1 / 28

Brazilian Steel Sector Overview - Production, Consumption, and Competitiveness

This document provides an overview of the Brazilian steel sector, including production statistics, exports, investment schedules, and market competitiveness. It highlights the major steel producers, their products, and their regional distribution. The document also discusses the competitive edge of the Brazilian steel industry and provides financial results for the first quarter of 2004.

haroldb
Download Presentation

Brazilian Steel Sector Overview - Production, Consumption, and Competitiveness

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Second Annual NYSE Small-Cap Conference for Non-U.S. Companies New York, May 6 - 7, 2004

  2. Steel SectorGerdau S.A. Consolidated Stock Market

  3. World Production Crude Steel In million tons In the 1Q 2004, the world produced247.7 million tons of crude steel. Brazil contributed with 3.2% of this tonnage. 03 Sources: IISI and MEPS

  4. Production Company (ITA) (USA) (JAP) (USA) (JAP) (BRA) (ENG) Largest Producers Crude Steel 2002 Production Company In million tons (LUX) (ENG) (JAP) (KOR) (CHI) (ENG) (GER) (JAP) 04 Source: IISI

  5. Usiminas/Cosipa 8,624 8,449 Belgo/CST/Acesita (Arcelor) Gerdau Açominas 6,976 CSN 5,318 Aços Villares 775 V&M do Brasil 551 Barra Mansa 421 MWL Brasil 36 Gerdau Açominas – 49.6% 3,894 thousand tons V&M do Brasil - 6% 466 thousand tons Aços Villares - 6% 456 thousand tons Belgo (Arcelor) – 33.8% 2,654 thousand tons Barra Mansa - 5% 385 thousand tons Overview Brazilian Steel Sector - 2003 CRUDE STEEL PRODUCERS IN BRAZIL In thousand tons TOTAL 2003: 31,150 thousand tons LONG STEEL PRODUCERS IN BRAZIL TOTAL 2003: 7,855 thousand tons 05 Source: IBS

  6. Domestic Sales Exports Exports of Long Steel Products Brazilian Steel Sector - 9M2003 Inmillion tons Domestic SalesSep.2003/2001- 11% Monthly Average 517.2 thousand tons Monthly Average 528.2 thousand tons Monthly Average 461.5 thousand tons 700 600 500 Exports Sep.2003/2001 +85% 400 Monthly Average 156.3 thousand tons 300 Monthly Average 84.4 thousand tons Monthly Average 99.2 thousand tons 200 100 2001 2002 2003 Exports of long steel products reached 2.2 million tons in 2003, an increase of 78% YoY. 06 Source: IBS

  7. Competitiveness Brazilian Steel Sector EBITDA MARGIN - 2002 35% In % 40 35 30 25 20 15 10 5 Brazil Asia* Japan EU North America Others (World) * Does not include Japan • Despite increases in the prices of main inputs, Brazil has the highest operating margin in the world. • The mills operate with up-to-date technology due to a permanent investment program. 07 Source: IBS

  8. Apparent Consumption In million tons Installed Capacity Crude Steel Production 1994 95 96 97 98 99 00 01 02 03 04 05 06 2007 Investments Brazilian Steel Sector INVESTMENT SCHEDULE In US$ million 2003 2004 2005 2006 2007 TOTAL FLAT STEEL 613.4 694.0 854.4 351.5 117.9 2,631.2 LONG STEEL 290.3 276.2 281.2 185.9 180.1 1,213.7 SPECIALTY STEEL 72.8 58.5 50.4 38.1 32.3 252.1 TOTAL 976.5 1,028.8 1,186.0 575.4 330.4 4,097.0 INSTALLED CAPACITY X PRODUCTION X APPARENT CONSUMPTION 08 Source: IBS

  9. Steel SectorGerdau S.A. Consolidated Stock Market

  10. BILLETS, BLOOMS& SLABS MERCHANT BARS REBARS FABRICATED STEEL HEAVYSTRUCTURAL SHAPES WIRES WIRE-ROD NAILS Main Products 10

  11. Installed Capacity In thousandtons SLABS, BLOOMS& BILLETS COMMON ROLLED PRODUCTS CRUDE STEEL PRODUCTS Billets, slabs, blooms, merchant bars, rebars, wire rod, drawn products, welded wire meshes, structurals, nails, downstream products,fab. steel products and specialty steel. Gerdau Açominas 4,640 7,575 2,610 Billets, merchant bars, rebars and wire rod. South America 634 510 - Billets, merchant bars, rebars, wire rod, drawn products, welded meshes, nails, downstream products andfabricated steel products. North America 6,186 6,568 - 11,460 TOTAL 14,653 2,610 11

  12. Co-Steel 2002 Part. Açominas 1997 Usiba1989 Piratini1992 AmeriSteel USA 1999 12.3 million Pains1994 Sipsa Argentina1997 Barão de Cocais1988 CearenseGuaíra1982 9.0 million Part. Sipar Argentina 1998 MRM Canada 1995 Hime1985 Aza Chile 1992 Courtice Canada 1989 Laisa Uruguay 1981 Açominas (control) 2002 1980 1984 1988 1992 1996 2000 2003 Crude Steel Rolled Products Output Evolution AVERAGE GROWTH RATE 1980 - 2003 Crude Steel 10.2% per year Rolled Products 9.2% per year • 14th largest world steel producer according to the IISI. • Largest long steel producer in the Americas. 12

