new york – june 13 th , 2003
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New York – June 13th, 2003
JP Morgan
STEEL SECTOR
WORLD
Brazil
GERDAU S.A. CONSOLIDATED
Highlights
Consolidated Figures
Outlook
Capital Markets
WORLD PRODUCTIONCrude Steel
Source: IISI 3
1st China
2nd Japan
3rd USA
4th Russia
5th South Korea
6th Germany
7th Ukraine
8th Brazil
9th India
10th Italy
Other
Total
20012002In million metric tons
Var.
On 1Q 2003
Brazil
produced
7.5 million
tons, 6.9%
more than in
the 1Q 2002.
181,6 150,9 20,3%
107,7 102,9 4,7%
92,2 90,1 2,4%
59,9 59,0 1,6%
45,4 43,9 3,5%
45,0 44,8 0,5%
34,1 33,1 2,9%
29,6 26,7 10,8%
28,8 27,3 5,6%
26,0 26,7 -2,7%
236,5 228,5 3,5%
886,7 833,8 6,4%
LARGEST PRODUCERS Crude Steel 2002
Source: Metal Bulletin
In million metric tons
Gerdau pro forma
Output in 2002: 11,3 million tons
(including 12 months of Co-Steel)
1st Arcelor 44,0
2nd Nippon Steel 30,9
3rd Posco 28,9
4th LNM Group 27,5
5th Shanghai Baosteel 19,5
6th Thyssen Krupp Steel 17,0
7th Corus Group 16,8
8th NKK 16,5
9th Riva Group 15,2
10th US Steel 14,5
11th Kawasaki 13,7
12th Nucor 12,4
13th Sumitomo Metal 11,8
14th Sail 11,4
15th GERDAU 11,3 4
FEB 2003 (USA)
SCRAP PRICEUS$ 114 / TON
PIG IRONUS$ 160 / TON
INTERNATIONAL PRICES
Source: MEPS/ USGS / AMM
1Q 2003Price increases:
5% in slabs
11% in bars 12% in wire rod12% in rebars
5
US$ 294 Rebars
US$ 344 Slabs
US$ 322 Bars
US$ 306 Wire rod
Jan. 01 Jul. 01 Jan. 02 Jul. 02 Jan. 03
200
260
300
360
US$/ton.
1S 2002 (USA)Pig Iron price
+17%
1S 2002 (USA)Scrap price
+37%
1S 2002Price increases:
39% in slabs
10% in bars13% in wire rod16% in rebars
STEEL SECTOR
World
Brazil
GERDAU S.A. CONSOLIDATED
Highlights
Consolidated Figures
Outlook
Capital Markets
BRAZILIAN STEEL SECTOR
Source: IBS
12 12
29,6 26,7 10,8%
9,0 8,6 4,7%
2,9 2,3 28,3%
64,4 66,1 -2,6%
16,5 16,7 -1,1%
105,0 107,6 -2,4%
8th 9th
Steel companies
Crude Steel output (million tons)
Revenues (US$ billion)
Exports (US$ billion)
Number of employees (thousand)
Steel apparent consumption (million tons)
Crude steel per capita consump. (kg/inhab.)
World Ranking
20012002 Var.
7
CRUDE STEEL OUTPUTBrazil - 2002
Source: IBS
In 2002, the output of crude steel reached 29.6 million tons compared to 26.7 million in 2001, an increase of 10.8%.
Consolidating companies by economic groups, Gerdau is the 3rd largest producer in Brazil. Individually, Gerdau ranks 5th and Açominas 7th.
In thousand tons
Usiminas/Cosipa
Gerdau/Açominas
Belgo/CST/Acesita (Arcelor)
CSN
Aços Villares
V&M do Brasil
Barra Mansa
8,447
5,999
8,439
5,107
700
500
387
BRAZILIAN CRUDE STEEL OUTPUT PER ECONOMIC GROUP
1Q 2003
Usiminas/Cosipa – 2,083
Arcelor – 2,079
Gerdau – 1,675
CSN – 1,2728
Output of long steel, sector in which Gerdau is present, totaled 7.6 million tons in 2002. This is an increase of 4.7% compared to 2001, when output reached 7.3 million tons.
ROLLED PRODUCTS OUTPUTBrazil - 2002
Source: IBS
1Q 2003
Gerdau – 921 K ton. – 49%
Arcelor – 677 K ton. – 36%
9
Belgo/CST/Acesita(Arcelor) – 2,735 k ton.
