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Gerdau

January 2007

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One of the world’s lowest cost steel companies– Strong cost position as a result of diversified production processes

and multiple raw material sourcing

Strong foreign currency generation– Large export base– International subsidiaries

Ranked 14th globally by steel output for year 2005 with an output of 13.7m tons

Largest long steel producer in the Americas– 2nd largest long steel producer in North America – 32 mills, integrated and mini mills, with state of the art technology

Relevant market share and diversified product range through downstream and service centers

Strong balance sheet, low leverage and strong cash generation

Gerdau S.A. shares are listed on the São Paulo, New York and Madrid Stock Exchanges

Highlights

3

Agenda

Industry Overview

Group Overview

Operating and Financial Highlights

All data presented in US Dollar and in metric tons, except when indicated

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0

200

400

600

800

1000

1200

1400

1950

1960

1970

1980

1990

1996

1998

2000

2002

2004

2006

a

1º Oil Shock

World Production

WORLD CRUDE STEEL PRODUCTION In million tonnes

Source: IISI / IISI apud IBS

EVOLUTION OF WORLD CRUDE STEEL PRODUCTION

2º Oil Shock

USSR breakupAccelerated increase of

China

World

China

Corresponds to 70% of the world

production growth from 2001 to 2005

9M05 9M06

828903

9.1%Production should reach 1,2 billion tonnes in 2006.

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2004 2005 2006e 2007e

World Demand

2005 2006e 2007e

1,0291,121 1,179

China

NAFTA

Japan

India

South America

e: estimated

Source: IISI

8.9%

5.2%

FINISHED STEEL APPARENT DEMANDIn million tonnes

FINISHED STEEL APPARENT DEMAND PER CAPITA (KG)

322295

195

110

344

205171

102

NAFTA

China

World

Brazil

With increasing investments in infrastructure

and civil construction, India should grow 10% in

2006.

Steel consumption in South America should

increase 12% in 2006.

Chinese steel consumption should experience a

more moderate growth in 2007.

The world steel demand should increase 4.2% p.a. from 2010 to 2015.

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349

11294

6648 45 39 38 32 29

Crude Steel Production – 2005

Source: IISI

Brazil and the Global Steel Industry

In million tonsIn million tonnes

China USAJapan Russia Germany Ukraine BrazilIndia Italy

Total World Production: 1.1 billion tonnes

China represented 31.4% of the global steel production

Brazil represented 2.8% of the global steel production

South Korea

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Agenda

Industry Overview

Group Overview

Operating and Financial Highlights

All data presented in US Dollar and in metric tons, except when indicated

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THROUGH THE 40’s

THE 60’s

THE 50’s

First steel mill acquisition – Siderúrgica Riograndense (1948)

Expansion of Siderúrgica Riograndense Construction of second Riograndense’s mill

Market share increase by the: - Diversification and verticalization of product line - Structuring of distribution network (today more than 70 sales points) - Acquisition of mill in Pernambuco

100+ Years in Business

Acquisition of three mills (Rio de Janeiro, Minas Gerais and Bahia) Construction of two new plants (Paraná and Ceará) Operations abroad begin (Uruguay

and Canada)

THE 80’s

THE 90’s Diversification into specialty steel –

acquisition of Piratini Expansion abroad – acquisition of mills

in Chile, Canada, Argentina and the USA Acquisition of second mill in Minas

Gerais and rolling mill in São Paulo Shareholdings restructuring Acquisition of stake in Açominas

1901 1901 – First operation: nail factory

Capacity expansion with acquisition of two mills (Alagoas and Paraná);

construction of largest Gerdau mill (Rio de Janeiro) Diversification into reforestation

THE 70’sTHE NEW MILLENNIUM

Acquisition of four companies in the US Acquisition of downstream units and

fab shops in North America Entering the European market Construction of a steel mill in São

