conference call –2nd quarter 2008 gerdau s.a. consolidated · 2q07 1q08 2q08 20.1% 18.4% 18.8%...
TRANSCRIPT
Conference Call – 2nd Quarter 2008GERDAU S.A. CONSOLIDATED
André Gerdau JohannpeterPresident and CEO
Osvaldo B. SchirmerExecutive Vice President Finance and
Investor Relations Director
August 6th, 2008
02
GROSS REVENUES
2Q 2008: R$ 12,3 billion ���� +46,2% compared to 2Q 2007
EBITDA
2Q 2008: R$ 2,7 billion ���� +72,0% compared to 2Q 2007
NET INCOME
2Q 2008: R$ 2,1 billion ���� + 85,3% compared to 2Q 2007
SALES
2Q 2008: 5,5 million tonnes ���� +32,1% compared to 2Q 2007
INVESTMENTS (ACQUISITIONS AND CAPEX)
US$ 3,5 billion ���� 2Q 2008
Gerdau – Highlights2nd Quarter
Source: IISI (International Iron & Steel Institute)
03
Steel Market2nd Quarter
WORLD STEEL PRODUCTION
� Growth of 5,9%, reaching 355 million tonnes
� China leadership: 138 million tonnes produced (+ 10,6%)
PRICES / COSTS
� Prices are following the increases in raw material and other costs
OUTLOOK
� Growth of 6% to 7% on world steel demand in 2008, with emphasis on
Asia, Middle East and Latin America
04
Source: IBS (Instituto Brasileiro de Siderurgia)
Gerdau – Performance 2nd Quarter
Brazil
�Record long steel apparent consumption: civil construction, capital goods
and automotive
�Gerdau: sales up by 34,5%
�Higher costs for iron ore, coal, scrap, energy, electrodes, refractories, alloys
and equipment/machinery
INVESTMENTS
�Capex: US$ 232 million
OUTLOOK
�Continued growth of the Brazilian economy
�Growth in domestic shipments
North America
� 16.3% growth in non-residential construction
� Reduction in imports and increase in exports
� Shipments: growth of 47.5%
� Steel prices up, following trend in raw materials; high metal spreads
INVESTMENTS
� Capex: US$ 33 million
� Acquisitions in US / increased equity participation in PCS (84%)
OUTLOOK
� Continuous monitoring of the economic environment
� Steel import levels should remain low
05
Gerdau – Performance 2nd Quarter
Latin America (excluding Brazil)
� GDP growth in majority of countries: good domestic demand and investments in
infrastructure
� Cost increases
� Shipments up 8.8% over same period last year
INVESTMENTS
� Capex: US$ 53 million
� Acquisitions in Colombia, Mexico and Chile, and strategic partnership in
Guatemala
OUTLOOK
�Monitoring of markets and inflation
� Economic growth, helped by strength in civil construction
06
Gerdau – Performance 2nd Quarter
Specialty Steel
� Brazil: automobile production up by 24.3%
� Europe: stable market, good margins
� US: diversification of customer order book
� Shipments up 47.7% compared to 2nd Q 2007
INVESTMENTS
� Capex: US$ 62 million
� Acquisitions in the US and Spain; 28.9% increase in participation in Villares
OUTLOOK
� Brazil: growth in automotive sector
� Europe: stable markets; costs should go up
� North America: growth in specialty steel demand; exception is automotive industry
07
Gerdau – Performance 2nd Quarter
2Q0 7 1Q0 8 2Q0 82Q0 7 1Q0 8 2Q0 8
Gerdau - Performance 2nd quarterBrazil1
2,4252,906
3,576
MARGINS
08
Note1: Does not include specialty steel operations
612821
1,208
EBITDAIn millions of R$
NET SALESIn millions of R$
Gross Margin
EBITDA Margin
34.1% 33.0%
39.9%
25.2%28.2%
33.8%
2Q07 1Q08 2Q08
2Q0 7 1Q0 8 2Q0 8
20.1%
18.4%
18.8%
21.0%19.4%
17.8%
2Q07 1Q08 2Q08
2Q0 7 1Q0 8 2Q0 8
Gerdau - Performance 2nd quarterNorth America1
MARGINS
2,628
3,5094,170
09
Note1: Does not include Mexico and MacSteel
Note2: Information above does not include data from associated companies and joint ventures
469
683
875
NET SALES2In millions of R$
EBITDAIn millions of R$
Gross Margin
EBITDA Margin
24.6%
19.1%
26.6%
21.9%
16.4%
25.9%
2Q07 1Q08 2Q08
2Q0 7 1Q0 8 2Q0 8
Gerdau - Performance 2nd quarterLatin America1
MARGINS
10
NET SALES2In millions of R$
EBITDAIn millions of R$
Gross Margin
EBITDA Margin
Note1: Does not include operations in Brazil
Note2: Information above does not include data from associated companies and joint ventures.