35.9%
Gerdau/Açominas3,660 K ton. – 48.0%
Barra Mansa – 367 K ton. – 4.8%
Aços Villares – 421 K ton. – 5.5%
V&M do Brasil – 442 K ton. – 5.8%
TOTAL SHIPMENTS WERE 27.5
MILLION TONS IN 2002,
10,1% HIGHER THAN IN 2001.
OF THIS TOTAL, 58% WENT TO
THE DOMESTIC MARKET AND 42%
TO EXPORTS.
TONS SHIPPEDBrazil - 2002
Source: IBS
Exports of flat steel increased most: 46.6%; semi- finished products increased 22.2%; long products increased 17.3%
Total volume exported increased by 25.8% in 2002, reaching 11.7 million tons.
Long Products6.7M tons
42.6%Flat Products
9.1M tons 57.4%
DOMESTIC MARKET
Long Products 1.2M t – 10.2%
Other Products0.5M t – 4.5%
Flat Products 2.2M t – 18.7%
Semi-finished7.8M t – 66.6%
EXPORTS
10
IMPORTS & EXPORTSBrazil - 2002
Source: IBS
200219991998 2000
11,686
9,291
6721,076
9,59910,017
930642
8,741
886
US$/t 250.6
US$/t 245.6
US$/t 283.1US$/t
236.1
US$/t315.0
2001
1Q 2003 - EXPORTS US$ 281.2 / ton
Imports Exports
Exports US$/ton
In thousand metric tons
In 2002 exports increased by 25,8%. The devaluation of the real and the price
increases in the international markets were the main variables in explaining this growth.
Dec02 / Dec01
Increases in export prices
Billets +33,2%Slabs +33,7%Bars +7,4%Rebars –4,0%
11
APPARENT CONSUMPTIONBrazil - 2002
Source: IBS
Apparent consumption in 2002 decreased
1,1% compared to 2001, basically due to the
reduction in demand for flat steel (-1,8%).
Long steel products represent 42% of
apparent consumption.
2001 2002
7.0 7.0
9.7 9.5
Long Products
FlatProducts
16.7 16.5
FLAT PRODUCTS 2002
Imports0.4M tons
4.7%Domestic
sales9.1M tons
95.3%
Imports0,2M tons
3.3%
Domestic sales
6.8M tons 96.7%
LONG PRODUCTS 2002
12
STEEL SECTOR
World
Brazil
GERDAU S.A. CONSOLIDATED
Highlights
Consolidated Figures
Outlook
Capital Markets
102 years of tradition focused on the production of steel in mini-mills and in the
distribution of steel products.
Installed capacity of 14 million metric tons of crude steel.
19th largest world steel producer according to Metal Bulletin Magazine (15th
including
12 months of Co-Steel) .
Largest long steel producer in the Americas.
Gerdau S.A. is listed on the Brazilian Stock Exchanges, on the NYSE and on the
Latibex (Madrid Stock Exchange). Gerdau Ameristeel Corp. is listed on the Toronto
Stock Exchange.
10 units in Brazil, 12 abroad and 2 strategic shareholdings (Sipar and Gallatin Steel).
68 sales points in Brazil (Comercial Gerdau).
17 downstream operations and special sections (5 in Brazil e 12 in North America).
26 fabrication shops (9 in Brazil, 03 in South America and 14 in North America).
4 service centers for flat steel in Brazil (Comercial Gerdau).
Highlights
14
Barão de Cocais
BRAZIL 7.4 MILLION TONS OF CRUDE STEEL PER YEAR 4.8 MILLION TONS OF ROLLED PRODUCTS PER YEAR
ABROAD 7.0 MILLION TONS OF CRUDE STEEL PER YEAR
6.8 MILLION TONS OF ROLLED PRODUCTS PER YEAR
SIPAR
LAISA
GERDAU AMERISTEEL
GERDAU S.A.
AÇOMINAS
AZA
Cambridge, ON (Courtice)
Jacksonville, FL
Cartersville, GA
Charlotte, NC
Knoxville, TNJackson, TN
Perth Amboy, NJSayreville, NJ
Whitby, ON
HOGallatin County, KY
MRM Special Sections
Whitby, ON
Gerdau Ameristeel Corp.
