Business

• The Gerdau Açominas (state of Minas Gerais) expansion project is underway, increasing the plant’s annual installed capacity from 3 million metric tons to 4.5 million metric tons.

• The Gerdau São Paulo steel mill (state of São Paulo) begins operations with an annual installed capacity of 900,000 metric tons of steel.

• Gerdau Aços Especiais Piratini (state of Rio Grande do Sul) expands its production capacity to 500,000 metric tons of finished products per year.

• Gross revenues from Brazilian operations totals R$ 13.2 billion, 2.2% higher than in 2004.

• Net income from the Group’s businesses in Brazil increases 10.6% to R$ 2.4 billion.

• Exports compensate, in part, for the reduced demand in Brazil and reach 2.8 million metric tons, 2.6% higher than the previous year.

• Gerdau enhances the exchange and transfer of management technologies to its units located outside Brazil.


Environment

• Thousands of tons of scrap iron are recycled every year, reducing the volume of material sent to landfills and generating raw material collection jobs.

• Investments in this area total R$ 145.8 million in 2005.

• Water consumption is reduced by 17%. The Group invests R$ 24.2 million in technologies to increase the efficiency of water treatment and recirculation systems.

• Resources made available for air protection exceed R$ 67 million.

• Nearly 80% of the by-products generated during the production process are reutilized by various economic sectors.

• Protection is provided for 2,800 hectares of native forests.


People
Employees

• Employee profit sharing totals R$ 190.5 million.

• Training resources exceed R$ 30.7 million, an 18.9% growth on 2004.

• Investments in health and wellness increase 27.1% to R$ 59.6 million, with more than 842,000 consultations.

• Financing for home purchases and improvements totals R$ 11.9 million and university scholarship funds reach R$ 10.2 million.

• Awareness and investment campaigns totaling R$ 20.2 million increase employee and service provider safety in the workplace.

Community

• The Gerdau Group supports more than 400 social projects that help 7.3 million Brazilians.

• Investments in this area total R$ 41.1 million, compared to R$ 37.2 million in 2004.

• The Prato Popular (Popular Plate) Project benefits 9,000 low income people in the country through seven restaurants. Two additional restaurants opened in the beginning of 2006.

• Around 1,400 employees participate in volunteer activities, 115.1% more than in 2004.

Business

• Growth that is consistent with the market.

• Pursue operational excellence through process improvement and innovation.

• Seek to increase proximity to customers.

• Develop alternative raw material supply sources.

• Expand research and development projects in partnership with universities and study centers.


Environment

• Optimize the use of natural resources to minimize the environmental impact of the Group’s operations.

• Generate the smallest possible amount of by-products during the production process and increasingly encourage their recycling or reuse by other economic sectors.

• Obtain ISO 14001 certification for all industrial units.


People

Employees

• Achieve an environment that is free of lost time accidents.

• Develop global leaders who are able to meet the Group’s growth requirements.

• Global consolidation of the policies, practices and guidelines of the people management process.

Community

• Consolidate and institutionalize social responsibility policies and guidelines and community projects in the various operations.

• Encourage the growth of social responsibility and volunteer work among employees.

• Intensify social investments related to the transfer of management technology to the third sector and governments, as well as those related to the improvement of education and assistance in the communities in which the Gerdau Group operates.