A history of financial solidity and profitability
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| RESULTS |
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| EBITDA grows to R$ 1.3 billion up from R$ 1 billion |
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| • | The 2001 financial statement confirms the Gerdau Group's recent growth, having reached a consolidated net profit of R$ 551 million, compared to R$ 406 million in the previous year. The demand for steel products, new gains in efficiency and reduced operating costs were the main factors in this 36% increase. |
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| • | Gross sales revenue grew 13.8%, to R$ 7.1 billion up from R$ 6.2 billion, driven by increased sales, and by favorable exchange rates when converting foreign sale revenues into reais. |
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| • | The full consolidation of Açominas as of November 2001 contributed to the improved results. Previous financial statements reported Açominas' figures only to the proportion of Gerdau's stockholdings in the company. |
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| • | The devaluation of the Argentinean peso against the US dollar and the Brazilian real resulted in a R$ 49.7 million loss in 2001. Of this total, R$ 23.1 million resulted from revaluation of assets, and R$ 26.6 million from increased financial expenses related to US dollar debts contracted in Argentina. |
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| • | The Gerdau Group's Brazilian operations were responsible for R$ 4.5 billion of the consolidated gross revenue, or 64% of the total. Operations in Argentina, Chile and Uruguay were responsible for 5% (R$ 331 million), and the North American operations, 31% (R$ 2.2 billion). |
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| Gross revenueR$ 7.1 billion |
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| • | Net sales revenue was R$ 5.9 billion: 13.3% greater than in 2000. |
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| • | EBITDA - earnings before interest, tax, depreciation and amortization - reached
R$ 1.3 billion, 23.2% higher than in the previous year. Operations in Brazil were responsible for 76% of total EBITDA, operations in Argentina, Chile and Uruguay were responsible for 4.6%, and the North American operations, 19.4%. |
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| • | In consolidated terms, gross margin reached 28.1%, EBITDA margin, 21.8%, and net margin, 9.4%. |
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| CASH GENERATION |
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| Net operating cash increased by 67% |
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| • | Net operating cash was 67% higher than in 2000, reaching R$ 1.3 billion. This represents 21.4% of net sales revenue, compared to 14.5% in the previous year. |
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| • | At year end, available cash and financial applications showed a balance of R$ 1 billion, against R$ 689 million in the previous year, representing an increase of 45.6%. |
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| INVESTMENTS AND FINANCIAL LIABILITIES |
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| New investments do not affect liquidity |
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| • | Resources invested in 2001 totaled US$ 360.5 million, of which 54% were invested in new assets and stockholdings, and the remaining 46% in the technological modernization of the industrial plants and in the preservation of the environment. |
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| • | One important fact that deserves to be highlighted is the investment in Açominas that enabled Gerdau to acquire control of the company. At the auction held by the Brazilian Central Bank in December, the Gerdau Group offered R$ 426.6 million for the 17.67% stake in Açominas held by Agropecuária Senhor do Bonfim, a company controlled by Banco Econômico. |
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| • | As a result of this investment, Gerdau acknowledged a financial commitment of
R$ 333.8 million in the 2001 balance sheet, and increased its stake in Açominas to 51.7%. This deal was concluded in February of 2002, when Clube dos Empregados and Fundação Aços (Employee's Association and Pension Fund Association) relinquished their right to a proportional share of the stocks under offer. Natsteel, the other member of the controlling block, had previously relinquished their right. With the decision of Clube dos Empregados and Fundação Aços not to exercise their option, Gerdau's stake in Açominas increased to 54.14%. In the same month, the Company reached an agreement with Natsteel to acquire its 24.8% stake for a sum of R$ 508.9 million. The agreement gives Gerdau the right to acquire this stake by September 9, 2002, and will give it a qualified majority under the shareholders' agreement. |
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| • | In the United States, Gerdau paid US$ 48.8 million for the operating assets of the Cartersville steel mill in the state of Georgia, which were consolidated in the balance sheet as of December 2001. The Gerdau Group's fifth US mill has a nominal capacity of 725,000 metric tons of steel per year, and complements AmeriSteel's product line with gauges of up to 12 inches, especially in the area of structural profiles. |
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| • | The Brazilian companies' exposure to foreign exchange risk was R$ 1.4 billion at year end, equivalent to US$ 619 million. Hedging operations to the value of US$ 325 million were carried out to protect against the effect of fluctuations of the real against the US dollar on foreign currency debts contracted in Brazil. Debts indexed to exchange rate variation were swapped for liabilities in reais at an average rate of 91% of the variation in the CDI. The combination of these hedging operations with export revenue and dollarized assets practically neutralized the exposure of these debts to foreign exchange risk. |
