1
Conference Call – 3rd Quarter 2008
GERDAU S.A. CONSOLIDATED
André Gerdau Johannpeter
President and CEO
Osvaldo B. Schirmer
CFO and IR Director
November 5th, 2008
2
SHIPMENTS
3Q 2008: 5.1 million tonnes ���� +21.3% compared to 3Q 2007
REVENUES
3Q 2008: R$ 13.9 billion ���� +61.3% compared to 3Q 2007
EBITDA
3Q 2008: R$ 3.8 billion ���� +153,7% compared to 3Q 2007
NET INCOME
3Q 2008: R$ 1.4 billion ���� + 37.2% compared to 3Q 2007
INVESTMENTS (Acquisitions and Capex)
US$ 477 million
Gerdau – Highlights
3rd Quarter
3
Steel Market
3rd Quarter
Source: World Steel Association, Steel Business Briefing
WORLD STEEL PRODUCTION
� Growth of 2.4%, reaching 340 million tonnes compared to 3Q 07
� China: stable production growth levels
PRICES / COSTS
� Prices kept following the upward trend in raw materials and other costs
OUTLOOK
� 2008 should prove to be a year of growth for the steel industry as a whole,
despite the uncertainty about the effects of the world economic crisis.
�4th Quarter should present reduction on raw materials and steel prices
4
�Apparent consumption in 3rd Quarter still very robust, based specially on civil
construction, but also capital goods and automotive
�Shipments for the Brazilian operations up 30% compared to last year
INVESTMENTS
�Capex: US$ 212 million
OUTLOOK
�Brazilian economy with sustainable growth in the year 2008
�Steel demand in Brazilian domestic markets stable in the near term
Gerdau – Performance 3Q08 vs. 3Q07
Brazil
Source: IBS (Instituto Brasileiro de Siderurgia)
5
North America
� Robust 3rd Quarter: record quarterly EBITDA
� Shipments: growth of 17% compared to 3Q07
� Well capitalized and diversified business
� 40% of scrap consumption is now internally sourced
INVESTMENTS
� Capex: US$ 47 million
OUTLOOK
� Continuous monitoring of the economy
� Steel demand affected by market and seasonality in 4th Quarter
� Scrap and steel products price reduction, but spreads above historical averages
Gerdau – Performance 3Q08 vs. 3Q07
6
Latin America (excluding Brazil)
�3rd quarter: sound financial results (higher spot coke prices – business acquired in
Colombia)
INVESTMENTS
� Capex: US$ 45 million
OUTLOOK
�Seasonal reduction on demand in 4th Quarter
�Focus on infrastructure investments on majority of countries
�Monitoring effects of the financial crisis on the different economies
Gerdau – Performance 3Q08 vs. 3Q07
7
Specialty Steel
� Brazil: strong quarter - automobile production up by 16%
� Shipments up 51% compared to 3rd Q 2007
INVESTMENTS
� Capex: US$ 61 million
OUTLOOK
� Brazil: stable automobile and equipment/machinery segments.
� Europe and US: diversification of customer base (energy, heavy machinery)
Gerdau – Performance 3Q08 vs. 3Q07
8
Summary
� Strong quarter
� Focus on:
� Cost efficiency
� Synergies
� Best practices
� Alignment with market demand/customer base
� Investment Program: reassessing priorities and schedules
9
1,
51
4
3,
84
1
1,
61
5
1,
98
5
2,
74
7
3Q07 4Q07 1Q08 2Q08 3Q08
Gerdau – Consolidated Financials
EBITDA
In millions of R$
In millions of R$ 3Q08 3Q07
MARGINS
(149)37Other operating income (expenses)
1,0351,420NET INCOME
(210)(434)Provision for income tax
57 (1,553)Net financial results
2795Equity in earnings of unconsolidated companies
1,1613,312Operating profit
(606)(815)Sales, General and Administrative Expenses
1,9164,090Gross profit
7,66512,444NET SALES
23.6% 23.8%
26.8%
22.2%
24.7%
25.0%
32.9%
19.8%
30.9%
20.0%
3Q07 4Q07 1Q08 2Q08 3Q08
GROSS Margin EBITDA Margin
10
Exchange Rate Effects
ASSETS
US$ 4.7 billion
