cash provided by financing activities 2,599,958 6,070,269
Exchange variation on cash and cash equivalents 325,856 (387,749)
Increase in cash and cash equivalents 513 955,572
Cash and cash equivalents at beginning of period 2,026,096 1,070,524
Cash and cash equivalents at end of period 2,026,609 2,026,096
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
56 2008 GERDAU ANNUAL REPORT
METALÚRGICA GERDAU S.A. and subsidiaries CONSOLIDATED BALANCE SHEET(In thousands of Brazilian reais [R$])
Note 2008 2007(a)
CURRENT ASSETS
Cash and cash equivalents 4 1,884,912 2,046,665
Short-term investments
Held for Trading 5 2,795,797 2,744,936
Available for sale 5 627,151 276,374
Trade accounts receivable 6 3,713,885 3,226,310
Inventories 7 10,398,263 6,056,661
Tax credits 8 867,568 627,026
Prepaid expenses 89,262 108,690
Unrealized gains on derivatives 16 10,035 14
Other current assets 441,300 407,128
20,828,173 15,493,804
NON CURRENT ASSETS
Long-term investments 5 77,563 -
Tax credits 8 521,441 512,847
Deferred income taxes 9 1,827,459 1,045,166
Unrealized gains on derivatives 16 68,145 1,553
Prepaid expenses 129,368 110,207
Judicial deposits 18 259,196 224,275
Other non-current assets 365,910 338,134
Prepaid pension cost 20 280,174 515,726
Equity Investments 11 1,775,060 628,829
Other investments 11 22,344 18,995
Goodwill 12 12,235,808 6,043,396
Intangible assets 13 1,712,930 1,073,715
Property, plant and equipment, net 10 20,053,348 15,829,091
39,328,746 26,341,934
TOTAL ASSETS 60,156,919 41,835,738
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
572008 GERDAU ANNUAL REPORT
METALÚRGICA GERDAU S.A. and subsidiaries CONSOLIDATED BALANCE SHEETS(In thousands of Brazilian reais [R$])
Note 2008 2007(a)
CURRENT LIABILITIES
Trade accounts payable 2,855,562 2,586,761
Short-term debt 14 3,809,679 2,575,934
Debentures 15 145,034 38,125
Taxes payable 17 522,948 469,058
Payroll and related liabilities 552,651 519,733
Dividends payable 7,585 1,097
Unrealized losses on derivatives 16 69,435 1,964
Other current liabilities 550,713 497,940
8,513,607 6,690,612
NON-CURRENT LIABILITIES
Long-term debt 14 18,605,974 12,481,760
Debentures 15 1,764,968 791,433
Deferred income tax 9 3,119,606 2,442,203
Unrealized losses on derivatives 16 314,267 16,106
Provision for contingencies 18 467,433 490,319
Employee benefits 20 1,275,985 758,899
Put options on minority interest 16-f 1,307,608 1,441,185
Other non-current liabilities 409,551 379,588
27,265,392 18,801,493
SHAREHOLDERS’ EQUITY 22
Capital 6,881,998 3,744,000
Treasury stock (69,861) (69,861)
Legal reserve 62,082 131,295
Other reserves (473,866) 50,803
Retained earnings 2,424,360 2,752,244
Cumulative translation adjustment 947,342 (539,471)
PARENT COMPANY’S INTEREST 9,772,055 6,069,010
MINORITY INTEREST 14,605,865 10,274,623
SHAREHOLDERS’ EQUITY 24,377,920 16,343,633
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 60,156,919 41,835,738
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
58 2008 GERDAU ANNUAL REPORT
Note 2008 2007(a)
NET SALES 24 41,907,845 30,613,528
Cost of sales 28 (31,018,946) (23,133,902)
GROSS PROFIT 10,888,899 7,479,626
Selling expenses 28 (691,193) (620,267)
General and administrative expenses 28 (2,322,932) (1,914,102)
Other operating income 212,171 141,006
Other operating expenses (145,485) (298,828)
INCOME FROM OPERATIONS 7,941,460 4,787,435
Equity in earnings of unconsolidated companies 122,808 118,399
INCOME BEFORE FINANCIAL INCOME (EXPENSES) AND TAXES 8,064,268 4,905,834
Finacial revenues 29 548,761 866,220
Financial expenses 29 (1,754,497) (1,210,090)
Exchange variations, net 29 (1,035,560) 723,289
Gain and losses on derivatives, net 29 (62,396) 1,170
INCOME BEFORE TAXES 5,760,576 5,286,423
Provision for income and social contribution taxes
Current 9 (1,451,877) (881,050)
