gerdau s.a. third annual natural resources conference jp morgan são paulo february, 2003
TRANSCRIPT
Gerdau S.A.Third Annual
Natural Resources ConferenceJP Morgan
São PauloFebruary, 2003
Steel Sector
Crude Steel Output2002
Source: IISI
1,000 tons 2002 2001 % change
China 181,552 150,866 20.3
Japan 107,748 102,866 4.7
United States 92,378 90,104 2.5
Russia 58,567 57,475 1.9
South Korea 45,390 43,852 3.5
F.R. Germany 45,004 44,803 0.4
Ukraine 34,049 33,074 2.9
Brazil 29,604 26,717 10.8
India 28,814 27,291 5.6
I taly 25,970 26,461 (1.9)
Other 237,673 230,244 3.2
TOTAL 886,748 833,752 6.4
03
Largest Crude Steel ProducersIISI - 2001
* OUTPUT OF GERDAU BASED ON 100% OF
AÇOMINAS + CO-STEEL + SOUTH AMERICA
2001 OUTPUT
Gerdau is the largest long steel producer
in the Americas
Source: IISI e Gerdau
Million tons
8 Riva 15.09 NKK 14.810 Kawasaki 13.311 USX 12.812 Sumitomo 11.713 Nucor 11.214 SAIL 10.815 GERDAU * 10.5
Million tons
04
1 Arcelor 43.1
2 Posco 27.8
3 Nippon Steel 26.2
4 Ispat 19.2
5 Shanghai 19.1
6 Corus 18.1
7 Thyssen Krupp 16.2
Brazilian OutputCRUDE STEEL 2002
Source: IBS
1,000 tons
1 Usiminas + Cosipa 8,447
2 Belgo + CST + Acesita (Arcelor) 8,439
3 Gerdau + Açominas 5,999
4 CSN 5,107
5 Villares 700
6 Other 912
TOTAL 2002 29,604
05
Gerdau S.A.
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.
15th largest world steel producer according to the IISI ranking.
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 - Rolling mill in Argentina and Gallatin - flat steel in the USA).
72 sales points in Brazil (Comercial Gerdau).
17 downstream operations and special sections (4 in Brazil e 13 in North America).
25 fabrication shops (9 in Brazil and 16 in North America).
4 service centers for flat steel in Brazil (Comercial Gerdau).
Highlights
07
Met. Gerdau S.A.
Gerdau S.A.
Seiva Gerdau Internacional Açominas
Sipar
Laisa
Aza
50%
79%100%96%
67%
38%
100%
100%
Courtice
MRM
AmeriSteel
Gallatin
Gerdau Ameristeel Corp.
100%
100%
100%
50%
Capital Structure
08
Barão de Cocais
BRAZIL 7.2 MILLION TONS OF CRUDE STEEL PER YEAR 4.7 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
Geographical Distribution
Gerdau S.A.
Açominas
Cearense
Açonorte
Usiba
Cosigua Açominas
Guaíra
Piratini
Riograndense
Divinópolis
09
Billets, rebars, merchant bars, profiles,
wire-rod, drawn products, nails, specialty
steel.
Billets, slabs, blooms, rebars,merchant bars, profiles and structurals.
Gerdau S.A. 4,174 3,971
Açominas 3,000 740
South America 430 609
North America 6,565 6,186
TOTAL 14,169 11,506
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 & Products2002
1,000 tons
10
Output Evolution
Objectives
Strategies
Evolution
Main Events
Gerdau Ameristeel Corp.
Challenges and Forecasts
Growth Average Rate
1980 - 2002
CRUDE STEEL 10.4% year
ROLLED 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
11
Business Breakdown2002
CRUDE STEEL OUTPUT
BRAZIL 64%NORTH AMERICA 33%SOUTH AMERICA 3%
100%
ROLLED PRODUCTS OUTPUT
BRAZIL 46%NORTH AMERICA 49%SOUTH AMERICA 5%
100%
NET REVENUE
BRAZIL 57%NORTH AMERICA 38%SOUTH AMERICA 5%
100%
EBITDA
BRAZIL 79%NORTH AMERICA 16%SOUTH AMERICA 5%
100%
NET INCOME
BRAZIL 83%NORTH AMERICA 13%SOUTH AMERICA 4%
100% 12
Results 2002
BRAZILNORTH
AMERICASOUTH
AMERICACONSOLIDATEDUS$ million
13
Net Sales
Ebitda
Net Income
Gross Margin
Ebitda Margin
Net Margin
1,485.3 994.3 113.3
474.0 98.3 31.1
192.3 29.7 9.5
40.1% 11.1% 31.3%
31.9% 9.9% 27.5%
12.9% 3.0% 8.4%
2,593.0
603.4
231.5
28.6%
23.3%
8.9%
Results - North AmericaCURRENT BASIS
Net Sales
Ebitda
Net Income
Ebitda Margin
Net Margin
US$
1Q02 2Q02 3Q02 4Q02 TOTAL
217 248 227 302 994
26 32 23 17 98
6 10 10 4 30
12.0% 12.9% 10.1% 5.6% 9.9%
2.8% 4.0% 4.4% 1.3% 3.0%
2.3236 2.8444 3.8949 3.5333
14
Gerdau Ameristeel Corp.Corporate Law X Pro forma figures
Gerdau S.A.Consolidated figuresOct 23 – Dec 31, 2002
Gerdau Ameristeel Pro forma figuresOct 1 – Dec 31, 2002
Net Sales: US$ 302 million Net Sales: US$ 391 million22 days more in October
Net Income: US$ 3,8 million Net Income: US$ 8,4 millionGerdau Consolidated 3,8
Adjustments 4,6
EBITDA: US$ 17 million EBITDA: US$ 39,6 millionGerdau Consolidated 17,0
Adjustments 4,6
Non-recurring pretax cash gains 6,1
Equity pick up over Dofasco JV 4,5
Depreciation 7,4 15
IndebtednessGERDAU S.A. - CONSOLIDATED
TOTAL DEBT 100%Foreign currency 35%Dometic currency 22%Abroad 43%
EXPOSUREForeign currency debt 718.1
Swap operations 580.0 Cash & equiv. in US$ 263.6 TOTAL HEDGE 843.6
HEDGE / EXPOSURE 1,2X
TOTAL DEBT
SHORT TERMDomestic currencyForeign currencyCompanies abroad
LONG TERMDomestic currencyForeign currencyCompanies abroad
CASH & EQUIVALENTSDomestic currencyForeign currencyCompanies abroad
NET DEBT
Partic. Dec.02
100% 2,028.7
52% 1,049.4 136.1 464.0 449.4
48% 979.2 310.2 254.1 414.9
- 404.9 141.3
- 263.6
- 1,623.7
Sep.02
1,824.8
1,019.2 27.8
436.4 555.0
805.6 289.7 235.2 280.7
503.9 162.2
- 341.7
1,320.8
COST OF DEBT
Brazil - in R$ 4.5%Brazil - in US$ + FX rate 6.8%Abroad 5.4%
US$ million
16
Outlook 2003
Economic growth in Brazil
U.S. economy slowly recovering from 2001 recession
Steel imports declining
Slow recovery in Argentina
Positive outlook for the Chilean operations
New federal administration in Brazil
Cost of inputs17
Capital MarketsSTOCK PERFORMANCE
600%
400%
200%
0%
-200%
+42%-18%
-14%
+45%-26%
-36%
+573%
+1%+11%
1 YEAR 3 YEARS 5 YEARS
GERDAU DOW JONES IBOVESPA
Source: Economática Date: 01/30/2003
Appreciation Chart
18
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