Gerdau S.A

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Gerdau S.A.

May 2006

Global Metals, Mining & Steel Conference

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Agenda

Steel Sector

Gerdau Group

Operating and Financial Highlights

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The North American crude steel output for 1Q2006 was 32.1 million metric tons,

an increase of 2.0% compared to the previous quarter.

Steel Sector – 1st Quarter 2006

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.

Source: IBS and IISI

Worl

d 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.

Bra

zil

Nort

h

Am

eri

ca

Sou

th

Am

eri

ca 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.

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92

2824

1712 11 10 9 8 7

Crude Steel Production – 1Q06

China

USAJapan

Russia

South K

orea

Germany

Ukrain

e

Brazil

India

Italy

Source: IISI

Brazil and the Global Steel Industry

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

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Agenda

Steel Sector

Gerdau Group


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VISION

MISSION

TO BE A WORLD-CLASSINTERNATIONAL STEEL COMPANY

TO BE A WORLD-CLASSINTERNATIONAL STEEL COMPANY

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

Philosophy

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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

Investment Considerations

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Value Builder CompanyATKearney

Value Growth

RevenueGrowth

Industryaverage

Industryaverage

StelcoHaynes

AK Steel

Smorgon

Carpenter

Salzgitter

Onesteel1)

Boehler-Uddeholm

INI SteelIpsco

Allegheny

Rautaruukki

Usinas

Ispat

Kennametal

SSAB

Voest-Alpine

Harsco

Nisshin Steel

Eregli Demir

Wuhan Steel1)Kobe

Dofasco

Iscor

Tata

RIVA1)

SAIL

Outokumpu

Corus

Gerdau

CSN

US Steel

Acerinox

Nucor

Thyssenkrupp

China Steel

Arcelor

Baoshan1)

Posco

JFE

Nippon Steel

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

-35% -25% -15% -5% 5% 15% 25% 35% 45%

Note: 1) RIVA 98 02, Wuhan Steel & Onesteel 00 03, Baoshan 01 03Source: ThyssenKrupp (segment), Kobe (segment), RIVA, Haynes:

EBIT Growth

Growth portfolio (CAGR 1999-2003)

benchmarked against industry average

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1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Laisa - 1980(Uruguay)

Piratini(Brazil)

AZA(Chile)

Ameristeel(USA)

AZANew Plant

(Chile)

Additionalstake in

Açominas(Brazil)

Potter FormGate City & RJ

North Star(USA)

SACK(Chile)

Cambridge(Canada)

Usiba(Brazil)

Manitoba(Canada)

Controllof

Açominas(Brazil)

CartersvilleDrawingCo-Steel

(USA)

1,757

3,072 3,934

4,595

7,69611,076

16,372

Abroad – Crude Steel Installed Capacity

TOTAL INVESTED (1981-2005):Brazil = US$ 4.0 billion + Debt North America = US$ 1.4 billion + DebtSouth America = US$ 468 million + Debt

In thousand tons

Solid Track Record

Brazil – Crude Steel Installed Capacity

Diaco(Col.)

16,475

Barãode

Cocais(Brazil)

2,611Stake in

Açominas(Brazil)

4,568

18,658Araçariguama

(Brazil)

Sidenor (Spain)

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Brazil

9 million tons of crude steel

5.5 million tons of rolled steel products

Abroad

9.7 million tons of crude steel


Total Capacity (Includes Strategic Shareholdings)

18.7 million tons of crude steel


11 mills

11 fabrication shops

6 downstream operations and special sections

74 sales points and flat steel service centers

19 mills

38 fabrication shops

15 downstream operations and special sections

An International Company

Steel mills

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Strategic Shareholding

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BRAZIL

Gerdau 48%

Belgo35%

Barra Mansa5%

Other 7%

NORTH AMERICA

Nucor21,8%

Gerdau Ameristeel

14,8%

Commercial Metals

5,6%

Mittal6,8%

Other41,9%

COUNTRY MARKET SHARE MAIN COMPETITORS

Solid Market Share in Long Steel

Aços Villares5%

CHILE

URUGUAY

ARGENTINA

51%

20%

90%

CAP + Imports

Acindar + Bragado + Zapla

Imports

COLOMBIA 37% Acerias Paz Del Rio

SPAIN 36%* GSB

* Specialty steel only

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Agenda

Steel Sector

Gerdau Group


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2001 2002 2003 2004 2005 1Q05 1Q06

ShipmentsIn thousand tons

3,374

7,411

9,109

12,56012,144

13,550

Billets, blooms& slabs

Merchant bars

Rebars Fabricated steel

Heavystructural shapes

Wire-rod Wires Nails

3,691

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)

