Investor Presentation

Transcription

1 September, 2012

2 Gerdau Brief Overview Over 110 years of operations in the steel market One of the world s most competitive steel companies, with operations in 14 countries Largest long steel producer in the Americas and 2 nd globally Vertically integrated operations with flexible production processes Relevant market share in its markets and diversified product range through downstream and service centers Strong balance sheet and strong cash generation With more than 140,000 shareholders and ADTV of over R$ 300 mm, Gerdau shares are listed on the São Paulo, New York and Madrid stock exchanges Source: Steel on the Net, Worldsteel 2

3 Regional Summary Apparent Steel Use, finished steel (SRO April 2012) Source: World Steel Association (Apr/12) 3

4 Global Player with Dominant Regional Presence Rolled Long Steel Capacity - Ranking by company (million tonnes)* Arcelor Mittal 54.4 Spain Gerdau 25.1 India Evrazholding 18.4 Tata Corus 11.9 USA. & Canada Dominican Republic Nippon Steel 11.1 Mexico Guatemala Colombia Venezuela Nucor Group 10.8 Peru Brazil JFE Steel Group 10.2 Chile Shanghai Boasteel 9.4 Steel Units Associated Companies Argentina Uruguai Hebei Steel 9.1 Joint ventures Riva Group Source: Steel on the Net *Last information available: Largest long steel producer in the Americas and 2nd globally Operations in 14 countries with relevant market share 4

5 Operational Strategy Vertical Integration Blast furnace Iron ore Converter Integrated mill Continuous casting Mini - mill Pig iron Scrap Electric arc furnace Ladle furnace Ladle Billets Drawing unit Wire rod Laying head Finishing unit Rolling mill Reheating furnace Drawn wire Cooling bed Nail machine Welding manufacturing processes Galvanizing unit Upstream Steel Downstream Relevant level of direct purchase and captive scrap (50%) 2.9 billion t of iron ore resources (70% self-sufficiency) Coke unit and coking coal mine in Colombia Partial level of self generation energy Focus on the steel market Low cost structure Mini-mills and integrated mills Up-to-date technology Reinforcing steel fabrication facilities (Fab Shops) Downstream operations Drawn products Multi-product distribution network Tailor-made approach (~40% of sales to civil construction) 5

6 Consumer Markets PRODUCTS Billets, blooms & slabs Merchant bars SBQ Rebars Fabricated steel Ready-to-use products Heavy structural shapes Wire-rod Wires Nails Brazil North America Latin America Special Steel Housing Infrastructure Housing Automotive Infrastructure Non-residential Infrastructure Shipbuilding Industry and commercial buildings Agricultural Industrial Industry and commercial buildings Energy Exports of slabs, blooms and billets 37% of Net Sales 31% of Net Sales 12% of Net Sales 20% of Net Sales 44% of EBITDA 24% of EBITDA 5% of EBITDA 27% of EBITDA Note: Net Sales and EBITDA consider 2Q12 results. 6

7 Brazil Business Operation Good demand for the next years World Cup, Olympic Games, pre-salt and PAC Wide access to raw materials (80% captive scrap; investments for iron ore self sufficiency) Wide distribution network Investments in capacity expansion (long and flat steels) Developing iron ore business GDP forecasted growth for 2012: 1.9% Apparent steel use growth for 2012: 5.4% Gerdau s Installed Capacity (million tonnes) 25,300 36% 9,100 Crude Steel 21,260 25% 5,320 Rolled Products Brazil Brazilian Infrastructure investments Pipeline (R$ billion) 14 Santo Antônio Hydroelectric 9 Jirau Hydroelectric 1 Tucuruí Locks 4 BR 101 (South and Northeast) 19 Belo Monte Hydroelectric 2 Nova Transnordestina Railway 5 São Francisco River Transposition Total estimated investments: R$177 bn 6 East-West Railway 4 2 Cacimbas-Catu North South Railway Pipeline (South) 34 Trem Bala 13 Oil Platforms 5 São Paulo 3 Rodoanel Açu Port (South) 23 São Paulo Subway To be concluded in the following years 7 Santos Port 9 Angra 3 Nuclear Plant 19 Comperj Projects under development 7

