2012.11 - apresentação institucional...

November, 2012

Investor Presentation


► One of the world’s most competitive steel companies, with operations in 14 countries

► Vertically integrated operations with flexible production processes

► Largest long steel producer in the Americas and 2nd globally

► Over 110 years of operations in the steel market

Gerdau Brief Overview

2

► 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


Regional SummaryApparent Steel Use, finished steel (SRO October 2012)

Mt %

2011 2012 2013 11 / 10 12 / 11 13 / 12

World 1,380.9 1,409.4 1,454.9 6.2 2.1 3.2 119.5

European Union (27) 153.1 144.5 148.1 5.9 -5.6 2.4 74.6

Other Europe 33.2 34.4 36.0 12.7 3.8 4.5 113.7

C.I.S 54.8 55.2 57.4 13.8 0.8 3.9 101.9

NAFTA 121.3 130.4 135.1 9.0 7.5 3.6 95.3

2013 with

% of 2007

3

Source: World Steel Association (Oct12)

NAFTA 121.3 130.4 135.1 9.0 7.5 3.6 95.3

Central and South America 45.7 47.4 50.4 2.6 3.8 6.3 123.1

Africa 23.9 25.3 27.3 -3.4 5.8 7.7 131.5

Middle East 48.2 49.9 52.8 2.9 3.5 5.9 121.3

Asia & Oceania 900.6 922.2 947.9 5.9 2.4 2.8 138.5

China 623.9 639.5 659.2 6.2 2.5 3.1 157.6

Tata Corus

Evrazholding

Rolled Long Steel Capacity - Ranking by company (million tonnes)*

Global Player with Dominant Regional Presence

USA. & Canada

Dominican Republic

India

SpainArcelor Mittal

Gerdau

11.9

18.4

25.1

54.4

Nippon Steel

Source: Steel on the Net*Last information available: 2012

� Largest long steel producer in the Americas and 2nd globally

� Operations in 14 countries with relevant market share

Steel Units

Associated Companies

Joint ventures

Mexico

Colombia

Peru

Chile

Uruguai

Argentina

Brazil

VenezuelaGuatemala

4Investor Presentation

Nucor Group

JFE Steel Group

Hebei Steel

Shanghai Boasteel

Riva Group 9.0

9.1

9.4

10.2

10.8

11.1

Operational Strategy – Vertical Integration

Billets

Cooling bed

Reheating furnaceFinishing

unitLaying headWire rodDrawing unit

Iron ore Converter

Blast furnace

Continuous casting

LadleScrap

Pig iron

Electric arc furnace

Ladle furnace

Drawn wire

Integrated mill

Mini - mill

Rolling mill

Billets

Cooling bed

Reheating furnaceFinishing

unitLaying headWire rodDrawing unit

Iron ore Converter

Blast furnace

Continuous casting

LadleScrap

Pig iron

Electric arc furnace

Ladle furnace

Drawn wire

Integrated mill

Mini - mill

Rolling mill

►Relevant level of direct purchase and

captive scrap (50%)

► 6.3 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)

Upstream Steel Downstream

Galvanizing unit

wire

Nail machine

Welding manufacturing

processes

Galvanizing unit

wire

Nail machine

Welding manufacturing

processes


PRODUCTS

Brazil North America Special Steel

Ready-to-use products

Billets, blooms& slabs

Merchant bars

RebarsFabricated

steelHeavy

structural shapesWire-rod Wires NailsSBQ

Latin America

Consumer Markets

► Housing

► Infrastructure

► Industry and commercial buildings

► Agricultural

► Exports of slabs, blooms and billets

► Infrastructure

► Non-residential

► Industrial

► Automotive

► Shipbuilding

► Energy

► Housing

► Infrastructure

► Industry and commercial buildings

36% of Net Sales

61% of EBITDA

34% of Net Sales

18% of EBITDA

13% of Net Sales

0% of EBITDA

17% of Net Sales

21% of EBITDA

Note: Net Sales and EBITDA consider 3Q12 results.


