Tenth Annual Latin America Conference
description
Transcript of Tenth Annual Latin America Conference
![Page 1: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/1.jpg)
Tenth AnnualLatin America Conference
New York - March 2002
![Page 2: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/2.jpg)
Steel SectorCompany Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
All data contained in this presentation pertains to Gerdau S.A. consolidated - 2001
![Page 3: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/3.jpg)
Steel Sector
World* Excess capacity* Lower prices* Economic slowdown* Long products* Consolidation
South America * Crisis in Argentina* Gerdau companies
Brazil * Power rationing* Strong demand
USA* Anti-dumping process* Section 201* Economic recovery
03
![Page 4: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/4.jpg)
Source: IISI
World output
As published byMetal Bulletin,Gerdau is the
24th largest
crude steelproducer in
the world
04
In million metric tons
1 China 141.4 126.3 11.9%2 J apan 102.9 106.4 (3.4%)3 USA 89.7 100.7 (10.9%)4 Russia 57.5 57.6 (0.1%)5 Germany 44.8 46.4 (3.4%)6 Korea 43.9 43.1 1.7%7 Ukraine 33.1 31.3 5.8%8 India 27.3 26.9 1.4%9 Brazil 26.7 27.9 (4.1% )10 Italy 26.5 26.5 (0.3%)
Others 230.2 236.4 (2.6%)TOTAL 823.9 829.6 (0.7%)
Country 2001 Variation2000
![Page 5: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/5.jpg)
Source: IISI
In million metric tons
Apparent consumption in Latin America
South America 27 35 5.5Asia 332 377 2.7Middle East 16 18 2.5Africa 16 17 1.9Oceania 7 7 1.5Europe 210 225 1.4Nafta 144 151 0.9TOTAL 752 830 2.1
Region 2000Average annual
growth %2005
Estimate
05A
![Page 6: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/6.jpg)
Brazil
2.7
-5.1
-23.8
5.43.1
-0.2
2.4
-10%
-5%
0%
5%
10%
15%
20%
1994 1995 1996 1997 1998 1999 2000
-30
-25
-20
-15
-10
-50
5
10
Elas
ticity
(mul
tiple
s)
Apparent consumption - Brazil
GDP
Elasticity
Source: IISI/ IBS
APPARENT CONSUMPTIONBrazil x GDP
05B
MARKET SHARELong products
GERDAU48%
Belgo36%
Others 16%
![Page 7: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/7.jpg)
Source: IBS/ Gerdau
Includes stake in Açominas since 1999
Crude steel
Long rolled
80 90 01
9% 12%17%
21%
32%
48%%
CST
GERDAU
Usiminas
CSNBelgo
4,784
4,662
4,620
4,048
2,668
LARGEST CRUDE STEEL PRODUCERS
GERDAU’S PARTICIPATION IN THE NATIONAL PRODUCTION
06
Brazil
1,000 metric tons
![Page 8: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/8.jpg)
Steel Sector
Company OverviewRecent Facts
Operating Performance
Financial Performance
Growth Strategy
![Page 9: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/9.jpg)
Gerdau
08
* 100 years of tradition focused on the production of steel in mini-mills and in the distribution of steel products.
* Installed capacity of 11 million metric tons of crude steel (including 100% of Açominas and the Cartersville unit).
* 24th largest world steel producer and the best ranked Brazilian company.
* Largest Latin American long steel producer.
* Distribution network with 70 sales points, 3 service centers for flat steel and 27 fabrication shops for civil construction.
* 10 steel plants in Brazil (including Açominas), 10 abroad and 1 strategic shareholding.
![Page 10: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/10.jpg)
Capital structure
Met. Gerdau S.A.
Gerdau S.A.
Seiva Gerdau International Açominas
AmeriSteel
Courtice
MRMSipsa
Laisa
Aza
Sipar
51%
56%100%96%
85%
100%
100%
38%
72%
100%
100%
09
![Page 11: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/11.jpg)
Participation in total capital
Metalúrgica Gerdau S.A.