Paulo

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CANADA

Brazil

9.2 million tonnes of crude steel

6.3 million tonnes of rolled steel products

Abroad

10.0 million tonnes of crude steel

10.7 million tonnes of rolled steel products

Total Capacity(Includes Strategic Shareholdings)

19.2 million tonnes of crude steel

17.0 million tonnes of rolled steel products

11 steel mills

12 fabrication shops

6 downstream operations

74 sales points and flat steel service centers

21 steel mills

44 fabrication shops

17 downstream operations

2 strategic shareholdings

An International Company

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1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2008

e

Laisa - 1980(Uruguay)

Piratini(Brazil)

AZA(Chile)

Ameristeel(USA)

AZANew Plant

(Chile)

Additionalstake in

Açominas(Brazil)

North Star(USA)

Cambridge(Canada)

Usiba(Brazil)

Manitoba(Canada)

Controlof

Açominas(Brazil)

Co-Steel(USA)

1,757

3,072

3,9344,595

7,696

11,076

16,372

Diaco(Colombia)

16,709

Barãode

Cocais(Brazil)

2,611

Stake inAçominas(Brazil)

4,568

19,230Araçariguama

(Brazil)

Sidenor (Spain)

Sheffield (USA)

Siderperú(Peru)

GSB(Spain)

Solid Track Record

e: estimated

In thousand tonnes

21,605Installed Capacity

Expansion

Abroad – Installed capacity of Crude SteelBrazil – Installed Capacity of Crude Steel

Besides the mills acquired, as related above, Gerdau acquired many fab shops in order to add value to its products and offer services and products to its clients according to their needs.

2009

e

TOTAL INVESTED (1981- Sep.2006):Brazil = US$ 4.5 billion + Debt North America = US$ 1.8 billion + DebtSouth America = US$ 590 million + DebtEurope = US$ 235 million + Debt

CAGR 1996-2006: 15% p.a.

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49.9

46.7

32.9

31.4

29.6

22.7

19.3

18.5

18.2

17.5

16.6

15.2

13.9

13.7

Mittal Steel (UK)

Arcelor (LUX)

Nippon Steel (JAP)

Posco (COR)

JFE Steel (JAP)

Shanghai Baosteel (CHI)

US Steel (EUA)

Nucor (EUA)

Corus Group (UK)

Riva Group (ITA)

ThyssenKrupp (ALE)

Severstal (RUS)

EvrazHolding (RUS)

Gerdau Group (BRA)

Among the LeadersCrude Steel – Output 2005

Gerdau should have an installed capacity of 21.5

million tonnes of crude steel per year after the investment program in Brazil is completed

in 2009.

In million tonnes

Source: Metal Bulletin

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GERDAU GROUP (BRA)

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3

4

5

6

7

8

9

10

11

12

13

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Rank

12

Value Builder CompanyATKearney study

Notes: 1) EBIT-growthNotes: USINAS = USIMINAS; ARCELOR Takeover MITTAL/ SERVERSTAAL: The market capitilization of Severstaal is 6.8 bn USD

(same as revenue, hence valued above the industry multiple of 0,79)Source: Thyssenkrupp: steel segment

IndustryAverage

Revenue Growth

Industry Average

AK Steel

Oregon Steel Mills

Worthington

Onesteel

Hylsamex

Neomax

Cap

Imsa

Maanshan Iron Steel

Eregli Demir Celik

Angang

Boehler-Uddeholm

Steel Dynamics

Carpenter Technology

Nisshin Steel

HyundaiSteel

Tokyo Steel

Bluescope 03 05

Rautaruukki

Acerinox

Salzgitter

Ipsco

SSAB

Voestalpine

Corus

Tata Steel

Severstal

US SteelSAIL

Usinas

Gerdau

Baoshan

Novolipetsk1)

Thyssenkrupp1)

