3rd quarter 2005. source: international iron and steel institute - iisi - 2005 100 400 200 300 500...

3rd Quarter

2005

1950 1960 1970 1980 1990 2000

Source: International Iron and Steel Institute - IISI - 2005

Years World Prod.

1950 2001955 2701960 3501965 4501970 5951975 6441980 7161985 7191990 7701995 7521996 7501997 7991998 7771999 7882000 8482001 8502002 9022003 9652004 1,033

Years World1970-75 1.61975-80 2.21980-85 0.11985-90 1.41990-95 -0.51995-00 2.42000-02 3.2

2002-03 6.62003-04 7.0

Average Growth Rates

% per annum

100

400

200

300

500

600

700

800

900

1,000

1,100

World Steel Production (million t.)

Substantial growth in the past few years ...

1

112.798.5

64.347.5 46.4 38.7 32.9 32.6 28.4

269.3


2004(million t.)

China Japan USA Russia Korea Germany Ukraine Brazil India Italy

Steel Production

... mainly coming from China

2

-24.7

-13.2

-9.2

-6.1

-6.0

-5.0

4.2

7.2

8.4

11.0

28.2

28.2

30.5

-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35

Turkey

Germany

Belgium / Luxembourg

Brazil

Russia

Ukraine

Japan


Top net Exporters Top net importersTop net importers

World Steel Trade

million t.million t.

Trade ~ 200 million tons per year

Trend may continue through 2005

Vietnam

Italy

Hong Kong

Thailand

China

USA

3

Gerdau22.1%CSN

16.8%

Others6.4%

Acesita2.5%

USIMINAS SYSTEM27.2%

Arcelor25.0%

17,6

17,9

19,0

20,8

21,4

30,2

31,6

32,4

42,8

46,9

8,923 - USIMINAS

10 - Thyssen Krupp

9 - Nucor

8 - Corus

7 - US Steel

6 - Baosteel

5 - Posco

4 - J FE

3 - Nippon Steel

2 - Mittal Steel

1 - Arcelor

Source: IISI - 2005

Source: IBS - 2005

million t.

Usiminas System is the 23rd largest producer in the world and 1st flat steel producer in Latin America

Top Brazilian Steel Producers - 2004

Usiminas

Leading Producer

Major Steel Plants 2004 (crude steel

production) million t.

4

Steel in Brazil

High quality iron ore

Well located plants and modern technology

Competitive Costs

Product quality and environmental management

Qualified labor and management

Its competitive conditions make the country a global leader

5

Source: WSD - August 2005

Cost CompetitivenessCost Competitiveness

Production Cost – (US$/t)Slabs (Jun 2005)

Brazil has the lowest production cost in the world

6

Operating Margin % - 2004

Cost CompetitivenessCost Competitiveness

Usiminas has one of the highest operating margins in the world

Data: Integer Research, Company Annual ReportsSeptember, 2005

7

RAILROAD

HIGHWAY

CVRD

ES

PÍR

ITO

SA

NTO

SÃO PAULO

BAHIA

MINAS GERAIS

ATLANTIC OCEAN

Itabira

Vitória

Port of Praia Mole

Santos

RIO DE

JANEIRO

Ipatinga

Usimina

sBelo HorizonteUsiminas

Headquarters

Sepetiba Port

Rio de JaneiroSão Paulo

Cosipa

Cubatão

Usiminas

Location: Ipatinga, State of

Minas Gerais

Cosipa

Cubatão, State of

São Paulo

Usiminas is strategically located

Close to main markets

2 ports

Railroad (MRS)8

Products

Complete product lines: from slabs to coated products

Major consumers

Heavy plate 1,000,000 1,000,000

Hot coil 3,550,000 2,100,000

Cold coil 2,500,000 1,200,000

-

-

Capacity (tonnage/year)

360,000

400,000

Slab 5,000,000 4,500,000

Electrogalvanized coil

Hot dip galvanized coil

Un

coate

dC

oate

d

Pipelines, pressure vessels, shipbuilding, general structures.

Agricultural machinery, pipe and tube, chassis, gas cylinders, containers, generalstructures.

Auto industry, household appliances, packaging.

Auto industry, household appliances.

Auto industry, household appliances,civil construction.

Rolling mills.

Capacity: 4.5 million t.Capacity: 5.0 million t.

9

Sales (thousand t.)

Domestic market is a priority

Usiminas + Cosipa

As of September, 2005

72%

82% 70% 69% 72%

28%

18%

30% 31% 28%

2001 2002 2003 2004 9M05

Domestic Market Foreign Market

6,602

7,722 7,7108,062

5,367

10

Civil Construction

7%

Auto Industry

13%

Autoparts15%

Distributors 23%

Others16%

Small Diam. Tubes

7%

Pipelines9%

Packaging2%

Household Appliances

2%

Shipbuilding1%

Elect. Equipment

5%

Domestic Sales - 9M05

Usiminas + CosipaVolume: 3.88 million t.

