nova versão apresentação institucional gerdau ing · notes: usinas = usiminas; arcelor takeover...
TRANSCRIPT
11
October 2007
Investor Presentation Investor Presentation
22
� Among the most competitive steel companies in the world
• Strong low cost structure as a result of diversified production processes and multiple raw material sourcing
� An international company
• Large export revenues from Brazil
• Operations in 13 countries
� Ranked 14th globally by steel output for year 2006 with an output of 15.6 million tonnes (source: International Iron and Steel Institute - IISI)
� Largest long steel producer in the Americas
• 2nd largest long steel producer in North America
• 41 steel units 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
33
Industry Overview
Group Overview
Operating and Financial Highlights
Agenda
All data presented in US Dollar and in metric tons, except when indicated
44
Supply
Source: IISI / IISI apud IBS
Production
increased 8.9% in
2006 compared to
2005.
Equivalent to 70% of the world’s
production growth from 2001 to 2006
0
200
400
600
800
1000
1200
1400
1950 1960 1970 1980 1990 1996 1998 2000 2002 2004 2006
Accelerated growthin China
1st Oil Shock
2nd Oil ShockUSSR breakup
World
China
423
1,244
WORLD CRUDE STEEL OUTPUT EVOLUTION
55
2006 2007e 2008e
Demand
1,1131,179
1,251
e: estimated
Source: IISI
5.9%6.1%
FINISHED STEEL APPARENT DEMANDIn million tonnes
FINISHED STEEL APPARENT PER CAPITA DEMAND (kg)
The world steel demand should increase 4.2% p.a. from 2010 to 2015.
333298
42
315
94106
146
28
66102
2002 2003 2004 2005 2006e 2007e
NAFTA
China
World
Brazil
India
STEEL USE PER CAPITA GROWTH (2002 – 2007)
NAFTA: +5.7%
China: +104.1%
Brazil: +12.8%
World: +54.5%
India: +50.0%
66
� Total World Production: 1.2 billion tonnes
� China represented 34.0% of the global steel production
� Brazil represented 2.4% of the global steel production
and is the 10th largest crude steel producer in the world
Crude Steel Production – 2006
Source: IISI
Ranking
In million tonnes
423
11698
7148 47 44 41 32 31
UkraineChina USAJapan Russia Germany BrazilIndia ItalySouth Korea
77
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
0%
3%
6%
9%
12%
27%
15%
18%
21%
24%
Production in 1990Production in 1990
770 million tonnes770 million tonnes
Production in 2005Production in 2005
1,129 billion tonnes1,129 billion tonnes
Consolidation Global Steel Market
Source: Prof. Germano de Paula
TOP 5: 12.3% (1990) 16.9% (2005)
TOP 5: 13.4% (1990) 24.4% (2005)
EX-CHINA
WORLD
88
Industry Overview
Group Overview
Operating and Financial Highlights
Agenda
All data presented in US Dollar and in metric tons, except when indicated
99
100+ Years in Business
1900 1940´s 1950´s 1960´s 1970´s 1980´s 1990´s New
Millenium
1901 - First Operation:Nail Factory
1st Steel Mill Acquisition
(Riograndense)
•Expansion of Riograndense (Construction of 2nd
steel mill)
Market Share increase by:•Diversification / Verticalization•Distribution Network•New acquisition (Pernambuco, Brazil)