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Strong Export Business

Asia22%

Central America12%

South America 25%

North America16%

Africa13%

EXPORT SHIPMENTS BY REGION

Europe12%

1Q06

NET REVENUE BREAKDOWN BY REGION

Brazil (Domestic Market) 35%

Exports (from Brazil)9%

North America44%

South America9%Europe

3%

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22.5%20.8%

7.9%7.3%

13.2%

16.5%

13.9%

14.8%

0%

10%

20%

30%

1Q05 2Q05 3Q05 4Q05 1Q06

26.0%

35.0%

15.5%14.2%

22.7%25.2%

24.3% 20.8%

0%

10%

21%

31%

42%

1Q05 2Q05 3Q05 4Q05 1Q06

Margin Evolution

Gross Margin

Net MarginEBITDA Margin

34.5%

40.5%

18.6%15.6%

26.1%

29.5%

27.6%26.3%

0%

10%

21%

31%

42%

52%

1Q05 2Q05 3Q05 4Q05 1Q06

Brazil

North America

South America

Consolidated

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Consolidated FinancialsIn US$ millions

1Q05 4Q05

Income Statement

Net revenueGross profitOperating incomeNet incomeEBITDA

1Q06

2,187605439304531

2,088551375312443

2,584681532383538

Balance Sheet

Current assetsNon-current assetsFixed assetsTotal

Current liabilitiesNon-current liabilitiesShareholders’ equityTotal

3,725409

3,0757,209

1,7422,3073,1607,209

5,182377

3,7889,347

1,7903,2254,3329,347

5,684503

4,43210,619

1,9763,6285,015

10,619

Ratios

Gross marginEBITDA marginTotal debt / EBITDANet debt / EBITDA

27.6%24.3%

1.1x0.7x

26.4%21.2%

1.6x0.4x

26.3%20.8%

1.7x0.5x

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Indebtedness

Mar. 06

In US$ million

GROSS DEBT 3,660 100%

SHORT TERM 670 18%

Domestic Currency 113 3%

Foreign Currency 184 5%

Companies Abroad 373 10%

LONG TERM 2,991 82%

Domestic Currency 791 22%

Foreign Currency 1,508 41%

Companies Abroad 692 19%

CASH & CASH AND EQUIV. 2,550 100%

Domestic Currency 1,558 61%

Foreign Currency 992 39%

NET DEBT 1,110

In US$COST OF DEBT IN MAR. 06 (per annum)

DEBT AVERAGE LIFE 8.8 years

Brazil – Domestic Currency

Brazil – Foreign Currency

Companies Abroad

14.2%*

7.3%

7.8%

DEBT STRUCTURE

Domestic Currency25%

Foreign Currency

46%

Companies Abroad29%

*Includes (7.19%) of 2006 FX

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2006 – US$ 1.7 billion



NEW CAPACITY US$ 2.0 billion

MAINTENANCE US$ 1.8 billion

Brazil US$ 674 MM

North America US$ 977 MM

South America US$ 129 MM

Expansion Program 2006 - 2008

+ 14%

2006 2008

10,073

8,585

10,675

10,685

18,65821,360

+ 24%

+ 6%

INSTALLED CAPACITY EVOLUTION

2006 2008

9,610

5,260 6,585

14,87017,471

+ 25%

+ 13%

+ 17%

Brazil

Abroad

Brazil

Abroad

Crude Steel Rolled ProductsIn thousand tonsIn thousand tons

10,886

Investment Program 2006 – 2008: US$ 3.8 billion Investment Program 2006 – 2008: US$ 3.8 billion

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30 3055 66

81

118

302334

153153

584253

71

1999 2000 2001 2002 2003 2004 2005

Dividends Policy

30% of the adjusted net income (Pay-out)

Dividend payments are being made on a quarterly basis

In US$ million

DIVIDEND YIELD

1999 2000 2001 2002 2003 2004 2005

GOAU4 6.0% 7.9% 17.0% 11.3% 6.2% 7.8% 6.1%

GGBR4 3.6% 6.1% 6.8% 6.8% 3.9% 6.1% 4.6%

DIVIDENDS DISTRIBUTION*DIVIDENDS DISTRIBUTION*

Metalúrgica Gerdau S.A. (GOAU4)

Gerdau S.A. (GGBR4)

* Dividends related to each period, but not necessarily paid in the same period.

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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

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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.

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www.gerdau.com.br

[email protected]

+55 51 3323 2703

Gerdau S.A.

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Gerdau S.A