Deferred 9 534,072 (86,868)
(917,805) (967,918)
NET INCOME 4,842,771 4,318,505
ATTRIBUTED TO:
Parent company's interest 1,814,337 1,819,764
Minority interests 3,028,434 2,498,741
4,842,771 4,318,505
Basic earnings per share - preferred and common 23 4.60 4.94
Diluted earnings per share - preferred and common 23 4.60 4.94
METALÚRGICA GERDAU S.A. and subsidiaries CONSOLIDATED STATEMENT OF INCOME(In thousands of Brazilian reais [R$])
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
592008 GERDAU ANNUAL REPORT
METALÚRGICA GERDAU S.A. and subsidiaries CONSOLIDATED STATEMENT OF CASH FLOW(In thousands of Brazilian reais [R$])
Note 2008 2007(a)
Cash flows from operating activities
Net income 4,842,771 4,318,505
Adjustments to reconcile net income to the cash flow provided by operating activities:
Depreciation and amortization 1,896,215 1,317,298
Equity in earnings of unconsolidated companies (122,808) (118,399)
Exchange variation 1,035,560 (723,289)
Loss (Gains) on derivatives, net 62,396 (1,170)
Post-employment benefits 130,467 (151,195)
Stock based remuneration 7,545 5,707
Income tax 917,805 967,918
Loss on disposal of property, plant and equipment and investments 73,248 62,444
Provision for losses on avaible-for-sale securities 140,166 15,727
Allowance for doubtful accounts 28,166 16,445
Reserve for contingencies (13,978) 179,402
Distributions from joint ventures 68,095 109,959
Interest income (303,595) (714,222)
Interest expense 1,214,090 735,162
Provision for obsolescense and net realisable value adjustment 256,457 (584)
10,232,600 6,019,708
Changes in assets and liabilities:
Reduction (Increase) in trade accounts receivable 1,086,564 (508,382)
Increase in inventories (2,489,882) (777,140)
Decrease (Increase) in trade accounts payable (2,215,795) 455,903
Increase in other receivables (395,503) (398,870)
Increase in other payables 236,644 284,627
Investments in Trading securities and available for sale securities (7,237,719) (4,195,504)
Redemption of trading securities and available for sale securities 7,124,198 6,876,111
Cash provided by operating activities 6,341,107 7,756,453
Interest paid on loans and financin (970,986) (711,518)
Income and social contribution taxes paid (1,899,696) (702,391)
Net cash provided by operating activities 3,470,425 6,342,544
Cash flows from investing activities
Additions to property, plant and equipment and intangibles (2,738,620) (2,758,234)
Payments for business acquisitions 3.6 (4,271,778) (8,513,602)
Interest received on cash investments 313,182 191,923
Net cash used in investing activities (6,697,216) (11,079,913)
Cash flows from financing activities
Capital increase/Treasury stock 3,008,988 907,324
Dividends and interest on capital paid (1,677,393) (1,233,036)
Borrowings 5,117,617 11,867,692
Repayment of loans and financing (4,975,872) (5,740,550)
Intercompany loans, net 1,266,157 293,986
Net cash provided by financing activities 2,739,497 6,095,416
Exchange variation on cash and cash equivalents 325,541 (387,748)
Increase in cash and cash equivalents (161,753) 970,299
Cash and cash equivalents at beginning of period 2,046,665 1,076,366
Cash and cash equivalents at end of period 1,884,912 2,046,665
Transactions not affecting cash
Acquisition of 28.88% of Aços Villares S.A., via debentures 3.5 1,302,803 -
(a)2007 comparative amounts have been changed due to the adoption of paragraph 93A of IAS 19, as stated at Note 2.19b.
The accompanying notes are an integral part of these Consolidated Financial Statements.
60 2008 GERDAU ANNUAL REPORT
INFORMATION AND CONTACTS
Gerdau
Av. Farrapos, 1811
Porto Alegre — RS — Brazil
Phone: +55 (51) 3323.2000
www.gerdau.com
Shareholder Relations
Av. Farrapos, 1811
Porto Alegre — RS — Brazil
CEP 90.220-005
+55 (51) 3323.2211
Fax: +55 (51) 3323.2281
Depositary Bank in Brazil
Banco Itaú S.A.