Nucor

Sumitomo

Mittal

JFE 03 05

Nippon Steel

Arcelor02 05

-10%

0%

10%

20%

30%

40%

50%

60%

70%

-40% 10% 60% 110% Equity Value Growth

Growth portfolio (CAGR 2001-2005)

benchmarked against industry average

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Shipments

Billets, blooms& slabs

Merchant bars

Rebars Fabricated steel

Heavystructural shapes

Wire-rod Wires Nails

Brazil – Domestic Market (26% in 2005)

Brazil – Exports (21% in 2005)

South America (6% in 2005)

North America (47% in 2005)

In thousand tonnes

7,411

9,109

12,56012,144

13,550

2001 2002 2003 2004 2005

Europe

83% increase in the last 5

years

9M05 9M06

10,18111,143

+ 9.5%

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BRAZIL - 2005

COUNTRY MARKET SHARE MAIN COMPETITORS

Gerdau 48%

Arcelor Brasil 36%

Barra Mansa5%

Other 5%

V&M do Brasil6%

CHILE

URUGUAY

ARGENTINA

51%

20%

84%

CAP + Imports

Acindar + Bragado + Zapla

Imports

COLOMBIA 37% Acerias Paz Del Rio + Imports

* Specialty steel only

NORTH AMERICA 15% Nucor + ArcelorMittal + CMC

Markets

PERU ~44% Aceros Arequipa + Imports

SPAIN 36% ArcelorMittal + Imports

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LONG STEEL PRODUCTS (Brazil)

Maintenance of market share

Improvement of current installed

capacity

São Paulo mill expansion

SPECIALTY STEEL

Active role in the steel sector

consolidation process

Search for new opportunities

AÇOMINAS (Ouro Branco mill)

New 1.5 MM ton blast furnace

Growth platform for slabs, blooms

and billets

Growth Opportunities

LATIN AMERICA

Maintenance of leadership in

the long steel sector

New markets

NORTH AMERICA

Efficiency and productivity

gains (Gaps)

Enhancement of leadership in

the long steel sector through

acquisitions

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Outlook

Brazil Domestic volumes growing around 6 - 8% in 2007 Strengthening of the housing and industrial sectors Price stability in local currency terms Relatively stable costs

North America Solid demand for rebars and merchant bars Reduced level of imports Increase in supply of higher value added products

South America Solid economic growth Strengthening of the civil construction sector Government spending Demand in line with economic growth

Europe Good performance in the specialty steel business Growing market share

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Agenda

Industry Overview

Group Overview

Operating and Financial Highlights

All data presented in US Dollar and in metric tons, except when indicated

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EXPORTS BY REGION (IN TONNES)

NET SALES BREAKDOWN BY REGION

Exports

Brazil 41%

North America

46%

Europe3%South America

10%

9M06

Asia24%

Central America 15%

South America

27%

North America16%

Africa 9%

Europe 9%

Domestic Market 79%

Exports 21%

(35% in tonnes)

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0%

10%

20%

30%

40%

1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06

,

0%

10%

20%

30%

40%

50%

1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06

Consolidated

Brazil

North America*

South America*

Gross Margin

EBITDA Margin

Margins

30%

20%

42%

26%

17%

28%

32%

26%

19%

17%

21%21%

26%21%

33%23%

* Calculated by hard currency

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Consolidated FinancialsIn US$ million

2004 2005

Income Statement

Net revenueGross profitOperating incomeNet incomeEBITDA

9M05

7,3621,9961,4241,1321,743

Balance Sheet

Current assetsNon-current assetsTotal Assets

Current liabilitiesNon-current liabilitiesMinority InterestShareholders’ equityTotal Liabilities and Shareholder’s equity