Fasal, Rio Negro and Dufer 7%

{

Combination of market leadership and diversified customer base reduces market risk

11


15%

6%

31%

25%

51%

28%

77%

12%

52%

51%

32%

30%

7%

14%

75%

14%

6%

17%

42%

7%

7%

21%

55%

87%

55%

35%

66%

46%

47%

42%

41%

6%

0% 20% 40% 60% 80% 100%

Distributors

Packaging

Civil Construction

Shipbuilding

Elect. Equipment

Household Appliances

Pipelines

Small Diam. Tubes

Autoparts

Auto Industry

TOTAL

Usiminas Cosipa Others

Usiminas + Cosipa = 53%

Domestic Market Share (%) 9M05

Combination of market leadership and diversified customer base reduces market risk

12


Domestic Market Outlook

2,4002,210

1,8281,7931,8171,682

2000 2001 2002 2003 2004 2005E

9,20010,109

8,9088,5768,6508,368

2000 2001 2002 2003 2004 2005E

Source: Anfavea / UsiminasSource: IBS / Usiminas

Flat Steel Demand (1,000 t.) Vehicle Production (1,000 vehicles)

Sector 2003 2004 04/ 03 (% )Auto 817 1,142 39.8Autoparts 928 1,188 28.0Shipbuilding 32 84 162.5Agricultural/Road Mach. 213 247 16.0Industrial Machinery 173 178 2.9Household Appliances 287 343 19.5Civil Construction 800 868 8.5Small Diam. Tubes 757 743 -1.8Distributors 2,794 3,097 10.8Pipelines 310 344 11.0Others 1,797 1,875 4.3

TOTAL 8,908 10,109 13.5 Source: Usiminas

-9.0%

8.6%

13

Usiminas + CosipaVolume: 1.5 million t. - 9M 2005

International Market

Diversified geographic sales

14


Investments & Technology(US$ million)

Commitment to the best technology

• More than US$ 3 billion invested in the last decade

• Partnership with Nippon Steel assures access to state-of-the-art technology in steel production, including high value-added products

• 6th Technology Transfer Agreement with Nippon Steel, valid until 2009

• 407 registered patents, of which 23 are international

• 150 researchers

• In the last 3 years, for each US$ 1 spent in technology Usiminas sells US$ 3

15



525578

469

136 94 83 65 130255

212162

156

452

79

70

135

8032

6052

31

36

1997 1998 1999 2000 2001 2002 2003 2004 9M05 2005E 2006E

New Investments

737 740

500

292

546

111 119 117

200

390

Usiminas

Cosipa

140

16



Next 2 years: Maintenance - approximately US$ 120 million per year

Projects approved by the Board• Increase of self-generated energy from 16% to 33% Power Plant 60 MW - Usiminas BF Top blowing turbine 12 MW - Cosipa

• Self-sufficiency in coke production by 2007 550.000 tons/year Coke plant - Usiminas

• Productivity Revamping of Continuos Casting Machine - Cosipa

Projects under study • Production Capacity Increase (on-going studies)

1.0 ~ 2.0 million tons

17

Creation of Ternium

Consolidate control of Hylsamex, Sidor and Siderar

Ternium will have ~ 11.5 million t. capacity

Present Situation Proposed Situation

UsiminasTechint G.

SiderarSidor Hylsamex

Ternium

Amazônia

Usiminas

SiderarSidor

16.6%

5.3%

59.7%

Control

59.7%

Control

Control

16.3% 83.7% Initial

C. Amazônia

18

Ebitda Evolution Consolidated (US$ million)

AVG.

US$

Investment return and market conditions have allowed consistent cash generation ...

539

655646652

538

422318

263225255258274200170150

49%46%

39%

31%33%36%

42%45%

37%

31%27%

48% 50%47%

41%

1Q022.3220

2Q022.5840

3Q023.3697

4Q023.7141

1Q033.4929

2Q032.9810

3Q032.9326

4Q032.8999

1Q042.8985

2Q043.0429

3Q042.9782

4Q042.7862

1Q052.6672

2Q052.4819

3Q052.3454

Ebitda Ebitda Margin

19


Ebitda Evolution Consolidated (US$ million)

AVG.

US$

Investment return and market conditions have allowed consistent cash generation ...