19%
26%
27%
27%
Controllers
Brazilian Institutional Investors
Public
Foreign Institutional Investors
Date: 12/31/2001 10
54%
14%16%
16%
Gerdau S.A.
![Page 12: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/12.jpg)
Output evolutionAçominas
1997
Piratini1992
Usiba1989
Sipsa Argentina1997
AmeriSteelUSA1999
1,000 metric tons
1980 2001 Variation
Crude steel 1,303 7,242 +5.6 x
Rolled products 1,182 6,059 +5.0 x
11
![Page 13: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/13.jpg)
Installed capacity
BRAZIL* 7.2 million metric
tons of crude steel
* 4.7 million ** metric tons of rolled products
11 MILLION METRIC TONS
ABROAD* 3.8 million metric
tons of crude steel
* 3.6 million metric tons of rolled products
** Includes the new Açominas’ rolling mill 12
![Page 14: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/14.jpg)
Geographical distribution
Sipar
Aza
Sipsa
Laisa
AmeriSteel(with Cartersville)
Courtice
MRM
Gerdau S.A.
Açominas
Cearense
Açonorte
Usiba
CosiguaBarão de Cocais
Açominas Guaíra
Piratini Riograndense
Divinópolis
GERDAU S.A.AÇOMINAS
13
![Page 15: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/15.jpg)
Steel Sector
Company Overview
Recent FactsOperating Performance
Financial Performance
Growth Strategy
![Page 16: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/16.jpg)
Recent facts
15
** In December 2001, through an auction organized by the Brazilian Central Bank, Gerdau acquired an additional 17.67% of Açominas' total capital.
** Also in December 2001, Gerdau acquired the operating assets of Birmingham Southeast, through AmeriSteel, its subsidiary in the United States.
** In February 2002, Gerdau signed contracts to acquire 24.8% of Natsteel's stake in Açominas’ total capital. This agreement must be implemented by September 9th , 2002.
![Page 17: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/17.jpg)
Açominas
Source: Açominas
PRODUCTS:
Billets Blooms Slabs
Rebars Merchants Structurals
Shapes and Profiles
INSTALLED CAPACITY (metric tons):
Crude Steel 3.0 million
Rolled Products 740 thousand
YEAR 2001:
NET SALES: R$ 1,025 million
EBITDA: R$ 265 million
NET INCOME: R$ 93 million
16
![Page 18: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/18.jpg)
Steel Sector
Company Overview
Recent Facts
Operating PerformanceFinancial Performance
Growth Strategy
![Page 19: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/19.jpg)
Output
1,000 metric tons3,661 5,066 7,058 7,242
2,974
555132
3,875
1,005
186
4,450
2,348
260
4,662
2,295
285
CRUDE STEEL
98 99 00 01
3,398 4,272 5,901 6,059
2,753
485160
3,111
918
243
3,390
2,195
316
3,528
2,193
338
ROLLED PRODUCTS
1,000 metric tons
98 99 00 0118
Brazil
South America
North America
![Page 20: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/20.jpg)
Sales3,811 5,094 7,213 7,394
3,046
260
3, 882
927285
4,598
2,264
351
4,724
2,294
376
505
IN METRIC TONS
98 99 00 01
2,060
NET SALES
271
2,178 2,353 3,149 3,557
741
1,800216
247
5,8885,1963,3102,178In R$ million
98 99 00 01 19
Brazil
South America
North America
![Page 21: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/21.jpg)
Industry 51%
Civil construction 46%
Agriculture 3%
SALES BY MARKET SEGMENTSGerdau S.A. non-consolidated
SalesSALES BY PRODUCT LINEIn metric tons
Common long rolled 67%
Specialty 4%
Drawn 10%
Flat 6%
Semi-finished 13%
20
![Page 22: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/22.jpg)
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial PerformanceGrowth Strategy
![Page 23: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/23.jpg)
Brazil North America
South America
Total
Gross Margin
37.1% 12.6% 27.1% 28.1%
Net Margin
14.4% 1.5% 1.1% 9.3%
EBI TDA Margin 28.2% 12.1% 21.6% 22.3%
Highlights 2001
Brazil North America
South America
Total
Net Sales (R$ million) 3,557.5 2,059.7 271.2 5,888.4
Net Income (R$ million) 512.0 31.2 3.1 546.3
EBI TDA (R$ million) 1,002.1 249.3 58.6 1,310.0
22
![Page 24: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/24.jpg)
Ebitda & Net incomeR$ million
29.7% 32.6%
25.8%28.1%
20.4%
25.2%
20.4%22.3%
8.8% 9.3%7.7%
10.6%
1998 1999 2000 2001
Gross Margin
EBITDA Margin
Net Margin
Brazil North Am. South Am.