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| • | Net debt increased 26.3% to R$ 3.2 billion, but did not affect the liquidity of the company. The main causes of this increase are the full consolidation of Açominas, with a total net debt of R$ 577.2 million, and the acknowledgment of the R$ 333.8 million corresponding to the 13.82% of Açominas capital stock held by Agropecuária Senhor do Bonfim. At year end, net debt was 2.5 times EBITDA. |
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| • | Offsetting this growth in net debt, total assets grew 39.9% to R$ 9.8 billion, up from
R$ 7 billion in 2000. |
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| CAPITAL MARKETS |
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| Shares grow in value in Brazilian and US stock exchanges |
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| • | The Gerdau Group has two listed companies: Gerdau S.A. and the holding company Metalúrgica Gerdau S.A. |
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| • | In 2001, the listed companies totaled 42.5 billion shares traded (up 18.1%) in 42,295 trades (up 19%), to a value of R$ 898.4 million, bringing added value and liquidity to our shareholders. |
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| • | Gerdau S.A. joined the São Paulo Stock Exchange Program of Corporate Governance (Level 1), a new set of standards of conduct for stock markets in Brazil. The Company is listed in the Ibovespa index, one of Brazil's main financial barometers. |
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| • | The value of Gerdau S.A. preferred shares on the Bovespa rose 28.4%, while the Ibovespa index fell 11%. The number of shares traded increased 15.7% to 35 billion. The number of trades increased 15.9% to 33,497, and the total value traded was
R$ 650.9 million. |
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| • | In the last six years the average daily volume of Gerdau S.A. shares traded on the Bovespa increased by more than 3,600%, from R$ 70,000 in 1996 to R$ 2.6 million in 2001. |
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| • | In the New York Stock Exchange (NYSE), the number of Gerdau S.A. ADRs traded grew 52.4%, to 7.7 million. This performance gave a daily average of US$ 250,000. The value of Gerdau S.A. ADRs rose 14.2% in 2001, while the Dow Jones index fell 7.1%. |
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| • | Metalúrgica Gerdau S.A. shares increased in value by 9.8%, with 7.5 billion shares traded, a volume 30.9% higher than in 2000. The number of trades increased 32.4% to 8,798, and the total value traded was R$ 247.5 million. The average daily volume traded increased to R$ 967,400. |
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| • | Dividends distributed to shareholders in the form of interest on capital stock totaled
R$ 164.2 million for Gerdau S.A. and R$ 76.2 million for Metalúrgica Gerdau S.A. |
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| • | Returns to shareholders in the form of dividends in the last 22 years totaled
US$ 726 million, 31% higher than the inflow of capital from stock issues realized in the same period. Since 1980, issues of public and private debentures totaled
US$ 306 million, while public and private share issues totaled US$ 553 million. |
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| • | Gerdau S.A.'s controlling block holds 53.6% of its capital stock, with 13.9% held by Brazilian institutional investors, 16.2% by foreign institutional investors, and 16.3% by other investors. In Metalúrgica Gerdau S.A., the controlling block holds 27% of stock, Brazilian institutional investors hold 26.4%, foreign institutional investors hold 19.5%, and other investors hold 27.1%. |
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| • | The free float - the proportion of capital stock available for trading - is 46.4% of Gerdau S.A. stock, and 73% of Metalúrgica Gerdau S.A. |
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| • | GTL Financial Corp, the Gerdau Group's financial arm, accessed the US markets with a new US Commercial Paper issue of US$ 140 million, with the same terms as the previous year: LIBOR + 1.6% per year. It also extended its debt profile by replacing short term debts with a US$ 100 million Syndicated Medium Term Bank Loan. This facility matures in two and three years, with interest rates of LIBOR + 3% per year and
LIBOR + 3.5% per year, respectively. |
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| • | As part of a policy of full disclosure, the company offers a thorough detailing of financial information, in addition to quarterly teleconferences on the Internet and meetings with market analysts in Brazil, the United States and Europe, reaching a total of more than 1,200 participants in 2001.
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| • | In recognition of these practices, Gerdau S.A. received awards from the Southern and Northeastern chapters, and was also honored for one of the best financial statements, according to the award presented jointly by ANEFAC (National Association of Finance, Administration and Accounting Executives), FIPECAFI (Foundation of Accounting, Actuarial and Financial Research) and SERASA (a company which deals in economic and financial analysis). The Investor Relations area of the www.gerdau.com.br website was selected as one of the three best in the financial field in Latin America, according to direct vote for the Latin Finance MZ Consult Award, POP+ category.
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Distribution of added value
Metalúrgica Gerdau S.A. Consolidated |
R$ 2.96 billion |
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Taxes, social security contributions and payroll taxes
Metalúrgica Gerdau S.A. Consolidated |
R$ 1.06 billion |
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