Total debtCash & EquivalentsNet debt

5,1524,1599,311

1,6983,267

8433,5039,311

3,2602,1111,149

Ratios

Net debt / Total capitalizationTotal debt / EBITDALTM

Net debt / EBITDALTM

21%1.4x0.5x

19%1.6x0.6x

3,6003,4317,031

1,9772,186

5802,2887,031

2,402769

1,633

36%1.1x0.8x

5,1824,1659,347

1,7903,225

8963,4369,347

3,2692,335

934

18%1.6x0.4x

9M06

8,0882,2891,6101,2371,900

6,2515,656

11,907

2,5393,6521,2354,481

11,907

3,9182,5891,329

7,3832,3531,6781,2192,092

9,0772,4461,7271,3872,098

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DEBT STRUCTURE

Domestic Currency 25%

Foreign Currency

45%

Companies Abroad 30%

DEBT AVERAGE LIFE 8.8 YEARS

US$ MM

GROSS DEBT 3,918 100%

SHORT TERM 980 25%

Domestic Currency 217 6%

Foreign Currency 210 5%

Companies Abroad 553 14%

LONG TERM 2,938 75%

Domestic Currency 758 19%

Foreign Currency 1,574 40%

Companies Abroad 606 16%

CASH & CASH AND EQUIV. 2,589 100%

Domestic Currency 1,622 63%

Companies Abroad 967 37%

NET DEBT 1,329

COST OF DEBT (per annum)

InUS$

Brazil Domestic Currency 20.7%

Foreign Currency 7.1%

Companies Abroad 7.4%

September 2006

Consolidated Debt Profile

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Pre-Exports: 113FINIMP: 151BNDES: 99Companies Abroad: 64Securitization: 41

Pre-Exports: 22

FINIMP: 55

In US$ million – Sep/06

Companies Abroad: 55FINIMP: 59FINIMP: 32

Companies abroad: 409

Companies Abroad: 110 Pre-Exports: 55

BNDES: 88Securitization: 44FINIMP: 139

BNDES: 43Companies Abroad: 411FINIMP: 59Debentures: 55

4Q06 1Q07 2Q07 3Q07 2008 2009 2010 2011

SHORT TERM: US$ 980 LONG TERM: US$ 2,938

491

101

206 182 160

473

354

618

76

Consolidated Debt Amortization

2012 After 2012

1,014

Companies Abroad: 32FINIMP: 37Perpetual Bond: 600Debentures: 292

4Q07

243

BNDES: 67FINIMP: 85Securitization: 41

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9M069M06 Investment Program 2007 – 2009: US$ 3.0 billionInvestment Program 2007 – 2009: US$ 3.0 billion

BRAZIL 484.6

ABROAD 588.1

North America 270.6

South America 100.2

Europe 217.3

TOTAL 1,072.7

In US$ million

2007 2008 2009 Total

Brazil 806 691 517 2,014

Abroad 235 378 356 968

TOTAL 1,041 1,068 873 2,982

CAPEX 2007 - 2009

INSTALLED CAPACITY EVOLUTION

Crude Steel Rolled Products

In thousand tonnesIn thousand tonnes

Brazil

Abroad

Brazil

Abroad

+ 12%

2006 2009

9,970

9,260

11,005

10,600

19,23021,605

+ 14%

+ 10%

2006 2009

10,680

6,3607,050

17,04019,035

+ 11%

+ 12%

+ 12%

11,985

In US$ million

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Disclaimer

This document can contain statements which constitute forward-looking

statements. Such forward-looking statements are dependent on

estimates, data or methods that may be incorrect or imprecise and that

may be incapable of being realized. These estimates also are subject to

risk, uncertainties and suppositions and include, among other, overall

economic, political and commercial environment, in Brazil and in the

markets we are present in addition to government regulations, present

and future. Prospective investors are cautioned that any such forward-

looking statements are not guarantees of future performance and

involve risks and uncertainties. The Company does not undertake, and

specifically disclaims any obligation to update any forward-looking

statements, which speak only as of the date made.

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www.gerdau.com.br

inform@gerdau.com.br

+55 51 3323 2703

Gerdau S.A.