8 North America Business Operation Well positioned in the market to meet infrastructure investment needs Competitive cost structure (labor force, energy, raw materials and currency) Wide downstream operations coverage Highlight: Industry and energy markets Gerdau s Installed Capacity (million tonnes) 25,300 21,260 North America 39% 43% 9,860 9,220 Crude Steel Rolled Products US GDP forecasted growth for 2012: 2% Canada GDP forecasted growth for 2012: 2.1% US apparent steel use forecasted growth for 2012: 6% 8

9 Latin America Business Operation Dynamic and emerging market Relevant presence in main markets Mexico 2 plants Access to the U.S. market New structural profile rolling mill GDP forecasted growth for 2012: 3.4% Colombia Coal resources and coke production Apparent steel use growth for 2012: 6.4% Investments in port (2012) Investments for capacity increase (2015) Gerdau s Installed Capacity (million tonnes) Peru Excellent logistics 25,300 21,260 Strong growth 10% 14% 2,590 3,030 Crude Steel Rolled Products Latin America Chile Mature market Good distribution network Study for capacity increase 9

10 Special Steel Business Operation Global Coverage 1,500 kg Operations in Brazil, US, Spain and India Second largest producer worldwide Capacity increase in Brazil and US. Rolling mill in India will start up in 2012 World s vehicle production growth in 2012: Light vehicle: 5,7% Medium and heavy vehicle: 3,9% NAFTA Total Auto and Light Truck Assemblies Gerdau s Installed Capacity (million tonnes) 25,300 21,260 Special Steel 15% 17% 3,750 3,690 Crude Steel Rolled Products 10

11 Investments R$ 10.3 billion investment plan for 2012 to 2016: Investment Plan - Main Projects Brazil BO Location Additional production capacity (1,000 Start-up Flat steel rolling (heavy plates and hot rolled coil) at Açominas Mill in Minas Gerais Brazil /2013 Stage 1: Expansion of mining operations capacity to 7 million tons 2 Brazil Stage 2: Expansion of mining operations capacity to 11,5 million tons 2 Brazil Rebar fabricating and ready-to-use steel product units Brazil Wire rod and rebar rolling mill at Cosigua in Rio de Janeiro 1,2 Brazil North America BO Reheating furnace at C alvert City, Kentucky USA Increase in crude steel capacity at Midlothian mill - Texas USA Increase in rolling capacity at Midlothian mill - Texas USA Latin America BO Port facilities (for coal and coke shipments) Colombia Rebar and light commercial profile rolling in Guatemala 3 Guatemala /2013 New melt shop in Mexico (Gerdau Corsa) 3 Mexico New structural profile rolling mill in Mexico (Gerdau Corsa) 3 Mexico Expansion of crude steel capacity at all Colombia's mills Colombia Expansion of rolling capacity at all C olombia's mills Colombia Specialty Steel BO New continuous slab casting unit with production capacity increase at Monroe Mill - Michigan USA Specialty steel rolling mill at Pindamonhangaba Mill in São Paulo Brazil Expansion of rolling capacity at Mogi das C ruzes Mill in São Paulo Brazil Specialty steel and rebar rolling mill, sintering, coke plant and power generation 3 India /2013 New continuous casting and reheating furnace at Pindamonhangaba in São Paulo Brazil Expansion of crude steel, long steel products and finishing capacities (at 2 different mills) 2 USA To meet this rolling capacity, one of the electric furnaces in the melt shop w ill be revamped. 2 Investment w ith approval in stages. 3 This capacity is not included in the consolidated figures since it is a jointly-controlled entity. 11

12 Strategic investment: Developing Iron Ore Business Resources of 2.9 billion tonnes : 24% measured, 9% indicated e 67% inferred MG BELO HORIZONTE Várzea do Lopes Dom Bosco Miguel Burnier AÇOMINAS MILL ES VITÓRIA Praia Mole SP COSIGUA MILL Itaguaí SÃO PAULO RIO DE JANEIRO ATLANTIC OCEAN RJ MILLS PORTS CITIES Vitória Minas MRS Quadrilátero Ferrífero Iron Ore Mines Santos 12