► Wide access to raw materials (80% captive scrap; investments for iron ore self sufficiency)

► Investments in capacity expansion (long and flat steels)

► Wide distribution network

► Good demand for the next years − World Cup, Olympic Games, pre-salt and

PAC

Brazil Business Operation

► Developing iron ore business

14Santo AntônioHydroelectric

9Jirau

Hydroelectric

1TucuruíLocks

19Belo Monte

Hydroelectric

2Nova

TransnordestinaRailway

5São Francisco River

Transposition

6East-WestRailway

4Cacimbas-Catu

Pipeline

2North South Railway

Brazilian Infrastructure investments Pipeline (R$ billion)

► GDP forecasted growth for 2013: 4.0%

Gerdau’s Installed Capacity (million tonnes)

► Total estimated investments: R$177 bn

PipelineNorth South Railway(South)

4BR 101

(South and Northeast)

5São Paulo“Rodoanel”

(South)

23São PauloSubway

7Santos

Port

19Comperj

34Trem Bala 13

Oil Platforms

3Açu Port

9Angra 3

Nuclear Plant

To be concluded in the following years

Projects under development


► Apparent steel use growth for 2013: 4.2%

9,1005,320

25,300

21,260

Crude Steel Rolled Products

Brazil36%25%

► Competitive cost structure (labor force, energy, raw materials and currency)

► Wide downstream operations coverage

► Well positioned in the market to meet infrastructure investment needs

North America Business Operation

► Highlight: Industry and energy markets

► US GDP forecasted growth for 2013: 2.1%



► Canada GDP forecasted growth for 2013: 2%

► US apparent steel use forecasted growth for 2013: 3.6%

9,860 9,220

25,30021,260


North America39%

43%

► Relevant presence in main markets

► Dynamic and emerging market

► GDP forecasted growth for 2013: 3.9%

Latin America Business Operation► 2 plants

► Access to the U.S. market

► New structural profile

rolling mill (2014)

Mexico

► Coal resources and coke production

► Investments in port (2013)

Colombia

► Apparent steel use growth for 2013: 6.4%► Investments in port (2013)

► Investments for capacity increase (2015)

► Excellent logistics

► Strong growth

Peru

► Mature market

► Good distribution network

► Study for capacity increase

Chile



► Apparent steel use growth for 2013: 6.4%

2,590 3,030

25,300

21,260


Latin America

10% 14%

► Second largest producer worldwide

► Global Coverage

► Operations in Brazil, US, Spain and India

► Rolling mill in India will start up in 2012

Special Steel Business Operation

► Capacity increase in Brazil and US.

1,500 kg

NAFTA Total Auto and Light Truck Assemblies



3,750 3,690

25,300

21,260


Special Steel

15% 17%

InvestmentsR$ 10.3 billion investment plan for 2012 to 2016:

Investment Plan - Main Projects Location

Additional

production

capacity (1,000 t)

Start-up

Brazil BOFlat steel rolling (hot rolled coil) at Açominas Mill in Minas Gerais Brazil 800 2012/2013

Flat steel rolling (heavy plates) at Açominas Mill in Minas Gerais Brazil 1,100 2014

Expansion of mining operations capacity to 11,5 million tons2 Brazil - 2013

Expansion of mining operations capacity to 18 million tons2 Brazil - 2016

Expansion of mining operations capacity to 24 million tons² Brazil - 2020

Rebar fabricating and ready-to-use steel product units Brazil - 2013

Wire rod and rebar rolling mill at Cosigua in Rio de Janeiro1,2 Brazil 600 2013

New melt shop at Riograndense plant4 Brazil 650 2015

North America BOReheating furnace at Calvert C ity, Kentucky USA - 2012

Increase in crude steel capacity at Midlothian mill - Texas USA 200 2014

Increase in rolling capacity at Midlothian mill - Texas USA 100 2014

Latin America BO


Latin America BOPort facilities (for coal and coke shipments) Colombia - 2013

Rebar and light commercial profile rolling in Guatemala3 Guatemala 200 2012/2013

New melt shop in Mexico (Gerdau Corsa)3 Mexico 1,000 2014

New structural profile rolling mill in Mexico (Gerdau Corsa)3 Mexico 700 2014

Expansion of crude steel capacity at all Colombia's mills Colombia 400 2015

Expansion of rolling capacity at all Colombia's mills Colombia 450 2015

Specialty Steel BOExpansion of rolling capacity at Mogi das Cruzes Mill in São Paulo Brazil 60 2013

Specialty steel rolling mill at Pindamonhangaba Mill in São Paulo Brazil 500 2013

Specialty steel and rebar rolling mill, sintering, coke plant and power generation³ India 300 2012/2013

New continuous casting and reheating furnace at Pindamonhangaba in São Paulo Brazil - 2013

Expansion of crude steel, long steel products and finishing capacities (at 2 different mills)2 USA 300 2014

1 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.

