The Gerdau Group’s competitiveness in the international market and the strong demand for steel in China and other parts of the world contributed decisively to the positive results achieved in 2005 by the operations in Brazil.

Even with the valuation of the Brazilian real in relation to the US dollar, Company exports grew during the year and partially compensated for the 9.6% reduction in domestic sales caused by the Brazilian government’s austere economic policy. Strict measures led to the reduction of activities in certain sectors that employ steel products, such as civil construction and agricultural machinery and accessories.

The Group shipped 2.8 million metric tons of steel abroad, 2.6% more than the previous year, generating revenues of R$ 3.2 billion. The main products exported were billets, rebar, bars, profiles and wire rod.

The majority of sales in the Brazilian market, totaling 3.5 million metric tons, were directed at the industrial sector (56%), followed by civil construction (42%) and agriculture (2%).

As a result, the Company’s gross revenues in Brazil grew from R$ 12.9 billion to R$ 13.2 billion, with a net income of R$ 2.4 billion, and representing a 10.6% increase.