LIABILITIES
US$ 2.8
billion
Gain: directly to
equity (IFRS)
3Q08: R$ 1.1 BILLION
NEGATIVE FX VARIATION
ON INCOME STATEMENT
(R$ 700 AFTER TAX)
BALANCES IN BRAZILIAN SUBSIDIARIES DENOMINATED
IN FOREIGN CURRENCY:
NET ASSET POSITION:
US$ 1.9 billion
Loss: income statement (IFRS)
EXCHANGE RATE
R$ / US$
20 %
� Effect is non-cash
� Not related to derivatives
� Tax-deductible
3Q08: R$ 1.8 BILLION
POSITIVE FX
VARIATION ON EQUITY
3Q08: R$ 1.1 ECONOMIC
GAIN (AFTER TAX)
1.59
1.91
Q208 Q308
11
Gerdau - Performance 3rd Quarter
Brazil1
Note1: Does not include specialty steel operations
NET SALES (R$ Million) &
GROSS MARGIN (%)
EBITDA (R$ Million) &
EBITDA MARGIN (%)
73
6 1
,2
08
82
1
62
9
1,
91
7
24.2%
41.1%
33.8%
28.2%27.7%
3Q07 4Q07 1Q08 2Q08 3Q08
4,
66
2
2,
59
9
2,
90
6
3,
57
6
2,
65
3
36.0%
45.8%
36.4%
33.0%
39.9%
3Q07 4Q07 1Q08 2Q08 3Q08
12
Gerdau - Performance 3rd quarter
North America1
Note1: Does not include Mexico and MacSteel
Note2: Information above does not include data from associated companies and joint ventures
NET SALES2 (R$ Million)
& GROSS MARGIN (%)
EBITDA (R$ Million) &
EBITDA MARGIN (%)
2,
67
8 3,
50
9
4,
17
0
3,
09
9 4,
14
4
17.0% 17.2%
18.4%
20.1%
22.4%
3Q07 4Q07 1Q08 2Q08 3Q08
53
5
87
5
68
3
40
2
99
0
15.0%
23.9%
21.0%
19.4%
17.3%
3Q07 4Q07 1Q08 2Q08 3Q08
13
89
7 1,
11
3
95
0
89
0
1,
44
7
20.1%
30.2%
26.6%
19.1%
13.9%
3Q07 4Q07 1Q08 2Q08 3Q08
Gerdau - Performance 3rd quarter
Latin America1
Note1: Does not include Brazil
Note2: Information above does not include data from associated companies and joint ventures
NET SALES2 (R$ Million) &
GROSS MARGIN (%)
EBITDA (R$ Million) &
EBITDA MARGIN (%)
11
2
28
9
15
6
15
5
40
3
17.4%
27.9%
25.9%
16.4%
12.5%
3Q07 4Q07 1Q08 2Q08 3Q08
14
Gerdau - Performance 3rd quarter
Specialty Steel
NET SALES (R$ Million)
& GROSS MARGIN (%)
EBITDA (R$ Million)
& EBITDA MARGIN (%)
1,
49
8
1,
57
9 2
,2
41
1,
42
5 2
,1
90
19.6%
22.0%
18.7%
26.9%
23.1%
3Q07 4Q07 1Q08 2Q08 3Q08
23
2
37
5
32
5
32
8
53
1
16.7%
20.6%
16.3%
21.9%
24.2%
3Q07 4Q07 1Q08 2Q08 3Q08
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Indebtedness
Set. 08
In millions of R$
Dec. 07
DEBT/EBITDA
LTM EBITDA: Last 12 months EBITDADebt Average Term: 7 years and 3 months
GROSS DEBT/TOTAL CAPITALIZATIONDEBT MATURITY
* Data in IFRS. Others in BRGAAP.
Local currency 3,422 3,718
Foreign currency 6,012 4,862
Companies abroad 9,578 7,323
GROSS DEBT 19,012 15,903
Financial Investments 5,640 5,139
NET DEBT 13,372 10,764
15
10.8
13.4
1.3 x
1.7x
1.9x
2.5x
Dec.07 Sep.08
Net Debt Net Debt/EBITDALTM
Gross Debt/EBITDALTM
4,421 4,855 7,613
14,188
21,071
7,168 6,263
6,377
7,651
9,878
16,642
24,242
10,141
15,903
19,01216,483
44%
62%
56%
46% 43% 41%
49%
44%
2002 2003 2004 2005 2006* 2007* Jun/08* Set/08*
ShareHolders Equity Gross Debt Gross Debt/Total Capitalization
0.40.90.50.82.6
4th Q3rd Q2nd Q1st Q2009
Period
Debt
2.6
1.9
2.1
3.8 3.9
5.0
1.1
2008 2009 2010 2011 2012 2013 After
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Liquidity
�Strong cash position
�Access to credit lines
5,640 Subtotal Cash
1,198 Other
770 Cash North America
3,672 Cash Brazil
R$ Million
11,615Total Estimated Liquidity
3.393Subtotal Best Efforts
5.975Subtotal Credit Lines
249Other
1.884Latin America
302Pre-Export
957ACC
2.582Subtotal Committed
1.816North America (Committed)
766Senior Liquidity Facility (Committed)
R$ Million
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Dividends
Dividends – 3rd quarter 2008
�Payment: November 26th, 2008
�Base date: record at close of business on November 14th (ex-