  13. (1) Flat steel mill, 50% stake JV (2) Rolling mill, 38% stake JV Geographical Distribution NORTH AMERICA • 10 mills and 1 strategic shareholding (Gallatin Steel) • 20 fabrication shops • 12 downstream operations and special sections BRAZIL • 10 mills • 11 fabrication shops • 6 downstream operations and special sections • 68 sales points (Comercial Gerdau). • 5 service centers for flat steel (Comercial Gerdau). Gerdau AmeriSteel Corp. Gallatin Steel (1) Gerdau Açominas S.A. SOUTH AMERICA • 2 mills and 1 strategic shareholding (Sipar) • 3 fabrication shops AZA Laisa Sipar (2) 13

  14. Competitive Edge • Focus on long steel products manufacturing and distribution • Market mill approach • Up-to-date technology • Competitive production costs • Diversified production processes • Multiple raw materials sourcing • Vertical and horizontal integration • Relevant market share in every country in which the Company has operations • Financial soundness and access to international capital markets • Confirmed experience in turning around distressed operations 14

  15. Results 1Q2004 15

  16. Results by Regions 1Q2004 16

  17. 7,394 3,658 3,811 5,094 7,213 9,151 12,144 12,492 TOTAL TONS 436 SouthAmerica 416 NorthAmerica 5,140 5,180 352 3,034 351 376 2,264 2,294 Brazil (exports) 3,211 3,476 285 1,891 927 1,052 1,068 260 240 730 505 499 208 208 3,152 3,546 3,656 3,874 3,376 3,400 2,837 2,711 Brazil(domestic sales) 2000 1997 1998 1999 2001 2002 2003 1Q04Annualized Sales Track Record In thousand tons 17

  18. Indebtedness In R$ million FX rate US$ R$ 2.9086 R$ 2.8892 19

  19. Gerdau Açominas US$ 230 mm North America US$ 59 mm South America US$ 7 mm Investments 2003 NEW WIRE-ROD MILLInstalled capacity: 550 thousand tons/year Total investment:US$ 66 mm TOTAL IN 2003: US$ 295 MM FORECAST FOR 2004: US$ 350 MM 20

  20. Gerdau S.A. Aço Minas Gerais S.A. Açominas Gerdau Açominas S.A. + = Met. Gerdau S.A. Gerdau S.A. Brazil North America South America Gerdau Açominas S.A. Gerdau Ameristeel Gerdau AZA Gerdau Laisa Sipar Operational Integration • Combination of strengths of both companies: greater competitiveness • Project developed in partnership between Gerdau and CEA (Employee Investment Club) • Headquarters in Ouro Branco - MG NEW CORPORATE GOVERNANCE 21

  21. Outlook • Stronger demand in Brazil (domestic market); • Lower interest rates in Brazil expected for the end of the year; • Economic stability in Brazil and uncertainty in the political scenario; • International prices trend: stable to upwards; • North American operations pursuing better results; • US economy recovering; • South American operations in very good shape and improving. 22

  22. Steel SectorGerdau S.A. Consolidated Stock Market

  23. Metalúrgica Gerdau S.A. Gerdau S.A. Other Shareholders 36% Other Shareholders 16% Other Gerdau Companies 25% Met. Gerdau and otherGerdau companies 52% Foreign Inst. Investors 22% Brazilian Inst. Investors 24% Foreign Inst. Investors 15% Brazilian Inst. Investors 10% Gerdau Açominas S.A. Gerdau Group 92% CEA Clube / Fund. Aços 4% Other Shareholders 4% Shareholders Structure 24

  24. 1.080 GERDAU S.A. METALÚRGICA GERDAU S.A. 351 In R$ million 546 763 In R$ million 172 265 413 234 462 141 123 165 381 306 174 125 163 98 57 54 2003 1999 2000 2001 2002 2003 1999 2000 2001* 2002 31.5% 32.2% 32.8% 35.7% 34.7% 32.5% 33.0% 32.6% 52.5% 34.2% PAY OUT 6.2 % 3.6% 6.1% 6.8% 7.1 % 3.9% 6.0% 7.9% 17.0% 12.4 % YIELD Dividends paid Adjusted Net Income Dividend Policy • Payout of 30% of the Adjusted Net Income. • Dividend payments are being made on a quarterly basis since March 2003. * Met. Gerdau paid a higher amount due to a one-time supplementary dividend payment in 2001. 25

  25. Stock Price Performance Brazil (São Paulo Stock Exchange) USA (New York Stock Exchange) 2003 > GGBR4: + 152% GOAU4 : + 161% 2004 > GGBR4: + 10% GOAU4 : + 25% 2003 > GGB: + 195% 2004 > GGB: + 12% Canada (Toronto Stock Exchange) 2003 > GNA: +103% 2004 > GNA: + 9% Period: 01.01.2003 to 04.19.2004 Source: Economática/Bloomberg 26

  26. BRAZIL (Bovespa) GOAU+720% GGBR4+468% GOAU4+458% GGBR4+319% GOAU4 +199% GGBR4+180% IBOV+82% IBOV+11% IBOV13% Metalúrgica Gerdau S.A. Gerdau S.A. Ibovespa Gerdau - ADR Dow Jones Appreciation Chart In US$ USA (NYSE) GGB +304% GGB +246% GGB +171% DOW +25% DOW -2.4% DOW 0% 1 year 3 years 5 years Source: Economática Base: 04.19.2004 Dividend-adjusted 27

  27. Comparative Chart 28 Source: Economática and company websites

  28. www.gerdau.com.br inform@gerdau.com.br

More Related