•Acquisition of a new steel mill (Paraná, Brazil)•Construction of a new mill (Rio de Janeiro, Brazil)
•Acquisition of 3 mills (Rio de Janeiro, Minas Gerais and Bahia, Brazil)•Construction of 2 mills (Paraná and Ceará, Brazil)•International expansion (Uruguay and Canada)
New Acquisitions:• Piratini (Rio Grande do Sul, Brazil) –specialty steel•Second mill in Minas Gerais and rolling mill in São Paulo (Brazil)•Stake in Açominas•International expansion ( Chile, Canada, Argentina and USA)
•New Acquisitions:-USA-Downstream mills
and fab shops in North America•Entering European and Asian market•Expansion in Latammarket•Construction of steel mill in São Paulo (Brazil)
1010
19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 9 e
Installed Capacity Expansion
Sidertul(Mexico)INCA
(Dom.Rep.)Sizuca
(Venezuela)SJK
(India)Chaparral(USA)
1980 – Laisa (Uruguay)1988 – Barão de Cocais(Brazil)1989 – Usiba (Brazil)Cambridge (Canada)1992 – Piratini (Brazil)AZA (Chile)1994 – Pains (Brazil)Manitoba (Canada)Stake in Açominas(Brazil)
Ameristeel(USA)AZA
New mill(Chile)
Additionalstake inAçominas(Brazil)
North Star(USA)
Controlof
Açominas(Brazil)Co-Steel(USA)
7,69611,076
16,372
Diaco(Colombia)
16,709
4,568
19,230São Paulo(Brazil)
Sidenor(Spain)
Sheffield (USA)
Siderperú(Peru)
GSB(Spain)
Solid Track Record
25,42522,700
TOTAL INVESTED (1981 – 1H2007):
Brazil = US$ 5.7 billion + Debt
North America = US$ 2.4 billion + Debt
Latin America = US$ 1.1 billion + Debt
Europe = US$ 420 million + Debt
In thousand tonnes (BR GAAP)
CAGR 1997-2007: 17% p.a.
Abroad – Installed capacity of Crude SteelBrazil – Installed Capacity of Crude Steel e: estimatedBesides 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.
1111
Spain
Dominican Republic
Steel Units
Associated Companies
Joint Ventures
BRAZIL
9.3 million tonnes of crude steel
6.2 million tonnes of rolled products
11 Steel Units
12 Fabricated Reinforcing Steel Facilities
04 Downstream Operations
68 Retail Facilities (Comercial Gerdau)
06 Flat Steel Service Centers
ABROAD (including JV in India)
13.4 million tonnes of crude steel
14.0 million tonnes of rolled products
30 Steel Units
44 Fabricated Reinforcing Steel Facilities
11 Downstream Operations
02 Associated Companies (Spain and Dom. Rep.)
02 Joint ventures (USA and India)
Canada
United States
Mexico
Venezuela
Colombia
Peru
Chile
Brazil
Argentina
Uruguay
India
Location
1212
15,6
16,8
17,5
18,2
18,3
19,1
20,3
21,2
22,5
30,1
32,0
32,7
117,2
16,1
Gerdau Group (BRA) 14
EvrazHolding (RUS) 13
ThyssenKrupp (GER) 12
Severstal (RUS) 11
Riva Group (ITA) 10
Corus Group (U.K.) 9
Tangshan (CHI) 8
Nucor (USA) 7
US Steel (USA) 6
Baosteel (CHI) 5
Posco (KOR) 4
JFE Steel (JAP) 3
Nippon Steel (JAP) 2
Arcelor Mittal (LUX) 1
Source: IISI
Crude Steel Production - 2006In million tonnes
Ranking by Company
Gerdau should have an
installed capacity of 26 million
tonnes of crude steel per year
after the investment program
in Brazil is completed in 2009.