1,8401,930

1,001794

671742530

46%46%

35%35%32%35%

31%

19991.8133

20001.8300

20012.3539

20022.9236

20033.0746

20042.9262

9M052.4981

Ebitda Ebitda Margin

20


1,8171,8121,8472,0332,2042,3162,5982,6262,7052,764

2,5932,6992,8113,111

3,387 0.7

5.2 5.04.2

3.4 2.9 2.8 2.7 2.6 2.4 1.9 1.4 1.1 0.8 0.7

500

1,500

2,500

3,500

4,500

1Q022.3236

2Q022.8444

3Q023.8949

4Q023.5333

1Q033.3531

2Q032.8720

3Q032.9234

4Q032.8892

1Q042.9086

2Q043.1075

3Q042.8586

4Q042.6544

1Q052.6662

2Q052.3504

3Q0522,222

Total Debt Total Debt / Ebitda

R$ /US$

Total Debt Evolution

Consolidated (US$ million)

... and have made it possible to considerably reduce debt

21


123583

4779

808

82

524

388

239309

Cash 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014on

SwapCDI44%

US$

56%

Debt Maturity Consolidated(US$ million)

Long74%

US$ 1,344 mi

Short26%

US$ 473 mi

Foreign69%

Local31%

TERM CURRENCY

Note: Principal, 2005- October to December maturities

Debt has an adequate maturity profile

“Stand by Facility” - Export Pre-Payment US$ 250 million

22


Control Group: 53%

UsiminasVoting Capital

Shareholder Structure

Excellence of the main shareholders

• Board of Directors from solid Brazilian and foreign groups

• Long-term relationships with steel business and Usiminas

• Committed to add excellence and experience to business management

CVRD23.0%

Others (Distributors)

2.3%

Others8.8%

Sudameris (ABN Amro)

1,9%

Bradesco2.6%

Caixa dos Empregados da

Usiminas13.4%

Nippon Usiminas18.4%

Camargo Corrêa7.3%

Votorantim7.3%

Previ14.9%

23


24

Potential value creation for shareholders

5750

72

107

78

46

0

20

40

60

80

100

120

Annual shareholder return (2003 - Jul 2005)

BelgoGerdau

CST

UsiminasCSN

% p.a.

Source: Economática, Banco Itaú (Oct./05)

Creation of Value for Usiminas and thesteel industry has been considerable

over the last few years ...

... and Usiminas still has strong potential for additional value creation

Acesita

Ibovespa = 28%

EV / Ebitda

P / E

2005e 2005e

Arcelor 3.6 5.0

Posco 2.5 5.2

China Steel 3.9 5.8

International Avg. 3.3 5.4Usiminas 2.2 3.7

CSN 3.2 7.2

Gerdau 3.2 5.5

Arcelor Brasil 3.8 7.5

Brazil Avg. 3.1 6.0

Multiples

Positive stock market reactionPositive stock market reaction

(*) Theoretical Ibovespa portfolio Sept/Dec 20052001

2002

2003

2004# of trades 232

Shares (000) 567

Vol. (R$ 000) 3,924

Ibov. Portf. 1.25%

Position 26th

# of trades 265

Shares (000) 628

Vol. (R$ 000) 4,067

Ibov. Portf. 1.49%

Position 21st

# of trades 457

Shares (000) 800

Vol. (R$ 000) 12,745

Ibov. Portf. 2.67%

Position 11th

# of trades 1,060

Shares (000) 1,040

Vol. (R$ 000) 40,005

Ibov. Portf. 4.05%

Position 5th

Steel Sector Bovespa 2004

Ibovespa Portfolio

5.72%

4th2005 (*)

New Ibov. Portfolio

... & ADR I e Latibex... & ADR I e Latibex

Usiminas PNA31%

Sid Nacional ON 29%

Gerdau PN 21%

Sid Tubarao PN 9%

Others10%

25

Sept 30/05 Dec 31/04 Dec 31/03 Dec 31/02

Crude Steel Production (thsd t) 6,517 8,951 8,621 8,447

Sales (thsd t) 5,367 8,062 7,710 7,722

Net sales (US$ million) 4,035 4,197 2,845 2,250

EBITDA (US$ million) 1,840 1,930 1,002 794

Net Profit (US$ million) 1,167 1,032 426 (152)

Gross Debt (US$ million) 1,817 2,033 2,626 2,699

Gross Debt / EBITDA 0.7 1.1 2.5 3.9

EBITDA / Interest Expenses 16.9 11.3 4.3 3.7

Other Highlights

Consolidated Figures - USIMINAS

26

www.usiminas.com.br

Investor Relations:

Bruno Seno Fusaro Luciana Valadares dos Santos Matheus Perdigão Rosa [email protected] [email protected]@usiminas.com.br Tel.: + 55-31-3499-8772 Tel.: + 55-31-3499-8619

Tel.: + 55-31-3499-8056 Fax: + 55-31-3499-9357

Gilson Rodrigues Bentes - COSIPA (São Paulo Office)[email protected].: + 55 11 5070-8980

Declarations relative to business perspectives of the Company, operating and financial results and projections, and references to the growth of the Company, constitute mere forecasts and were based on Management’s expectations in relation to future performance. These expectations are highly dependent on market behavior, of Brazil’s economic situation, on the industry and on international markets, and are therefore subject to change.

27

3rd quarter 2005. source: international iron and steel institute - iisi - 2005 100 400 200 300 500...

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