Geographical Distribution
Gerdau S.A.
Açominas
Cearense
Açonorte
Usiba
Cosigua Açominas
Guaíra
Piratini
Riograndense
Divinópolis
15
Billets, rebars, merchant bars, profiles,
wire rod, drawn products, nails, specialty
steel.
Billets, slabs, blooms, rebars,merchant bars, profiles and structurals.
Gerdau S.A. 4.374 4.071
Açominas 3.000 740
South America 430 609
North America 6.567 6.187
TOTAL 14.371 11.607
Rebars, merchant bars, profiles and wire rod
Products
Rebars, merchant bars, profiles, wire rod,
downstream products, special sections
and flat products.
Crude
Steel
Rolled
Products
Capacity & Products2003
In thousand metric tons
16
Output Evolution
Objectives
Strategies
Evolution
Main Events
Gerdau Ameristeel Corp.
Challenges and Forecasts
Growth Average Rate1980 - 2002
CRUDE STEEL 10.4% yearROLLED PRODUCTS 9.6% year
AzaChile1992
Part. Sipar
Argentina1998
MRMCanada1995
Part. Açominas
1997AmeriSteel
USA1999
CrudeSteel
Rolled Products
CearenseGuaíra1982
LaisaUruguay
1981
Hime1985
Barão de Cocais1988
CourticeCanada1989
Usiba1989
Piratini1992
Pains1994
Sipsa Argentina
1997
2002*
Açominas(control)
2002
Co-Steel2002
1980 1984 199619921988 2000
* 100% of Co-Steel
17
STEEL SECTOR
World
Brazil
GERDAU S.A. CONSOLIDATED
Highlights
Consolidated Figures
Outlook
Capital Markets
HIGHLIGHTS1Q2003
Net Income of R$ 287 million in the 1st quarter (+129%).
Net Sales of R$ 3.3 billion in the 1st quarter (+101%).
Output recorded 1 million metric tons of crude steel in March.
Dividends paid in a quarterly basis.
Stock Bonus of 100% to Metalúrgica Gerdau S.A. shareholders and
30% to Gerdau S.A shareholders.
Shares reduced by 1,000:1 reverse split and shares traded as single units.
Stock option plan to the management and employees.
Gerdau is the 19th largest crude steel producer in the world as published
by Metal Bulletin.
Metalúrgica Gerdau S.A. will be listed in the Level I of Bovespa Corporate
Governance Index.
19
RESULTS1Q2003
20
In R$ million
Net Sales
Gross Profit
EBITDA
Net Income
In R$ / ton
Net Sales
Gross Profit
EBITDA
Net Income
In %
Gross Margin
EBITDA Margin
Net Margin
NORTH SOUTHBRAZIL AMERICA AMERICA TOTAL
1.717,0 1.490,0 119,8 3.326,8
733,1 57,5 40,9 831,5
620,0 47,3 38,4 705,7
287,4 (22,4) 22,3 287,3
1.137 1.174 1.115 1.152
485 45 381 288
410 37 358 244
190 (18) 208 99
42,7% 3,9% 34,1% 25,0%
36,1% 3,2% 32,1% 21,2%
16,7% -1,5% 18,6% 8,6%
Gross Margin Ebitda Margin
Brazil North America South America
R$ millionNet Sales
1Q02 4Q02 1Q03
1,659
2,566
3,327120
1,717
1,490
EbitdaR$ million
1Q02 4Q02 4Q03
412
598706 39
620
47
36%
32%
3%
1Q02 2Q02 3Q02 4Q02 1Q031Q02 2Q02 3Q02 4Q02
43%
34%
4%
1Q03
RESULTS COMPARISON
21
Good market condition in Chile.
Merger with Co-Steel and recovery of demand after the harsh seasonal weather.
Açominas operating in full capacity.
Better international prices and stronger exports could balance the lower domestic market demand.
SHIPMENTS
Brazil – Domestic Market
Brazil – Exports
North America
South America
Exports
13.3%
Domestic Market
12.9%
854
657
1,269
107
980
580
1,067
106
876
536
625
84
1Q02 4Q02 1Q03
2,8872,733
2,121
22
In thousand metric tons
Domestic Market
14%
Exports
86%
SEMI-FINISHED PRODUCTS
Gerdau has 49% of the market share in the Brazilian long steel market.
