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Gerdau S.A.

Gerdau S.A. Global Metals, Mining & Steel Conference. May 2006. Steel Sector Gerdau Group Operating and Financial Highlights. Agenda. Steel Sector – 1 st Quarter 2006.

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Gerdau S.A.

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  1. Gerdau S.A. Global Metals, Mining & Steel Conference May 2006

  2. Steel Sector Gerdau Group Operating and Financial Highlights Agenda

  3. Steel Sector – 1st Quarter 2006 • The world’s steel output reached 284.5 million metric tons in the 1st quarter, a decrease of 1.15% compared to that of the forth quarter of 2005. World • Total output in Brazil reached 7.2 million metric tons in the 1st quarter of 2006, a decrease of 9.8% compared to 4Q2005. • In the 1Q2006, the long steel production (including blooms and billets) remained in the same level’s of the last period, reaching 2,7 million metric tons. • Domestic sales of long steel products (including blooms and billets) in 1Q2006 reached 1.7 million metric tons, an increase of 9.1% compared to the quarter before. • Exports of long steel products (including ingots, blooms and billets) totaled 1.0 million metric tons in the 1Q2006, compared to 894 thousand metric tons in 4Q2005. Brazil • The North American crude steel output for 1Q2006 was 32.1 million metric tons, an increase of 2.0% compared to the previous quarter. North America • The South American crude steel output for the 1Q06 was 10.6 million metric tons. Brazil is the largest producer, with 67.5% of the total output, followed by Argentina, with 12.8% of the total output in the region. South America Source: IBS andIISI

  4. Brazil and the Global Steel Industry Crude Steel Production – 1Q06 In million tons Total World Production: 285.2 million tons China accounted for 32.3% of the global steel output Brazil accounted for 2.5% of the global steel output India Italy Brazil China Ukraine Japan USA Germany Russia South Korea Source: IISI

  5. Steel Sector Gerdau Group Operating and Financial Highlights Agenda

  6. Philosophy VISION TO BE A WORLD-CLASSINTERNATIONAL STEEL COMPANY MISSION Gerdau is an organization focused on the steel business with a mission to satisfy customers` needs and add value to shareholders, committed to the fulfillment of people and to the sustainable development of society

  7. Investment Considerations • A low cost international steel company with operations in Brazil, Uruguay, Canada, Chile, Argentina, Colombia, Spain and the United States • Substantial international profile – foreign exchange generation through subsidiaries abroad and export sales amount approximately 60% of consolidated revenues in the 1Q06 • Ranked 14th globally by steel output in 2005 with an output of 13.7MM tons (including strategic shareholdings) • 2nd largest long steel producer in North America and largest long steel producer in the Americas • Focused on the production of long steel products Gerdau operates 30 mills incorporating both integrated and mini mills with the latest technologies • Relevant market share in every country with operations and diversified product range, with high value-added products • Strong low cost strategy as a result of diversified production processes and multiple raw material sourcing • Sound balance sheet (Gross Debt-to-EBITDA at approximately 1.7x in 1Q06) and strong cash generation • Shares of Gerdau S.A. are currently traded at the São Paulo, New York and Madrid stock exchanges • Shares of Metalúrgica Gerdau S.A. are traded at the São Paulo stock exchange • Gerdau Ameristeel’s shares are traded at the New York and Toronto stock exchanges

  8. Growth portfolio (CAGR 1999-2003)benchmarked against industry average Value Builder CompanyATKearney Revenue Growth 30% Gerdau Outokumpu Acerinox 25% China Steel Baoshan1) Usinas INI Steel Nucor Salzgitter 20% Ipsco Rautaruukki Tata US Steel 15% Voest-Alpine Smorgon Industry average 10% Boehler-Uddeholm Arcelor SSAB Corus Ispat JFE 5% SAIL Harsco Thyssenkrupp Dofasco CSN Nippon Steel Onesteel1) Kobe 0% Wuhan Steel1) Kennametal RIVA1) Carpenter -5% Iscor AK Steel Stelco Nisshin Steel Haynes Posco Allegheny -10% Eregli Demir -35% -25% -15% -5% 5% 15% 25% 35% 45% Industry average Value Growth Note: 1) RIVA 98 02, Wuhan Steel & Onesteel 00 03, Baoshan 01 03 Source: ThyssenKrupp (segment), Kobe (segment), RIVA, Haynes: EBIT Growth

  9. Solid Track Record Brazil – Crude Steel Installed Capacity Abroad – Crude Steel Installed Capacity 16,372 In thousand tons Potter Form Gate City & RJ North Star(USA) SACK(Chile) 18,658 TOTAL INVESTED (1981-2005): Brazil = US$ 4.0 billion + Debt North America = US$ 1.4 billion + Debt South America = US$ 468 million + Debt Araçariguama(Brazil) Sidenor (Spain) 11,076 7,696 ControllofAçominas(Brazil) CartersvilleDrawingCo-Steel (USA) 16,475 Diaco(Col.) Ameristeel (USA) AZANew Plant(Chile) Additionalstake inAçominas(Brazil) 3,072 3,934 4,568 Cambridge(Canada) Usiba(Brazil) Piratini(Brazil) AZA(Chile) 4,595 Stake inAçominas (Brazil) 2,611 Manitoba (Canada) 1,757 BarãodeCocais(Brazil) Laisa - 1980(Uruguay)