845950
1,113
185156
289
2Q0 7 1Q0 8 2Q0 8
18.7%
22.0%22.2%
16.7%
20.6%20.1%
2Q07 1Q08 2Q08
2 Q0 7 1Q0 8 2Q0 82Q07 1Q08 2Q08
Gerdau - Performance 2nd quarterSpecialty Steel1
MARGINS
11
NET SALESIn millions of R$
EBITDAIn millions of R$
Gross Margin
EBITDA Margin
1,643 1,579
2,241
331 325375
Note1: Includes specialty steel operation in Brazil, Europe and United States
Joint Ventures and Associated Companies
12
1,025
120
-
75
150
680
Annual Crude Steel Installed Capacity (thousand tonnes)
1,270
-
200
150
210
710
Annual Rolled Products Installed
Capacity (thousand tonnes)
301
3
49
30
22
197
Shipments(thousand tonnes) 2Q08
49%Corsa (Mexico)
49%Inca (Dominican Republic)
45%
30%
50%
Shareholding
SJK Steel (Asia)
Corporación Centroamericana del Acero (Guatemala) (1)
Gallatin Steel (USA)
TOTAL
(1) Acquisition announced on April 21st, 2008
� Total net revenue was equivalent to R$ 561.4 million
� Total equity in earnings of unconsolidated companies was R$ 82 million
2Q0 7 1Q0 8 2Q0 8
Gerdau – Consolidated Performance
MARGINSEBITDAIn millions of R$
In millions of R$
13
Gross Margin EBITDA Margin
1,5971,985
2,747
2Q08 2Q07
NET SALES 11,100 7,541Gross profit 2,980 1,894Sales, General and Administrative Expenses
(741) (640)
Other operating income (expenses) 17 6Operating profit 2,256 1,260Equity in earnings of unconsolidated companies
82 33
Net financial results 435 149 Provision for income tax (649) (296) NET INCOME 2,124 1,146
26.8%23.8%
25.1%
24.7%
22.2%21.2%
2Q07 1Q08 2Q08
4,421 4,855 7,61314,188 16,642
21,0717,168 6,263
6,3777,651
9,878
15,903
16,483
10,141
44%
49%
41%43%46%
56%62%
2002 2003 2004 2005 2006* 2007* Jun/08*
Shareholders Equity Gross Debt Gross Debt/Total Capitalization
Indebtedness
Jun. 08
In millions of R$
Dec. 07
14
Local currency 3.102 3.718
Foreign currency 2.665 3.066
Companies abroad 10.716 9.119
GROSS DEBT 16.483 15.903
Financial Investments 5.557 5.139
NET DEBT 10.926 10.764
10.8 10.9
1.4 x 1.7x 2.1x 2.5x
Dec.07 Jun.08
Net Debt Net Debt/EBITDALTM
Gross Debt/EBITDALTM
Gross Debt/Total Capitalization
LTM EBITDA: Last 12 months EBITDA
Debt Average Term:
6 years and 6 months
Gross Debt/Total Capitalization
* Data in IFRS. Others in BRGAAP.
Dividends
15
Dividends – 2nd quarter 2008
�Payment: August 27th, 2008
�Base date: record at the close of business on August 15th
(ex-dividends on August 18th).
�Metalúrgica Gerdau S.A. will pay R$ 244 million (R$ 0.60
per share)
�Gerdau S.A. will pay R$ 511 million (R$ 0.36 per share)
Holding Discount
-14.5%Metalúrgica Discount regarding Gerdau
21,459 52.00 413 Metal. Gerdau
25,112 (=) Theoretical market cap of Metalúrgica
1,139(+) Interest in Aços Villares (28.88%)
569(+) Other investments
23,404 Metalúrgica´s interest in Gerdau (42.58%)
54,965 38.40 1,431 Gerdau S.A.
Market Cap (R$ million)
Price Shares PN
Nº of Shares (million)
Base June 30th, 2008:
16
DISCOUNT BETWEEN THE MARKET VALUE OF METALÚRGIGA GERDAU S.A. AND THE MARKET VALUE OF ITS INTEREST IN GERDAU S.A.
Quarterly Discount
24.2%
24.6%
23.9%
24.0%
21.8%20.2%
15.2%
18.8%
14.0% 14.5%
15.0%
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Contact information: +55 (51) 3323 2703
www.gerdau.com.br/ing
This presentation may contain forward-looking statements. These forward-
looking statements rely upon estimates, information or methods that may be
incorrect or inaccurate and may not actually occur. These estimates are also
subject to risks, uncertainties and assumptions, including, among others:
general economic, political and commercial conditions in Brazil and in the
markets where we operate and existing and future government regulations.
Potential investors are hereby informed that these estimates do not constitute
a guarantee of future performance as they involve risks and uncertainties. The
Company does not undertake, and specifically denies, any obligation to update
any estimate, which only speak as of the date they are made.
Statement
17