Gerdau Group (BRA) 14
1313
Value Builder CompanyATKearney study
Notes: 1) EBIT-growthNotes: USINAS = USIMINAS; ARCELOR Takeover MITTAL/ SEVERSTAL: The market capitalization of Severstal 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
EregliDemir 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 Steel
SAIL
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
1414
LONG STEEL PRODUCTS (Brazil)
� Maintenance of market share
� Improvement of current installed
capacity
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
� Iron Ore Reserves
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
1515
OutlookBRAZIL
� Domestic demand will continue to grow especially in the civil construction and industrial
sectors which have the largest customers
� Prices should remain firm in the domestic market
� In the international market, prices should track raw material price volatility and the
sustainability of demand in the different regions of the world
� High maritime freight charge
NORTH AMERICA
� Demand continues intense
� Product price volatility is a function of scrap prices
� Higher operating costs due to maintenance downtime
� Metal spread stands at record levels
LATIN AMERICA
� Economies reporting solid growth
� Investments in infrastructure and good demand from the civil construction sector
� High costs
� Stable prices
EUROPE
� Seasonal impacts in 3Q07 (annual August vacation period in Spain)
� Demand continues strong
� Stable prices
� Good performance from the specialty steel sector
Obs.: As of end of June 2007
1616
Industry Overview
Group Overview
Operating and Financial Highlights
Agenda
All data presented in US Dollar and in metric tons, except when indicated
1717
63% inc
rease i
n the la
st 5 yea
rs
Shipments
Billets, blooms& slabs
Merchant bars
Rebars Fabricated steel
Heavystructural shapes
Wire-rod Wires Nails
Brazil – Domestic Market (25% in 1H07)
In thousand tonnes (BR GAAP)
9,109
2002
Brazil – Exports (14% in 1H07)
Latin America (13% in 1H07)
North America (45% in 1H07)
12,56012,144
13,550
2003 2004 2005
Europe (3% in 1H07)
2006
14,819
1H06 1H07
7,4338,212
1818
Europe
Latin America
North America
Brazil - Exports
Brazil - Domestic Market
Foreign Currency Generation – 1H07
9,148
Net sales from the overseas units plus exports from Brazil, represented 69% of consolidated net sales
Net Sales - Currency Breakdown
Historical Net Sales Geographical Distribution
10,940
5,321
6,853
US$ millions (BR GAAP)
34.0%
13.4%
47.0%
5.6%
31.7%
9.1%
45.9%
9.9%
3.4%
31.8%
8.6%
47.5%
8.5%3.6%
30.7%
11.9%
43.1%
9.1%
5.2%
Brazil -Domestic Market 31%
North America43%
Europe5%
Latin America12%
Brazil – Exports 9%
Exports From Brazil (By Region)(35% of Brazilian shipments in tonnes)
Africa 13% Central America
16%
Latin America 21%
North America13%
Europe 13%
Asia 24%
2005 2006 1H06 1H07
1919
0%
10%
20%
30%
40%
2003 2004 2005 2006 1H 07
0%
10%
20%
30%
40%
50%
2003 2004 2005 2006 1H 07
Consolidated
Brazil
North America
Latin America
Europe
GROSS MARGIN
EBITDA MARGIN
Margins
26%
34%
24%
34%
39%
18%
25%22%
19%22%
31%
26%
31%
18%
20%21%
4%
4%
18% 19%
2020
BALANCE SHEET Current assets 6,573 6,150 7,012 Non-current assets 6,022 5,330 7,370 Total Assets 12,596 11,480 14,382 Current liabilities 2,571 2,545 2,870 Non-current liabilities 4,070 3,570 4,263 Minority Interest 1,294 1,075 1,494 Shareholders’ equity 4,661 4,290 5,755 Total Liabilities and Shareholder’s equity 12,596 11,480 14,382 Total debt 4,240 4,002 4,493 Cash & Equivalents 2,791 2,722 2,572 Net debt 1,449 1,280 1,921
INCOME STATEMENT Net sales 10,999 5,321 6,853 Gross profit 3,038 1,471 1,762 Operating income 2,055 1,084 1,191 Net income 1,347 836 896 EBITDA 2,502 1,194 1,455 EBITDA Margin 22.3% 22.4% 21.2%
RATIOS Net debt / Total capitalization 19.6% 19.6% 21.0%
Total debt / EBITDALTM
1.7X 1.8x 1.6x
Net debt / EBITDALTM
0.6X 0.6x 0.7x
Consolidated FinancialsIn US$ millions (BR GAAP)
1H071H062006
LTM = Last twelve monthsEBITDA = Earnings before interest, taxes, depreciation and amortization
2121
DEBT STRUCTURE
Domestic Currency 33%
Foreign Currency
43%
Companies Abroad 24%
DEBT AVERAGE LIFE:8 years and 1 month
US$ MM
1,921
1,248
1,324
2,572
757
1,695
1,032
3,484
323
256
430
1,009
4,493
9%Domestic Currency
22%SHORT TERM
100%GROSS DEBT
78%LONG TERM
7%Companies Abroad
6%Foreign Currency
17%Companies Abroad
38%Foreign Currency
23%Domestic Currency
51%Domestic Currency
100%CASH & CASH AND EQUIV.