  10. An International Company Total Capacity (Includes Strategic Shareholdings) 18.7 million tons of crude steel 14.9 million tons of rolled steel products Brazil 9 million tons of crude steel 5.5 million tons of rolled steel products 11 mills 11 fabrication shops 6 downstream operations and special sections 74 sales points and flat steel service centers Abroad 9.7 million tons of crude steel 9.3 million tons of rolled steel products 19 mills 38 fabrication shops 15 downstream operations and special sections Steel mills Strategic Shareholding 12

  11. Solid Market Share in Long Steel NORTH AMERICA BRAZIL Barra Mansa5% Other41,9% Gerdau 48% Mittal6,8% Other 7% Commercial Metals5,6% Aços Villares5% Gerdau Ameristeel14,8% Nucor21,8% Belgo35% MARKET SHARE MAIN COMPETITORS COUNTRY CHILE 51% CAP + Imports URUGUAY 90% Imports ARGENTINA 20% Acindar + Bragado + Zapla COLOMBIA 37% Acerias Paz Del Rio SPAIN 36%* GSB * Specialty steel only

  12. Steel Sector Gerdau Group Operating and Financial Highlights Agenda

  13. Shipments Brazil – Domestic Market (27% in 1Q06) Brazil – Exports (17% in 1Q06) South America (9% in 1Q06) North America (45% in 1Q06) Europe (2% in 1Q06) Billets, blooms& slabs Heavystructural shapes Wires Wire-rod Rebars Merchant bars Nails Fabricated steel In thousand tons 13,550 12,560 12,144 9,109 7,411 3,691 3,374

  14. Strong Export Business 1Q06 NET REVENUE BREAKDOWN BY REGION South America9% Europe3% Brazil (Domestic Market) 35% North America44% Exports (from Brazil)9% EXPORT SHIPMENTS BY REGION Central America12% Africa13% Europe12% North America16% Asia22% South America 25%

  15. Margin Evolution South America Brazil Consolidated North America Gross Margin EBITDA Margin Net Margin

  16. Consolidated Financials In US$ millions 1Q06 1Q05 4Q05 Balance Sheet Current assets Non-current assets Fixed assets Total Current liabilities Non-current liabilities Shareholders’ equity Total 3,725 409 3,075 7,209 1,742 2,307 3,160 7,209 5,684 503 4,432 10,619 1,976 3,628 5,015 10,619 5,182 377 3,788 9,347 1,790 3,225 4,332 9,347 Income Statement Net revenue Gross profit Operating income Net income EBITDA 2,187 605 439 304 531 2,584 681 532 383 538 2,088 551 375 312 443 26.3% 20.8% 1.7x 0.5x 26.4% 21.2% 1.6x 0.4x Ratios Gross margin EBITDA margin Total debt / EBITDA Net debt / EBITDA 27.6% 24.3% 1.1x 0.7x

  17. Indebtedness In US$ million COST OF DEBT IN MAR. 06 (per annum) In US$ Mar. 06 14.2%* 7.3% 7.8% Brazil – Domestic Currency Brazil – Foreign Currency Companies Abroad DEBT AVERAGE LIFE 8.8 years *Includes (7.19%) of 2006 FX DEBT STRUCTURE Companies Abroad29% Foreign Currency46% Domestic Currency25%

  18. Abroad Abroad Brazil Brazil Expansion Program 2006 - 2008 Investment Program 2006 – 2008: US$ 3.8 billion 2006 – US$ 1.7 billion 2007 – US$ 1.4 billion 2008 – US$ 0.7 billion INSTALLED CAPACITY EVOLUTION Rolled Products Crude Steel In thousand tons + 14% + 17% 17,471 21,360 18,658 14,870 + 6% + 13% 10,675 10,886 10,073 9,610 + 25% + 24% 10,685 6,585 5,260 8,585 2006 2006 2008 2008

  19. Dividends Policy • 30% of the adjusted net income (Pay-out) • Dividend payments are being made on a quarterly basis DIVIDENDS DISTRIBUTION* In US$ million Metalúrgica Gerdau S.A. (GOAU4) Gerdau S.A. (GGBR4) * Dividends related to each period, but not necessarily paid in the same period.

  20. Outlook Brazil • Greater economic growth in 2006 – around 3.5% • Growing volumes – Domestic market from 8 to 10% • Strengthening of the civil construction sector • Price stability in Brazilian currency • Inventories adjusted North America • Consistent economic growth • Greater investments in infrastructure • Production costs stability • Prices rising • Growing metallic spread South America • Consolidated economic growth • Strengthening of the civil construction sector • Demand is strong Europe • Consolidation of the specialty steel operations at Sidenor

  21. Safe Harbor Statement This presentation 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.

  22. Gerdau S.A. www.gerdau.com.br inform@gerdau.com.br +55 51 3323 2703

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