445 640 755 1,002
291 255
2493150
1,3101,060961
44559
98 99 00 01
EBITDA
191 291 374 512
5322
31
82
546398
352
191
3
Brazil North Am. South Am.
98 99 00 01
NET INCOME
23
![Page 25: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/25.jpg)
Investments
304Average1991 - 2001
96
US$million
83171
390
703
260217
600
200
97 98 99 00 01 02 03
24
2002 investments include the payments of:
Açominas’ auction (17.7%) US$ 180Natsteel’s stake in Açominas (24.8%) US$ 210
![Page 26: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/26.jpg)
Indebtedness
LONG TERMR$ 2.1 Bi
BNDESR$316MCompanies
abroadR$602M
Pre Export R$104M
FIRCER$142M Açominas (US$)
R$227M
Açominas (R$) R$148M
OthersR$ 15M
Eurobonds R$287M
DebenturesR$ 219 M
25
BNDESR$102M
ACC / Pre Export R$ 71MFIRCE
R$159M
Brazilian Central Bank R$333M
Açominas (US$) R$391M
Açominas (R$) R$46M
Others R$ 12M
SHORT TERMR$ 2.1 Bi
Companiesabroad
R$993M
![Page 27: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/27.jpg)
Year
R$ million
US$ million
2002 2,107 908 2003 578 249 2004 639 276 2005 379 163 2006 145 62 2007 40 17 After 2007 279 121 TOTAL 4,167 1,796
Amortization
26
![Page 28: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/28.jpg)
Ratios
-
1998 1999 2000 2001
36.74% 57.53% 56.55% 51.55%
25.93% 50.87% 50.35% 44.61%
2.4X 3.5X 3.0X 3.2X
1.4X 2.7X 2.3X 2.4X
Total debt/ Total capitalization
Net debt/Total Capitalization
Total debt/ EBITDA
Net debt/ EBITDA
EBITDA/ Net financial expenses (minus monetary & exchange rate var.)
- 3.9X 5.7X
27
![Page 29: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/29.jpg)
2000 2001
Cash at the beginning of the period 695 704
Net operational cash 772 1,251
Proceeds from fixed assets financing 666 910
Amortization (financing) (546) (749)
Interest paid for financing (169) (208)
Funds used for investments (484) (792)
Other investments (116) (35) Dividend/ interest & statutory participation payment (114) (138)
Cash at the end of the period 704 1,013
R$ million
Cash flow
28
![Page 30: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/30.jpg)
Steel Sector
Company Overview
Recent Facts
Operating Performance
Financial Performance
Growth Strategy
![Page 31: Tenth Annual Latin America Conference](https://reader036.fdocuments.us/reader036/viewer/2022062411/56815659550346895dc400ea/html5/thumbnails/31.jpg)
Growth strategy
* Mini-mills
* Acquisitions
* Internationalization
* Standing out between peers
* Barriers to entry
* Market Segments (Civil Construction, Industrial and Agriculture)
30