NET DEBT
49%Companies Abroad
8.0%Companies Abroad
6.6%Foreign Currency
22.2%
Brazil
Domestic Currency
InUS$
COST OF DEBT (per annum)
June 2007 (BR GAAP)
Consolidated Debt Profile
ALL DATA IN BR GAAP
2222
FINIMP: 209
BNDES: 152Working
Capital: 265
Companies
Abroad: 251
In US$ millions – Jun/07 (BR GAAP)
Companies
Abroad: 289
FINIMP: 80
Pre-export: 83
BNDES: 79Companies
abroad: 101FINIMP: 90
BNDES: 79
BNDES: 129
FINIMP: 122
BNDES: 61
FINIMP: 44
2H07 1H08 2H08 2009 2010 2011 2012
SHORT TERM: US$ 1,009 LONG TERM: US$ 3,484
301
708
535498
395
174
Consolidated Debt Amortization
After 2012
1,174
Perpetual Bond: 600
Debentures: 273
FINIMP: 172
708
Companies
Abroad: 426
BNDES: 100
FINIMP: 95
2323
ACTUAL 1H07 (BR GAAP) INVESTMENT PLAN 2007–2009
In US$ millions
CAPEX
Current
Capacity*
2007 2008 2009 New
Capacity
Variation
Crude Steel 9.340 1.560 50 - 10.950 17,2%
Rolled Products 6.160 - - 350 6.510 5,7%
Crude Steel 10.490 50 230 370 11.140 6,2%
Rolled Products 10.630 30 130 875 11.665 9,7%
Crude Steel 2.290 10 825 50 3.175 38,6%
Rolled Products 2.970 - 270 475 3.715 25,1%
Crude Steel 460 - - 60 520 -
Rolled Products 490 - - - 490 -
Crude Steel 22.580 1.620 1.105 480 25.785 14,2%
Rolled Products 20.250 30 400 1.700 22.380 10,5%
TOTAL
Brazil
North America
Latin America
Europe
In US$ millions
709.1
40.2
100.9
84.7
225.8
483.3
403.5
0
393.5
10.0
403.5
0
494.4Latin America
1,112.6TOTAL
40.2Europe
94.7North America
629.3ABROAD
483.3BRAZIL
527142125260Latin America
935315360260North America
148434560Europe
1,610500530580ABROAD
TOTAL200920082007
2,3901,000570820BRAZIL
1,5001,400 1,100 4,000TOTAL
1H07ACQUISCAPEX
2424
� External members on the Boardof Directors
� Fiscal Board (Audit Committee)
� Gerdau Executive Committee
� Support and Excellence Committee
� Corporate Governance Committee
� Strategy Committee
� Compensation and Succession Committee
� Disclosure Committee
Gerdau S.A. shares are included in the following São Paulo stock exchange indexes:
Bovespa Index - Ibovespa
Corporate Sustainability Index – ISE
Special Corporate Governance Stock Index – IGC
Special Tag Along Stock Index – ITAG
Brazil Index 50 - IBrX 50
Industrial Sector Index – INDX
� Gerdau Business System
� Risk Management
� Tag Along (100% ON and PN)
� Quarterly dividends (30% of the adjusted net income according to BR GAAP)
� Bovespa Level 1
� New York Stock Exchange
� Toronto Stock Exchange
� LATIBEX – Madrid Stock Exchange
Governance – Best Practices
2525
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.