4 Deactivation of current melt shop (450,000 tones capacity)

Strategic investment: Developing Iron Ore Business

�Resources of 6.3 billion tonnes, with iron content greater than 40%

MGES

Praia MoleVITÓRIA

AÇOMINAS MILL

Miguel BurnierVárzea do Lopes

BELO HORIZONTE

Dom Bosco

MGES

Praia MoleVITÓRIA

AÇOMINAS MILL

MGES

Praia MoleVITÓRIA

AÇOMINAS MILL

Miguel BurnierVárzea do Lopes

BELO HORIZONTE

Dom Bosco

12

RJSP

ATLANTIC OCEAN

Itaguaí

Santos

SÃO PAULO

RIO DE JANEIRO

MILLS

PORTS

Vitória MinasMRS

Quadrilátero Ferrífero

COSIGUA MILLCITIES

Iron Ore Mines

RJRJSP

ATLANTIC OCEAN

Itaguaí

Santos

SÃO PAULO

RIO DE JANEIRO

MILLS

PORTS

Vitória MinasMRS


SP

ATLANTIC OCEAN

Itaguaí

Santos

SÃO PAULO

RIO DE JANEIRO

MILLS

PORTS

Vitória MinasMRS


COSIGUA MILLCITIES

Iron Ore Mines

Strategic investments: India and Flat Steel► Two flat steel rolling mill at Gerdau Açominas: 1.9 MM tonnes

►Brazilian Market – Hot rolled coil

24%

7%

5%

12%4%

38%

10% Auto-parts (including car bodies)

Construction

Rerolling

Tubes with small diameters (∅<7")

Tubes with big diameters (∅>7")

Distribution/Resale

Others

►Brazilian Market – Heavy Plate

6%9%

19%

6%

18%

35%

6% Ships

Agricultural/Roads

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 ► 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 2013: 6%

► Light and heavy vehicle production should grow 8.3% and 2.3% in 2012, reaching 4.2MM.

13

Corporate Governance

► 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

BEST PRACTICES

► 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).

SHAREHOLDERS

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► 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

► 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

► Social projects add value to the business chain and reinforce commitment to sustainable development.

SOCIETY

14

29%

10%32%

14%

15%

2Q12

Gerdau Consolidated Performance

28%

11%32%

14%

15%

3Q11

27%

9%

36%

15%

13%

3Q12Brazil - Domestic Market

Brazil - Exports

North America

Latin America

Special Steel

Shipments Breakdown by Operation

Investor Presentation15

Net Sales & Gross MarginR$ million

R$ million

EBITDA & EBITDA Margin

8,967 9,0669,199

9,975 9,819

15% 13% 12%14% 12%

3Q11 4Q11 1Q12 2Q12 3Q12

1,2151,025 1,008

1,244

1,033

14% 11% 11% 12% 11%

3Q11 4Q11 1Q12 2Q12 3Q12

DEBT MATURITY

COST OF DEBT: 5.9%

Local currency: 7.1%Foreign currency: 5.7% + VCCompanies abroad: 5.7%

DEBT BREAKDOWN

Capital Market: 59%Commercial banks: 22%BNDES: 11%Export credit agencies: 8%

Indebtedness

13.7 13.5

14.9 15.0

2.9x3.0x

3.3x 3.5x

2.0x2.2x

2.6x

2.8x

In R$ billion

DEBT MATURITY

Debt average term: 4.9 years

16

(1) EBITDA in last 12 months

4.6

3.4 3.2 3.0

dec.11 mar.12 jun.12 sep.12

Gross Debt (R$ billion) Cash (R$ billion)

Gross Debt/EBITDA (1) Net Debt/EBITDA (1)

0.3 1.4

0.8 0.3

3.3

5.9

Oct-Dec/13

2014 2015 2016 2017 2018 and after

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

Statement

17

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.


www.gerdau.com

[email protected]@gerdau.com.br

+55 51 3323 2703


2012.11 - apresentação institucional...

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