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Gerdau: Brazil's Leading Steel Producer

Gerdau is a Brazilian company with 100 years of tradition in steel production and distribution. It is the 24th largest steel producer globally and the largest in Latin America. With an extensive distribution network and strategic investments, Gerdau is a market leader in Brazil.

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Gerdau: Brazil's Leading Steel Producer

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  1. GRUPO GERDAU Brazil Day NYSE New York Stock Exchange SEPTEMBER 7th, 2001

  2. COMPANY * 100 years of tradition focused on the production of steel in mini-mills and the distribution of steel products. * Installed capacity of 8.4 million metric tons of crude steel. * 24th largest world steel producer and the best ranked Brazilian Company. * Largest Latin American long steel producer. * Distribution network with 64 sales points, 3 service centers for flat steel and 27 fab shops for civil construction. * 9 steel plants in Brazil, 9 abroad and 2 strategic shareholdings. 02

  3. 1901 ‘40 ‘60 ‘70 ‘80 ‘90 Decades VOCATION FOR STEEL MAKING Nail Factory Acquisition of Sid. Riograndense Mill Expansion in Brazil Construction of Cosigualargest Latin American market mill Expanding internationally Privatization 20 market mills in the Americas 03

  4. MARKET LEADER OF ROLLED PRODUCTS IN BRAZIL Belgo 35% Gerdau 46% Other 19% * 90% of total sales are shipped to the manufacturing and civil construction sectors. The balance goes to the agriculture and specialty segments. MARKET SHARE 04

  5. STRATEGY * Focus on long steel products output and distribution * Vertical and horizontal integration * Market mills * Geographical expansion through acquisitions and greenfield projects * Professionalism * Empowerment 05

  6. OTHER INVESTMENTS * Reforestation * Retail sales * Bank * Power generation * Fabrication shops JOINT VENTURES * Açominas * Sipsa/Sipar * Monteferro 06

  7. MRM Courtice AmeriSteel Gerdau S.A. Sipar Açominas Aza Laisa Sipsa GEOGRAPHICAL DISTRIBUTION 07

  8. CAPITAL MARKETS • Begins trading in: • 1947 - Porto Alegre Stock Exchange • 1970 – Listing of shares on the • Rio de Janeiro and São Paulo Stock Exchanges • 1984 – Listing of Cosigua’s shares • 1999 – Listing of ADR level II on the NYSE • 2000 – Bovespa Index (Ibovespa) • 2001 – Corporate Governance Index (IGC - level I) - Bovespa 08

  9. WHAT STILL NEEDS TO BE DONE * Increase liquidity in the US * Further consolidation of North American operations * Enhance the presence in Brazilian growing markets 09

  10. US$ 1 = R$ 1.9554 Source: Gerdau GERDAU - 2000 GROSS SALES: R$ 6.2 billion NET INCOME: R$ 398 million EBITDA: R$ 1.1 billion TOTAL ASSETS: R$ 6.9 billion SHAREHOLDERS EQUITY: R$ 2.4 billion PRODUCTION: 7.1 MILLION METRIC TONS OF CRUDE STEEL 10

  11. 19% 20% 15% 10% 7% 5% 0% 1996 1997 1998 1999 2000 EARNINGS DISTRIBUTION AS A % OF EBITDA 11 Source: Gerdau

  12. R$ million 1,060 836 444 1998 1999 2000 US$ million 542 467 367 1998 1999 2000 EBITDA 12 Source: Gerdau

  13. Index 300 200 Gerdau Dow Jones 100 T- Bond 30Y 1999 2000 2001 TOTAL RETURN TO SHAREHOLDERSIN DOLLARS Source: Economatica 13

  14. 280% 200% 100% -20% 3 years 5 years 10 years Gerdau Dow Jones Ibovespa Source: Economatica Reference: 8/27/2001 APPRECIATION CHART FROM 1992 TO 2001 14

  15. Gerdau average (99-01): 6.12 Brazilian steel sector average (99-01): 6.18 20 15 10 4.6 5 3.3 0 Jun 99 Jan 99 Nov 99 Apr 00 Sep 00 Feb 01 Jul 01 Gerdau Brazilian Steel Sector PRICE / EARNINGS (P/E) Source: Economatica 15

  16. 100% 72% Jan 99 Jun 99 Nov 99 Apr 00 Sep 00 Feb 01 Jul 01 Gerdau PRICE / BOOK VALUE Source: Economatica 16

  17. US$ billion 2,0 1,5 US$1.1 billion 1,0 0,5 Jan 99 Jun 99 Nov 99 Apr 00 Sep 00 Feb 01 Jul 01 Average Market Capitalization Gerdau MARKET CAPITALIZATION US$ Source: Economatica 17

  18. www.gerdau.com.br inform@gerdau.com.br

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