13 Strategic investments: India and Flat Steel Two flat steel rolling mill at Gerdau Açominas: 1.9 MM tonnes Brazilian Market Hot rolled coil Brazilian Market Heavy Plate 10% Auto-parts (including car bodies) 24% Construction 6% 6% Ships 9% Agricultural/Roads 38% 4% 7% 5% 12% Rerolling Tubes with small diameters ( <7") Tubes with big diameters ( >7") Distribution/Resale Others 35% 18% 19% 6% Industrial machinery and equipaments Construction Tubes with big diameters ( >7") Distribution/Resale Others India: Specialty steel and rebar rolling mill, sintering, coke plant and power generation. Ownership of cars per 1,000 people India 12 Indonesia 21 China 128 Brazil 156 Spain 479 Germany 558 United States 842 GDP growth for 2012: 6,1% Light and heavy vehicle production should grow 14% 2012 reaching 4.4MM. 13

14 Corporate Governance SHAREHOLDERS Relationship with more than 140 thousand shareholders following the principals of transparency, clarity and agility. Bylaws mandate minimum dividend of 30% of annual adjusted net income (pay-out). BEST PRACTICES Independent Board Members Sarbanes Oxley Compliant Gerdau Business System Tag Along (100% common and preferred shares) Bovespa s Level 1 corporate governance listing New York Stock Exchange LATIBEX Component of Bovespa stock indexes: ISE, IGC, ITAG, Ibovespa, IBrx 50 e INDX Stock Trading Policy Related-Party Transactions Policy Risk Management Policy ENVIRONMENTAL MANAGEMENT Scrap: largest recycler in Latin America Energy: continuously invests to expand energy efficiency Air: mills are equipped with modern dust removal systems By-products: use of by-products generated during the steel production Sustainable Products: Falcão Bauer Environmental Seal Biodiversity: contributions to preserve the biodiversity Water: high levels of water reuse Environmental Education: conductions of awareness campaigns, lectures and training courses SOCIETY Social projects add value to the business chain and reinforce commitment to sustainable development. 14

15 Gerdau Consolidated Performance Shipments Breakdown by Operation 16% 2Q11 25% 14% 1Q12 26% 15% 2Q12 29% Brazil - Domestic Market Brazil - Exports 12% 14% 14% North America 33% 14% 36% 10% 32% 10% Latin America Special Steel Net Sales & Gross Margin R$ million 9,199 9,010 9,066 8,967 9,975 EBITDA & EBITDA Margin R$ million 1,309 1,215 1,025 1,008 1,244 16% 15% 13% 12% 14% 15% 14% 11% 11% 12% 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 15

16 Indebtedness COST OF DEBT: 5.9% Local currency: 7.3% Foreign currency: 5.7% + VC Companies abroad: 5.6% x 2.9x 3.0x 2.1x 2.0x 2.2x x 2.6x DEBT BREAKDOWN Capital Market: 59% Commercial banks: 21% BNDES: 12% Export credit agencies: 8% sep.11 dec.11 mar.12 jun.12 In R$ billion DEBT MATURITY Debt average term: 5 years 5.7 Gross Debt (R$ billion) Cash (R$ billion) Gross Debt/EBITDA (1) Net Debt/EBITDA (1) 3.2 (1) EBITDA in last 12 months 0.8 Jun- Dec/ and after 16

17 Statement This presentation may contain forward-looking statements. These forward-looking statements rely upon estimates, information or methods that may be incorrect or inaccurate and may not actually occur. These estimates are also subject to risks, uncertainties and assumptions, including, among others: general economic, political and commercial conditions in Brazil and in the markets where we operate and existing and future government regulations. Potential investors are hereby informed that these estimates do not constitute a guarantee of future performance as they involve risks and uncertainties. The Company does not undertake, and specifically denies, any obligation to update any estimate, which only speak as of the date they are made. 17

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