The strong participation of common long steel products abroad is due to the merger with Co-Steel.
SALES BY PRODUCT LINE
Common long steelproductsAbroad 43%
Common long steelproducts Brazil 22%
Semi-finished
19%
Specialty steel 3% Drawn products 6%
Flat steel 8%
1st QUARTER 2003
Domestic Market
72%Exports
28%
COMMON LONG STEEL PRODUCTS
SALES BY SEGMENTS
45% Civil Construction, 53% Industry and 2% Agricultural
(Gerdau S.A. non consolidated)
23
OUTPUT
CRUDE STEEL OUTPUT ROLLED PRODUCTS OUTPUT
1Q02 4Q02 1Q03
798
612
71
996
1,084
105
922
1,122
911,481
2,185 2,135
1,675
1Q02 4Q02 1Q03
1,496
662
69
1,691
1,134
97
1,195
852,227
2,922 2,955
South AmericaNorth AmericaBrazil
24
In thousand metric tons
INDEBTEDNESSMarch 2003
In R$ million
Partic. Mar.03 Dec.02
TOTAL DEBT 100% 7.259 7.168
SHORT TERM 63% 4.570 3.708 Local currency 475 481 Foreign currency 1.852 1.639 Companies abroad 2.242 1.588
LONG TERM 37% 2.690 3.460 Local currency 1.121 1.096 Foreign currency 813 898 Companies abroad 756 1.466
CASH & EQUIVALENTS 19% 1.344 1.431 Local currency 306 499 Foreign currency - - Companies abroad 1.038 932
NET DEBT 81% 5.915 5.737
The increase in the ST portion is due
to the reclassification of North
American debt - LT x ST
(refinancing process under development)
Cash & equivalents reduction due to
the dividend payment made in the 1st
quarter of 2003 (R$ 186 million).
TOTAL DEBTLocal currencyForeign currencyCompanies abroad
FX RATE EXPOSUREForeign currency debt
Swap operationsCash & equiv. in US$
TOTAL HEDGE
HEDGE/ EXPOSURE
100%22%37%41%
2.665
1.981 1.038
3.020
1,1X
25
DEBT BREAKDOWNMarch 2003
Companies abroad
R$ 2,234 million
Other - R$ 285 million
BNDES – R$ 110 million Açominas (in R$) – R$ 114 million
Import loans – R$ 362 million
Pre-export /ACC – R$ 341 million
Açominas (in US$) - R$ 834 million
Working capital (in US$) - R$ 290 million
SHORT TERM – R$ 4.6 billion
Companies abroad
R$ 547 million
Other - R$ 165 million
BNDES – R$ 278 million
Açominas (in R$) – R$ 186 million
Debentures - Brazil– R$ 543 million
Pre-export /ACC – R$ 124 million
Açominas (in US$) - R$ 114 million
Working capital (in US$) - R$ 179 million
Import loans – R$ 28 million
Eurobonds – R$ 317 millionDebentures
Abroad– R$ 209 million
LONG TERM – R$ 2.7 billion
DEBT - Average cost
Brazil - in R$ 18.0%
Brazil - in US$ + FX 6.6%
Companies abroad 5.5%
26
FINANCIAL RATIOS
* EBITDA last 12 months.
Total debt / Total capitalization
Net debt / Total capitalization
Total debt / EBITDA*
Net debt / EBITDA*
Ebitda / Net financial expenses (-MV and FX)
EV / EBITDA*
Mar.03 Dec.02
61,1% 61,8%
56,1% 56,5%
3,0X 3,4X
2,4X 2,7X
6,0X 5,7X
3,9X 4,5X
27
INVESTMENTS
1ST QUARTER 2003 US$ 78 MM
AçominasUS$ 37 mm
GerdauUS$ 17 mm
South AmericaUS$ 2 mm
North AmericaUS$ 22 mm
Stronger investments in the 1Q 2003 due to the new wire rod
rolling mill facility.
HIGHLIGHTS
Conclusion of the new wire rod rolling mill in Açominas.
Enlargement of electric furnace of Piratini and an increase of 15% in the melt shop capacity.
Implantation of a new continuous casting in Usiba mill (conclusion in 2004).
Improvements and technological update of the facilities in North America.
The São Paulo Greenfield project will be analyzed in the 2nd half of 2003.