Phone: +55 (11) 5029.7780
Custodian Bank Overseas
The Bank of New York
Phone: +1 (610) 382.7836
Services to Analysts and Investors
Av. Farrapos, 1811
Porto Alegre — RS — Brazil
CEP 90.220-005
Phone: +55 (51) 3323.2703
Fax: +55 (51) 3323.2281
Gerdau Ameristeel Corp.
4221 W. Boy Scout Blvd. — Suite 600
Tampa — FL 33607 — USA
Phone: +1 (813) 286.8383
www.gerdauameristeel.com
Independent Auditor
Deloitte Touche Tohmatsu
CREDITS
Coordination
Gerdau Corporate Communications and Public Affairs
Writing and Production Supervision
Gerdau Corporate Communications and
Public Affairs and Imagem Corporativa
Concept
SLM Ogilvy
Graphic design
Néktar Design
Translation/Proofing
Eriksen Translations/Scientific Linguagem
Printing
Gráfica e Editora Comunicação Impressa
Paper and ink
Duo Design 300 g (cover) and Couché Matte 150g
(inside pages) produced by Cia. Suzano from
cultivated trees certified by the Forest Stewardship
Council (FSC). Printed with soy-based ink.
Print Run
3,500 copies in Portuguese,
1,500 in English and 1,500 in Spanish
Photo and illustration credits
Gerdau archive (pg. 22, 38, 45, 46, 47), Agência Nitro/
Leo Drumond (cover, pg. 17, 47), Agência Nitro/Bruno
Magalhães (pg. 03, 04, 10, 11, 19, 42), Emmanuelle
Bernard (pg. 10, 32), Flavio Luiz Russo (pg. 18), Iberê
Camargo Foundation (pg. 40), Mathias Cramer (Perfil), MP
Fotos/Eduardo Simões (p. 24), Leonid Streliaev (pg. 23).
Gerdau believes in the importance of evaluating
and continuously improving all of its processes,
products and services. Fill out the opinion survey at
www.gerdau.com/relatorioanual2008 or send an
e-mail to [email protected], with suggestions
concerning aspects that may be improved.
2008 ANNUAL REPORT DYNAM IC108 YEARS ON THE MOVE
PROFILE
GERDAU
Gerdau is the leading producer
of long steel in the Americas and
one of the largest suppliers of
specialty long steel in the world.
It has operations in the Americas,
Europe, and Asia, which together
represent an installed capacity of over
20 million metric tons of steel per year.
It produces common long steel,
specialty steel, and flat steel for
the civil construction, industry
In 108 years of existence, Gerdau has learned to coexist with different cultures, languages, markets and realities. It has grown without losing sight of its principles and values. It has always managed to work in an agile, sustainable manner to attain its objectives, relying on the support of its thousands of employees throughout the world. The result of this dynamism is precisely what gives the Company its conviction to always overcome challenges.
ARGENTINAwww.sipargerdau.com
BRAZILwww.gerdau.com.br
CANADAwww.gerdauameristeel.com
CHILEwww.gerdauaza.cl
COLOMBIAwww.diaco.com.co
DOMINICAN REPUBLICwww.industriasnacionales.com
GUATEMALAwww.acerosdeguatemala.com
INDIAwww.kalyanigroup.com
MEXICOwww.sidertul.com.mx
PERUwww.sider.com.pe
SPAINwww.sidenor.com
UNITED STATESwww.gerdauameristeel.com
URUGUAYwww.gerdaulaisa.com.uy
VENEZUELAwww.sizuca.com.ve
www.gerdau.com
and farming sectors.
Its products are part of people’s
daily lives and are used in homes,
cars, freeways, bridges, agricultural
machinery, home appliances,
telephone towers and in the
energy industry, among others.
It is the largest recycler in Latin
America, and around the world, it
transforms around 16 million metric
tons of scrap into steel annually.
With over 140,000 shareholders,
Gerdau’s public companies are listed
on the stock exchanges of São
Paulo (Bovespa: GGBR4, GGBR3,
GOAU4, GOAU3, and AVIL3), New
York (Nyse: GNA, GGB), Toronto
(GNA.TO), Madrid (Latibex: XGGB),
and Lima (BVL: SIDERC1).
Cover photo
Low Income Mall in Brasília, opened
in April 2008. The project, by architect
Alencar Blanco Cinnanti and civil
engineer Dalmo Blanco Cinnanti, was
constructed using structural shapes
manufactured at Gerdau Açominas.