2003 FORECAST
US$ 230 MM
28
STEEL SECTOR
World
Brazil
GERDAU S.A. CONSOLIDATED
Highlights
Consolidated Figures
Outlook
Capital Markets
FORECASTS
BRAZIL
Increase of 2.0% in GDP
Increase of exports
Decrease of the Brazilian risk
Better risk perception by foreign investors
Record year of Agricultural output
Impact of the Asian economy slowdown
NORTH AMERICA
End of the war and slow economic recovery
End of winter time and increase in demand
Price increases will enhance 2Q2003 results
Main inputs cost decreasing
SOUTH AMERICA
Good condition of the Chilean economy
Slow recovery of Argentinean economy
30
STEEL SECTOR
World
Brazil
GERDAU S.A. CONSOLIDATED
Highlights
Consolidated Figures
Outlook
Capital Markets
Other investors16%
Foreign Inst. Investors19%Brazilian Inst. Investors
13%
Gerdau Companies52%
SHAREHOLDERS STRUCTUREMarch 2003
Other investors 33%
Foreign Inst. Investors19%
Brazilian Inst. Investors23%
Gerdau ControllingGroup
25%
METALÚRGICA GERDAU S.A.
GERDAU S.A.
32
STOCK BONUS & REVERSE SPLIT
Events schedule 05.02.2003: shares traded with all adjustments (ex-rights) 05.15.2003: dividend payment based on positions held on 03.31.2003 06.10.2003: deadline to shareholders compose their odd lots 06.23.2003: Bovespa’s auction to sell the odd lots 06.30.2003: credit in the shareholders’ bank accounts of the odd lot amounts
METALÚRGICA GERDAU S.A.
POSITION
SharesOrdinaryPreferredTOTAL
R$ millionCAPITAL STOCK
R$QUOTES
OppeningClosing
BEFORE ACTUAL
million thousand6,931 13,861
13,861 27,72320,792 41,584
640 1,280
lot unit04.30.03 05.02.03
33.20 66.40 34.01
GERDAU S.A.
POSITION
SharesOrdinaryPreferredTOTAL
R$ millionCAPITAL STOCK
R$QUOTES
OppeningClosing
BEFORE ATCUAL
million thousand39,591 51,46874,528 96,886
114,118 148,354
1,335 1,736
lot unit04.30.03 05.02.03
28.20 35.65 28.89
33
DIVIDEND POLICY
Adjusted Net Income Dividend paid
Distribute, at least, 30% of the Adjusted Net Income. Since March 2003, the dividend payment started to be made on a quarterly basis.
1998
R$ million
METALÚRGICA GERDAU S.A.
2000
17457106
34
1999
16354
2001*
234123
2002
412140
Pay out 32.8% 32.0% 32.8% 35.6% 34.9%32.0% 33.1% 32.6% 52.5% 33.9%
34
Yield 11.7 % 3.6 % 6.1 % 6.8 % 7.1%16.4 % 6.0 % 7.9 % 17.0 % 12.4 %
GERDAU S.A.
2001
461164
2000
382125
1999
30698
1998
18159
2002
763266
R$ million
* Higher amount due to the supplementary dividend payment.
LIQUIDITY OF SHARESGerdau S.A.
NYSEBovespa
20001999 2001 LTM*
250
10 423
282
54
82
143
459
700
US$ million
+70%Bovespa
+440%Nyse
-33%Bovespa
+52%Nyse
-3%Bovespa
4%Nyse
2002
500
300
100
+68%Bovespa
+68%Nyse
474
138
*Date: 04.30.2003
Traded Volume
Source: Economática 35
60
100
150
200
250
2001 2002
Base 100
Metalúrgica Gerdau S.A Gerdau S.A Ibovespa
Period: 01.01.2001 a 04.30.2003
Source: Economática
QUOTES EVOLUTION
36
APPRECIATION CHART
Date: 04.30.2003Source: Economática
GGBR4+2%
Ibov-22%
GGBR4+29%
GGBR4+84%
Dow-6%
Ibov-57%
Dow-15% Dow
-21%
Ibov-49%
GOAU4+37%
GOAU4+53%
GOAU4+98%
1 year 3 years 5 years
Met. Gerdau – GOAU4
Gerdau - GGBR4
Ibovespa
Dow Jones
37
PROFITABILITY IN US$
www.gerdau.com.br
inform@gerdau.com.br
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